Steady Ground in Store; 2008 Real Estate Market to Balance Out

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Often looking ahead requires us to look back, especially when it comes to markets and especially if you want to look ahead with any clarity, and the Edmonton real estate market in 2007 has a lot to say about what we should expect in 2008.

So let us look back at a year that can be best described as an up - down market. We saw an overly aggressive market in early 2007, fueled in part by fear of a rising Loonie and higher interest rates. The most positive story that has seldom been mentioned is our average selling price for 2007, which is up about 35% to $338,009 from $250,915, the average selling price in 2006. That's a massive increase. December 2006 to December 2007 average price was up almost 12% and that too is exceptional growth.

So where did this inventory come from and why weren't we prepared? Well investors played a big role by taking advantage of relaxed lending which brought tons of new buyers to an already heated market, and these investors had no intent on keeping the property beyond close. Investors were a big part of the growth of our market and are now playing a big part in the correction, isn't it amazing how everything seems to achieve a balance?

Another factor in our massive supply was new home buyers who were holding their current property as long as possible assuming the market would continue to grow. This was great advice earlier but some simple awareness earlier on would have saved that segment a lot of trouble.
Lastly, we are seeing a lot of sellers cashing in on their equity and moving it to other provinces and other markets which are seeing good growth potential and lower average prices. Investors are now looking to foreign markets such as the southern United States seeking higher growth with our higher dollar helping facilitate this.

Source: The Edmonton Sun - February 24, 2008