2011 EDMONTON HOUSING FORECAST - SUMMARY

2010

  • the Bank of Canada warned that interest rates would increase
  • on April 19, 2010, mortgage qualification rules changed
  • buyers panicked causing sales peak earlier in the year than predicted
  • sellers responded to sales and inventory ballooned
  • there was an immediate slow down in the housing market when the interest rates increased slightly so the Bank of Canada backed off from more increases
  • Edmonton saw an increase in both fulltime and parttime job creation by the end of 2010--these are our homebuyers of tomorrow
  • for every 10 jobs created in Alberta in 2010, 6 were in the Edmonton area
  • with the sharp increase of jobs and decrease in unemployment, 2010 in Edmonton was an "evening out" year - jobs lost in 2008 and 2009 have now been largely recovered
  • natural gas prices did not see the increase in 2010 as predicted
  • oil prices remained mroe stable in 2010 than had been predicted
  • although Alberta was behind in national recovery throughout 2010, it was a solid year for Edmonton with more than 3% growth

2011 - ECONOMY

  • increase in interest rates by Bank of Canada is inevitable
  • predictions say +3/4 to 1% by the end of 2011; +200 basis points by the end of 2012
  • for 2011 we will be in a low inflation environment if we are able to maintain parity with the US dollar
  • there will be a net inflow of people to the Edmonton and Alberta regions - projecting good economic prospects from stimulating net migration
  • unemployment will continue to trend down - currently running around 5.8%
  • we now have a stable and sustainable growth pattern happening instead of the past "boom" that was caused primarily from the investment-lead bubble driving gas/natural gas and the oil sands projects
  • a migration of somewhat younger demographic profile allows Edmonton to grow slightly more rapidly than the rest of Alberta
  • low interest rates will not last - potentially sharp increases in the second half of 2011
  • sovereign debt in Europe will have little effect on Canada if Germany continues to carry the debtload
  • faster interest rate hikes will only happen if US recovery, unemployment, and housing market somehow rebounds faster than it is doing now

2011 - HOUSING & REAL ESTATE

    • Housing will remain affordable compared with past years
    • There is a lot of supply on the market
    • It is still a buyer’s market with less than one in 5 listings selling each month
    • Prices for single homes and condos showing some moderation in recent months - will likely continue
    • Builders are backing off - especially on building spec homes - due to increased inventory
    • Inventory is up but stable compared to the unsustainability of 2008/2009
    • Higher priced properties are not moving as quickly
    • Values of new houses are increasing but are well below where they were at the end of 2009
    • Prices to edge upward in 2011 but will remain below peak levels
    • 2011 production of multi-family starts should coe close to 2010 volumes
    • Large projects are viewed as wild cards to the banks; they are dependent on presales
    • Average Apartment rents have held instead of lowering - rental incentives are high and are masking the effects of rents
    • As vacancies decrease in 2011, rents will move upward - likely around +2% in 2011

Housing = Where I Live (not investment, not losing $, not interest rates)

Buyers not panicked - time to consult with a Realtor

Sellers require patience - site improvements and appropriate pricing

Credits:  Garth Warner (President/CEO Servis Credit Union); John Rose (Chief Economist, City of Edmonton); Patrick Shaver (Urban Development Institute Greater Edmonton Chapter); Ian Glassford (CFO Servus Credit Union); Richard Goatcher (Sr. Market Analyst CMHC), Chris Mooney (President REALTORS Assoc. of Edmonton)

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