DailyStats.ca

Too much supply on the market.  It just keeps building and building up.  What is happening in the U.S. housing market and finance industry isn't helping much either.

Real Estate prices is a local market. Everyone needs a place to stay and as long as there's "good" paying jobs, the attraction is there to be in Calgary. This means affordability, and sustainability. Though affordability can be argued both ways but for relevancy, for one to be here in Calgary, you either rent or buy or live in the shelter or the street. Most would choose the former two.

Agreed, Alberta is a good place to weather the storm.  Housing prices are not likely to see significant uptick but rather stagnant price movements in either direction.  The large supply of inventory should cause a short term movement down however.  Once that supply is eaten up I predict prices will stay sticky the rest of the way.

Something interesting to see:

http://en.wikipedia.org/wiki/Image:EconomistHomePrices20050615.jpg

Not that it is Alberta, but just to illustrate the coming "storm" that will cause a fair number of folks to hide in areas of economic stability (Alberta, Texas, Alaska...etc) with large reserves of commodities.

Just thought i'd add this in about what happened in Japan's (asia) credit bubble:

"The easily obtainable credit that had helped create and engorge the real estate bubble continued to be a problem for several years to come, and as late as 1997, banks were still making loans that had a low guarantee of being repaid. Correcting the credit problem became even more difficult as the government began to subsidize failing banks and businesses"  - Wiki

Just a few days ago the Federal Reserve and the Treasury (goverment) stepped in to bail out Bear-Stearns, accepting 29 billion dollars in liabilities.  It is predicted that this is not the only bank that will need this, eyes are turning to fellow bank Lehman Brothers and several other smaller regional banks.

Will we see the coming collapse of the real estate bubble throughout the western nations?  Starting as a big wave in the USA...

The report didn't sound so uplifting to me. An annual rate of increase of 3.1% is less than inflation currently is. The target price of $320,728 in 2012 is less than Condo prices last summer. To me the article says 'Soft Landing'.

 That condo report is ridiculous. So if you're trying to sell now, the trick is to wait through 2008 as the prices are set to rise 4.1%  Is that a joke???? Tell that to all the condos that have been parked on the market for months and months. Hey maybe they should all increase their prices! Ha!  

I understand the Herald needs to try and spin-positive on Real Estate, and they are really just parroting this garbage anyway, but it takes away the credibility of the paper to provide accurate information.

They should have saved this story for April Fools Day

XCalgary; It's a good thing we have this website to set people straight! Seriously, the Herald will only quote sources who are accountable. Write a letter to the editor if you don't agree with a story. I've had numerous letters published over the years when I disagreed with something that the Herald printed. You'll have to give your name, however. Anonymous comments mean nothing to a media outlet. That's how they maintain credibility. Answer this question: Why are people so reluctant to go on record? If you truly feel passionate about an issue, would you not be willing to stand behind your words?-Bob

XCalgary

What do you think of the Herald when they run a headline that says, " Average price plummets $20,000." Yet they don't mention the median price barely moved?

Great to see the blog back.  Thanks Bob.  The idea to track the process of a sale from the seller's perspective is a neat one.  I'll watch with interest.

Was slow to get back to commenting this round, but did want to say, Heather, that its great to hear all is well with your place and that you are enjoying the 'intangibles'.

Mike - also neat to hear that you sold your place - good for you.  I'm curious to know how you are finding the market from the buyer's point of view - we are looking too and see a real mix - some very pricey places that have come down substantially and some others that seem stuck at last summer's price despite being, in some cases, nearly a year on the market.  Some places that seem to be  great value and others are unbelievably bad - in the same price range.    We've seen one multiple offer situation first hand, and other places that have had heavy open house traffic but no offers for months.  Pricing and marketing seem to be extremely variable.  Maybe this is how the market has always been (Bob?) but my impression is that it is particularly wacky right now.

Carol; There's still some uncertainty among the "elective" buyers. Those are buyers who don't have any real need to move. If you have a job transfer, or you require a bigger place because of kids, those people are buying. And we're coming off two wacky years and that still has some people feeling "off balance."

Just today, I had a deal firm up from buyers who are moving here because of a job transfer. Now their parents are moving here, too.

Glad to see you're back! - Bob

Janice, I call that bad journalism as well.  I guess the problem with what we read in local media is that the reports are either all one way or another.  There often is no balance in the article at all.

This being said, positive stories are far more common than negative ones.  Possibly because Calgary's real estate story has been more positive!

In any market that has seen huge increases in a matter of a few years like we have, there are bound to be ups and downs in this new and uncharted territory.  Unless interest rates rise and/or Alberta's economy goes belly up I do not see a crash in RE.

The fallout with YOY losses basically affects speculators and flippers.  They would lose money if they tried to sell now and I don't think too many people would be feeling sorry for them. I don't. If people bought their home with the intentions of living in it for a few years, they will be just fine.

Hello all, Glad you hit your goal this winter Bob, and glad the blog is thriving again.

My take:  The buyers are going away.

Last February with 3,434 buyers on 3,942 listings.

This February, there is 2,236 buyers on 5,520 new listings.

To me, that means we are headed for significant downward price pressure, and I think the typical Jan-Jun price increase cycle of Calgary is going to be short-lived and likely reversed this spring season.

Im strongly debated selling my property now with a 90 day possession date, and waiting till close to see what has happened.  ("Selling short" in financial market terms...).

Anyone have any thoughts on that strategy?

Ether; It's good to have your input again. If you do "sell short," make sure you get a very healthy deposit. If indeed the price drops a lot, the buyer would be tempted to walk. -Bob

Bob,

In regards to your very last comment about the "sell short" and buyer's tempted to walk away in a down market I have been wondering about that scenario myself.  Although this is very hypothetical in theory you would think someone would walk away if they put 10k down but the market suddenly plunges 40k.  However have you ever seen anyone in your career walk away from 10k?  

Vinny; I've never seen anyone walk away from a firm deal. If it did happen, however, the seller still has the option to sue, but you have to consider your legal costs.  -Bob

I also feel the market is going to take a small drop but highly doubt I see a sudden plunge though.

Sudden plunge is unlikely as the local economy still remains strong.  Steady price decreases will happen however similar to what the article Bob posted said.

Any guesses on housing inventory come this summer?

Carol said: ""Mike - also neat to hear that you sold your place - good for you.  I'm curious to know how you are finding the market from the buyer's point of view - we are looking too and see a real mix - some very pricey places that have come down substantially and some others that seem stuck at last summer's price despite being, in some cases, nearly a year on the market.  Some places that seem to be  great value and others are unbelievably bad - in the same price range.    We've seen one multiple offer situation first hand, and other places that have had heavy open house traffic but no offers for months.  Pricing and marketing seem to be extremely variable.  Maybe this is how the market has always been (Bob?) but my impression is that it is particularly wacky right now.""

Hi Carol,

I wasn't intending to post on Bob's blog ever again (as I've asked him serveral times to remove harassing posts and delete some person info I've posted, but he don't seem to care) but your worth answering here.

Yes, sold the home, and very thankfully made a lot on it too. $400k in 2 years, amazing. But your right, we are looking to buy in this market now. At first, we were looking at cheaper homes (bank the money) around the $500k mark rather than going after the $1m+ ones we would have upgraded to in a "normal" market. But while the market is "very uncertain" out there, I get the feeling that it's not going to crash like the Albertabubbleblog doom gang* predict (or hope they are never true, *imagine how many families would be ruined if they got their wish). So today we are going to see 4 $935-1.3 million dollar homes. It might be steady at 4% increase, but I see it this way. Alberta is a great place to ride out a storm in. Maybe we are different, maybe we are not, but we DO have the resources to sell that powers the Canadian economy, we have the jobs, we have the hard-working people of Alberta too. Alberta has a future. And about the Royalty program? I don't even worry about that anymore, did you know in Norway, the royaly there is 79%?! Yes, 79% of what you take out is the gov'ts. Here, 3.5%. We have the lowest (by far) in the world and the oil companies know that too.

Carol, your observation is the same as mine: "some very pricey places that have come down substantially and some others that seem stuck at last summer's price despite being, in some cases, nearly a year on the market.  Some places that seem to be  great value and others are unbelievably bad - in the same price range."

But I have noticed the really good properties are selling, and there is a LOT of junk on the market (again) like in 2006. That's the key, find the good stuff.

We'll be here in Calgary for a while so I'm looking at the next 5 years before I sell that $1m home. Then I'll look at BC RE after the 2010 Olympics (but not before).

The ironic thing I thought about on Earth Day today is. I am a big conserver of energy, gas, oil and recycle 75% of what we use. I even vote Green Party (ha), but, by doing all that, am I hurting the Alberta economy? Should I be buying a Humvee to keep the oil and gas in high demand??

Mike

Carol, this is for you:

Here is something really interesting that I am having a hard time disproving:

I really think there is some scary accurate connection between the oil prices and Calgary RE. Look at both charts side-by-side. Look when oil goes up, Calgary RE goes up, and visa-versa. It matches for all the booms and busts for the past 35 years. Even with the last 3 "weird" years of RE here, look at the last 3 "weird" Oil price years too. Is the current market "correction" resulting in just recent "correction" of oil prices?

Could it be this simple? Do people over analysis data?

These charts do not take into account (or seem to care at all) about current inventory levels, affordability, employment rate or income.

Oil:

http://zfacts.com/metaPage/lib/zFacts-Gasoline-Price.gif

Calgary RE:

http://www.investingintelligently.com/wp-content/uploads/2006/09/calgary-house-prices-1973-2006.jpg

So, for you Carol, something to think about. Do you think oil will be above $80 a barrel next year? If so, history shows, home prices will rise in Calgary. If you think like the oil futures do that oil will be $135 a barrel next year, then, we are looking at another round of good increases. Depending on your conclusion, that will give you an answer to the possible future. For me, I'll put my $1 million on the table for a Calary home and say, oil will be a minimum of $110 next year a barrel.

Mike

Carol,

You may wish to consider a short on Boardwalk (bei-un).

http://finance.yahoo.com/q/bc?s=BEI-UN.TO&t=1y&l=on&z=m&q=l&c=

They have a lot of exposure to the Alberta market and it may be a good hedge against buckling prices. It has already come down a lot over the last year - I think it may be a good leading indicator of where prices are headed. Although I got stopped out last week, I believe there to be more downside profit to be had.

George

Worldclass...

I think the inventory will stay high for another 6 months. We have to muddle our way through all these investor/speculator properties, but it will happen and by January the market will be firing on all cylinders. There are going to be some terrific opportunities over the next 6-9 months for buyers.  

Thanks George - the Boardwalk opportunity is interesting.

Mike - I bet we are looking at some of the same properties - inner city in that price range.  It would be interesting to compare notes off the blog - would you be willing?  (I wouldn't want to discuss specific properties publicly).

We are not at all worried about short term price changes - we plan to be in this next house for at least 30 years.

Hello All (and Bob),

Just had Mr. Truman in to take a look at my property, and to compare his opinion with that of another realtor that evaluated my property.  Its interesting to see how even realtors, with access to more information then we see (or at least its packaged a bit differntly - although certainly a lot is published here by Bob) have starkly different opinions as to the market to the same extent as all of us here have differing opinions.

Regardless, I can say that Bob is in real life as he come across here on this site:  A professional and courteous (and busy) individual.  

Thanks for taking the time to look at my property Bob, and we will be in touch.

Ether; It was a pleasure...and I still made it to the open house in time! -Bob

Mike

I actual made a graph of Edmonton house prices compared to the price of oil (WTI).  I didn't adjust for inflation.

http://img507.imageshack.us/img507/7738/hpvsopet3.gif

I think it has more to due with the economic benefit, ie investment, from higher oil prices rather than the price of oil directly.

World Class

Here is that RBC report.  

http://www.rbc.com/economics/market/pdf/house.pdf

hi all

We put in an offer here in E-town...after a year and a half of looking...it is in the SW area, about 6 years old.

Good day all,

I've got some thoughts on the fall out of the YOY decline.  I'd say that it is a good thing as it will push speculators out of the market and slow price appreciation.  I believe Edmonton RE was starting to bubble but the builders got overly aggressive and concerns about the various US bubbles woke people up.  The YOY decline is a sign that the market is taking these concerns seriously.  Once the uncertainty fades I see the market to start climbing again, but slightly below the rate of inflation to create small improvements in affordability over time.

Buyers shouldn't have fears about recession here in Alberta. No fears in Alberta.

Read here : "Earlier this week, Bruce Irvine, vice-president for business development and retention at Calgary Economic Development, told the Herald that with the fears of a potential economic downturn across North America, "Alberta seems to be a place that you want to weather the storm."

"Calgary is a very attractive market for investors because of the strength of the oil and gas business, new office space being created, as well as condo and other housing projects."

Canadian real estate stable despite U.S. turmoil

http://www.canada.com/calgaryherald/news/story.html?id=cf65de3b-19f5-45af-a165-5be7443f6209&k=65150

Calgary market shines as U.S. takes its lumps

http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=936cc5aa-1317-40a6-bf11-3b85addaca98

Carol said:  Mike - I bet we are looking at some of the same properties - inner city in that price range.  It would be interesting to compare notes off the blog - would you be willing?  (I wouldn't want to discuss specific properties publicly).

Sure thing! Bob has my email already so just write him and ask for it. No problem at all. :)

Neil said:  Mike

I actual made a graph of Edmonton house prices compared to the price of oil (WTI).  I didn't adjust for inflation.

Thanks Neil for those charts! Can you do one for Calgary too? Interesting how accurate home prices (move slower to the price of oil) but follow oil prices.

Mike

I used to be of the belief that High oil = good real estate value.  This is true in a way, however the high value of the CAD $ offsets this benefit.  And I think it has to do more with Nat Gas prices in AB than oil.  The reason we have this slump right now in AB is because Nat gas went down to under $6 and everyone stopped drilling.  At that same time, inventory started to creep up as oil industry workers were selling their homes and moving back to the East Coast, or wherever the work was.  And to add to that, workers weren't coming to AB for the O&G industry, for the same reasons.  However, it is changing a bit now, but I do think that Calgary doesn't have much steam left in this train.  We may level off, but I can't see us going much higher than it is now without some sort of correction first.