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This is why buyers are on the sidelines:

Bubble and burst

A housing bubble consists of a boom followed by a bust. Prices rise rapidly during the boom, and people buy homes on the assumption that prices will keep rocketing upward. The bubble bursts when home values fall. A burst bubble hurts homeowners who have to sell at a loss or who remain in their homes longer than intended, stubbornly waiting for values to return to previous levels.

Bubble believers maintain that low mortgage rates, combined with a mass delusion that property values will skyrocket forever, have inflated a bubble. They predict that rising interest rates will pierce the bubble, causing mass psychology to reverse: As houses take longer to sell, homeowners will put their homes on the market before the bottom falls out, panicking still more homeowners into dumping their homes on the market to limit their losses. In this scenario, potential buyers take their time, because they know prices will drop next week or next month. A deflationary spiral ensues.

As evidence that home values have moved out of whack, bubble partisans note that house prices have far surpassed rental rates.

Billy, when we we see the bottom of prices?  In your opinion?

Here is a "What are Buyer's Thinking".  I had an offer on my place yesterday.  The guy tried to offer 40k below asking on my 400k house.  I know that isn't all the facts but we are already below the price of all the other prices on the block that are smaller.  Only issue is that there are TONS in our area for sale.  This is my small rant for the weekend.

Btw Bob, nothing personal about not asking you to list my place.  Just that when I moved here two years ago my realtor went over and above to help me through my initial deal.

Vinny; I'm a big believer in being loyal to one realtor if he/she is doing a good job for you. Good luck with your sale.-Bob

It does create urgency to buy for sure. You don't feel confident to let a property "sit" for a long time as you don't want to lose it. If sales are down, listings are up I don't see how DOM is 40 days from 51, must be a lot of "new mls re-list numbers" or something. But I agree, HOMES ARE SELLING quicker on average out there. Or at least in the prices I'm looking at. Even homes that need $100-250k in reno's are not staying on the market.

Billy said:  "This is why buyers are on the sidelines:

Bubble and burst"

Yes, your definition of bubble isn't bad. Although I don't see that happening in the Calgary market to the extent you imply.

You know, I was talking to my wife last night about the "doom-and-gloomers" and I think the boom has created 2 camps of people. Those who own real estate and made a wheel barrel full of money on it and those in 2004 who said "$180 is unaffordable for a home!; the prices can't go up much more!; it's going to crash!; keep renting, don't buy!" listened to that, didn't buy and now are angry with themselves they didn't. Thus the latter group wants home prices to go back down to 2004 levels so they can "get in the action".

Think the $450k average price is a lot in Calgary? Check out Vancouver, Toronto or London, UK. Both cities cost more to live in, you make less and you pay a lot more for a lot less of a house. Does this mean Calgary is "amazing value" no, although it WAS in 2004. Now, $450k is just the "normal" price of doing business. Pre-04 Calgary real estate was CHEEEEEEEEEAP and on sale! Now, it's a "fair deal". You can still buy an inner-city home in Calgary in the $300's. Toronto, $500k, Vancouver, $700k, London, $2 million.

Bob/Al - I think you need to remind us again what a "normal" maket means... DOM, selling price % vs list price, % over sale price, how many competitive bids on a home. The months listings usually ramp up, peak and then go down. Our market for the past 2-3 years has been abnormal in many ways and people I think need a "refresher" on what "Normal" is.

Mike

Mike; Regarding the DOM going from 51 to 40, there were substantially fewer re-lists in February than in January. If those were accounted for, DOM would have seen an even bigger differential. -Bob

I've heard this mentioned a few times so I thought I would bring this up.  Toronto housing is still a fair bit cheaper than Calgary.  This is just one of the links I've seen this on:

http://www.canadian-housing-price-charts.235.ca/canadian_housing_price_chart.htm

vinny - Good luck on the selling of your house. If you just listed it and got an offer already, WOW, that's fantastic. $40k under as the FIRST offer is ok, unless you are selling at a loss at that?

I always believe, WORK THE DEAL. It's an offer, so counter. You may get it sold for just $25 under your asking.

--Toronto housing is still a fair bit cheaper than Calgary --

Thanks for the chart. It's a great example of data that is accurate, but does not show the accurate picture. I'm from Toronto (lived there for 28 years). The Toronto data they are using MUST be for the WHOLE GTA + outskirts (pickering, Ajax, brampton, whitby, Oshawa, etc). In the GTA, the average home price IS NOT that cheap. Ok, Scarboro, yes, but there are FEW homes below $350 even in Scarboro.

Toronto home prices are very expensive vs Calgary. Few people I knew could afford to own a home in TO. The vast majority (in my family) rented. And people in TO rent for 40 years.

Here is a good example of CHEAP $400k innercity Toronto RE: http://www.mls.ca/PropertyDetails.aspx?vd=&SearchURL=%3fPage%3d1%26Mode%3d0%26vs%3dResidential%26ret%3d300%26sts%3d0-0%26beds%3d0-0%26baths%3d0-0%26aid%3d3333%252c3334%252c3339%252c3340%26MapURL%3d%253fAreaID%253d6367%26tte%3d1%26tt%3d1%252c2%26mp%3d0-0-0%26mrt%3d0-0-4%26trt%3d2%26of%3d1%26ps%3d50%26o%3dA&Mode=0&PropertyID=6254523

Yes, the WHOLE house IS the lot.

or something like this for $770k inner-city: http://www.mls.ca/PropertyDetails.aspx?vd=&SearchURL=%3fPage%3d3%26Mode%3d0%26vs%3dResidential%26ret%3d300%26sts%3d0-0%26beds%3d0-0%26baths%3d0-0%26aid%3d3333%252c3334%252c3339%252c3340%26MapURL%3d%253fAreaID%253d6367%26tte%3d1%26tt%3d1%252c2%26mp%3d0-0-0%26mrt%3d0-0-4%26trt%3d2%26of%3d1%26ps%3d50%26o%3dA&Mode=0&PropertyID=6314645

Now, there ARE deals in TO, just like Calgary, but if you want to have less than a 1h 30m commute (like I had), then your shelling out $600k+

Mike

Mike,

Good joke comparing Calgary to London, UK (and Calgary is more expensive than Toronto). If you have ever been to London you know why real estate is ridiculous - zoning laws where you can't make high towers in many parts of the city and one of the highest city densities in the world (ie, they are actually running out of space). This is opposite to Calgary.

Next income, go to statscan and pull up the latest numbers, Calgary income is 17% higher than the national average. Are houses here 17% higher than the average? According to CHMC as of 2006 the Canadian avg was 276k. I guess the average Calgary price of 323k would make that work perfectly.. oh wait.. Calgary prices are way higher than 323k.

Basically you argument doesn't hold water because while incomes affect housing prices to some degree it isn't linear. For example, Vancouver real estate is really expensive even though people's incomes aren't that high. On the other hand, real estate in NWT and Yukon are cheap as dirt even though their income is one of the highest in Canada (higher than Alberta as of 2005, mainly due to gov't subsidies). Why is that? Answer is quite simple, people WANT to live in BC because the weather is great, it is by the ocean and is a "big city." While Alberta is no Yukon, you can see how the allure is much less pronounced.

Secondly, the supply/demand factor is totally against Calgary. I challenge you to name a single city in the developed world that has higher average housing price with a lower density than Calgary (similar size, ~1mil). Lets compare apples to apples here, Calgary isn't NY or Paris; go compare Calgary against cities of similar size and you will see how ridiculous prices are (or even against moderate sized US cities like Atlanta or the real energy capitals of North America: Houston/Dallas).

PS. I am not calling for a big crash, but anyone who expects to see double digit gains going forward needs to rethink their logic.

Vinny, Toronto housing specially closer to downtown Toronto is way much expensive than Calgary's areas closer to downtown. If you want cheaper housing in Toronto then it's outside of downtown BUT then you need to drive at least 2 hours to get into downtown.

:)

Thanks for the info guys.  I haven't been to TO for sometime so I can only really rely on website stats.  Therefore I don't have the full picture of TO.  It looks like Toronto must have a lot wider range of pricing.  For the average pricing to be lower than Calgary yet its core being much more expensive than Calgary's it's satellite communities would need to be much cheaper than Calgary's.  I don't have all the numbers to do the math but in theory that's how averages have to work right?  

So we did counter a bit to see how serious these guys were.  They only came up 5k.  I think they were basically testing us to see if we were desperate.  The house has been on the market for 3 weeks now.  We'll keep trying but luckily we're not in any situation where we need to sell, just the wife wants a bigger house.  Some of you guys probably understand that.  My coworkers (many female) have taught me "Happy wife = happy life".  I hope it's true  =)

As a first time buyer myself last fall. I wasn't rushed to buy I was simply ready to buy. Tired of paying someone else's mortgage, and ready to use some savings to purchase. Maybe somewhere on the very outskirts of my mind I thought about prices increasing if I waited another year,(I never thought they'd keep popping but even a 2 or 3% gain YOY was in my price range going to be another $10,000) but mostly it was simply because I was ready.

I think for myself when a first time buyer is ready they are ready. For me that was the driving force not what was being said about the market or the DOM

has anyone kept track of the # of people moving out of alberta back to newfoundland or wherever they came from for their DREAM.. i personall know alot of people that came to alberta for the good jobs and realized how expensive it is to live here.. PLEASE.. don't compare calgary to vancouver and london. not even close in lifestyle and housing.. these are international cities that have alot more to offer than calgary..  So, if there is no people moving here to but, who is gonna buy.. JOE BOB, with his min. pay job. people left because they put most of their income into housing. there was a few stories on cbc on that topic..  average home are not selling, just like VINNY  said unless people offer way less than the asking price.. I don't know about the rich areas. My brother's neighbour in Temple has a similar situation with a 50000 lower offer on his home, he was tempted but like all of us he is CONFUSE....  God, it is so difficult to understand the marke these days... high inventory, plummeting sales  as the herald said and creb... no one knows till the smoke clears. Bob, have you seen the phenomonon happen in the market before?? what is contributing to this confusion.

Confused; Average homes are selling if they are priced correctly. By the way, what do you think is an average home?

Remember, your property is worth what someone is willing to pay for it. I'm not sure what phenomenon you are referring to. If it is that sellers are wanting more for their homes than people are willing to pay, that is not a phenomenon. It's always been that way. Sales are only plummeting compared to the record years of 2006 and 2007. Now that was a phenomenon. Sellers have some high expectations because of the past two years, but that will gradually change. -Bob

Mike,

thanks for the link.

That one house in Toronto looked like a barn from the outside and they want 399k for it!  Hopefully it comes with some animals and hay.  Nothing wrong with being a redneck in the inner city.  

Bob,

buying last fall would have been ideal compared to now because of the price increase but like Heather mentioned people will buy when the timing is right for them.  And usually late winter and spring is the time that is right for a lot of buyers.  So they can get settled in their new place before summer and then take holidays.  A lot of people do not like moving when the kids are in school, but it does happen.

That is a great story about CCl classic communities.    One of the problems with any boom, is that people are left behind.  Sadley, the dream of owning a home is only a dream for some people.  It would be great if more builders were like this.  Just if some would even cut their prices by a bit.  Builders have made huge profits the last few years.  So what if the average price drops a bit.  I would be all for lower prices and more people attaining their dream of a home.  I believe it would be for the betterment ( is this a word?) of society.  But then again I bought way before the boom and selling my home wouldn't be a problem.  Someone who bought last spring would be in a pickle if they tried to sell in this scenario.  But this is a great feel good story.

To Al Bundy or anyone else who's followed Don Campbell of REIN.

How has his track record faired on the Calgary market over the last couple of years. Were his predictions too high, low or pretty accurate?

Thanks Bob for your response on the Strathcona property.

RD and Confused. I didn't say I compared Calgary to London, I just stated prices in those centers. I picked London, UK as my wife just came back from there 2 weeks ago and we have friends that bought a house there late last year, so I knew the prices there.

RD, even if I picked, say. NIAGARA-ON-THE-LAKE, Ontario as it is the same density as Calgary and they can grow out, and they have the same "average" price too you might rule it out because they grow wine near there. There is NO "fair" place to compare Calgary to. Even Victoria "we have no room to build" is a lie, they do, but they like their MASSIVE green spaces between communities, unlike Calgary.

Confused - The wages in Calgary are outstanding. $15 an hour to cook chicken. $15 to stock shelves. That's amazing. In fact, when my brother came out from Toronto, he took photos of the now hiring and $15/hr signs to show his friends in TO...haha  Toronto home prices are higher and their wages are lower = our home prices are not as unaffordable. Rents in Calgary are cheaper than Fort Mac. Same price as Toronto (2 bed = $1600 in Scarb ON).

Migration is still +, +15,000 people per 1/4 year are moving here. Employment in Ontario and Quebec is... aweful... manufacturing IS their "oil and gas" and it is in bad shape. O/Q economy is poor and 100,000's of jobs are being lost each 1/4. How long do you think before those people move to Alberta? The cost of living is the same, homes same price and Calgary wages are higher and SURPRISE, Calgary is hiring! I've never seen so many "help wanted" signs in Ontario.

Calgary IS the city of opportunity, worldwide. There's jobs, great living, SAFE atmosphere, low taxes and a really bright future. I'm not Albertian, but Ontarian and I'm saying this... :)

Mike

Mike; Did you see Ed Stelmach's victory speech last night? "Welcome to Alberta's Century." Sounded a lot better than "Welcome to Ralph's World." -Bob

What they (young couple) have expected in Calgary?

He is the only worker in the family of 3 (HR specialist ~30 CAD/h or less). If my wife wouldn't work I couldn't afford anything more than a dog kennal.

Guys, XXI century, one income is not enough, such a life...

Mike; Did you see Ed Stelmach's victory speech last night? "Welcome to Alberta's Century." Sounded a lot better than "Welcome to Ralph's World." -Bob

Yes, in fact, for the first time, I voted PC. I felt that PC was the "right thing for Alberta, for the people of Alberta and the future of Alberta". I may not be here all my life, but I want to make sure those who are, are taken care of very well. :)

About affordability....

I was walking to the post office and thought about it along the way...

Even with the corrected home prices, they are affordable, to those who WANT to own a house, they will. They will save and work towards that goal. It doesn't matter if their family makes $50k a year or $100k. They WILL find a way to buy a home.

There will always be people who say "homes are unaffordable", or make up a vault of excuses not to try to buy one "they will go down... it's better to rent... I didn't buy at the ""right time"" etc".

With 40 year mortgages, and 5% down, you CAN get in, work hard, save hard and that home ownership dream is yours. The ney-sayers will say "40 year mortgage, forget it", "5% down? CMHC fees are too much!!". If you start with a 40 year mortgage remember it doesn't mean you have to wait 40 years to pay it off.

The majority of people CAN buy a home/condo. It just takes commitment, hard work, saving and dedication. Or you can rent, like my folks, for 40 years, in the same place and don't ever put in the effort to buy one because (insert excuse here).

Mike

Hi

My $0.10.

Point 1 - overpriced! cheaper to rent.

I'm getting ready to sign 1 year lease for a large 2 bedroom condo downtown.

Based on what I'm paying in rent per month, minus condo fees (what I've see online mls), landlord has around $1700 a month to pay mtg , buy beer etc. Minus say $100 for a fund to paint once a few years, fix taps etc.

$1700 a month, with 10% down, and interest at the current  6.5% affords a mtg of about $220K.

Interestingly enough, units are selling for $425K, reduced from $459K from a few months ago.... imagine that - $34K drop in a few months. Not jumping in has  paid for my rent for a year and no stress.

From my calculations, most re here is overpriced by about 47% based on the income these investments produce for landlords.

These are plain fundamentals. Sooner rather than later, its going to swing back the other way. At that point in time... I will buy.

Point 2 - affordability.

Funny everyone talking about $15/hour. Thats $30K a year. Or $60K a year for a working couple.

I believe the average wage in calgary is $25/hour. $100K a year for a working couple. Take off $20K for taxes. Thats $80K net. 1/3 of that, is  $2222/month available for housing. With a 40 year mtg, and say interest rates of  9% (long term average) that $2222 will power a $275K mortgage. 105% of that is... roughly $290K

Average price, in Calgary should be.. about $290K. What is it... $471K. Or, 38% higher than it should be.

Sooner or later, its going to come back into sync... all the poor people from ontario moving here with no $ are not going to save things here.

fisherman,

As I mentioned, I've never met Don Campbell, but I've had access to his site which talks about real estate all over Canada and even internationally.  I've never met the man.

But I'd dare say this... his track record of predictions was certainly better than either of the past two presidents of CREB.  Even my predictions were better than the past two presidents of CREB, or CREN for that matter.  Truman's predictions for Calgary are as about as good as it gets.

But Don Campbell has a huge network that looks all across the country and looks at a lot of different financial and commercial issues that we don't look at, here in Calgary.  I'd say that Don Campbell is well worth listening to, on the national level.  So many people only look at the Calgary scene.  Campbell is well worth listening to.

At the local level, I like Bob Truman's opinions and incedible service.  He offers us this blogsite for free, with all his free stats.  How can you not love that... and a man like that?  If anyone locally deserved our business...  that's a no brainer. Al

When this blog first started up, Mike was the very first to post here.

I'll never forget his advice to those who were complaining that they couldn't afford to puchase a home.  His advice said amoungst other things:

"Cut the capuccinos".  "Cut the Friday night movie every week".  "Use both sides of the toilet paper".

And I laughed so hard I nearly wet my pants... but his message was so real.  And now I see where he got that message from.  Read his above post.

Thanks Mike.  That's a very heartfelt thank you to you for a brilliant attempt in 2006 to spur people on.  The only person I know of, who we actually affected, was Heather, and I'm so proud of her.  I think you'll get a few more thanks again, in the next year Mike.  Some day they will think of you as a great old buddy.  I do!

"Use both sides of the toilet paper", and buy a house!  What a great lesson in frugality and the success that follows!

Al Bundy

There's a story in the financial post about condo sales and prices in Toronto.

www.financialpost.com/Story.html?id=107000

They look like a lot more than Calgary. Just thought it might be of interest.

I've been reading here since the summer of last year and there are a number of people who make sense to me.

Most recently and in my memory always is Mike. Hi Mike.

Correct me if I'm wrong Mike but it seems you say

If you are a flipper looking to make a fast buck then real estate is always a risky game.

If you are an investor who has time and money you are always going to come out ahead at some time.

If you are a smart buyer (pay your mortgage down and as fast as you can) you will always win in the long game.

I've probably over simplified it but it makes sense to me. Like anything in life instant reward has the highest risk. And slow and steady the highest chance of success.

Well its been a while so nice to have the blog back Bob!

Here is our update we still can not buy, we will still be putting cash in the bank. But really we have put the dream of owning a home way back on the burner. The prices are just to high.

We are now just enjoying life and getting on with living, as we found it very stressful trying to buy a home . We still have a small hope we might be able to buy one day but its not a major concern for us anymore. As we have been priced out of the market at this time.

I'm wondering how the R/E market in Calgary will react now the the prime has been drop by 1/2 a percent.

To comment Johnny's question regarding Coralspring neighborhood, I think if you house is in the high end for that neighborhood (ie 600+) you will have a tough time to sell it. The potential buyers there treat homes like commodity. The cheaper the better. This is a significant factor that drives the prices down. This is sad but true situation for most NE communities.

Al/Heather: Wow, I'm absolutely GLOWING with the complements you have paid me. :))

I just don't know what to say other than Thank You back. :))

You have inspired me to check out some "good" starter stuff on the MLS for the fine folks here in all quadrants to give examples of what I'd look at if I was buying my first home. Remember: I'm NOT a realtor and I'm going off what I see as value under $325. I view the "inner-city" to be MY choice investment spot, a BIG lot, R2 if possible, fully DETATCHED home, SW/NW address ideally and a livable home. $325 isn't much to play with, but I found some good examples.

We ourselves started out with a $178k 1983 Millrise starter home, $60k a year family income, 10% down, 25 year, 4.65% 5yr fixed mortgage.

http://www.mls.ca/index.aspx

South West:

C3302128 - Millrise. Hey, what's not to like at $319k, 1532sq/ft, big lot, reno'd home and on a cul-de-sac! I love Millrise, it's close to the LRT, great location near fishcreek park and I got my start in  Millrise in our first (1,110 sq/ft) home. :)

North West:

C3299978 - Bowness. $299k, 128' huge reverse pie lot, 861 sq/ft bungalow, backing onto tennis courts, community centre and park! Damn. I'm not a huge fan of Bowness, but it's up and comming, has trees, is an established community and it's "inner-city". Maybe even an R2 lot too.

South East:

C3310663 - Dover/Valleyview. $294k. Under property assessment. Quiet area, beside school, 45' wide lot, GARAGE, 3 bd 950sq/ft bung. Also within eye sight of the new Valleyview $650k homes. Really nice looking home.

C3305299 - Ramsay. $259k. You want a home minutes to downtown on a nice lot that's updated and has some new reno's for a 2006 price? The trick is you have location, but a cute small 538 sq/ft bungalow home to live in that will cost you nothing to run? Can you do it for a year? You'll have to buy "small space IKEA" stuff! But it's only going to go up.

North East:

C3303774 - Radisson Heights. $299k. Pie lot, on a cul-de-sac. Nice bi-level (lots of light in basement), walking distance to LRT (big bonus), fully finished basement and new flooring.

C3292777 - Forest Lawn. $316k. Now you might say, "I'm not living in Forest Lawn!", but hear me out. Have you drove SOUTH of 17th ave in Forest Lawn? It's actually really clean and nice; trust me. It's a gem of a secret. The great thing about forest lawn in it's R2 and you can rent the basement to help in your rent = get those renters to buy you your home AND the bank takes rent/income into consideration for a mortgage. Ok, so we have a 1,000 sq/ft bung, on a big 50' lot, 3 bd up, 3 bd suite down (That's HUGE, a 3bd suite = $$$ rent!). Quiet street, west backyard, inner-city. With renting out the basement, it's a no-brainer.

C3311395 - Dover. $319k. Another nice home, suited up and down. Nice large lot, Recently reno'd, west backyard and very close to big park. Another mortgage helper.

Now onto the next message for replies...

Mike

Thanks Al,

I re-read Bob's last post to me. He mentions the Alberta economy as being the driving force for continued price appreciation which makes sense.

Bob, what do you think appreciation looks like going forward 2 years for a property like mine? I just interviewed a realtor yesterday which is well known in Strathcona and he thinks that I should list my property as soon as possible. He thinks that the spring market will soften quickly this year. I'm not  sure I'm comfortable with this guy, we disagreed on quite a few things.

fisherman

Tania Davies - I fully hear your points and appreciate them. In the

short term, yes, it CAN be cheaper to rent as you point out. Just

don't look at renting as a "lifestyle" over owning. It works only when

the housing market is going down vs buying. But NO big city RE market

goes down forever.

It work agaist you in a "balanced or up market" as you lose equity in

many ways. Your paying rent and getting nothing back when you move

out. You don't get "home appreciation" for the time you spend living

there. You do not "invest" the same $$ as you would be paying for a

mortgage if you were paying a mortgage. You also don't build "bank

equity as well". Remember too that you CAN control your mortgage

payments (fixed mortgage) but you have NO control over rent payments.

Yes, you can move, but renters know how HARD it is to find a unit as

at rental prices just a few years ago.

Tania Davies - "Sooner rather than later, its going to swing back the

other way. At that point in time... I will buy."

Imagine if prices dropped by $181,000 dollars on average. That would

be AWESOME for first time buyers...and investors (locally, nationally,

and internationally)...and move up people, and seniors and even the

unemployed! But with ALL that demand, we are back up to $471k average

(as people bought all the inventory!)... So you and 10,000 people who

bought made $200,000... House prices are $471k average again or much

more (0 supply + lots of demand). What did that do for the greater

good?? If home prices were $80,000-100,000 in the NE/SE, I'll take 15

homes please! But WHO will put up for sale their homes at such a

MASSIVE loss for me to buy them at that time?? (I hear crickets)

At $15 hour, that's good pay, but not "estate home" pay, but all the

homes I listed above, you can afford! You can still buy a condo in the

low $100's, even if you made $15 a hour, you can buy a condo... That's

REALLY cool. The weird thing would be your $125k condo could go up as

much per yearly pay is. If that happend, you would in fact be making

double your salary.

In Toronto, the $15 Calgary min wage is $8.75/hour. I'll be frank and

say you CANNOT buy ANYTHING at Toronto's min wage, but amazingly

enough, YOU CAN at Calgary's min wage... That's affordability (for

now).

Al Bundy -- "Cut the capuccinos".  "Cut the Friday night movie every

week".  "Use both sides of the toilet paper".

Ah, so true. Damn who would have guessed that cutting out those

capuccinos would make such a MASSIVE difference in one's life.

Everyone, think of it this way, for every little, tiny $1 you save,

it's like $5 (or more) towards YOUR future. It's the magic of compound

interest. Make your money work for you, not you for it. It's the

little expenses in life that prevent us from acquiring the "big

stuff".

Sadly Al, your right, I saw 2006 coming, I knew it in my gut and I

told EVERYONE that I could what I foresaw. It would be like knowing

the winning lotto numbers and telling people to just play them. I only

got 1 other couple to trust me, buy a big home and move. They made

over $200,000 profit (today's market) on their new home because they

just listened. I despirately tried to tell my friends and my brother

in Toronto to move out here in 2005, buy ANYTHING. Even my wife's

sister to get her to buy that brand new built $59,000 point-of-view

condo. The expression "You can lead a horse to water, but you can't

make them drink," might apply well here. As my wish is to help others

even before myself, you can only imagine my sadness and frustration.

Heather - I've been reading here since the summer of last year and

there are a number of people who make sense to me. Most recently and

in my memory always is Mike. Hi Mike.

Wow, I'm so happy to hear that, hopefully I was helpful to you and

even just a little helped your future to be just 1 watt more brighter.

Hey Heather!  :)

"If you are a flipper looking to make a fast buck then real estate is

always a risky game."

Yes, indeed. But with an awesome realtor, research of the

market/products, time and commitment, you can control those risks to

some degree*.

"If you are an investor who has time and money you are always going to

come out ahead at some time."

Yes, it's "true" to a point. The point being is where you are on the

cycle, what you buy, where you buy and what upside/hook that property

has. Location IS important, but there is no "IDEAL" location, and if

there is, you can't afford the millions for it (Doh!). You can't get

caught up in analysis paralysis or you lose. You take the best you can

at the time it's available and work with it. Identify whats "special"

(you NEED special) about the lot/home and work it. The market doesn't

ALWAYS go up EVERY year, but it ALWAYS goes up. (I'd buy ANY home at

TOP list price at the PEEK of the 1980's crash, right now, in fact,

give me as many as I can get a mortgage for!).

"If you are a smart buyer (pay your mortgage down and as fast as you

can) you will always win in the long game."

Ohh, this is a big fat JUICY tip. Yes, it SUCKS to pay OUT more

money than you "have to". But, oooo, it works in YOUR favour, NOT your

banks! You save not only on the viewable "total owing" part, but you

save SO MUCH more on the componding interest agaist you part. Eg. You can cut a 40 year mortage to 33 years, just by going weekly from monthly! That's 7 YEARS of payments, POOF! GONE! Just Double up your payments and that 40 year could be cut 25 years to 15! 25 years of payments, compound interest, gone! Want to make "more money" on your home? DO THIS!

(note the below example is very rough, but its a good "general" example)

EG; Take a $350,000 mortgage, 25 year, fixed at 6%. Payed Monthly.

You take 25 years to pay it off. You'd pay $321,800 in just INTEREST. In 25 years, that $400,000 home would be worth, say, $1.5 million. So you net out $778,200 at the end of the day. That's a good investment, honestly. You made $778,200 TAX FREE baby!

Take the same $350,000 mortgage, 25 year, fixed at 6%. BUT payed Weekly and DOUBLE your payments.

You'd pay $89,514 in just INTEREST. In 8 years (you just chopped off 17 years in payments too). Sell your home for $1.5 million in 25 years (you did live mortgage free 17 years of them too).

You made $1,010,485 TAX FREE baby, Oh ya! Sign me up!

The best part is not only did you pay LESS in total buy paying MORE in payments, you also made $232,285 for your dedication AND lived 17 years with NO MORTGAGE payments.

Heather, not only are you a smart investor but you'll be able to achieve so much more than (hopefully) you dreamed of years ago because you care enough to take the time and listen to others tips and advice (both good and bad).

Mike

I remember seeing that house in Millrise selling for 359k last year.  I could be wrong but it certainly was not 319k.  Wow

vinny said:  

I remember seeing that house in Millrise selling for 359k last year.  I could be wrong but it certainly was not 319k.  Wow

Sometimes, sellers have to come to terms with a "realistic" price. I'm sure if they owned it for a few years, they made great money on it at $319k. But at today's corrected prices, $319k is a steal.

Mike

fisherman,

If you don't mind, I'll chirp in here.  I used to be a realtor for 10 years, and that occupation for me ended in 2002.

Your realtor is right.  This is the time to sell (springtime).  But to be able to predict 2 years into the future is exceedingly difficult.  I own 4 condos now, but none of them are in Calgary, although I live in Calgary, and love Calgary.  

Al Bundy

to mike..

thanks for all the detailed info you provided.. i lived in forest lawn for a while. it is not a bad place as the media make it out to be. however , have you been in the houses in person. trust me , they are old, smelly and outdated, maybe 319 grand is a steal for someone that lives in a 6-700 thousand dollar home. but how much renovations a person would have to dish out to make it decent .  SE. and NE calgary don't get much air time on this blog..Bob, those are the neighbourhoods that i call average, or middle class.. the ones selling now between 325-350 .. affordability is in the minds of whomever is well off or not... it is easy to say the housing market is affordable when you got money, however MIKE $15 dollars hourly is not affordabe, we still gotta eat, fill up gas...wow..gas i say.. buy clothing etc.. food prices and gas are at all time high, nothing is inline economically.. iam not a doom and gloom person, just trying to be realistic..

I totally agree with Confused, that’s our point. We could buy a home right now, but how do we pay for food & gas for the car. That’s the trouble we have, right now we rent at a $1000 a month and have living expensives of $500 for food $300 for gas for the car. Then there’s heat/power for the house we rent it really does not leave to much left. But we manage to save between 300 to 400 a month towards a down payment.

Not looking for hand outs this is just the facts for us along with many others I bet.

confused - I agree, it's extremely hard to save enough on a single $15/hour income to buy something over much over $100k. Years ago, Point-of-view condo's were in the high $50k's, then it was more possible.

I agree, gas, food, clothing, the basics and then rent $ till you can save up enough to put down. It's hard to balance for sure. I would imagine rent costs are the killer. A few years ago, $1000 rent was almost unheard of. Now, it's the norm. That's $12,000 at least out of your pocket a year, just to put your stuff and rest your head. On a $15/hr ($30k/yr) job, that's almost 50% of your after tax income gone.

Yes, NE, SE, the neighbourhoods of the working person. Blue collar, friendly, hard shift working, take the shirt off their back to help their neighbour folks. It's too bad they get a few bad apples where they live, but you make the best of what you got.

OIL AND GAS

So I just read that oil hit $104.XX a barrel yesterday, WOW. Alberta will be swimming the dough. That's GREAT news for RE prices, sales and demand. The bad news is they are predicting $1.40/l gas! Ouch! My advice, buy in Calgary, AVOID driving take the transit. Maybe even sell your car now while there is demand for it. haha.

Mike

fisherman - No matter what, make SURE you go with a realtor you are comfortable with and "on the same page" with. Area specialist realtors are great, but it doesn't mean you can't use a realtor whom your more comfortable with and doesn't usually sell/buy in that area. I saw a place for sale by Gordon W Ross in Haysboro. That's a weird community for him IMO. Some big name realtor names even can act as a NEGATIVE on your property too. I won't list names but when I see a property listed by Realtor X, the I know it's most likely not priced competitively.

With the listings going up quickly it should soften demand and prices as well. I don't predict negative prices, just slower growth till inventory softens again. Not sure why there are so many listings right now, it would be interesting to do a poll on that.

Strathcona is a nice area, underpriced and offers big homes close to the inner-city. The older part is a little more attractively priced and closer to DT. Good area to buy or hold in. I've heard the commute out of the hill is getting bad on Bow and 17th. True? If so, that will affect desireability there. The new C-Train West will have a station at 69th and 17th ave in 2011/12.

My prediction is home prices have corrected and are "near" the bottom of what they will be before going back up. The Alberta economy looks like it will be strong for another 5 years at least, oil prices keep going up and demand out strips supply. Nat Gas is going up to nice profitable levels again so Nat Gas companies can drill and explore. The East is getting hammered economicly which means more migration to Alberta is in the cards. Even with high rents, people will still come for a better future. Those who lived in Ontario in the 80's and 90's recessions know it's not fun to "stick it out".

Mike

One of A Kind said:  right now we rent at a $1000 a month and have living expensives of $500 for food $300 for gas for the car. Then there’s heat/power for the house we rent it really does not leave to much left. But we manage to save between 300 to 400 a month towards a down payment.

Congratulations on still being able to save $3-400 per month towards a down payment, that's good. You could add more to that if you look at what you are buying and how much it's costing and where you are driving. I don't know if you are 1,2 or have a family, but $500 for food, that's high. We spend $150 a month on food for 2 and $50 a month for gas. But we are careful of where we drive and what we buy. If it's not on sale, we don't buy it. If it's reduced, we will pick it up. Even if we don't need it just yet but will in the future.

If you can manage cutting down the $800 a month on gas/food to $200-350, that would give you $750-$1000 a month towards your down payment.

Tips. I eat noname Mr. Noodles for lunch daily, my wife makes and packs her lunch daily. We go out to eat 2 times a month but spend $20 on a meal for 2 (Entertainment Guide). Walk or transit all we can. Buy gas at discount stations only. Drive an economical car (Aveo). Use energy eff lights, have the heat set lower, etc. It all adds up. :)

As a suggestion, ask yourself; if we could move into a home that we could walk to work and shopping, could we lose that car for a year or two (no insurance $, no gas$, no maintenance $)? If you owned a downtown condo, would you need a car or just a couple of bikes?

BTW, Motorcycle insurance is CHEAP too, we own 2 bikes as well and pay $98 a YEAR for insurance. MUCH cheaper than $1100 for our car.

Mike

We are quickly approaching record levels of inventory for single family homes and condo's (if not already there).  In addition, sales are down roughly 40%, plus CMHC is reporting that residential construction is still near record highs (over 13,000 units currently under construction in Calgary, in addition to the ~9,500 old criteria MLS listings).

If prices are so high that we have too much supply, and demand is substantially less, then it appears that the current price point is not the one to maintain a sustainable equilibrium of inventory.

I expect that inventory is going to be at least 30% higher than our previous record high of inventory at some point later this year.  In this scenario, we may see yet another 10% decline in house prices later on this year.

The economic fundamentals in terms of house price to household income (should be about 3 instead of 5), and price to rent ratios (should generate better cash flow than safe investments like GICs and bonds) are still so bad that as a potential first time buyer I will choose not to buy until there are better fundamentals.

The conventional oil and gas industry is in a recession due to drilling being down 30% or 40% in Alberta, and with house sales down 30% or 40%, it is not hard to envision a recession in the residential sector as well.

Mike L, where are you living that you only pay $98/year on motorcycle insurance?  I thought those days were long extinct even in Sask.  If you live in Vancouver it's even worse than Alberta for motorcycle insurance.  I had a 1982 650 suzuki 2 years ago in Vancouver with no collision coverage and had my bike license almost 15 years and i still paid over 100/Month not per year.

$500/mth for food is probably the average where I don't know too many people who can do $150/mth for two.  When we lived in Vancouver we cooked every single meal, packed lunch and I was being very frugal and it still cost us $300/mth.  Sure you could do Mr Noodle every day for lunch but those arteries have to be almost plugged up by now.  Plus a guy a like me needs at least 3 of those to feel somewhat full and I'm a small guy.  And don't you get sick of eating that every single day?

Transit is defintely the way to go!However not everyone can get cheap auto insurance.  Some people have had misfortunes and now their insurance is pricy.  I only pay 600/year but I don't have collision insurance as my car isn't even worth insuring.

Mike,

I forgot to comment on the state of Bow Trail. The widening of Bow Trail being open for traffic has improved things greatly. Traffic is flowing again.

Radley77 - Nice site. I've book marked it and studied much of it in indepth before I replied below.

Unlike Mutual funds, stocks, bonds, RRSP's and offshore investments you can't really lump real estate into the "same" catagory. Many purchase a home not for "investment" but for "life". A home is a necessity (buy, rent), stocks are not. You can't live in your financial portfolio.

Your conclusions are very intelligent and thoughtful. Although I reserve the right to see them a little different. You love charts and graphs (I do too) but I feel your not seeing the forest for the trees, you are looking "too indepth" into things and searching for any micro spec that might be there.

I think it's near impossible to "analyse" accurately real estate trends. Too many variables, choas theories, unpredictable markets, unassociated influences, vastly different RE products (even each property IS different) you name it. That's why looking too close you can lose prespective. Although again, I do enjoy all the charts, data and numbers I can get my hands on. :)

I believe (and I'm putting my money where my mouth is) the Calgary market "feels right" overall. Strong employment, strong wages, positive future, growing economy, positive influx of people, the oil sands will be a trillion dollar long term project, the right provincial government, it all "feels good".

One MUST remember that:

A. If we are going to enter a recession then it's bad news all-over, not just in RE.

B. If homes fall in price, then other investments will fall too.

C. Making "Easy money" is mostly over. It's hard to make a lot in a little time today. Or so it seems.

D. Crashes, same word, two different meanings: Stocks crash 70% down (in 2000 a 70% (or so) drop of the NASDAQ composite index). Homes, 20% (worst ever, Japan 1980-2005.) +5 to -10% in USA today ( worst: Massachusetts fell over 10% in 2006.) YOY. Worst case synario here, what would you choose? Lose 70% of your investment or 20%?

E. Not every home goes down, not every home goes down the same. And the opposite is true as well.

Even in positive RE times, like Canada's West is experiencing, it is HUGELY important to do either/both:

1. Buy a home that you want to live in or a location that you love. That's what a home is for.

2. Even IF your not looking at it as an investment, LOOK at it as an investment. You'll sell one day and you'd be happier making $200,000 than $50,000. Or on the flip side, making $1 over making -$25,000. And don't forget, RE is the only Tax Free investment out there. (primary home, 1 year lived in date).

Love your home because it's YOUR home and you EARNED it. It's an big achievement in life to own a home.  It brings memories, pleasure, satisfaction, comfort, and security. (notice that "money" wasn't in there).

http://upload.wikimedia.org/wikipedia/en/a/af/Time_Magazine_June_13_2005_Cover.jpg

Data is GOOD, fun and I love it too. But too much data = Analysis Paralysis.

Yes, even in a down market you CAN make money in RE, just buy the "right house" in the "right location" for the "right price". Don't be "picky" about community, or the home or the location if it's a stand out good invesment. Doing the above = when you turn the door knob to enter your new investment you already made money on it.

Hope that helps anyone else who reads it. And Radley77, great site, love your work, keep it up!!

Mike

Hello Everyone,

I have been watching and reading this blog for quite some time, and rarely (if ever?) do I offer my opinion.

As far as migration numbers are concerned, I have friends from Calgary/Edmonton/Red Deer that chose to leave Alberta a bit better than a year ago.. about the time that the market hit it's peak here in AB. They left here to cash in on the cheap houses that Saskatoon had, and as of last week, had made so much money on RE investments in AB, and then in SK, that too a person, they all think that they will return, later this year (SK is having another hot spring).

I believe that in comparison, AB has far more to offer than SK, and with the ability for most of the people that moved to return to AB, grab their old house in AB, and have a fraction of the mortgage they had prior to leaving.. a number will do it.

thoughts on this?

A recent article in a Red Deer area paper commented on the undervalued prices in Central AB homes, and that there is an anticipated increas in home prices between 10-15% in Red Deer this year, and 8-10% in Innisfail (just south of RD 10mins, where I live, and currently have a home for sale).

The media plays an important role in the drive of this market..

LJ

Oh, and I failed to congrtulate you Bob on hitting 910km.. quite an achievment.. and with snow the last couple days, I hope you had the chance to come closer to your goal of 1000km.

LJ

Rent vs. Owning.

----------------

The other side of the coin.

I've read a lot and seen alot of data on Rent vs. Owning, but every one of them fails to point these facts out to you.

You can't control what your landlord charges you for rent. Our rental history Eg.

2000/1: Rent 1 bed in Kensigton $425

2001-3:Rent entire 1/2 duplex inc up/down in Charlswood 3-Bed $725.

2004: Rent in Erlton, 1 bed apt. $580

2006: (friend) Rent in Glamorgan, 1 bed apt $900.

2007: (friend) Rent in Glamorgan, 1 bed apt $1300 (as above).

2008: Rent increase (as above).

What we are seeing here is you can't control rent costs. They don't remain consistant, even over 3 years. And they don't go down. Many get $300/mo increases, even $1000 mo increases.

Thus, many data sets say "it's better to rent than to buy", BUT, they completely fail to take into consideration your rent won't remain the same for 25 years. $1300 rent in 2007 = owning a home in 2004/5. In 2004, if I used my current rent of $580, the Rent vs Buy calculator would tell me to "KEEP RENTING 100%". 2 years later, it would say "WHY DIDN'T YOU STOP RENTING AND BUY!!"

:)

Mike

Radley77 - I'm going to have to disagree with you on your recession points.

The conventional oil and gas industry is in a recession due to drilling being down 30% or 40% in Alberta, and with house sales down 30% or 40%, it is not hard to envision a recession in the residential sector as well.

FYI and all those here - Conventional oil (light sweet crude) has been in a decline for over 25 years in Alberta. There isn't many pockets of it left anymore and it's hard to find. So it's not surprising that drilling rigs are down. It's EXPECTED. Drilling rigs are ONLY used for this purpose, NOT for oil sands discovery or collection.

Natual Gas has been price depressed for almost 2 years, BUT, prices are going up very well. Nat Gas is up over 59% since it's low in Sept 07 of $4.42 per GJ. It has been climbing since and is currently at $7.42 GJ.

Natural Gas IS very important to the Alberta economy. Over 80 per cent of Canada’s natural gas production is from Alberta. Alberta produces five trillion cubic feet (Tcf) of natural gas per year. In 2006-07, the $12.26 billion in non-renewable resource revenue accounted for over 30 per cent of government revenue.

As Nat Gas prices rise, it only helps an already great economy.

Mike

Radley77,

those are huge numbers, 13,000 + 9,500 and add whatever the speculators will add to the market. Also people moving back to their home province, Sask, Newfies,etc could put lisitngs that are listed throughout the whole year at over 30,000. With interest rates and economy staying relative, I expect an average of 1200-1500 sales each month on average to cut into this inventory.

But this will definitely lead to all time highs in inventory.  I wouldn't be surprised to 15,000 at some point this year (late summer)

To eat in this inventory, there are really only two types of buyers, the rest of the sales will come from people who tradeup.  First time buyers and people immigrating here from other provinces and countries.  Interprovincial immigration needs to be reversed.  I  expect Eastern Canadians (Ontario and Quebec) will be moving out west because manufacturing is going into the toilet.  A big part of manufacturing has no future in Canada, I am sorry to say.  But in the west, we have what the world wants.  Many Eastern Canadians will soon realize that not only do they have no future in manufacturing, the same goes for their children.  Many will move west. And some will buy.

As for first time home buyers, prices will need to drop a bit for them.  But as I have mentioned before compared to last year affordability is better this year to buy.  Since June 07, interest rates are lower, wages have gone up and house prices are at least 40k lower. Even with that I expect 08 to follow a similiar path to 07, probably not as high average price in June, and with a possibly lower price in the fall 08 than 07.  But with builders slowing down, inventories should get cleaned up to a healthy balance next spring.

One thing I will say is that what is happening down south does give me some concern.  One just has to look at Phoenix, a sister city of Calgary.  I believe 3 times the size.  It had a housing boom a few years ago and now they sit at about 50,000 listings.  And this is a place with great employment, sports teams, lots of money coming in from people who retire, golf courses, great weather year round.  Subprime is the biggest issue here but it does make one think about RE in Calgary.

All in all, if one is buying a home just ask yourself why you are buying. Every market has its ups and downs RE included.  But by owning my own home I have a pride of ownership that I can not put a price tag on. Good luck

High oil spurs record drilling

I want to point out that prices of homes are going to Rise more. I talked with some of my friends who work in the real estate area and the ones in the oil industry and they told me this. So if buyers think that should still wait,I think they'll be priced out forever if they don't start buying now.Here's the info in Calgary Herald: High oil spurs record drilling  http://www.canada.com/calgaryherald/news/story.html?id=94fb46ad-f76a-41da-89fa-58fe4d2ba006&k=76798

I don't want to be a skeptical here but we have to be realistic. Regardless of which market we are in, market always will behave based on supply/demand rule. Right now, with the excess inventory in the market, I don't see how the prices will go up.

I believe that a strong marketplace should not require marginal buyers be fearful of being priced out of the market.  

This illustrates the high sensitivity to economic shock required to enter the Alberta real estate market.

Under these circumstances, wherein the average person cannot afford the average home, there is a great amount of fragility in the market.  The US housing crash should serve as an example to what happens when house prices outstrip the ability of the average person to repay the debt.

John Said: "http://www.canada.com/calgaryherald/news/story.html?id=94fb46ad-f76a-41da-89fa-58fe4d2ba006&k=76798 "

Excellent article! I forwarded it to my wife's work to read as well.

Vinnie said: " supply/demand rule. Right now, with the excess inventory in the market, I don't see how the prices will go up. "

I agree, supply/demand rule. But it doesn't mean it applies to all properties, just "available properties". Some properties are low in supply, some high. The key is to find those "low in supply" that are being price "affected" by the "high in supply" types of properties. :)

Radley77 said: "wherein the average person cannot afford the average home, there is a great amount of fragility in the market"

Yes, we definately need the average person to "get into the market". BUT, this doesn't mean a SFH only. In Toronto or Vancouver, the average person cannot afford a home. So they enter the market with a condo or townhouse. It's an accepted lifestyle in Toronto to get into the market, it will be in Calgary too. Then in TO, you move up to a small home. It's "weird" thinking in Calgary, but completely normal elsewhere. That's one of the BIG reasons why the prices in Calary corrected and went up 100% (oil price was the other), Calgary SFH homes were TOO CHEAP. The average person could easily afford a SFH home here pre-04, which was an abnormal situation to say the least. When Calgarians realised this, they bought too, creating a RE boom.

But I don't think the average Calgarian saw this as they were biased on what was "normal price" as it was all around them. But anyone from a big city moving to Calgary saw it and bought.

It is compairable to Mexico real estate. Mexican's saw their real estate as expensive, but forigners saw "$100,000" for oceanfront and said, "man, that's cheap".

Eddie Van Halen - "15,000 at some point this year (late summer)"

Humm, that would be interesting forsure. 15,000... It's possible. But what do you think the makeup will be? 60% condos?

vinny said: "where are you living that you only pay $98/year on motorcycle insurance?"

Calgary. I own a 2007 Suzuki DL650 and my wife a 2006 Kawasaki Z750S. I get better gas milage (500-600km's highway), she has more hp (110hp). haha.

I do eat other things, but I do enjoy Mr. Noodles. Usually a shopping trip contains about $50 of the basics, meat, cheese, milk, fruit/vegs and what's on extreme sale or reduced. We stock up big at Superstore's $1 Buck deal days too.

LJ said: "and rarely (if ever?) do I offer my opinion. AB has far more to offer than SK, and with the ability for most of the people that moved to return to AB, grab their old house in AB, and have a fraction of the mortgage they had prior to leaving.. a number will do it.

"

Post your opinions, they are good! AB/SK - Sounds like a lot of work, uprooting and risk. Sask RE is IMO, risky, more so than Vancouver RE. I read Sask had a 43% reduction in new home permits for Jan.

If I remember it right, Vancouver RE boomed, then Calgary, then Edmonton, then Sask, Halifax and next, Winnipeg. But you'll notice a trend, each boom after the other was shorter in duration.

Mike

Mike,

I might have to look into another motorbike.  Maybe if I take the safety course it'll drop my insurance?

I just got another email notice about a new listing.  I always get excited to see if it's something that might suit us.  Of course when i pop it open the house looks amazingly familiar.  Then I realize this is the 2nd time this realtor has taken this same house off the market and re-listed lower.  I wonder how common this has become.  I wasn't consciously keeping track but it happens so often that I actually know the names of a few realtors that do this religiously.

Bob you said this happened lots in January and possibly more.  Is there really any well to tell how often this is happening other than someone like me who sees the same house come back up for cheaper?  I know there is nothing wrong with this and I also know the reason why the realtors do this but it sure makes it difficult for monthly comparisons.

Vinny; It's a labour-intensive job to go through every listing and check to see whether it has been re-listed. If I get a chance, I'll try to get some stats on this.-Bob

Here is something else interesting.  My realtor just told me this morning he got an offer of 195 on his 235 condo and it's happening more and more.  Could that be an indication of it shifting in favour of the buyers?

Mike,

just some stats from creb.com

Feb 07 4,288 listings

      3,434 sales

Feb 08  10,652 listings

       2,236 sales

When I think about it, there will be probably be more than 15,000 listings sometime this year. There are more listings coming this year than last year and less sales than last year. Could even hit 20,000. We will have to wait and see.  As for percentage wise, I would put houses at 60% and condos at 40%.

I was looking at Saskatoon MLS, they have less than 400 properties listed.  No wonder why they are booming.  Supply and demand comes into play with every market.

Another thing that can impact the market is the mortgage approvals. Bob, is there a stat on the number of failed transaction in Calgary (ie house got C/S but put back into market due to failure to get mortgage approval?). I've talked to several guys in the R/E industry and they said the banks now are very conservative these days.

Vinnie; When a deal falls through, there's no way of knowing what the condition was. It could have been home inspection, financing, or a multitude of other possibilities. -Bob

vinny said:  "I might have to look into another motorbike.  Maybe if I take the safety course it'll drop my insurance?"

Check out this site: http://totalmotorcycle.com/BBS/index.php and YES, taking that MSF course not only will save you $$ on your insurance, but make you a great rider too. I recommend Too Cool Motorcycle School.

About what's happening on the market. I can't tell you specific details as I'm the "private seller", but, I've had MULTIPLE offers on our house now. Our home is "sold" till the deadline for the last offers to come in, but so far the offers put it $130,000 over asking thus far. Unfortunately as it's a non-MLS/Realtor sale it won't affect the CREB numbers or even show up in the stats. This proves that there is A LOT behind the sceens we don't see.

Hold in there with your home, sales are picking up, even if the stats don't show it. Are you looking to move up? If so, where abouts?

Eddie Van Halen - "houses at 60% and condos at 40%. Feb 08  10,652 listings       2,236 sales"

I'll bet that those %ages flip by the end of the year as the condo buildings go more and more online. As my home is for sale, I call tell you most of those listings are NOT SFH in the inner-city. There sure isn't a lot of product to choose from yet around here.

RE Saskatoon MLS: Is 400 average? Is it a little less or more? I don't know. Saskatoon isn't a big town.

News: http://canadianpress.google.com/article/ALeqM5gaL6dVaFCGbroDA4ljVlQsT0eUkQ

This is REALLY encouraging. If you think Canada will follow USA into a recession, well, maybe not...

Canada gains 43,000 jobs in February while the U.S. loses 63,000. CIBC senior economist Avery Shenfeld said Canada avoided following the U.S. into the 1973-75 oil shock recession and the 2001 technology slump, and will likely avoid the current U.S. subprime recession. Calgary unemployment rate is now Feb: 2.8% (Jan: 2.9%)

Very good news.

Mike

wow! Mr. Noddles , I have to say we believe one thing we will never cut back on is Food to get us a house! I think if things get way out of hand in housing we will just pack up and move to a different location where we can afford to live. The quality of life is more important then having all the must haves in life.

I commend Bob for making a living in RE but also balancing lifestyle! I hope he continues to go sking in the winter and stays fit! Thats our goal too!

we should live life,enjoy it and not age by worrying about housing to the point that we don't even enjoy what to eat. Com'n Mike, you want us to eat noodles, cut down on our quality of life to live in an overprice house.. why no one admits on this blog that inventory is way out of hand and people are panicking to sell. why else the huge # of homes being listed daily. it is a visious cirle, it will only get worse. anyways, the more i read about the housing market the more i care less about buying, i have calculated to the extreme and IT IS NOT AFFORDABLE... it is an individual choice, it varies from one person to another where they are in life in relation to buying a home, we can't be all lumped into the same mold.. I WANT TO LIVE, ENJOY THE TASTE OF FOOD, SMELL FRESH AIR AND LIVE, HAPPY.. NO MATTER WHERE, IN A MANSION OR A TENT.. HAPPINESS SHOULD NOT BE ABOUT SACRIFICING THE SIMPLE THINGS IN LIFE, NO ONE KNOWS WHEN THEY GO. ENJOY LIFE ALL.. don't stress too much, what good a house if your health is in bad shape... if you can't afford a house now, why not wait.. hey it's not gonna get any worse...

Wow, so much going on, I have to admit that I had missed this blog a bit.  The opinions are...interesting, lol.

Mike, your statement about "I eat noname Mr. Noodles for lunch daily, my wife makes and packs her lunch daily."  has kept me laughing all week.  You eat Noname Ramen noodles for lunch daily?  You know those things have, like, 1/3 of you daily fat intake and 3/4 of your daily sodium intake, right?  Personally, I think people can save even more money for the home ownership dream if they stop paying for food altogether.  Restaurants throw out lots of half-eaten food every day, I think that's a goldmine of savings right there, lol.  Seriously, ramen noodles every day??

Funny video:

http://www.youtube.com/watch?v=TxylHPnoloI

My favorite lines:

"You've taken hold of the American dream - a big house, nice yard, and a mortgage payment that eats up 60% of your gross household income."

"But hey - top ramen tastes a lot better when you eat it off of a granite countertop."

And Mike wrote:

"Crashes, same word, two different meanings: Stocks crash 70% down (in 2000 a 70% (or so) drop of the NASDAQ composite index). Homes, 20% (worst ever, Japan 1980-2005.) +5 to -10% in USA today ( worst: Massachusetts fell over 10% in 2006.) YOY. Worst case synario here, what would you choose? Lose 70% of your investment or 20%?"

So let's clear up some mistakes.  +5%??  Where exactly would that be (going by the Case-Shiller index)????  The worst is not Massachusetts in 2006.  Phoenix, Vegas, L.A. are all down over 15% in just one year.  Miami is down 17.5%.  And last time I checked, not a single economist sees any upside to housing until at least 2010.  Just trying to lay the facts out for people to make their own decisions about.

Yes, the stock market is much more volatile.  That means there are bigger (and quicker) drops.  That also means there are bigger (and quicker) gains.  Always keep in mind that stocks have historically outperformed RE by about 7 to 2.  In the end, RE can only go up in relation to people's incomes - in the end, everyone needs somewhere to live and has to pay for it.  So while "You can't live in your financial portfolio", you also can't spend your home.  Results in the whole "house rich - cash poor" phenomenon that is so common today.

Anyways, this is all old information.  What is new is that everything is rosy in the Calgary real estate market.  DOM is down, and it has nothing to do with the ridiculous number of de-lists and re-lists going on.  Prices are up, but of course still a good $40,000 down from last year's peak.  The percentage of vacant listings is slowly decreasing - but of course the actual number has soared to the point that there are now almost as many vacant listings on the market as there were total listings last year (2,686 total at end of Feb 07; 2,496 vacant as of Friday).  What other stats can I pick and choose from and make bullish comments on, hmmmm?

All I know is that I'm told we are now (finally) in a balanced market.  Unless of course you're going by the traditional definition of a real estate balance.  Because 4 months of supply is not "balanced".  I'm not even going to mention that given how March is looking, we may hit 5 months supply by the end of it(projected 9,474 total listings with 1,891 projected sales).  There's that pesky issue of half the sales and twice the listings again.  My only actual question to the cheerleaders is, where do you expect this inventory to go??  Just disappear quietly???

And lest I get labelled as a "bitter renter" who's angry at myself for not buying when I had the chance...I actually am looking at getting a place this fall.  I'm feeling comfortable in my situation and have been running the numbers a lot, and I have a feeling that the market will be in my favor, lol.  But I am sure angry at missing out on my chance, RE is (supposedly - see comments about a different sales mix below) up a whopping 10.2% since I moved here a year and a half ago.  Wow, did I miss out!! (How do you show sarcasm on a blog post?).  And I (like Carioca Canuck always wrote about) have been making a fantastic return on the huge spread between my rent and what my mortgage payments would have been.  I have never said it's always better to rent than buy - but it sure as hell has been since I got here.  As for where we are right now - why buy something today that you can get for 10% less in six months??

Long story short, I think all the comments about the prices "rising" due to a different sales mix are correct.  Some people may think that sales are better than the stats reflect, but I can tell you firsthand that practically no starter homes in the neighborhoods I've been watching have moved.  Actually, many of the ones that disappeared last Nov/Dec are now starting to pop back up again, lol.  Play my favorite game, bookmark a property and put the price in the bookmark title.  Then check back as it sits and watch the price come down.  Price reductions (advertised or not) are not supposed to happen in the middle of March, lol.

If I didn't know better, I'd think that the average family can no longer afford the average home.  But oil is over $100 bbl, so just remind them of how rich they are this summer when it's $1.40 a liter to fill the car, lol.

So any thoughts on what magic trick is going to make all this pesky inventory go away??

I cringe at the state of many of my generation.And I apologize to those of you like me who do not resemble the following statements

We expect to live the lifestyle our parents lived only when they reached their late 30's or 40's. But we want it now. We are the Instant Gratification Generation. I hear the same unaffordability comments at work from the people who throw away $15.00 a day for restaurant lunches, plus another $15.00 a day for Starbucks coffees, drive their vehicles downtown and pay for parking even though they live right on the C-Train line. Go out for drinks a couple of times a week with work buddies, and order take out for dinner 3 times a week.

Oh yeah though baby I'm living the good life, I'm living the high life. I'll spend over $300 a week just for food and drink maybe another couple of hundred for that purse I want. And I won't get into the real estate market cause hey....I can't afford that 2000 sq foot house with all the brand new shiny things. I mean really I have an image to maintain and living in a starter house is just not acceptable.

PLeeeeeeaaaaaaaaassssssssssseeeeeee.

Okay all of you who think you deserve that lifestyle go ahead and jump on me. Let's hear the justification of the lifestyle described above.

For Mike, Bob, Carol and Al

Just found out from my building manager that the unit right next door to me. Precise comparable. Same size, layout, view, floor, and lack of renos since the late 70's like mine. Just sold for $18,000 more than I bought mine for last fall. Thanks guys for all your caring and support through this blog.

Heather said:  "...Just sold for $18,000 more than I bought mine for last fall. Thanks guys for a