Real Estate Prices Stabilizing in Alberta

"The difference in the resale housing market now, compared to the beginning of the year, is night and day and nowhere is this more evident than in the West," said Dale Ripplinger, association president.

"Homebuyers recognize that interest rates and prices have bottomed out, and are taking advantage of excellent affordability before prices and interest rates move higher."

A five-year fixed-rate mortgage, the most popular among consumers, is still available for less than four per cent at some financial institutions.

Variable-rate mortgages, tied to prime, remain at about three per cent and are not expected to rise until June. The Bank of Canada has pledged not to change its lending rate until then -- but it is not an ironclad guarantee.

The low rates seem to have worked and have the market even hotter than in 2007, a record year. July sales in 2009 were 3.9 per cent above the previous July high set in 2007.

It has been a stunning reversal for a real estate market that had almost ground to a halt over the winter." Read More

Is that a glimmer of hope?

It seems as though everyone is seeing them nowadays. Glimmers of hope caught here and there in the news. Obama saw one and now the heads of three major Edmonton-based financial institutions are seeing them too. Is it something in the water?

Low interest rates and a slight loosening on mortgages both stimulate the real estate market and help more and more people get into a property.

"I'd rather be here in Alberta than anywhere else in the world right now to ride out this recession," Garth Warner, chief executive of Servus Credit Union

CREA also got into the happy hour with predictions of a slump in sales but then increases across Canada by 2010.

Edmonton felt the slowdown first so it will be the first area to get out of it. Meanwhile I'm buying properties at soft prices with $300 per month positive cashflow.

Seems like the time to buy.

Canadian Business Magazine Podcast

Scott Steele interviews the magazine's features editor Andy Holloway. Generally they're saying it is a good time to buy if you think for the long term. Andy suggests that if you buy now then be prepared for the prices to drop over the next 6 months. This may be true in some areas but not necessarily all. It's a very generalized interview but the key points are true for any region.

Other points:
1. Houses are safer than stocks. Stocks have dropped about 43% and housing about 11%
2. Now is not the time to sell, unless you bought 10 years ago. (Long term is ok)
3. It's a good time to buy rates and prices are low.
4. Canada is not facing a sub-prime meltdown.
5. Some depreciation in commercial markets in Calgary an Toronto.
6. Real estate investing is based on simple economics - in- migration, growth, economic potential of a city. Edmonton has all three.

Edmonton Alberta Market Update

Edmonton detached bungalows are down 11.2% in price compared to the first quarter of last year, two-storey homes down 12.6% and condos are down 13.8%.

Because Alberta was one of the first places to feel market corrections before the economic crisis could fully be appreciated, it's assumed that it will be one of the first places in Canada to stabilize. If the rest of Canada can expect their home prices to start to appreciate again in the first half of 2010, then Albertans can hope for a market upturn a little earlier than that.

As the supplies decline and people come out of a winter deep freeze, when buying interest is typically low, the market will see more activity and eventually rising prices.

Now is a good time to buy a home or investment property because you can take advantage of low interest rates and a wide selection of properties at lower prices.

Edmonton 2009 House Prices

Want to see how house prices across major Canadian cities have fared over the the last 2 years?
Take a look at this interactive map of real estate statistics from across the country, including home sales, average prices, apartment rents and vacancy rates.

Edmonton's stats are as follows in October 2008:
Vacancy rate - 2.4%
Average monthly rent for 2 bedroom apartment - $1035
Average resale home price (Dec 2008) - $310,000

Home prices dropped 1% in 2008 and are expected to drop another 10% until 2010 when they will start to pick up again.

As an investor house values are only important when you sell. Therefore timing when to sell is crucial. The best thing to do is not sell now unless you absolutely have to. Take steps to reduce your costs and make your properties positively cash-flowing.

How do you do that?
Keep your property manager productive
Keep your property a rock solid money making fortress
Avoid fear and keep your head about your investment goals


Best of all now the buying signals are phenomenal! It's a buyer's market with incredibly low mortgage rates.

Anyone who has made a lot of money in real estate will tell you that buying when markets are low, during times of crisis is the smart man's game.

Crisis of the Mind

Interesting times. This year and into next will be the good news, bad news routine. Until we (Canadians, Americans, consumers...) can make up our collective minds as to whether the economy is crashing or recovering we'll fluctuate from elation to despair.

I read an interesting article about the psychology of the Japanese economy called 'Crisis of the Mind'. In a nutshell it is a change of thinking and implementation of new ideas that will decide how long or short, deep or shallow the current 'correction' will last.

Here is an article titled 'Alberta To Shed Thousands of Jobs' - pretty scary title, but if you read the article you'll see that the Alberta unemployment rate is actually below 5%, which is incredibly low! Compare that with many European countries to get a sense of what is truly real. 5% unemployment rate is hardly indicative of a 'severe' recession.

And - look at the mortgage rates - lowest mortgage rates in Canadian history. These are fantastically strong buying signals; time to take advantage of whether it be an investment property or residence in a Top 10 City.

"It is only the farmer who faithfully plants seeds in the Spring, who reaps a harvest in the Autumn." -BC Forbes

Even Tiger Woods Needs A Break

He is among the most successful and currently the No. 1 golfer in the world. His level of achievement is legendary. He is focused, highly skilled and can probably perform at this level for many years to come.




Like many super-performers he knows there are times to step back improve, re-tool your skills and evaluate your game. You just have to take the a break sometimes.

When he does nobody says, "He's done! Golf is finished!" They wait and watch him comeback new and improved.

That is what is happening in Alberta Real Estate. The global economy is wonky, oil prices dropped and the housing market was way over-heated. So the market cooled down, prices dropped and then regulated and the market became more balanced.

Edmonton, Alberta real estate is still a "Tiger Woods" area - super performer says Don R. Campbell of REIN.

"People need to be realistic,.....The last three years in Alberta have been the Tiger Woods years of real estate. No matter what you did, you won, but that can't sustain forever."

"Alberta still has the three things the world is going to need when the recovery hits. It has food, fuel and fertilizer and those are the things the world needs and needs in abundance,"

Have You Heard This One Before?

It's always a good idea to invest. Sure there appear to be many reasons not to and some of them huge, however, well placed investments especially in changing times produce profits.

Warren Buffet's philosophy is to buy stocks of companies he understands that have seen a decrease in their "real" value. It would seem that now with the stock market up and down there are many companies that are falsely low and are a great deal. The same holds true for real estate - take an economically sound region where prices are slightly depressed and you can find some great deals that will appreciate quite well. Edmonton, Alberta is exactly such a region.

Here is a list created by John S. Baen, Professor of Real Estate at the University of North Texas, of why people don't invest -- even though they know they should. I changed some parts to make it Canada-centric

Why People Don't Invest: 12 Humorous Reasons

1. They're already paying into Old Age Security Pension.
   
2. Their budget includes $20 per week for lottery tickets, which is bound to pay off soon.
   
3. They believe that inflation means their money will grow.
   
4. Old people don't eat much anyway.
   
5. They sit at home waiting for the Publishers Clearing House van to pull up in their driveway and deliver their check.
   
6. Their money is safely buried in the backyard.
   
7. Their rich Aunt Melba will die soon.
   
8. Little Matilda is sure to make it big in Films Canada.
   
9. They can cash in their Edmonton Oiler collector glasses when it's time to retire.
   
10. Their dot-com stocks will come back to life.
    
11. They'll write a book and live off the royalties.
    
12. They plan on marrying a young wife/husband when they're 60 and depend on their financial support.