Edmonton Journal, October 20, 2010

Edmonton's housing market, while no longer red-hot, remains on steady ground for prices, according to a report by Royal LePage.

At the end of July, August and September, detached bungalows in the Edmonton area rose an average of 0.9 per cent year-over-year to $311,429 while standard two-storey houses increased 3.4 per cent to $338,571, said the real estate services firm Tuesday.

Standard condominiums declined 3.6 per cent to $204,167 over the same time last year.

Royal LePage said year-over-year unit sales declined and inventory levels increased, but didn't provide details.

"For most housing types, prices have increased slightly from where they were a year ago," said Ken Shearer, a broker with Royal LePage Noralta Real Estate, in a release.

"However, we are currently witnessing a levelling off of prices after the quick recovery that began in 2009 and continued through until the spring of this year.

"To put it in simple terms: prices fell last year, rose quickly through spring and summer of 2010, then dropped back down."

Price differences varied by neighbourhood and home type. Clareview, for example, saw an average detached bungalow fall 9.1 per cent to $250,000 year-over-year but a standard two-storey increase by 22 per cent to $360,000.

A standard condo in Clareview dropped 11.1 per cent to $160,000.

In Riverbend/Terwillegar, bungalows increased on average 15.8 per cent to $440,000 while the average two-storey rose 11 per cent to $390,000.

Prices for all housing types remained flat in St. Albert. The survey is available at www.royallepage.ca.

Nationally, Royal LePage said that home prices in the third quarter of this year saw growth of less than five per cent, year-over-year, "which is historically typical of balanced real estate markets."

The average price of a Canadian bungalow in the three-month period ending in September was $324,531, up 4.6 per cent from a year earlier, Royal LePage said.

The average two-storey was up 4.4 per cent to $360,329, and the rate for a condominium rose 3.9 per cent to $226,481.

Phil Soper, chief executive of Royal LePage Real Estate Services, said that while annual price growth was slightly lower than five per cent in the last quarter, it's basically in line with that level when factoring in a lower rate of inflation.

In the early part of this year and latter part of 2009, double-digit price growth, year-to-year, was the norm. The Canadian Real Estate Association recorded a surge of more than 20 per cent in October 2009.

These strong gains, as the economy was rebounding from recession while enjoying historically low interest rates, had some fearing Canada was experiencing a housing bubble.

"A few weeks or a few months of unusually high period-over-period price increases after a recession is completely normal," Soper said. "And it's no bubble."

There were stronger-than-average price gains in some local markets in the third quarter, according to the Royal LePage report. For example, the average price of bungalows was up 14 per cent in St. John's, 9.2 per cent in Winnipeg, 9.1 per cent in Montreal and 8.8 per cent in Vancouver.

Vancouver was easily the most expensive housing market in the country, with an average bungalow price of $873,500.

There were few examples of price declines in the 16 local markets covered by Royal LePage. There was, however, a 4.4 per cent drop in the price of bungalows in Moncton, N.B., a one-per-cent decline for two-storey homes in Calgary, and Calgary, Edmonton and Regina all saw condo prices dip.

Soper said it's likely this year's fourth quarter will see Canadian home prices, on average, about even with year-earlier levels, given the high comparison levels.

Soper expects a return to a range of three-to five-per-cent growth early in the new year.

The Royal LePage report is the latest showing the Canadian housing market in stable territory.

CREA recently reported home sales rising in September for the second straight month. Prices of homes sold through the Multiple Listing Service (MLS) were flat compared with a year earlier and ahead 1.9 per cent from August.

As well, Statistics Canada recently said new-home prices in August were up 0.1 per cent, even as most economists expected a decline by as much.

Craig Fehr, a St. Louis-based analyst of Canadian financial services for Edward Jones, is among those who raised the spectre of a housing bubble in Canada earlier this year.

On Tuesday, he said the risk associated with Canada's residential real estate market has lessened due to some slowing of price growth and tighter lending conditions.

"Housing data has been a little more solid than we expected, which is a good thing, (but) we would continue our position that we would expect things to remain relatively tepid in the housing market as the recovery takes shape, because by no stretch are we back to the economy firing on all cylinders," said Fehr.

Despite the positive trends of the Canadian housing market, Fehr warned against looking to housing as a primary, long-term investment strategy, instead recommending diversification.