Edmonton beats Calgary for real estate investment.

Report blames 'correction' for slide in ranking
Mario Toneguzzi, Calgary HeraldPublished: Thursday, August 28, 2008

Edmonton tops Calgary as the best place to invest in the province's residential real estate market, according to a report by the Real Estate Investment Network.
Alberta's Top Ten Investment Towns report says while Edmonton's market is going to begin performing closer to historic norms, "the good news is that Edmonton's historic norms will be at or near the top of performance for all of Canada, both economically and in the resale and rental housing sectors."
Edmonton leads the list followed by Calgary, Red Deer, St. Albert and Grande Prairie. There are actually 13 locations cited in the report and they also include, in descending order: Lethbridge, Fort McMurray, Airdrie, Cochrane, Sylvan Lake, Lacombe, Devon and Sturgeon and Strathcona Counties.
The report says Calgary has just experienced one of the best economic and real estate periods in Canadian history and ran neck-and-neck with Edmonton for the No. 1 spot on the list.
"In 2008, the (Calgary) market is making a predictable (albeit soft) correction resulting in slightly more affordable housing compared to recent years," says the report.
"It was economically impossible for the market to continue at the pace at which it was heading and now finds itself adjusting to market realities. This adjustment period, as the market searches for its new foundation from which to build, should continue into 2009 when the provincial economy is poised for another growth spurt."
According to a recent report by the Canadian Real Estate Association, falling prices in Calgary and Edmonton are dragging down Canada's housing market. Led by declines of eight per cent in Calgary and five per cent in Edmonton, average house prices in Canada dropped 3.6 per cent overall in July compared with a year ago, according to the association.
The average national MLS residential sale price last month was $327,020, while in Calgary it was $402,788. In Edmonton, it was $335,100.
Don Campbell, president of the Real Estate Investment Network in Canada, said Edmonton's housing market will benefit from the economic ripple of the multibillion-dollar investment in the oilsands, leading to job creation.
"The people in Calgary, if they want to play offence and defence, should be following the ring road and the extension of the LRT and then starting to move into regions such as Forest Lawn, Forest Heights -- regions that have had a more difficult reputation than they should because the demographic has changed, the pride of ownership has changed," said Campbell, the author of two books -- Real Estate Investing in Canada and 51 Success Stories from Canadian Real Estate Investors.
The Real Estate Investment Network's previous top 10 list had Edmonton first, followed by Grande Prairie and Calgary.
A recent outlook by Canada Mortgage and Housing Corp. forecasts existing home sales in Alberta will drop by 20 per cent this year, the sharpest decline since 1982, due to demand being cut by weaker migration and the hefty jump in mortgage carrying costs from earlier years. The average price gains of 31 per cent in 2006 and 25 per cent in 2007 have proven unsustainable as the resale price is expected to advance by only one per cent this year, says the CMHC.

The CMHC is forecasting Calgary's average MLS sale price this year to increase by one per cent from a year ago to $418,000 while Edmonton will see an increase of 0.4 per cent to $340,000. The CMHC says the Wood Buffalo region, which includes Fort McMurray, will lead the province with a 16.6 per cent price hike this year to $540,000.
As for 2009, the CMHC is forecasting a 2.9 per cent jump in Calgary ($430,000), 3.5 per cent in Edmonton ($352,000) and 8.3 per cent in Wood Buffalo ($585,000).
The investment network report says a focus on the reality of the economics behind the Calgary market today is critical at this juncture and it will be important for investors and homeowners to pay close attention to the fundamentals.

Provincially, "Alberta's economy is as good as it gets," said the report, with high energy prices, rapid population growth, low unemployment, an abundance of jobs, and improved infrastructure.

Centres
1. Edmonton
2. Calgary
3. Red Deer
4. St. Albert
5. Grande Prairie
6a. Lethbridge
6b. Fort McMurray
7. Airdrie
8a. Cochrane
8b. Sylvan Lake
9a. Lacombe
9b. Devon
10. Sturgeon and Strathcona Counties
Source: Real Estate
Investment Network