With downturn ebbing, buyers flood market that’s ‘not going to get any better’

EDMONTON – Edmonton home sales surged in August by 18.6 per cent over the same month last year as the average price of a single-family detached house fell to its lowest level in 18 months, monthly statistics released Wednesday show.

Marc Perras, president of the Realtors Association of Edmonton, said the figures confirm what he’s experienced in his own real estate office.

“I’ve been run off my feet,” Perras said. “July was ridiculously busy and August has been ridiculously busy, and when it shows in the numbers, it’s not just me.”

It’s the second consecutive month that sales outperformed the same period last year.

New entries on the Multiple Listing Service also fell for the month compared to last year by 889 properties. It’s the first time since March that MLS homes for sale have dropped below 10,000.

There were 9,612 residential properties in the inventory on Aug. 31, compared with 10,501 at the beginning of the month.

“The stats show buyers are confident with the Edmonton economy. It’s a large selection to pick from right now, and I think they don’t foresee a drastic dropping of prices, so they want to get into the marketplace and buy.

“By the time we get through to next spring, we’re going to have a far more reasonable listing inventory and we’re going to have a far more balanced marketplace,” Perras said.

Richard Goatcher, Canada Mortgage and Housing Corp. senior market analyst for Edmonton, agreed the current buyers’ market is moving toward a balanced one, and that’s motivating

last year’s fence-sitters as selection slips and prices dip but remain relatively steady.

“For buyers, it’s not going to get any better than it is right now because of the supply, which is going to start to dwindle away,” Goatcher said.

“The buyers’ market will give way to more of a balanced market over the winter as supply gets reduced but sales remain fairly firm.”

Average MLS prices for all types of homes were down slightly in August from the previous month.

Single-family homes dipped 2.65 per cent to $369,190 — the lowest price in 18 months.

Compared to August 2007, single-family dwellings are down 8.56 per cent. The median selling price was $352,500, down about seven per cent year-over-year.

Condo prices inched down 1.1 per cent to $251,048 in August after sliding 3.25 per cent in July. Compared to

August 2007, they have dropped 6.72 per cent.

Duplex and row-house prices also showed stability, dropping less than half a per cent from the previous month.

The average residential price of all types of homes was $329,207.

That’s down 1.8 per cent from the previous month and down 4.52 per cent year-over-year.

Still, the value of total MLS sales for August was $574 million, up nearly three per cent from August 2007.

Despite a pickup in sales, days on market rose to 63 from 55. In 2007, days on market for August was 36 and in 2006, it was 20.

Perras said he believed the slippage in home prices will soon reverse.

“Housing prices typically rise slightly through the fall,” Perras said. “We expect that the strong sales this quarter will support rising prices as we approach year-end.”

Meanwhile, new-home sales are still straggling well behind resales.

“New-home sales are down dramatically partially because of the wide selection of homes available through the MLS, but buyers are demonstrating their confidence in this market and are not afraid to purchase.”

Single-detached houses started in Edmonton will drop by 57.7 per cent to 3,250 homes, compared to the 7,682 built last year, said a third-quarter housing-market outlook released by CMHC.

Lagging sales forced at least one builder, Jayman MasterBuilt to lay off 20 workers in Edmonton and 30 in Calgary last month. Company president Jay Westman predicted new-home sales will pick up when the large stock of resales shrinks.

Source – The Edmonton Journal

Report cites real-estate investment performance in resale, rental market

Looking for the best place in the world to invest in real estate?

If you live in Edmonton, you don’t have to go far, says a new report Top Ten Towns Alberta released today by a real estate author and analyst.

Edmonton tops the list and four of its neighbouring communities follow close behind — St. Albert at fourth, Devon tied at ninth and Sturgeon and Strathcona Counties tied at 10th of the best places in Alberta to make money in residential real estate based on long-term potential. The top 10 list actually has 13 areas. Calgary trailed Edmonton in second place.

“Once again, Edmonton clearly deserves to take the No. 1 spot on the list,” writes Don Campbell in his latest issue of Top Ten Alberta Investment Towns. Campbell is a real estate consultant, author and president of Real Estate Investment Network.

“Edmonton remains at the top of all lists of best places in which to invest, whether you are talking provincial, national or worldwide.”

The list is compiled from a survey of statistical and demographic data from sources such as Statistics Canada, Canada Mortgage and Housing Corporation, Multiple Listing Service, government and economic development offices.

Despite a cooled-down real estate market, strong economic fundamentals keep Edmonton in the top spot that it’s held for six consecutive reports, he said.

“The ‘Tiger Woods’ years are finally over and the market is going to begin performing closer to historic norms.

“The good news is that Edmonton’s historic norms will be at, or near, the top of performance for all of Canada both economically and in the resale and rental housing sectors.”

Campbell said the current slowdown in Edmonton may worry some people, but “the housing market had to take a breath as it just could not continue at its rapid clip. Economic diversity provides economic stability, meaning Edmonton is no longer prone to major upward or downward economic swings; this type of stability is what long-term real estate investors are seeking.”

St. Albert came in fourth. Campbell said the city is shedding its bedroom-community image to become an employment centre and is poised for another growth spurt this decade.

“If consistently low vacancy rates, high rents and strong property-value increases, with a location in a strategically situated city surrounded by a major job base … then St. Albert fits the bill,” the report said.

Devon, which tied for ninth with Lacombe, offers proximity to Edmonton, Nisku, Leduc and Edmonton International Airport along with small-town living and real estate prices, the report said.

“Its location … has been a boon to both real estate investors and homeowners.”

Strathcona and Sturgeon Counties tied for 10th place as centres of major refinery, upgrader and oil services.

“As the petro boom continues, so will the land boom across these two counties. And even if only a couple of the proposed refineries begin construction north of Fort Saskatchewan, watch the property demand hit new unseen heights.”

The report is equally effusive in praising the province for its real estate investment climate. “Fundamentally speaking Alberta’s economy is as good as it gets. High energy prices, rapid population growth, low unemployment, an abundance of jobs, improved infrastructure, and affordable housing costs translate into Alberta still being the No. 1 place in Canada — if not the world — in which to invest,” said the report.

THE TOP 10

1. Edmonton

2. Calgary

3. Red Deer

4. St. Albert

5. Grande Prairie

6a. Lethbridge

6b. Fort McMurray

7. Airdrie

8a. Cochrane

8b. Sylvan Lake

9a. Lacombe

9b. Devon

10. Sturgeon and Strathcona counties.

Source: Real Estate Investment Network

Article by Bill Mah | The Edmonton Journal

Western Canada job growth keeps rental accommodation demand strong, says city’s biggest landlord

EDMONTON – Edmonton’s largest landlord reported Thursday a profit of $11.7 million for the second quarter as its rental revenues climbed despite greater competition posed by an oversupply of houses and condos.

Boardwalk Real Estate Investment Trust (TSX:BEI.UN) said it earned rental revenue of $105.5 million for the three months ended June 30. That’s up by 13.8 per cent from $92.7 million for the same period last year.

The results were worth 21 cents per unit for the period ended June 30, up from a year-ago loss of $97.5 million, or $1.73 a unit. Net operating income increased to $66.7 million, up 13.6 per cent from $58.7 million from the comparable 2007 period.

The Calgary-based REIT said its funds from operations, a key measure of performance for real estate companies, rose 13 per cent in the second quarter, buoyed by Western Canada’s job growth, thriving energy industry, solid international migration and a rebound in interprovincial migration after two quarters of net losses.

“Economic strength in Western Canada continued to support strong demand for rental accommodations in our largest markets this quarter, producing positive revenue growth for the trust,” said CEO and board chairman Sam Kolias.

Boardwalk has 10,649 units in Edmonton, significantly more than any other city. Calling itself Canada’s largest owner/operator of multi-family rental communities, Boardwalk owns more than 260 properties primarily in Alberta, British Columbia, Saskatchewan, Ontario and Quebec.

Revenue from its Edmonton properties rose by 14.2 per cent and net operating income went up 12.4 per cent. Operating expenses also rose in the second quarter for Edmonton by 18.1per cent, mainly due to higher utility costs, particularly natural gas, Boardwalk said.

The second quarter has seen a continuation of a correction in the city’s real estate market that is tempering prices and has led to record numbers of unsold residential listings.

Kolias said the trust has been conservative in setting rents in the second quarter, opting to maximize occupancy — improving it from the first quarter.

“Much of our success this quarter can be attributed to our three-pronged revenue-maximization strategy, in which we actively monitor occupancy, adjust price and apply suite-specific incentives.

“In the first quarter of 2008, we strategically reduced market rents on select properties in response to weaker seasonal demand and quickly realized an increase in occupancy.

“In the second quarter, this strategy continued to be very successful, with occupancy improving overall in Alberta — where it holds 54 per cent of its inventory — Saskatchewan, British Columbia and Quebec.”

Boardwalk’s average occupied rents went up about $10 in Edmonton in June compared to March. In Calgary, average occupied rents were up about $6 in the same period. Year-over-year market rent decreased by $75 in Edmonton and by $34 in Calgary, according to Boardwalk.

“We are more conservative because we are watching very closely the home inventory and condominium inventory. The options for a renter to move into home ownership have increased. There’s a lot of choices out there and the last thing we want to do is give any one of our customers more incentive to move out and purchase with a higher than necessary rental increase,” Kolias said in a conference call.

“We’d rather have occupancy and we’d rather have the bottom line. Consumers are very price sensitive and that’s why we’re very sensitive with our prices and our rates. We want to continue to attract and retain residents through this more competitive market we’re seeing because of the housing market.”

The average vacancy rate across the trust’s portfolio for the second quarter was 4.74 per cent, down from 5.65 per cent in the first quarter and up from 4.16 per cent for the second quarter of 2007.

The average monthly rent for Boardwalk in the second quarter was $955 per unit, up $90 from the same period last year.

The Edmonton region vacancy rate rose in April to 3.4 per cent from 1.1 per cent a year earlier, said the Canada Mortgage and Housing Corporation in June. It pointed to lower migration into the province and an increased supply of rented condos and basement apartments.

The CMHC’s spring rental market survey said Calgary had the nation’s highest average monthly rents for two-bedroom apartments at $1,096 and Edmonton had the fourth-highest at $1,000.

Units of Boardwalk REIT closed at $38, up $2.06, or about six per cent, on trading on the Toronto Stock Exchange Thursday.

Bill Mah | The Edmonton Journal

Big drop in Alberta leads trend

TORONTO – The Canadian housing market got another dose of bad news with new statistics showing home prices are falling fast, led by a pullback in Alberta.

The Canada Real Estate Association says the average price of a home sold in Canada’s top 25 markets last month was $327,020, a 3.6 per cent decline from a year ago. It’s the second year-over year drop after the June numbers fell 0.4 per cent.

The news comes after Canada Mortgage and Housing Corp. said Tuesday that new home construction was down 13.6 per cent in July from a month earlier, reaching its lowest level in almost a year. Statistics Canada also said new home prices grew by only 3.5 per cent in June from a year earlier. It was the slowest rate of the growth since March, 2002.

The malaise in housing is now clearly being felt across most of the country, but nowhere more keenly than Calgary and Edmonton.

In Calgary, the average house home sold in July dipped to $413,371, a 10.1 per cent decline from a year earlier. Sales in Alberta’s largest city also fell 13.1 per cent from a year ago.

In Edmonton, the average price dropped eight per cent from a year ago to $344,636. Sales were up 12.4 per cent. About a year ago, it was not uncommon to see price increases of 50 per cent in both cities, a fact that propelled Calgary’ average sale prices past Toronto last year.

“The combination of a larger inventory of homes for sale and fewer home sales means less upward pressure on home prices in many markets,” says Calvin Lindberg, president of the Association. “The challenge for many sellers is determining the right price for today’s market conditions. There is no doubt the Canadian real estate market is pulling back from record sales and price increase levels of 2007.”

There were few exceptions to the trend in the major markets, which saw July sales dip 11 per cent from a year earlier. At the same time new listings rose 11.3 per cent.

Greater Vancouver sales continue to drop, with the number of units changing hands in July at 2,284, a 43.5 per cent drop from a year ago. New listings jumped 22.6 per cent in July from a year ago. The result was Vancouver home prices actually fell 0.7 per cent in July from a year earlier, though it is still the most expensive market in the country with an average price of $575,730.

Toronto did not fare much better. Sales in the country’s largest city fell 12.4 per cent from a year ago while new listings jumped 17.8 per cent last month from July 2007. Prices in Toronto rose a meagre 1.5 per cent to an average of $371,410.

The only market sill on fire is Regina where the average price of home sold in July was $247,030, a 35.7 per cent from a year ago. But there are telling signs there, too, with sales off 37.1 per cent from a year ago and new listings up 27.9 per cent.

Garry Marr | Canwest News Service

July sales spike 14% over last year as sellers drop prices to reflect market

EDMONTON – July home sales spiked 14 per cent over the same month last year as Edmonton’s cooled-down market showed signs of roaring back.

Buyers purchased 1,784 homes in July, compared to 1,565 in the same month last year, according to Edmonton Multiple Listing Service numbers released today.

Only MLS sales in July 2006 — 2,230 — were higher.

Realtors Association of Edmonton president Marc Perras noted that the turnaround in sales came in July, a month where activity usually drops.

“Sales have been steady for the past four months and have not dropped off as they usually do in July,” Perras said.

One big reason for the double-digit jump was that July is the first time that sales this year have been compared against a “normal market month” after last summer’s correction, Perras said.

“We’ve been saying all along this year that our sales are actually reasonably strong.”

But Perras also credited July’s upswing to Alberta’s robust economy and sellers who finally dropped their asking prices in a strong buyers’ market.

He noted that an analysis of June’s sales showed about half of that month’s sales had taken price reductions before selling with the prices coming down an average $28,000.

“I think that we still have some people thinking that their properties are still worth what they would have been worth a year ago, and we’re getting to the point that sellers are realizing that, ‘my property might not be worth what I thought it was.’ “

Prices, however, are “still relatively stable without any evidence of dramatic up or down swings.”

The average residential price dropped 1.8 per cent from last month to $335,100 — down 5.53 per cent from the same month in 2007.

The average price for a single-family detached home was $379,224, down a half-per cent from last month on stronger than usual July sales of 1,176 units.

Compared to July 2007, the average selling price for the single-family detached home dropped nine per cent.

The single detached home’s median selling price — middle figure in a list of all sales prices — fell 8.35 per cent year-over-year to $362,000.

The average price for a condo fell 3.25 per cent from last month to $253,850 on slowing sales of under 500 units. Compared to last year, it dropped nearly seven per cent.

Duplex/rowhouse homes rose 1.2 per cent to $316,832 in July with sales of 68 properties.

All figures are based on Edmonton-area sales through the Multiple Listing Service. They do not include private sales by owners.

Perras said Alberta housing prices peaked earlier than the rest of the country and have levelled off while prices elsewhere are still falling.

“I think in a lot of Canadian markets, they’re just starting to experience their correction where we went through ours last year,” Perras said.

Despite a pickup in sales, Perras said the buyers’ market continues because of a glut of homes for sale that remains entrenched despite a strong July.

Listing inventory has fallen to 10,501 properties as of July 31, down from a high around 11,500 earlier in the summer.

Average days on market for a home this July was 55, compared to 35 in the same month last year.

Bill Mah | The Edmonton Journal

Benchmark price for Metro Vancouver properties down 2.1 per cent from May

METRO VANCOUVER – Month-over-month declines in real estate prices across many Lower Mainland property markets are another sign the overall market cycle has run its course, according to one housing economist.

The so-called benchmark price for all property types tracked by in Metro Vancouver, excluding Surrey, have dipped 2.1 per cent since May to hit $556,605 at the end of July, the Real Estate Board of Greater Vancouver reported Tuesday.

In the Fraser Valley markets, which include Surrey, there were also month-to-month drops in prices in July with the biggest decline in average single-family-home price. The average Surrey house price of $520,232 was down six per cent from the month before.

Cameron Muir, chief economist for the B.C. Real Estate Association, said he doesn’t believe that there was a housing bubble that has now burst, but said there has been a change in the cycle.

“Typically at the end of a market cycle you will see home prices remain flat, or even come off a few percentage points a year, until the next cycle begins,” Muir said in an interview.

“That’s what we’re looking at right now,” he added, but “barring a complete deterioration in the provincial economy and mortgage interest rates climbing rapidly, that’s kind of what we see in terms of what market activity is showing us.”

The Vancouver board reported 2,174 property sales in July, a 44-per-cent decline from the same month in 2007. July listings, meanwhile, increased 24 per cent to 6,104 compared with the same month a year ago.

Total active listings in the inventory, however, were down slightly from June, the board said, at just over 19,000 compared with just over 20,000 the month before.

“We’re seeing more price reductions in properties listed on the market, which is a levelling impact on the housing-price increases experienced at the end of last year and into the first quarter of 2008,” Dave Watt, president of the Real Estate Board of Greater Vancouver said in a news release.

The board said the dip in prices was felt across property types. The typical detached home price has declined 2.3 per cent, the typical townhouse one per cent and the typical condominium one per cent since the end of May.

The dip, however, hasn’t taken out all of the gains that property owners have seen over the last year. Board statistics show that the typical detached home price, of $753,165 is still 5.4 per cent higher compared with the same month a year ago.

The typical townhouse price in July of $473,953 was 5.7 per cent higher than July 2007. And the typical condominium price of $381,687 in July was still 4.7 per cent higher than in the same month a year ago.

Sales across the Fraser Valley in July were down 35 per cent to 1,284 compared with the same month a year ago and new listings rose 20 per cent to 3,742 compared with July 2007, bringing the region to a record high inventory of 12,299 units.

“It’s a situation of supply and demand,” Kelvin Neufeld, president of the Fraser Valley Real Estate Board, said in a news release. “Buyers are now in the driver’s seat in the Fraser Valley and we’re starting to see that reflected in home prices.”

The average price of a detached home across the Fraser Valley was $530,455 in July, which was down 5.6 per cent compared with June but still two per cent above the July 2007 average sale price.

In townhouses, the average Fraser Valley price in July of $324,042 was 3.9 per cent less than the June average, but 0.2 per cent higher than in the same month a year ago.

In Fraser Valley condominium prices, the July average price of $234,597 was 1.1 per cent below June, but remains 6.5 per cent higher than in the same month a year ago.

Muir said several factors are crimping the demand side of housing markets. The prices have become less affordable for too many who want to get into the market, the economy has slowed in areas such as forestry and tourism, and consumer confidence is down in the face of high fuel prices, the spectre of rising food prices and bad news coming out of the growing housing recession in the United States.

“There’s not a lot of economic news out there right now that is going to bolster demand in a significant way that we’ll see sales levels return to what they were,” Muir added.

Tsur Somerville, director of the centre for urban economics and real estate in the Sauder School of Business at the University of B.C., said, “There is only so long that a market can continue on [price] increases.”

“After you’ve gone three years with double-digit price increases, and even if the economy is moving along and interest rates remain low, there is this sort of market exhaustion,” Somerville added.

He said that by now, many of the people who wanted to and were able to buy property have now bought, and “it’s not like there is any remaining great well of growth.”

First, it was Canada’s top 25 markets that were feeling the pain from a slowdown in housing prices. Now, it’s clear that the malaise has spread to the entire country.

Two weeks ago, Canadian Real Estate Association figures showed the average sale price of a resale house in the 25 largest markets was down 0.4% in June from a year ago.

New data released yesterday show housing across the country is losing out to inflation. The average sale price of a home in Canada last month was $314,028, a tiny $35 increase from the same month a year ago. For the first six months of the year, prices were up 3.6% from a year ago.

“In essence, Canada’s housing market has pulled back from the record-setting pace of 2007, but in most provinces it continues at or near sales levels set in the years before that,” says Calvin Lindberg, president of CREA. “The increase in housing prices is also pulling back from the record-setting pace of last year, but we have yet to see any of the price contractions that have impacted the housing market in the United States.”

CREA said there is good news in the numbers. For the fifth straight year, more than a quarter of a million units were sold in Canada. However, sales over the first six months of the year are down 13.1% from a year ago.

“Resale housing activity is cooling evenly in rural, suburban and urban markets,” said Greg Klump, CREA’s chief economist.

He said rising fuel prices have not affected the housing market. “There is no statistical evidence to date that shows increases in energy prices are prompting Canadians to relocate. Lifestyle factors remain the prevalent influence on homebuyer preferences.

by Garry Marr, Financial Post

Canada’s housing boom has come to an end and that is no more evident than in Alberta — with prices continuing to fall this year by eight to 10 per cent from their peak, says a national real-estate report.

The report released Thursday by TD Economics says “the long-awaited end of the Canadian housing boom has occurred, reflecting more moderate demand and increased supply of properties for sale” and it is a trend that is broadly based “but it has been particularly sharp in some of the markets that had experienced the most dramatic price growth.”

Evidence of the national downturn is evident in year-over-year price growth for existing homes in Canada’s major markets, which fell to only 1.1 per cent in May, down from 8.6 per cent just four months earlier, the report said.

“The combination of significantly higher listings … and weaker demand, due to the past erosion in affordability, are leading to declining sales and softer price performance across the country, particularly in the West,” said the report authored by Craig Alexander, vice-president and deputy chief economist, and Pascal Gauthier, economist, of the TD Bank Financial Group.

Home prices in the formerly red-hot markets in Calgary and Edmonton performed worse than the slowing national average, falling below levels reached one year ago in April and May.

“Alberta will have further weakness in the near term, as Calgary and Edmonton will likely see prices continue to fall for another three or four quarters, dropping eight per cent to 10 per cent from their peak, after which prices should stabilize and start rising at a low single-digit pace,” the report said.

National sales are likely to continue to decline in the coming quarters and price growth will slip to two per cent on a countrywide average basis in 2008 and rise only to 3.5 per cent in 2009.

Most markets will see low to mid single-digit gains, but Saskatchewan and Manitoba will continue to post double-digit gains in the near term followed by a significant cooling in 2009, “with the risk of a mild price correction in the major cities that have recently experienced extraordinary price growth.”

And while year-to-date sales have fallen by 12.5 per cent, sales are only returning to levels typically experienced in the three years (2004-2006) prior to the 2007 sales boom, the report said.

Nevertheless, “sales are also weaker in other parts of the country, with British Columbia and Ontario sales down by more than 10 per cent.”

“Resale activity in Vancouver is tracking significantly below last year’s levels and we expect sales for 2008 as a whole to end up almost 20 per cent lower than 2007. Toronto is expected to experience 10-per-cent lower sales.”

Ontario and Quebec homes, which have appreciated at a steady six to seven per cent rate over the last three years, will now only appreciate at half that pace through 2008 and 2009.

Even in Saskatchewan where price gains have mirrored those in Alberta the report forecasts only two- to three-per-cent price growth in 2009, with the risk of a mild price correction.

by Mario Toneguzzi

Strong demand for rental accommodation throughout B.C. pushed the apartment rental vacancy rate down to 1.1 per cent in April from 1.2 per cent a year ago, Canada Mortgage and Housing Corp. reported Thursday.

CMHC said the average rent for a two-bedroom apartment in B.C. has increased from $893 to $921 in the past year.
“Above-average job growth, very low unemployment rates and people moving to the region are a few of the factors behind the trend to lower vacancy rates,” said CMHC regional economist Carol Frketich.

The Metro Vancouver vacancy rate remained unchanged from a year ago at 0.9 per cent while Victoria’s rate fell from 0.8 per cent to 0.3 per cent and the rate in Kelowna dropped from 0.7 per cent to 0.3 per cent.

The apartment vacancy rate in Abbotsford rose from 0.6 per cent to 2.4 per cent while the rate in Prince George increased from two per cent to 2.7 per cent.

Bruce Constantineau

Vancouver Sun

A 31-year-old North Vancouver man has been charged with fraud for allegedly placing phony home rental ads on Craigslist.

Vancouver police arrested Edward Frank Hamilton on May 22 as he left the Provincial Court in Richmond and charged him with five counts of fraud.

He appeared in Vancouver Provincial Court and was released. Police have seized his cellphone.

Vancouver police Const. Tim Fanning said the suspect is alleged to have placed Internet ads on Craigslist, a free online classified service, offering to rent apartments or suites in Vancouver, where home rental space is at a premium.

He would take deposits from the prospective renters and give them keys to suites which didn’t exist, Fanning said.

The frauds date back to the beginning of the year, said Fanning, when a woman living in Red Deer who was moving to the Vancouver area allegedly sent Hamilton a $725 cheque for what she believed was the rental of part of a home, only to find when she arrived that the address he’d given was an apartment block.

Police allege four other victims turned over amounts ranging from about $160 to $300 to Hamilton for suites after he met them in fast-food restaurants and gave them keys.

Fanning said the suites didn’t exist.

by Gerry Bellett | Vancouver Sun