Real Estate misses Record

Canadian home sales continued their torrid pace in 2006, finishing the year just short of a record, the Canadian Real Estate Association (CREA) said yesterday, though it added that the market is showing signs of easing.

“The market is becoming more balanced generally, and with a more balanced market comes smaller price increases,” said CREA chief economist Gregory Klump. “Buyers are in less of a hurry, with more product to choose from.”

Ottawa-based CREA said sales of existing homes in Canada’s major markets last year totalled 336,271. That’s just 242 units short of the high set in 2005. Several cities across the country set new sales records, including Calgary, Edmonton, Winnipeg, Ottawa, Montreal and Quebec City.

But price increases finally started to taper off in the fourth quarter. The average price on CREA’s listing service rose 9.2% over the fourth quarter of 2005. That’s the first increase of less than 10% in 12 months. The average price of a home in Canada was $294,270 in 2006.

Benjamin Tal, an economist at CIBC World Markets, said the peak of the market is “absolutely over.” He thinks home sales will fall about 5% in 2007. “A 5% drop is still a very, very strong number. It’s simply falling from an unbelievably unsustainable number,” he said.

Phil Soper, president and chief executive of Royal Le Page Real Estate Services Ltd., said the market eased in 2006, as he expected, “if you take out Alberta.” “Cycles in our industry tend to be three or four years in length. This one has lasted seven years. We were well overdue for a slowing in the rate of appreciation,” he said.

Alberta is the exception, as increases in sales activity and price increases continue to trend well above the rest of the country. In Calgary, there was a big spike in sales activity near the end of the year, even though oil prices were dropping fast at the same time. The average price of a Calgary home was $361,611 in December.

In a statement yesterday, CREA warned that price increases in Calgary could heat up again if sales activity gains further momentum. But Mr. Soper said 2007 is the year that Calgary should finally cool.

“What will provide relief won’t be a significant increase in the supply of homes, but rather this massive reset in the average overall price that has simply taken many people out of the market,” he said. “Those crazy price increases we saw in the middle of 2006 were clearly unsustainable and I don’t think anyone will see those again for some time.” Mr. Tal agreed that the Calgary market should level off next year, and added that it may even decline.

“In Alberta, you don’t have the supply constraints of places like Manhattan and Vancouver,” he said. “Vancouver prices are in the sky because there’s no way you can build there. Calgary has a lot of room to expand.”

National Post
Thu 18 Jan 2007
Page: FP6
Section: Financial Post
Byline: Peter Koven
Source: Financial Post

Astonishing Edmonton prices.

Edmonton’s red-hot real estate market rose to record levels in December with average prices for detached homes hitting $341,933 — up 51.9 per cent in 12 months. “It’s been an astonishing year,” Madeline Sarafinchan, outgoing president of the Edmonton Real Estate Board, said Thursday.

ALL CATEGORIES AFFECTED
“Prices in all categories are a lot higher,” she said. “No one anticipated the dramatic rise
although Edmonton real estate has been undervalued for the last few years.” From December to December, average prices rose 52.4 per cent for condos. “Sellers are happy, of course. Their houses may be worth more than their wildest dreams,” Sarafinchan said.

“For buyers, it’s difficult.”
Total sales through the Multiple Listing Service rose in 2006 to $6.6 billion. That’s an average of more than $2.1 million for each of the board’s 3,104 realtors. While earning healthy commissions, they were stressed by serving clients in a tight market, with many homes attracting multiple offers and selling above list prices, Sarafinchan said.

“There’s only one buyer for every sale” — and often many disappointed would-be buyers,
she explained. Sellers also were challenged to make quick decisions, Sarafinchan said. “Some were snowed under by multiple offers arriving mere minutes after the house was listed.”

SPECULATION A FACTOR
Speculation may have fuelled increases early in the year when prices were lower, Sarafinchan said. “But not so much now because it’s difficult to invest in a property for $340,000.” In one year, the Edmonton region — including Spruce Grove, St. Albert, Fort Saskatchewan, Sherwood Park and Leduc — surged from the 10th-highest to the fifth highest average price in Canada, trailing only Toronto, Fort McMurray, Calgary and Vancouver.

Within Edmonton, December prices for detached homes ranged from $244,162 in the central zone to $468,706 in the southwest. Outside the city, St. Albert homes were the highest, averaging $425,187.

More than 20 homes sold for more than $1 million in 2006, Sarafinchan said. The highest price — $2.5 million was paid in Brander Gardens. During the year, 21,984 homes were sold through the board’s multiple listing service — up from 18,634 in 2005. Another 4,375 Edmonton-area homes — 17 per cent of the total – were sold privately by clients of ComFree, said ComFree president Erin Holowach.

The Edmonton Journal
Fri 05 Jan 2007
Page: E3
Section: Business
Byline: Ron Chalmers
Dateline: EDMONTON
Source: The Edmonton Journal