PRICES ARE UP EVERYWHERE BUT EDMONTON

The Globe & Mail, April 4th, 2008
Homeowners and homebuyers can expect prices to keep on rising in the months ahead, but at a slower pace, the head of Royal LePage Real Estate Services says.

Phil Soper, president and CEO of the Toronto-based realtor, said Thursday the firm's housing price survey for the first quarter of 2008 found prices rose in all major Canadian markets except Edmonton.

The country is returning to "an environment characterized by moderate house price increases," said Mr. Soper, pointing to slowing economies in Canada and the U.S. coupled with lower interest and mortgage rates.

Prices for detached bungalows increased the most in the first three months of the year, rising by 8.3 per cent from a year earlier to $336,834. Two-storey homes rose by 7.1 per cent to $400,647 and standard condo units jumped by 6.9 per cent to $240,423.

On the one hand, the drop in the cost of money and the anticipated further fall in the cost of money and mortgages in Canada and the U.S. in response to the worldwide liquidity crisis are having a positive impact on the Canadian housing market as governments try to avoid a recession by stimulating demand, said Soper.

Meanwhile, "rising home prices themselves are mitigating the ability of people to get into homes," he said.

The Canadian housing market "is being cooled" by a slowing economy and "it's being stimulated" by cheaper mortgages, said Mr. Soper.

But the "overall the pressure is on the downside so this market will continue to cool, however not at the rapid rate that has occurred south of border thanks to things like strong employment and cheaper mortgages."

In Edmonton, prices dropped for all the various forms of housing covered by the study.

The sale prices for standard condo units tumbled 7.7 per cent to $235,000, while the cost of an average bungalow fell 4.9 per cent to $330,000 and a two-storey by 3.7 per cent to $363,707.

While "the underlying strength of the Alberta economy continues to be there and there's no lack of jobs or consumer confidence," the province experienced some of the lowest housing price increases this quarter, Mr. Soper said.

"This is simply the reaction to runaway price inflation over the last couple of years," he said. "People ... have sticker shock and they're having to adjust to prices that rose at up to 50 per cent a year over the last couple of years."

In Calgary, home prices rose at a more moderate pace as the city's highest-ever inventory levels turned the market in favour of buyers.

Smaller cities, like Halifax, St. John, Saint John's, Regina and Saskatoon, are experiencing the greatest price appreciation right now, Mr. Soper said.

The driver is a combination of strong, resource-based economies and affordable housing, he said.

"As places like Saskatoon take care of that affordable housing part of the picture, the rate of price appreciation will come down quite dramatically."

The largest year-over-year price increases were in Regina and Saskatoon for all three types of housing measured in the report.

In Saskatoon, the price of a bungalow rose by 50.3 per cent to $340,000, a two-storey rose by 53.4 per cent to $395,000 and a standard condo unit by 41.9 per cent to $220,000.

While the overall housing market "is stable," said Mr. Sopher, "it is obviously a regional story."

"It's not very stable in Saskatchewan where a booming local economy combined with affordable housing is causing prices to escalate wildly," he said

The Saskatchewan market "will take care of itself the same way the Edmonton market did last year by simply pricing people out of the market. The unsustainable price increases we saw in the first quarter won't last."

In Toronto, where a new land transfer tax came into effect February 1, price gains were near the national average. Bungalows were up 11.3 per cent to $432,679, two-storey homes up eight per cent to $544,150 and condos up 6.9 per cent to $298,662.

In February, "the market slowed, prices did not drop, but the number of sales did, down eight to 12 per cent in overall sales," said Darryl Mitchell, area manager for central Toronto for Royal LePage Real Estate Services Ltd.

The weather in February also affected sales, said Mr. Mitchell. "You couldn't make it down Toronto streets" because of snow. "That made people stop buying or not list their properties."

But prices "still didn't drop and we were still seeing multiple offers on any really well priced good listings, so demand remained strong."

Vancouver remained the priciest city in the country to own a home, with bungalows up 12.5 per cent from last year at an average of $852,750.