Real estate buyers and sellers are sold on Edmonton.
With the latest Edmonton Real Estate Board (EREB) figures indicating a record-breaking year, officials are citing the so-called Alberta Advantage as a key contributing factor.
“The Alberta Advantage is a fact of our economic life. It’s not just a slogan,” said EREB president Bill Briggs. “You’d be hard pressed to find a province where more money per capita is being spent on construction than in Alberta.”
Briggs said it’s this money, $90 billion in oilsands and other major development projects, and the in-migration it attracts that’s helping propel the EREB figures.
June 2004 numbers show that total residential sales – single family, condominiums, townhouses and duplexes – came in at 1,974 units valued at $369 million – 17 per cent higher than the same period in June 2003.
Year-to-date figures, meanwhile, reflect four months of record-breaking sales and, as of July 2, total sales including commercial and residential topped the $2-billion mark. This level wasn’t reached until August 1 of last year.
In the commercial sector, it’s the strong economy along with attractive lease rates that are driving factors, according to Briggs.
Commercial property listings have risen from 1,261 in the first six months of 2003 to 1,383 in the same 2004 interval. The number of listings sold, however, has dropped slightly from 372 in the first half of 2003 to 362 in the first six months of 2004.
For commercial land, there were 2,120 listings in the first six months of 2004 with 952 pieces sold, compared with 2,141 listings and 862 transactions in the corresponding 2003 period.
But it’s the residential sector that the EREB says is red-hot.
The average single-family home price has hit a new record for Edmonton at $203,788, up 8.75 per cent over 2003.
Six months from now, it is expected to rise even higher, although homeowners selling and relocating in the same market will likely face a price escalation on the properties they’re looking at if they decide to wait that long to buy.
“It was only earlier this year that we hit $200,000 (for a single-family home) for the first time and I don’t see us turning back,” said Briggs.
“The steady price increases, strong resale possibilities and reasonable prices compared to other markets make Edmonton an attractive investment,” said Briggs. “An average home in Edmonton is half the price of an average Vancouver home and out-of-market investors are seeing the value.”
With 4,863 homes currently listed for sale on the Multiple Listing Service, a 21/2-month supply of properties is available in Edmonton, a level described as normal.
In addition, the number of new listings at 2,675 is up, while total year-to-date listings are 18 per cent above the same point last year.
It’s because of these factors that Briggs doesn’t see a real-estate bubble happening any time soon in Edmonton.
“The housing supply is at a normal level for this time of year,” said Briggs.
“The increased activity will not impact sales of owner-occupied properties or drive prices up faster than the normal market increases.”
The higher residential inventory levels, though, are making it harder to sell houses, according to Edmonton real estate broker Henry Mah.
“The market is flattening out,” said Mah, a Sutton Group-Synergy Realty agent. “There’s a lot more inventory now, there’s no question about it. Buyers are being a lot more careful. They realize there’s a lot more out there and because of this, we’re not seeing as many multiple offers. They’re not stampeding like they were the last couple of springs. Rather, they’re taking their time, looking at everything else that is out there and are not afraid to make a lower offer.”
Mah calls it a transition market, not as hot as it used to be, but still pretty good. “We’re not crashing, far from it. But it’s not like the last two years where we were spoiled – you’d list a property and in the next two days it was gone,” he said. “Today’s market is more hit and miss. On my own listings, I’ve been sitting on some for two or three months and there have been no offers – yet others have sold in a week or two.”
In the meantime, for those wanting to buy a condominium, prices slipped slightly in the Edmonton market, dropping 1.76 per cent from May’s record high of $139,044 to $136,596 in June.
Briggs called this a blip and doesn’t expect this anomaly to dampen a very strong condo market, which set a new single- month record in June with 504 units sold.
Another factor playing a role in Edmonton’s condo scene includes a relatively new phenomenon, where parents of out-of-town University of Alberta students are buying condos for their children instead of having them pay rent. Properties of choice include those near or on public transportation lines, along with some costlier units within easy walking distance of the university.
Once the student graduates, the condo is put up for sale and sold for a higher price, a move that shows investors are confident in the real estate market here, added Briggs.
As to the question of rising interest rates, Briggs doesn’t see any hikes of up to one percentage point hurting the market.
“Higher interest and mortgage rates will only put a damper on the market if they increase dramatically,” he said.
