I love Yegdt: downtown x-posed
I frequently get asked what’s happening downtown, especially with the ARENA buzz. What will prices do? What areas will be most affected? I get asked this at industry functions outside of Edmonton on a regular basis as well. I get these questions at the Y in the change room, at Yoga, at Starbucks and so on. This level of buzz around the downtown is certainly warranted given the possibilities. A number of our clients have asked questions on their specific interests downtown as well.
Most of the time my answers have been very general with the acknowledgement that I don’t have intimate knowledge of what is going on downtown. I do believe that the people who have good solid information can take advantage of the opportunities that might arise. So, if you are interested in the answers then this is where you want to be on December 15th, 2011 from 7:30am to 3:30pm: www.Edmonton.com/downtown.
This information session on downtown hosted by Economic development Edmonton is where we will be to get the answers to our questions. See you there.
Edmonton Area Condo Builders Get Busy in October
According to a press release from CMHC, condo builders are ramping up production in Edmonton. Edmonton area builders started almost three times as many new condos in October this year as they did last year. There were 786 multi-family units started in October, compared to 271 last year (most of these were apartment style - 550 units were started compared to 100 last year).
Meanwhile, single family home starts were down 44% from last year (builders started 464 homes).
“Adequate new and resale single detached inventories have subdued production levels throughout much of this year,” noted Richard Goatcher,
CMHC’s Senior Market Analyst for Edmonton.
Interesting that there is so much new construction of condos while average condo prices are dropping in Edmonton and single family homes are holding strong. My guess is that the builders are looking at the growing population in Alberta and thinking many of these new residents will want to purchase condos in the new year.
New Home Upgrades Worth Paying For, Part 4: Lot features
Vacant lot
There are 5 main factors that affect the value of your home: location, the home itself, the market conditions, your pricing strategy, and how well its marketed. Of course, the most important factor is location, and this means the lot itself, the neighbourhood, the city and the province. What can be tricky is deciding if a "premium" lot offered by the builder is actually worth the extra cost, and if it will improve your value when the time comes to sell.
Pie lot:
Most pie shaped lots are definitely worth the premium price - you get way more space than your neighbours, and more space between yourself and your neighbours. One downside is there tends to be less space for visitors to park, and there is generally not enough space between driveways for street parking. Another benefit though is that you have very little sidewalk to shovel in the winter. On the other hand, a reverse pie lot (where your front yard is wider than your back yard) is typically less desirable than a regular rectangular lot.
Lot orientation:
Most people prefer a lot where the back yard faces south, west or somewhere in between. This means you get the sun in your back yard for most of the day. You often seen owners of homes that have back yards facing north or east sitting in their front yards or driveways in the afternoons - a friend of mine calls them "garage people."
Green space:
A lot that backs onto green space is almost always worth a premium price. You have much more privacy, since your neighbours are so much further away. However, not all green spaces are created equal. Make sure you look into the restrictive covenants with regards to fences; some neighbourhoods require that the fencing along a green space be chain link. If you're on a fairly narrow green space with chain link fences, you actually end up with less privacy than you would backing onto other homes with a wooden fence. Siding onto green space gives you a little more space between you and your next door neighbour, but there will be foot traffic along the whole length of your lot
Corner lot:
Corner lots have to be assessed on a case by case basis as they can be more or less valuable depending on the situation. If you're on a corner lot siding onto a busy street it's less valuable. A definite downside to corner lots is sidewalk maintenance - in most cases you will have 3-4 times as much shovelling to do in the winter as your neighbours have to do on rectangular lots. However, in some cases the sidewalk along the side of your home is maintained by the city. So a corner lot, on a quiet street, with city maintenance can be quite valuable. In a city where it snows for half the year, shovelling is a major consideration for most home owners.
Walk out lot:
In general, a walk out lot has more value than a regular lot, but as in all cases there are some better than others. It is particularly important to find out what you back onto with a walk out lot: if you back onto a busy street or other homes your walk out home becomes a giant fishbowl towering over the neighbours for everyone to look in on. A severe slope can be less attractive to families, since kids will have to go down lots of stairs from the deck in order to play in the back yard (plus its harder to see them down there from inside the home). A shallow slope can lead what Sheldon calls an "alligator pit" where your walk out area is actually below grade - excellent landscaping is particularly important in this case.
Restrictive covenants:
No one likes to be restricted from doing what they want to do, but restrictions are generally a good thing when it comes to neighbourhoods. When you drive through a neighbourhood with no restrictions you get homes and fences in every shape, form colour and style under the sun. It usually ends up looking like a big mess. In general the more expensive the neighbourhood, the more restrictions you will find. Typical restrictions include the type and colour fencing, quality/type of exterior building materials, number and size of out buildings (garages, sheds etc), percent of coverage (how much space the home can take up on the lot), minimum number of trees, set backs, and height restrictions.
Power lines:
Whether you believe there are negative effects from living near power lines or not, your lot value will be lower if you're visibly close to large power lines. Perception is reality in real estate, and if power lines are the first thing a buyer sees when you're driving up to the home they will instantly discount it, if not take it off their list. The interesting thing is being just one block away can make all the difference in the world - the phrase "out of sight, out of mind" is really true in real estate.
So the most valuable lot in a subdivision would be a walk out pie lot, backing onto green space where the back yard faces south west and no power lines are visible.
Condo Act Changes Coming in Alberta
This weekend the Alberta chapter of CCI (Canadian Condominium Institute) had a conference here in Edmonton. While Sara was one of the presenters and presented on real estate trends I got the chance to sit in on some other presentations.
I often hear complaints from condo owners that are not involved in their condo associations and I realized at the conference just how many of these people are volunteers. They give up their own time and talent and take on many of the problems that must be faced with very little credit.
When I started selling real estate a few years back (1988) condos made up about 5% of the market in terms of sales. According to the REALTORS® Association of Edmonton they now make up about 28% of the market, and at one point (2007) made up 35% of the market.
Anyway, without further delay, the key thing I took away is that the condo act is currently undergoing an extensive review for the first time since 2000. If adopted, some of the proposed changes are going to be SIGNIFICANT. Service Alberta will be putting out a discussion paper that is definitely worth reviewing for anyone who has a stake in condominium living. Some of things in that discussion paper are as follows:
- Denying the right to vote. There will be clarification as to what level of arrears would enable a board the ability to deny an owner the right to vote.
- Provisions could be made for video and teleconference for board meetings.
- Possibly extending the insurance policy of the condo corp to include improvements in the individual units
- Possibly looking at licensing condo managers. About time! Most people are under the impression that if they use a property manager who is regulated by RECA that they are in fact using a licensed firm. RECA however does not regulate condominium management activities and therefore, even if they are licensed with RECA they do not have to follow property management requirements as set out by RECA. This is a very sketchy area as most condo boards have found out.
- Condo documents should belong to the board. I definitely did not know this one. The documents and financials are the property of the board. A very reliable source with the REALTORS® Association of Edmonton and the president of his condo corp indicated to us that when the let their management company go that they could not get their documents back. That just seems absurd to me but welcome to condominium management.
- Providing an alternate dispute mechanism for settling disputes instead of going through the courts which can be extremely pricey.
These are just a few of the major changes that are being contemplated in the condo act in Alberta, and you will have a chance to voice your concerns and comments as well when they release the discussion paper.
Edmonton Real Estate Market Improves in May
I would love to give you an explanation for what's happend with real estate sales in Edmonton, but I just don't have one. Last month we had the fewest sales we'd seen in April in years, and this month we saw a big jump in sales and the first month with more sales than last year. Back in March I predicted that we would see more sales than last year in May or June, and I have to admit I was a little nervous about that prediction last month, but it appears to have worked out as I predicted. We'll have to wait and see if the second half of my prediction comes true (that prices would be higher than last year by August or September).
“There is a wide range of property on the market right now but it is turning over quicker than in recent months,” said REALTORS® Association of Edmonton President Chris Mooney. “The local economy is picking up, the demand for labour is increasing but the national situation is keeping interest rates low. We anticipate increasing prices and sales through the summer ahead as we originally forecast.”
Edmonton real estate sales
The average sale price did increase slightly in May to $331,974 from $327k in April but was down 2.4% from last May. The median followed suit up $2500 from last month to $317,500 but down from $321,500 last May.
Average real estate prices in Edmonton
The number of new listings continued to increase in May, and based on the activity we are seeing in our office I wouldn't be surprised if this continued in June.
Edmonton real estate listings
The inventory also increased in May, but is still below the levels we saw last year:
Edmonton real estate listing inventory
I received a question about what phase of the sales cycle we are in - if you remember a few months ago I introduced the idea of a sales cycle as a way of predicting what prices are going to do. If sales are increasing on a year over year basis, prices will follow, if they are decreasing, prices will flatline and then start to fall:
Sales Cycle
So, after a number of months at the bottom of the cycle (phase 5) with lower sales and average prices, we have moved into phase 7 - higher sales but lower average prices:
Edmonton: Most Affordable Major City in Canada
Unlike most other major centres across Canada, housing affordability in Alberta remained stable in the first quarter of 2011, according to the latest Housing Trends and Affordability report issued by RBC Economics Research.
RBC's housing affordability measure in Canada's largest cities is as follows: Vancouver 72.1%, Toronto 47.5%, Montreal 43.1%, Ottawa 39.0%, Calgary 35.9% and Edmonton 31.5%. That means it taks 31.5% of monthly income in Edmonton to own an average detached bungalow, including taxes, utilities and mortgage payments. Meanwhile in Vancouver it would eat up 72.1% of your monthly income.
"The Alberta market continued to be stuck in low gear in the first quarter of 2011. Sales of existing homes and construction of new housing units showed very modest increases," said Robert Hogue, senior economist, RBC. "While market conditions have become more balanced in recent months, owning a home doesn't seem to be getting more expensive in the provincial market at this stage. Affordability levels are still looking quite attractive."
RBC's housing affordability measures remained relatively unchanged, and below their long-term averages in the first quarter of 2011 in Alberta. The measure for the benchmark detached bungalow in the province moved up to 31.3% (an increase of 0.4% from the previous quarter), the standard condominium stayed flat at 20.2% and the standard two-storey home fell to 34.2% (down by 0.2 of a percentage point).
RBC's report notes that there are signs that the Calgary housing market is finally overcoming its protracted slump. "Calgary home prices have yet to break out of their listless trends, but they rose at their fastest rate in more than a year in the first quarter, with detached bungalows leading the way," said Hogue. "Firmer market conditions and higher prices had only limited impact on Calgary's affordability, which remains among the most attractive of Canada's major cities." (This was interpreted by a Calgary reporter to mean that Calgary is THE most attractive of Canada's major cities).
They did not make any comments (that I could find) on the Edmonton market, even though it was the most affordable in their study. I assume that is because Edmonton is not yet showing signs of coming out of its "slump." I would suspect that will make us even more affordable next quarter (relative to other major cities).
The majority of Canadian markets experienced weakened affordability in the first quarter of 2011. "Despite the latest erosion in affordability, provincial levels generally continue to stand near their long-term averages, suggesting that owning a home remains affordable or, at worst, slightly unaffordable across Canada - with Vancouver being a notable exception," said Hogue.
“We are heading back to the Waltons” – multi-generational homes of the future
Speakers at the Urban Development Institute Alberta conference spoke about the future of housing yesterday, saying grandparents will increasingly become part of our households. “We’re heading back to the Waltons,” said Jonathan David Miller, a New York-based real estate analyst. “We’re going to see more of that and we’re going to see people living more in smaller places. North American economy is shedding highly paid manufacturing jobs and creating new ones in lower-paid sectors such as retail and temporary services and North Americans are carrying more personal debt. It’s not going to be as vigorous and consumer-led as it was. It can’t be and that has to affect real estate.” Home owner demographics are also changing as the population ages, and immigration patterns change. Immigrants from the Philippines, China and India are numerous and tend to have very strong family connections and live together. In fact, multi-generational housing is common place in much of the world. Of course child care costs are also a big consideration. It is also expected that Gen Y'ers will live at home longer than previous generations. Of course zoning regulations will have to change to allow for multi-generational housing to become more common in Edmonton. According to the Edmonton Journal Mayor Stephen Mandel and partners, Park Royal Homes Inc. and Encore Master Builder, are unveiling a new building project in La Perle (west Edmonton) where homes are built with a fully developed, rentable secondary suite. We have actually seen a lot of interest in new duplexes we have listed, where the parents want to buy one side and the kids the other. Living together can be great, but we all still want our own space.Healthy New Home Inventory Slows Construction in Greater Edmonton
CMHC release their monthly report on new home construction in the greater Edmonton area today. As we've seen for a number of months, new home starts are down from last year:
“This time last year the industry was working hard to replenish depleted inventories, whereas this spring the volume of complete and unabsorbed units is considerably higher,” noted Richard Goatcher, CMHC’s Senior Market Analyst for Edmonton.
Here are some highlights from the report:
- Builders started work on 758 units in April, down from 1,407 units last April. For the year-to-date, total housing starts reached 2,323 units, compared with 3,439 units in the first four months of last year.
- To the end of April, single-detached starts totalled 1,237 units,
down by 39% from the first four months of 2010. - Multi-family starts decreased on a year-over-year basis in April by 59% to 322 units. Activity last April was bolstered by a strong uptick in condominium apartment starts. On a year-to-date basis, multiple unit
starts were down by 24% to 1,086 units compared with 1,425 units
reported in 2010.
Landlord Bootcamp
Many of our readers are interested in investing in real estate, and potentially becoming landlords. Many already are and may need some advice on how to do it right. The Edmonton Apartment Association will be introducing a comprehensive ONE-DAY course on April 19, 2011 that has been designed to guide both new and/or experienced landlords and real estate agents in developing their professional skills and learning the tools of the trade. This course should offer an excellent opportunity to network with other landlords and discuss face-to-face ideas, problems and viable solutions.
New Home Construction in Edmonton Drops in February
According to a report released by CMHC today, housing starts in the greater Edmonton area dropped in February for the fifth consecutive month,on a year-over-year basis.
New Home Construction in Edmonton
Highlights from the report:
- Construction started on 489 homes in February, down from 642 last year
- 360 single family homes were started in February, down 26% from last year
- Builders have more inventory this year than they did last year (587 units)
- Completions increased on a year over year basis for the 14 consecutive month, builders completed 560 units up 64% from last February
- Absorption was up 49% from last February but fell short of completions by 31 units
- Unabsorbed inventory is at its highest level since July 2009
- Average price of new homes in February was $494,014 - up 6.8% from last February (while resale prices were down about $5k from last Feb
- Multi-family starts decreased 18% to 129 in February (year over year) with stronger activity in the suburban areas being countered by a 39% decrease within the city of Edmonton.
- Inventory of new multi-family homes was up 107 units to 1040 compared to January - this is not much different than last year but still the highest its been in 13 months
The gap in pricing between new and resale continues to climb. Builders are facing a tight labour market and having to compete for supplies with large infrastructure and refinery projects around the province causing their costs to increase.