5 January, 2010- As we look back at the real estate market in 2009 I can say that it was a better than expected year for real estate. As we ended 2008 the market had cooled off from earlier in the year and the pundits were doing media interviews that the "big crash" was coming and the market was going to see a reduction in activity and pricing through till the end of 2009 or beginning of 2010. I am glad to say that they were wrong.
The market saw high levels of inventory at the start of 2009 and a small number of transactions. In December 2008 only 599 homes sold. As we went through the first quarter, we saw the activity levels start rising and peak in June. Activity peaked in June with 2654 homes sold - up 3.8% from the same month in 2008. Essentially, after the first quarter every month saw a positive increase in transactions compared to the same month in 2008.
As the inventory levels started trending down in the second quarter more and more reports of multiple offers occurred. In 2009, July saw the most homes sell over list price with just over 13% of listings selling for more than 100% of list price. This was great improvement from the low seen in December 2008 of 5.2%. When inventory goes down and market activity raises another indicator of market strength is the sold price-to-list price ratio. With all the activity in June and July, the sold-to-list ratio peaked at just over 96.80%. This compares to 94.85 in December 2008. This means that a home listed at $350,000 would essentially sell for 1.95% or $6,825 more in July '09 than December '08.
Pricing turned the corner as well in late 2009. In September we saw the median price rise above the same 2008 month prices. All in all the average price of homes and condos in Edmonton alone was lower in 2009 ($321,972) than in 2008 ($334,753) for all homes sold that year. 2009 December average sale price for homes only in Edmonton was $318,513.
RE/MAX Associates still number one!
RE/MAX Associates in Edmonton continue to excel and were the number one choice of Consumers in the area. RE/MAX Associates account for 42.8% of the transactions recorded by the MLS system in 2009 - an increase from 2008. In second, Realty Executives accounted for almost one-third the transactions of RE/MAX at 16.14%. The other real estate franchises (Royal Lepage, Century 21, Coldwell Banker, and Sutton) accounted for a combined 23.26% of all homes listed or sold in 2009.
Now for my forecast...
As I look at where we have come and all the indicators that I've talked about, I see 2010 to be a very strong market through to the end of the year. We will definitely see an increase in mortgage rates in the first quarter, but not enough of an increase to have a substantial effect on activity. The feds have also thrown out rumours that they may increase minimum down payment requirements and/or reduce amortization periods. Based on the nation real estate market activity, I don't see this happening as the country, as a whole, is quite stable at this time, and they do not want to risk any actions that may hinder the economic recovery.
My forecast for the market activity sits at a 7-8% increase in the number of transactions and a 4.5-5.5% increase in the average price of homes.
Well, I wish you a healthy and prosperous 2010 and please continue to visit our blog for regular market updates and industry news.