Nationally, real estate prices are slowing down or dropping and Edmonton is following that trend with a 1.4% drop in prices during the second quarter of 2018. Compared to last October, the number of sales of residential units also decreased by 14%. This is according to the newest monthly report by the Realtor’s Association of Edmonton.
Even with a lower price tag, demand remains low. To add to that, it takes homeowners longer to sell. On average, single-family homes are staying on the market for 62 days. Last year, that period was 55 days.
Row-houses and duplexes were especially affected with a decrease of over 30% in sales on a year-over-year basis.
“The builders just kept on building throughout the summer, hoping things would turn around, but they haven’t turned around.”
Factors such as the Bank of Canada’s recent interest rate hikes and the drop in sales that is generally seen at this time of year are partially responsible for the decline. Overbuilding, though, is another ingredient.
Edmonton’s total inventory has continuously increased despite lower demands on housing. In October, the Canada Housing and Mortgage Corporation reaffirmed its concern that Edmonton’s real estate market was vulnerable to overbuilding as more housing projects were being developed, even though the demand wasn’t there.
As Greg Steele, an Edmonton Realtor and former president of the Realtor’s Association puts it, “The builders just kept on building throughout the summer, hoping things would turn around, but they haven’t turned around… There are open houses every single weekend at the show homes and people are walking through but you don’t see a lot of activity in the sales.”
Of course, whenever home prices fall and inventory increases, buyers gain more housing options at a lower price. However, a major market shift doesn’t occur at the smallest change in market circumstances. When home buyers have a lot of options, they tend to wait until they can find exactly what they want.
Darcy Torjhelm, the chair of the Realtors Association of Edmonton, says given the lack of confidence in the economy, he doubts things will be changing in the short term. Though he reassures us that “the sky is not falling,” he says and suggests that buyers be prudent.