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PRIYA SHARMA
Century 21 Signature Realty
#207, 2920 Calgary Trail NW, Edmonton, Alberta
P: 780-485-2100
F: 780-485-2180
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Thursday, August 5, 2010 - Rents head up, home prices down in Edmonton

EDMONTON — House prices dropped in July as a larger inventory gave buyers more choice, and city landlords are getting set to raise rents as apartment vacancy rates tighten, according to new reports.

Single family homes lost 3.1 per cent, condos 1.5 per cent and duplex/rowhouse prices just under one per cent, according to the Realtors Association of Edmonton.

“The number of homes in the inventory is giving buyers’ choice,” president Larry Westergard said.

“As a result, many buyers are taking their time, and prices are beginning to soften slightly. At the same time, some sellers who have been standing firm have been pushed to discount their initial list price.”

Less than half the active listings over 30 days have had a price reduction, but 93 per cent of July sales sold below list with about 40 per cent having already taken a price reduction, the association said.

Single family homes sold for an average of $378,979 in July, down over June but up 1.5 per cent over last year.

Condominiums dropped 1.5 per cent from June to $240,371, while duplex/rowhouses were down 0.9 per cent to $304,032. The average price for all properties was down 1.7 per cent to $329,734.

The large inventory of 8,892 residential properties available at month-end dampened both listings and sales, RAE said.

New listings were off 15 per cent from June and 3.3 per cent from last July. Sales dropped 15 per cent from 1,741 in June to 1,294 in July.

The apartment vacancy rate is down to 2.9 per cent from 5.2 per cent in April, and rents are likely to climb over the next six months, according to CB Richard Ellis’s latest report.

“We are finding that with the vacancy rate decline, landlords are beginning to eliminate incentives. It appears that the downward trend (in rents) has shifted, and we will likely see rates begin to climb in the latter half of 2010.”

The most expensive apartments are in downtown highrise buildings where the average three-bedroom goes for $1,480 per month, and two-bedrooms for $1,176 per month.

The lowest rents are in the Hudson Bay Reserve area with bachelors at $608 per month and two bedrooms at $888 per month.

The average two-bedroom rent has dropped 2.7 per cent from $1,105 per month in 2009 to $989 per month. One-bedroom units went from $862 per month to $843 per month.

Sales of apartment buildings are continuing last year’s dismal activity, down to $23.8 million from $74.4 million in the second half of 2009. While investment is down from the heady days of 2007, the value of the market is still very strong, the report said.

The Edmonton industrial market held its own over the first six months of 2010 and has out-performed many other markets across North America, as the vacancy rate dropped slightly to 3.5 per cent from year-end, and lease rates have remained stable, CBRE reported.

Landlords have increased inducements as they try to compete with the sublease market.

The office market continues to be soft, prompting more competition for tenants, CBRE said.

The downtown vacancy rate rose from 7.9 per cent at year-end to 8.6 per cent at the end of June, with the average asking lease rate up from $22.93 per square foot at year-end to $23.47 psf.

“This is quite misleading, however, as what has actually happened is that the difference between asking rates and actual rates has increased, significantly in some cases,” the report said.

The retail market remained stable through the economic downturn and is showing definite signs of positive growth.

The vacancy rate dropped from 3.7 per cent at year-end to 3.2 per cent in the second quarter of 2010.

Lower construction costs and improving business fundamentals are encouraging development, and improving consumer confidence should boost spending and help maintain a healthy market for the rest of the year, according to the report.

In the investment market, buyers and sellers have become more comfortable with pricing, and cap rates have stabilized since the rapid pace of change in 2007 and early 2008.

Interest from all investor types remains strong for quality Class A product due to the tremendous amount of capital available, CBRE said.

Transactions are up 20.8 per cent over mid-year 2009, with the largest gains in industrial and retail assets.

A total of $437.8 million worth of office, industrial and retail properties traded year-to-date, compared to $362.3 million at the same time last year.
 

posted in General at Thu, 05 Aug 2010 20:22:11 -0600



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