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The Journal Business Staff of edmontonjournal.com has put together an article designed to show how steady prices in Edmonton’s housing market have put to rest fears of a real estate bubble in the city.
Taking into consideration the latest data from the Royal LePage House Price Survey, that shows that at the end of July, August and September, detached bungalows in the Edmonton area rose an average of 0.9 per cent year-over-year to $311,429 while standard two-storey houses increased 3.4 per cent to $338,571, their conclusion is that the market is “stabilizing.”
“For most housing types, prices have increased slightly from where they were a year ago,” said Ken Shearer, a broker with Royal LePage Noralta Real Estate, in a release. “However, we are currently witnessing a levelling off of prices after the quick recovery that began in 2009 and continued through until the spring of this year. To put it in simple terms: prices fell last year, rose quickly through spring and summer of 2010, then dropped back down.”
Price differences varied by neighbourhood and home type. Clareview, for example, saw an average detached bungalow fall 9.1 per cent to $250,000 year-over-year but a standard two-storey increase by 22 per cent to $360,000.
In Clareview a standard condo dropped 11.1 per cent to $160,000. In Riverbend/Terwillegar, bungalows increased on average 15.8 per cent to $440,000 while the average two-storey rose 11 per cent to $390,000. Prices for all housing types remained flat in St. Albert.
Phil Soper, chief executive of Royal LePage Real Estate Services, said that while annual price growth was slightly lower than five per cent in the last quarter, it’s basically in line with that level when factoring in a lower rate of inflation.
In the early part of this year and latter part of 2009, double-digit price growth, year-to-year, was the norm. The Canadian Real Estate Association recorded a surge of more than 20 per cent in October 2009.
These strong gains, as the economy was rebounding from recession while enjoying historically low interest rates, had some fearing Canada was experiencing a housing bubble.
“A few weeks or a few months of unusually high period-over-period price increases after a recession is completely normal,” Soper said. “And it’s no bubble.”
The Royal LePage report is the latest showing the Canadian housing market in stable territory.
CREA recently reported home sales rising in September for the second straight month. Prices of homes sold through the Multiple Listing Service (MLS) were flat compared with a year earlier and ahead 1.9 per cent from August.
And Statistics Canada recently said that new-home prices in August were up 0.1 per cent, even as most economists expected a decline by as much.
However, despite the positive trends of the Canadian housing market, many analysts have warned against looking to housing as a primary, long-term investment strategy, and are instead recommending diversification.
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http://www.edmontonjournal.com/
The Royal LePage House Price Survey was released today, with third quarter results showing that Canadian house prices are appreciating just slightly below the long-term annual norm of five per cent per year.
“Most Canadian housing markets cooled in the third quarter. In fact, the year is unfolding much as we predicted, with the unusually active first half of 2010 giving way to slower markets in the later part of the year. Helped by very low rates in a competitive mortgage financing market, the third quarter was slightly stronger than anticipated, on new demand fuelled by improved affordability in many regions,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. Looking ahead, it is very unlikely that the period from now to year-end can keep pace with the activity levels posted in the overheated market of the final quarter of 2009.”
Average price of a Canadian detached bungalow in the three-month period ending in September was $324,531, up 4.6 per cent from a year earlier, for a two-storey home was $360,329, up 4.4 per cent, while the average price of a condominium was $226,481, up 3.9 per cent.
Housing markets in Alberta stabilized in the third quarter as inventory rose and year-over-year prices flattened. Detached bungalows in Calgary rose 2.7 per cent while standard condominiums and two-storey homes decreased by 1 and 1.1 per cent, respectively. In Edmonton, standard two-storey homes were up 3.4 per cent to $338,571, while standard condominiums were down 3.6 per cent year-over-year to $204,167.
About the Royal LePage House Price Survey
The Royal LePage House Price Survey contains information on seven types of housing in over 250 neighbourhoods from all over Canada. This release references an abbreviated version of the survey, which highlights house price trends for the three most common types of housing in Canada in 80 communities across the country.
More information:
Royal LePage Q3 2010 House Price Survey – Data Chart (.PDF)
Housing Starts in Edmonton rise in August
According to the latest “Housing Now” report for September, published by CMHC, total housing starts in the Edmonton Census Metropolitan Area (CMA) amounted to 690 units in August, up from 558 units in August 2009.
This represents the 14th consecutive month of year-over-year gains in new home construction. Year-to-date August, there have been a total of 7,018 housing starts in the Edmonton CMA, up from 2,921 units at this time last year.
There were 519 single-detached units started in August, an increase of 38 per cent from the 375 units started a year earlier. The higher number of housing starts this year has lifted supply levels back to the level experienced in 2008.
Single-detached completions reached 592 units in August, more than twofold the 258 units completed this time last year. Absorptions increased by 51 per cent year-over-year in August to 539 units, falling short of completions by 53 units. This resulted in an uptick in the month end inventory of unabsorbed singles, including show homes, to 436 units.
While 13 per cent below August 2009 levels, the inventory is now at the highest level since last November but is still considered low by historic standards.
Multi-family housing starts, which consist of semi-detached units, rows, and apartments, totaled 171 units in August, down almost seven per cent from the 183 units started in
August 2009. An absence of apartment condominium starts contributed to the lower activity in August. Multiple units under construction stood at 4,869 in August, down by just over three per cent from this time last year. Through two-thirds of this year, multi-family starts across the region have amounted to 2,700 units, up 134 per cent from the 1,156 units started in the corresponding period last year.
Multiple unit completions totaled 361 units in August compared with 1,346 units during the same month last year. Absorptions also dropped substantially year-over-year to 358 units. With absorptions coming close to completions, inventory levels were largely unchanged on a month-over-month basis. Compared with this time last year, inventories were up by 4.3 per cent to 1,019 units. At 605 units, condominium apartments represent the largest component of the completed and unabsorbed multiple units across the region. These numbers have remained largely unchanged since the beginning of 2010.
More Information:
http://www.cmhc-schl.gc.ca/
Vacancy Rates for Office Space rising across Canada
A recent report from CB Richard Ellis Ltd. says vacancy rates for office space across the country are climbing. The report said that Canada’s overall vacancy rate for downtown and suburban office makets is now at 9.8%, up from 9.4% in 2009.
John O’Bryan, vice-chairman of CB Richard Ellis, said that there have been no surprises this quarter:
“The recovery and rebound of the commercial real estate market in the third quarter is tracking as expected, and we anticipate that commercial real estate activity will continue to improve through to year-end, albeit, at a slower pace. Pent-up demand due to the uncertainty of the market from the start of the year is now starting to make its way through the system.”
As for Edmonton, the report indicates that overall office and industrial vacancy rate rose to 11.1 per cent from 8.3 per cent year-over-year. Among the causes for the rise, some analysts point at downtown rents that hit record highs last year, and as a result, during 2009 and early 2010 a number of downtown tenants migrated to the suburbs, such as Alberta Pensions Services Corp. moving from Park Plaza to a 62,500-square-foot building in southwest Edmonton.
However, the report took an optimistic outlook. “After 18 months at a standstill, developers are returning to Edmonton, with strong emphasis placed on industrial properties,” it said.
“With continued international demand on Alberta’s oil sector, both Calgary and Edmonton’s commercial real estate markets are poised for long-term growth.”
Cushman & Wakefield’s Edmonton 2010 first-half review predicted a rebound in the investment market from recent volume and sales lows last year and in 2008.
“Over the last year or so, financing has come back into the market,” said Jeff McCammon, associate partner at Cushman & Wakefield’s investment division.
“What’s happening now is, we’re starting to see the odd group not being forced to sell but planning to put their assets on the market so they can redeploy those funds and look for opportunities elsewhere, which is creating opportunities for other groups to come back into this market,” he added.