You’ve heard of the many times and many ways that Oil affects our economy, but now you hear many people say “Oil, Schmoil, we’re a construction town.” We tend to be a bit more pragmatic in our view.
Firstly, I believe this year that inventory will be at higher levels. There will likely be some competition from sellers in the tight $300K - $450K price ranges. People will usually hold off on selling because they believe better times are coming when times are good. However given the price of oil and the impact it has on Alberta’s economy, I believe many of those people who hold off on selling will get their properties on the market. I’m getting a lot more questions from home owners about getting their home on the market than I normally get at this time of year. We are not predicting inventory increases from 2500 listings in March to almost 10,000 in September in 2007, but we do expect to see a higher level of inventory than last year.
For the time being, demand is still strong and will likely remain reasonable given the large amount of construction that is currently happening in Edmonton. At this point, the Edmonton area still has a lot of jobs and jobs are what creates demand. The appetite for housing is determined by job levels, however, we believe the buyers will definitely have a better selection of listings. If the new home construction industry is able to realign their labour and material costs, there will definitely be some increased competition for resale pricing. The more inventory there is, the longer it will take for buyers to sort through their options to get the right deal.
The market in terms of sales and average price has basically been on a lineal trajectory up. This is not realistic in what is normally a pretty balanced market like Edmonton. At some point, some retrenching will be seen. The good news is that our market did not get substantially overheated like other Canadian markets.
If you are selling, it is important to know your level of competition. If you are buying, you must focus on the quality of homes in good locations.