The October resale numbers were released today, and it was a much different story then we’ve been hearing about the last few months, and even what happened in Calgary last month. While sales were down noticeably from September (as is normally expected given real estates seasonality), they were still very strong for October… yet prices were down in a big way.
In all categories prices fell, and rather significantly for month-over-month movements. Condo’s, single-family-homes and the residential averages were all down about $8,000 from September (3.2%, 2.2% and 2.5% respectively), and the single-family-home median was down $3,900 (1.1%).
An unusual softening given relatively strong sales, but as I’ve hypothesized in the last few months, this could be further evidence of the return of high levels of speculation. As they typically buy at the low end of the market, that would explain the strong sales and movement of price… or could just be wishful thinking.
Curious that Edmonton and Calgary tend to mirror each other, yet Edmonton had a significant drop while Calgary had increases. Could just be an aberration, or we could see one eventually follow the other.
As previously mentioned, sales were down month-over-month (-9.9%), but strong for this time of year (1,535). Inventory also continued it’s typical autumn decline, and now sit at 5,530. Finally absorption rate stayed about the same at 3.6, as sales and inventory fell off at similar clips.
As always, here are the hard goods (note, this will be the last month townhomes are included. They make up such a tiny portion of the market and are so frequently lumped in with condos there isn’t much point including them, but if so included you can still look them up in the EREB releases):
Sales = 1,530
Since two years ago = +20.3% (+259)
Since one year ago = +22.7% (+284)
Since last month = -9.9% (-169)
Active Listings = 5,530
Since two years ago = -42.3% (-4,047)
Since one year ago = -35.1% (-2,995)
Since last month = -8.3% (-502)
Single Family Homes Median= $346,000
Since peak (May ‘07) = -13.5% (-$54,000)
Since one year ago = +0.9% (+$3,250)
Since six months ago = +2.7% (+$9,000)
Since last month = -1.1% (-$3,900)
Residential Average = $318,969
Since peak (July ‘07) = -10.1% (-$35,749)
Since one year ago = +0.4% (+$1,185)
Since six months ago = +2.2% (+$6,842)
Since last month = -2.5% (-$8,266)
Single Family Homes Average = $363,694
Since peak (May ‘07) = -14.6% (-$62,334)
Since one year ago = +0.1% (+$420)
Since six months ago = +2.9% (+$10,308)
Since last month = -2.2% (-$8,253)
Condo Average = $237,601
Since peak (July ‘07) = -12.6% (-$34,307)
Since one year ago = +0.0% (+$11)
Since six months ago = +0.7% (+$1,581)
Since last month = -3.2% (-$7,945)
Townhome Average = $299,843
Since peak (Oct ‘07) = -18.5% (-$68,121)
Since one year ago = -2.4% (-$7,335)
Since six months ago = +3.0% (+$8,775)
Since last month = -0.0% (-$121)
“Thanks kevin for all your hardwork.
In your prior analysis has there been a strong relation between unemployment numbers for a region and housing sales? There appears to be an inverse corelation for housing sales for Edmonton and Calgary. Any thoughts?
I've never actually done a straight comparison to unemployment and prices actually, it would be a good idea though… I did do a fairly extensive post on the employment numbers back in July though
http://edmontonhousingbust.blogspot.com/2009/07/get-to-work.html
For now you could compare/contrast these two graphs (unemployment and average prices in Edmonton/Calgary)
http://dynamic-evolution.com/ehb/090710-1.jpg
http://dynamic-evolution.com/ehb/090309-2.jpg
The two noticeable spikes in unemployment also coincided with decreases in price, though the second one was very minor price wise. They were also overall recessions, but we're in one of those too now.
As per the inverse correlation between Edmonton and Calgary, I'd have to disagree, there is always the odd aberration and sometimes one will lead the other by a few months, but on the whole they seem to have a very positive correlation… generally what happens in one, happens in the other in short order.
Price/Rent ratios for Edmonton SFH…
Median rent: $1550
Median SFH : $346,000
= ratio of 223X or 18.6
Calgary SFH
Median rent: $1600
Median SFH: $410,000
= ratio of 256X or 21.4
Interest move my Mike Fotiou, doing a experiment with letting people list at a flat rate (non-refundable) in lieu of a listing agents commission.
http://calgaryrealestatereview.com/2009/11/03/list-for-less/
Kev, do you think the return of speculators to the market will hurt or help in the long run?
I don't think it'll have much of a long term effect, unless these sales remain for another year or more. There is already such an oversupply out there, whether the resales change hands from one speculator to another really doesn't matter.
It only becomes an issue with new sales, so if their is a sustained period of high sales, builders will start amping up construction and we'll be even more overbuilt. But with the excess supply from the prior two years, and that it takes longer for builders to respond to market forces I don't see a season or two having any real effect.
In many ways speculation helps the market, as it stimulates new construction because it transfers risk from the builders. The problem is when it gets carried away for years on end like it did and you end up with a massive glut.
On the resale market when speculation gets out of hand it can cause a short term pinch in supply (as witnessed in 2006), but ultimately it proves artificial.
CM could you share your source for median rent?
Hi DF,
I use the data at RentFaster.ca
It seems to provide a large enough sample size, although there seems to be a lot more listings for the Calgary area than Edmonton.