The Edmonton Real Estate Blog, Market Information, Advise & Opinion

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"Our local housing market is quite healthy with affordable prices, a good inventory and strong sales," said Association President Chris Mooney. "The selection of properties on the market for buyers is excellent. With employment opportunities popping up throughout the region and interest rates being very attractive, now is a good time to purchase a property in Edmonton."

The average price of a single family detached home in July was $384,656 with a median price of $360,000. Condo average price was $244,225 with a median of $223,000. Duplex and rowhouse prices rose on average from $296,969 to $309,816, a 4.3% increase.

"The increase in housing prices is on track with our January forecast and as we move into fall, we don't see prices increasing substantially," said Mooney.

Statistics Canada reported that Alberta boasted the highest spike in population in the first quarter with a 0.4% increase.

The Conference Board of Canada predicts that housing prices in Edmonton will increase from five to seven percent in the short term although local prices are currently down when compared to last year.

Although the Bank of Canada seems reluctant to raise interest rates because of the negative impact on exports, CMHC reports that Canadians are budgeting for an interest rate hike.

While housing prices nationally are up by 8.6% (May figures) Edmonton prices are tracking predictably in a stable market.

CIBC is of the opinion that Alberta home prices are over-valued by 17% yet RBC names Edmonton amongst the most affordable major metro markets in Canada.

A report by Peters and Co. forecast that $180 billion will be spent on new oilsands projects in the next decade with current oilsands operations and maintenance adding another $30 billion a year.

"The various reports and indicators can be confusing and contradictory," said Association President Chris Mooney. "Alberta and Edmonton are often moving in a different direction than the rest of the country and a national statistic or trend may not apply here. REALTORS® are very optimistic about the current market and are prepared to help home buyers and sellers sort through the figures to determine the best housing strategy for each individual or family."

In the short term, when compared to the previous month, prices in June were generally stable. Single family homes were up 0.31% from $378,239 to $379,409. Condo prices dropped from $239,782 to $231,852 (down 3.3% after rising 3.1% in May). Duplex and row house prices climbed slightly from $295,334 to $296,689. The all-residential average price dipped 0.5% during the month of June.

There were 1,768 residential sales in June with 3,260 listings resulting in a sales-to-listing ratio of 54%. This is compared to 53% in May. There are currently 8,432 residential properties in the MLS® System inventory and days-on-market is slower at 53 days (up from 50 in May).

"We know that all real estate is local and homeowners and buyers should focus on local data and local expertise to guide their decisions," said Mooney. "Is it a good time to buy a home in Edmonton? If your domestic needs have changed and you need to move, then seek professional advice and start the process."

According to the REALTORS® Association of Edmonton, the average price of housing remained relatively stable through April as compared to the previous month. The all-residential average price decreased $310 to $327,415; down from $327,725 in March. Single family home prices decreased $425 while condo prices rose $1,305 (0.6%) during the month. Despite the activity the market is balanced without a distinct advantage for either buyer or seller.

"Prices and sales usually increase in the second quarter and REALTORS® are busy serving new and repeat customers," explained REALTORS® Association of Edmonton President Chris Mooney. "The increase in new listings means that there is a good selection of homes to choose from. However, the market is still price sensitive and sellers will have to have a realistic pricing strategy if they are expecting a quick sale."

Residential sales were 1,487, down 7.8%; compared to 1,613 in March. Residential listing activity rose from 2,958 units in March to 3,278 units in April. Inventory of homes on the Multiple Listing Service® increased from 6,885 last month to 7,215 as of April 30.

The average price of a single family detached home in April was $379,075 with a median price of $357,000. Condo average price was $234,220 with a median of $220,000. Duplex and rowhouse prices rose on average from $294,585 to $300,906, a 2.1% increase. All prices reflected sales across the entire Edmonton region including surrounding communities and counties.

"There is a lot of activity in the local market and the situation changes every day and from neighbourhood to neighbourhood," said Mooney. "Only your REALTOR® has access to the most up-to-date sales activity and sold prices. He or she is prepared to work closely with you to locate your next dream home or sell the property that no longer meets your lifestyle needs."

David Larock in Mortgages and Finance
 
I’ve had a lot of calls lately from borrowers who are wondering if now is a good time to refinance their mortgage, so I thought I’d write a summary to help my readers answer that question. Today’s post will outline a step-by-step process and offer some suggestions where appropriate (this exercise should take you 30 minutes or less). You may find this information to be complex so feel free to call me and we’ll walk through the analysis together over the phone. Here then, is my guide to determining whether now is a good time to refinance your mortgage.

1. Calculate your mortgage penalty. If you have a variable-rate mortgage, your lender will normally charge you three-months interest on your current mortgage balance. If your mortgage rate is fixed, your lender will charge you the greater of three-months interest or “interest rate differential” (IRD), also using your current balance. Explaining the formula for IRD is complicated, so I suggest that you use my penalty calculator as a shortcut. If you have a fixed interest rate and your mortgage is with a Big Five bank, enter the posted rate that was offered at the time you obtained your mortgage in the “Current interest rate” field (unfortunately, this will arbitrarily double the size of your penalty, which isn’t fair, but until Mr. Flaherty addresses this issue, there’s not much we can do about it). My calculator will give you a reasonable estimate, which is a good start, but if you decide to refinance, you’ll eventually have to call your lender to get the exact amount.  

 Suggestion: Keep in mind that if you are planning to pay out your existing mortgage, you should first take advantage of your lump sum prepayment allowance as outlined in your mortgage terms (lenders will typically allow you to make additional lump sum payments that are between 15 to 20% of your original mortgage balance each year). If you have a line of credit (which can be paid off at any time with no penalty), consider using it to pay down your mortgage before you discharge. This will lower your mortgage balance (which is used to calculate your penalty) and you can roll that line-of-credit debt into your new mortgage in short order. While most borrowers don’t do this, it’s an easy way to reduce the size of your payout penalty.

2. Compare your current rate to today’s rates. Generally speaking, if you have a five-year fixed-rate mortgage at 5% or higher, or a variable-rate mortgage priced at prime or higher, a refinance is well worth considering. In simple terms, you want the savings from your new rate to be greater than the cost of any penalty plus refinancing costs such as legal fees, appraisals, etc. ($750 is a reasonable estimate for refinancing costs). My mortgage cost comparison calculator will help you follow this step. 

Suggestion: If you’re planning on borrowing at a variable rate as part of your refinance, increase it by between .75% and 1.5% when comparing it to your existing rate. Assuming a higher average variable rate ensures that you are making a conservative estimate of any potential savings.  
 
3. Add the savings realized from including any other debts in your refinance. If you have other credit-card or unsecured debts with higher interest rates that you are planning to roll into your new mortgage, don’t forget to factor in these savings as well. Refinancing high-interest debt into your mortgage will increase your cash flow and save you money, even in many cases where breaking your existing mortgage involves a substantial payout penalty. If you want help organizing your financial details so you can see how much a refinance will save you overall, feel free to use my debt consolidation calculator.

Suggestion: If you currently have an insured mortgage and you want to increase your loan amount, you will be required to pay a top-up premium on the difference between your original loan amount and your new loan amount. The fee CMHC charges depends on the amount of your equity remaining in the property. Here is the pricing table they use (see column on right). Be sure to factor the cost of your top-up premium into your refinancing costs.    

The most important tip I can give you: For a refinance to make sense, it should both save you money and increase the amount of cash you have left in your pocket at the end of the month. As you undertake your refinance, and before you get used to having the newly saved extra money around, consider putting some or all of it back into your mortgage. You have the option of setting your scheduled payment above the lender’s required minimum and doing so will help you become debt free faster.

To use an example, assume that you are refinancing into a new $300,000 mortgage at the current variable rate of 2.25% using a 25-year amortization. If you set your mortgage payments higher by pretending that you are paying the current five-year fixed rate of 4%, and if the variable rate averages 3% over your five-year mortgage period, you will have paid off a little more than $10,000 of extra principal in just five years by the time your renewal rolls around. In most cases this is a painless exercise because chances are your old mortgage rate was higher than 4%. So you end up with more cash in your pocket AND you’ll be paying off your mortgage faster.

I realize that today’s post is fairly technical, but if you use the calculators and tools I have provided, you should be able to work through the suggested steps. Having said that however, if you’d rather have me take you through the process personally, just send me an email or call. Instead of wondering whether you could be saving money and paying off your debts faster by undertaking a refinance, let’s put your current borrowing costs to the test and see what the numbers say.

Single family detached properties sold for $359,934 on average* in February; up 1% from January. The February price was down 3.1% from a year ago but close to the $349,810 price in February 2009. Condo prices followed the same pattern. At $230,911 on average, condos were up 4.5% from a month ago but down 0.65% year over year. In February 2009, condos sold for $229,685. The average price for a duplex/rowhouse in February was $303,440; up 2% from January but down 5.6% from a year ago. In 2009, the February price for this category was $288,379.

"Sales and prices in early 2010 were pushed up by the impending mortgage rate increases and qualification changes," explained REALTORS® Association of Edmonton President Chris Mooney. "Now that the market is stable, price levels have returned to the 2009 levels. However, the price increases for all housing types from January indicate the slow upward movement that local REALTORS® anticipated."

The all-residential average price (including single family, condo, duplex, townhouse, mobile home and other residential housing types) was up three quarters of a percent from January but down 1.8% from a year ago. However, at $312,840 it matched the February 2009 price at $310,488.

REALTORS® listed 2,631 residential properties in February and sold a total of 1,044 properties. Current residential inventory is 6,389 up 13.4% from last month. The sales-to-listing ratio in February was 39% with days on market down from 67 to 58 days. "With the recent announcement by the Bank of Canada that interest rates are not being raised, consumers can have confidence in the strength of the local real estate market," said Mooney. "Call a REALTOR® to begin your house search."

Highlights of MLS® System activity

¹. Residential includes SFD, condos and duplex/row houses.
². Single Family Dwelling
³. The middle figure in a list of all sales prices

he average price of a single family detached property in the Edmonton area continued to soften in November. According to the REALTORS® Association, at $362,657, the average SFD price was half a percent lower in November than it was in October. Compared to a year ago the price was down significantly by 2.5%. November condo prices also took one of the biggest drops this year with the average price down 2% to $229,603 month-over-month and just under 3% year-over-year. Average duplex/rowhouse prices of $318,605 went up over the previous month (6%) and previous year (10.6%).

Despite the softening of prices in specific categories, overall the market remained stable with the all-residential average price of $319,479 (up 0.65%) from October and up a third of a percent from last year. There were 1,120 residential sales on the Edmonton MLS® System in November as compared to 1,077 in October. Listings were down from 2,267 in October to 1,860 in November. This resulted in a drop in the available inventory from 7,689 to 6,982 residential units; still considered high for this market.

"Softening prices, a dip in interest rates, increasing sales nationally and excess local inventory all contributed to a month-over-month sales bump," said Larry Westergard, president of the REALTORS® Association. "Housing affordability in Edmonton is lower than the national average and economic growth in Alberta is expected to exceed other parts of the country."

The sales-to-listing ratio in Edmonton and area was 66% and the average days-on-market was down from 60 to 59 days. Taken together the two figures indicate that sellers must exercise patience as they wait for a buyer.