Headlines: Real Estate Boom is Over, No Bubble Coming
June 5, 2008 – 11:34 pmEdmonton Real Estate Blog
For the past couple of weeks I think every major newspaper in Canada has published an article with something similar to the above headline. And almost every article has mentioned the fact that the slumping national sales are mostly due to the slow down in Edmonton and Calgary. It seems all this information comes from a report by the Bank of Nova Scotia.
“Home resales have fallen for four consecutive months, and the inflation-adjusted average resale home price registered its first quarterly decline in seven years during the first three months of this year.”
Scotiabank Adrienne Warren said a major national correction — like the slumps that followed the housing booms in the 1970s and 1980s — is not in the cards.
“Our long-term housing price model puts average home prices in 2007 at about eight per cent above their long-term trend, compared with a premium of 12 per cent and 18 per cent, respectively, at the 1976 and 1989 housing cycle peaks,” she said.
Canada’s real estate market is not overbuilt and households are not excessively indebted, Warren added. “At the end of the day, we predict a soft landing for the Canadian housing market, with somewhat lower sales and construction, and a period of relatively flat inflation-adjusted home prices.”
One thing for certain, the market in Edmonton has no tolerance for seller’s “testing” the market with a high asking price right now; if a home is not priced sharply it won’t even get a nibble from buyers, let alone a viewing or an offer. Even well priced homes are getting a flurry of activity for the first week or two on the market and if there is no offer accepted then interest seems to tail off. There seem to be plenty of window shoppers out there, but these days it seems most will only take the plunge if they smell a deal. The funny thing is average prices are still up slightly over April…