With May sales up, housing market embarks on long road to recovery
If May’s sales numbers, compared to those in April, are any indication, the MLS housing market in the Edmonton census metropolitan area (CMA) is on the road to recovery.
Overall sales in the CMA last month increased 54 per cent from April, according to the Realtors’ Association of Edmonton. Single-family home sales increased 60 per cent, month over month, with condo sales up 28 per cent from April.
Still, the road to full recovery will be a long one.
On a year-over-year basis, total sales were down 42 per cent from May last year; single-family home sales decreased 39 per cent year over year; condo sales were down 54 per cent over the same time period.
“The Edmonton market experienced a significant decrease in year-over-year unit sales, with some downward impact on pricing,” says Realtors Association of Edmonton chair Jennifer Lucas. “Of course, with COVID-19 and the social distancing measures currently in place, this type of market decline is not surprising. There have been significantly fewer sales of single-family homes, condos and duplexes than in May of last year. Residential unit sales in May rose sharply relative to April.”
New listings and inventory levels followed the up/down story. Listings increased 59 per cent from April, decreasing 21 per cent from May 2019. Inventory was down 19 per cent from last May and up seven per cent from April.
Average prices showed modest year-over-year declines. The market-wide average declined four per cent to $353,953; single-family homes sold for an average of $412,329, a 4.5 per cent decline; condos averaged $204,365, 14 per cent lower than May 2019 and duplex prices dropped three per cent to $325,252.
Lower prices can be the result of people buying less expensive homes and regulatory issues, says John Carter, owner and broker at Re/max River City in Edmonton.
“It’s simply the total sales volume divided by the total number of sales, so is a reflection of price point of demand. Further, it’s also a reflection of lending policies and mortgage rates,” says Carter. “We saw this impact with lower borrowing power with the mortgage stress test when it came in, basically removing an average of $20,000 to $40,000 from the average buyer in our market. Prices didn’t drop by that, but those sellers may now have had a lowered demand from a certain number of potential buyers who would have wanted to buy their home and could qualify to buy it, but now couldn’t due to the policy change.”
Lucas feels the market is on the road to recovery.
“With COVID-19 restrictions slowly being lifted, I am cautiously optimistic that the market may be starting to move back toward normalized levels of activity,” she says. “It is too early to draw any definitive conclusions but we will be monitoring developments closely.”