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PRIYA SHARMA
Century 21 Signature Realty
#207, 2920 Calgary Trail NW, Edmonton, Alberta
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Tuesday, July 6, 2010 - Edmonton house prices up despite market glut

The number of homes listed for sale in the Edmonton area is nearing record levels, while June residential sales fell 37 per cent from last year.

At the same time, the average price of a single-family home rose nearly six per cent and the average price of all residences was up two per cent year-over-year, according to MLS figures released Monday by the Realtors Association of Edmonton.

What gives?

Association president Larry Westergard acknowledged the market was not yet responding to normal supply-and-demand pressures. But prices will begin dropping in the next few months, he said.

"The fact that it's holding its value, and over the last six months has been increasing in value, shows the consumer still feels the Edmonton market has still got a lot of value in the housing," Westergard said.

The residential average price in June for the Edmonton region was $335,397, up 2.03 per cent from June 2009.

Single-family homes sold for an average of $391,497, up 5.72 per cent from a year earlier, while the median price for single-family dwellings was $359,000, up 2.57 per cent year-over-year.

Condominium average selling prices fell 2.05 per cent since June 2009 to $242,644.

Westergard predicted a "gradual mellowing of prices in the second half of the year" and noted he's starting to see more sellers reduce their asking prices.

After the market got off to a hot start in the first four months of the year, with sales up about 10 per cent year-over-year, activity slowed in May and June.

Westergard said sales early in the year were buoyed by economic incentives, fears about looming interest-rate increases and changes in mortgage qualification rules.

That rush has ended and a traditional summer slowdown is also keeping buyers out of the market, he said.

There were 1,539 residential sales in June, down 37.1 per cent from June 2009 and down 8.5 per cent from May.

There were 9,406 homes in MLS inventory at the end of June -- close to the record set in September 2007 of 9,913 homes on MLS.

"The biggest pressure on our market right now is inventory," said Westergard, who said 6,000 listings would better suit current demand.

The oversupply marks a dramatic turnaround from January, when Westergard warned a lack of inventory could inflate prices.

"With just over 7,160 units listed in May and June alone, we're seeing -- because of the slower number of sales -- a bulge in inventory right now."

The Realtors' association downgraded its sales forecast for 2010 to 19,000 projected sales from its original prediction of 21,000 sales for the year. The group now forecasts zero sales growth from 2009 instead of a 10.5-per-cent sales gain.

Westergard is sticking with his January forecast that single-family home prices will go up five per cent year-over-year by the end of 2010 to $385,000.

"We're well above that now -- about 7.5 per cent -- so we will most likely come back down to the level we anticipated at the beginning of the year."

ATB Financial economist Dan Sumner also anticipates rising inventory and slowing sales will eventually push prices down. "Although prices have not moved a lot yet, they are starting to," Sumner said. "Buildups in inventory, combined with lower sales figures, often precipitates movements in prices."

Calgary and Edmonton home markets are now correcting for a spike in sales and prices before interest rates first rose in March, Sumner said.

"I think most analysts were in agreement earlier on (forecasting) that the second half of 2010 would see a slowdown in Alberta's and Canada's housing market, and it looks like that is coming to fruition."

posted in News at Tue, 06 Jul 2010 19:16:03 -0600



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