Expect price declines as housing market cools

It's been a cool summer in Edmonton — and that's not just with respect to the weather.

The resale real estate market has also seen much cooler conditions compared with last summer, continuing a downward trend in activity that could lead to even chillier market conditions this fall, says Darlene Reid, chair of the Realtors Association of Edmonton.

"When inventory is up and there are fewer sales, it's simply more competitive for sellers," she adds.

"In turn, they have to price aggressively, and buyers have more to choose and can be firmer when negotiating." RAE statistics illustrate the increasingly buyer-friendly conditions. In August, sales fell nearly 10 per cent year over year, and more than 15 per cent from July.

The average price was down about one per cent month over month while up about two per cent year over year to $469,602.

At the same time, inventory grew about 15 per cent year over year, though down one per cent from July.

Sales fell across all housing types. Average prices across housing types offered a more mixed picture of conditions.

For the most popular housing type, single-family detached homes, the average price gained about one per cent year over year to $575,575. Semi-detached homes also saw the average price rise, though less than one per cent, to $424,322.

Townhomes' average price, however, fell about one per cent to $298,238.

Apartments' average price also declined, closer to two per cent, to $215,422.

All housing segments reflect a balance between buyers and sellers — although activity could be trending toward favouring buyers this fall, Reid notes.

Conditions are not uniform. Some areas remain in high demand, says John Carter, broker/owner of Re/Max River City in Edmonton

"Sherwood Park and St. Albert are still very sought after and tight markets," he says, adding these communities continue to experience seller's market conditions.

Condominium apartments are at the opposite end of the demand spectrum. They have the highest level of new listings relative to sales. With every passing month, the segment inches closer to buyer's market conditions, more so than other housing types, Carter adds.

Townhomes are also experiencing downward price pressure. Like resale apartment condos, the segment faces more competition from record new home construction, he adds.

"By comparison, with semi-detached and detached homes, builders can't construct as many as quickly, and the costs are often much higher than resale."

Carter forecasts that Edmonton's resale market is likely embarking on a similar path as Calgary's market, which experienced record sales and prices, followed by consecutive years of declining price and sales.

"We typically trail conditions there by a few years."

Reid says the market is likely to keep slowing down into the fall.

"For that trend to change, new listings would have to slow, and sales would have to pick up," she adds. "But right now, it seems that the gap between listings and sales keeps getting bigger, moving toward a buyer's market."

Uncertainty from the referendum is not helping, she adds.

"People are waiting to see what happens."

Still, buyers who are house-hunting this fall are likely to find market conditions beneficial.

"You won't be competing in as many multiple offers."