Edmonton Real Estate Market Update During the Pandemic, Month Seven: Is change coming?

Well, well, well,

Four to five weeks has passed and I am excited to send this out. There is some awfully nerdy stuff happening out there, so let’s begin.

First off, check this out. We at Liv Real Estate™ published it last month. These are sales outside of Edmonton, but still within our Real Estate Board. (Our Board is pretty big) HERE

Sales outside of the city near doubled historical averages. Pretty crazy, eh? Why? I have no evidence either way, going in and out of homes and through municipalities like Fort Saskatchewan, Parkland County, Sturgeon County, and Strathcona County, I notice subtle differences. The homes and garages often have one lock, and often not even a deadbolt. The ball diamonds are manicured, the parks are maintained. Life appears a lot more predictable on the periphery of our fair city. What do you think?

Sales wise, things have been up as they have been every update. Well priced, well cared for homes move quickly. Personally, I look for homes priced for what they last sold for or less over the last 5-10 years and look for improvements. If they are competitively priced and improved, they tend to move. I am watching two stats right now. New Listings coming on per day, and number of sales per day. When the market turns from Sellers to Buyers, new listings will outpace sales, the number of days on market for listings will rise and prices will come down.  Today  caught my eye 190 listings came online in the city, 84 sold. As this article is stretching over two days, this morning shows 130 new listings, 50 sold so far. We could be reaching the tipping point where prices come down, days on market go up and % of listings that sell goes down.

Builders and Contractors

Builders prices are rising sharply. And so are contractors. The price of lumber, the price of ordering pretty much anything to build a home with that we don’t make here is in short supply and expensive. This should put upward pressure on the prices of the resale market over-time as buyers turn away from increased new home prices. So if you’d like to get out of an infill or newly bought home, your time may be coming as you will look awfully competitive.

Home Sales

I don’t know where to start with the housing market. Pre-lockdown the homes listed over $500K was all crickets, I ran numbers in McConachie the other day and there have been 47 sales in the last 90 days, a third over 500K. Its been remarkable. The handful of deals I put together in September were all similar, be the first ones in, and be decisive. I will say this, as competitive as it is for buyers now, there is value in ugly homes with long time owners. They can see their neighbours sell quickly and have the equity to come down in price. We watched a semi polished home sell in multiple offers the first day on market, we went a few doors down and negotiated almost 10% off an ugly one where the buyers were very capable of polishing the home with their cash savings. Now, negotiating this amount off is a large outlier, but it’s meant to make a point. Sometimes value is willing to do a little more to pay less in a competitive buying market.

Economic Uncertainty and the Foreclosure Market

No economic prediction can be considered without the observation of the intangibles in our marketplace right now. There are a few factors that are going to be interesting to watch and see how our housing market responds. Covid keeping manufactured goods in short supply, coupled with low interest rates, potential lockdowns, layoffs, reduced demand over the winter, and the projected foreclosures coming with the mortgage relief and Canadian Emergency Relief Benefit ending.

Prior to lock down in March, it had become common place for me to show a few foreclosures a week. Not to investors or deal hunters like I’d expect, but just home shoppers selecting listings online. And these were not the foreclosures that I had come to recognize in the past, homes beat up and worn so badly that going through them each told their own dark tale of violence, poverty, neglect, substance abuse and mental illness. No, these homes were often well cared for and left as though they had been loved, awaiting a new owner. Kind of sad really.  Once Covid hit, these listings disappeared along with the requests to view them. It’s not so much that they disappeared it’s that the courts that processed foreclosures had been shut down completely. No applications could come through either to sell or to be sold. Foreclosures, apart from the listings stuck in limbo, and I imagine, those who were on the verge of foreclosure couldn’t be processed, those on their way to foreclosure could now defer payments on their cars, homes, and credit cars, and anyone with a SIN could apply ethically or not for $2,000 a month directly deposited in the bank accounts. There was a complete foreclosure freeze. Until, today. This month the credit card, mortgage payment, car payment deferrals stop, CERB stops, and the courts are open. Cross out the two, carry the one, and divide by three, the next few months are going to be interesting.

Please reach out if you have any questions, please send back and feedback positive or negative.

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