DailyStats.ca

Your stats are excellent but first-hand accounts of your experiences, like the one here, are by far the most meaningful. I would like to hear more of what you are experiencing out there on the "front lines."

What would've happened if the dream house had been sold before you got back to it? Would your clients have been disappointed?

Carl; They would've been disappointed if they had to pay close to list price. If you are not in a rush, something else always does come along, especially in this market where we have lots of new listings. -Bob

Wow, some very interesting comments from some of the regular posters on here (Al, Mike, etc)!

Mike, great comments on the CREB.  Again, I'll tell people to read up on the NAR in the states, the CREB is following their playbook to the letter, because they both think it's always a great time to buy a home!!  I read the monthly summary and I was just waiting to hear it...thank you Ed Jensen, Mr. "this is a great time for buyers to buy a home".  NO IT'S NOT, lol.  For all the reasons Mike listed: record inventory, sales nearly half of last year, etc, etc.  Of course, if Mr. Jensen said this, he'd be fired because his job is to represent realtors who don't make any commission unless volume moves.  As Bob's post shows first hand - waiting should (and more often than not, will) get you a better price.  And if the seller does find someone who will pay what they're asking, then there are currently 9,065 other sellers who haven't.  Again people - 9,066 homes for sale in Calgary metro - who does this benefit, the seller or the buyer??

Watching all the bull/bear nonsense since I moved here, it's always amazed me how sensitive people get over housing.  It's an asset.  Nothing more and nothing less.  It's price can go up.  It's price can go down.  Over the past couple years it's price went up for a variety of reasons (strong local economy, huge inmigration, looser credit standards, etc).  We are now going to watch prices go down for a variety of reasons (too much inventory, not enough buyers, speculators vacating,etc).  This is a capitalistic cycle (unregulated, it tends to swing from boom to bust because of human's basic nature of greed).

Al, I agree that the sales/new listings ratio is important, but it has a cumulative effect that is reflected in the months of supply.  Consistent months of anything less than 100% sales/new listings would result in a building back supply of unsold homes (ignoring the effects of de-lists for simplification).  I think both are important in their own ways.

Please keep in mind that I'm not saying there's going to be a "crash".  But there is going to be a reduction in prices (basic economics).  The $15,000 under list that Bob negotiated the price for his buyers is a lot of money - many months of the average person's rent, let alone the one month of waiting it took them to get the reduction.

I do have to disagree with the poster from Sheldon's blog though who wrote "The farther we fall...the more people you price back into the market, increasing sales and decreasing inventory."  While this IS true, people have to remember that home ownership is the highest it's ever been (as a percentage) in Canada.  73% of Albertans (according to the 2006 census) own their home.  This number will never be 100%, as there are many people who, for whatever reason, will not be homeowners.  So while decreasing prices will put more buyers into the market, we're drawing from the smallest pool of potential buyers there has ever been (and simultaneously with the biggest number of listings there has ever been).

And (not to pick on you) Mike wrote "We have to be MOST careful of the "negative heard mentality" or we will truely create that which is NOT there."  I agree, but we should also have been careful of the "positive heard mentality" ("real estate always goes up") that got us to these unsustainably high prices.  The mob mentality goes both ways unfortunately.

And a while back someone posted about a correlation between oil prices and housing prices in Alberta.  As anyone who's been will know, Houston's energy industry absolutely dwarves Calgary's in every way.  Here's an interesting piece I found on Houston, with a lot of eerie similarities to what people say about Calgary.

http://news.moneycentral.msn.com/ticker/article.aspx?Feed=AP&Date=20080402&ID=8428691&Symbol=BP

Something for the bulls:

"The energy economy is booming, there's no other way to describe it,"

Something for the bears:

"He said he and his wife, who works for foodservice company Aramark, had no trepidation about taking out a mortgage on the $160,000 home."

And something for both, lol:

"Still, home prices remain fairly stable -- and among the lowest in the nation."

Re: Headlines

I can't think of a better place to be than Alberta. It shows that we are "different."

Interesting insights into the Calgary (and I would think the Edmonton market). Things are the reverse here in St. John's, NL. Houses are being sold the day they come to the market often for more than list price. It was less than a year ago we were in a buyer's market and it switched to a seller's market in less than 6 months.

Larry; Nice to hear from you. What is the reason for the seller's market? Let me guess - oil. -Bob

Warren, thanks for the complements on the comments. Since I sold (and have little wish to be a renter again) I'm in the "buyers market" right now. I've noticed something "big" I think about our current flooded inventory market.

A. Inventory is in the suburbs mainly*. (My wife has offered to do a GIS map of inventory/community to see where the "whole picture is". *Coventry Hills 142, Tuscany 175, Sunnyside 26, Mckenzie Towne 227, Inglewood 48, Elboya 22, Evergreen 199. This shows to me, it's the owners in the suburbs who are moving. (Gas prices? Poor transit? No trees? Commute/traffic? Wanting to get closer to work? I donno)

B. We now look more closely at what the asking price is and "what would it go up to in the future".

C. Location is more important than before. A greater % of homes on the mls now have "issues" such as poor locations, small size, tiny yards etc.

Warren: "The mob mentality goes both ways unfortunately" 100% agree with you.

Great article posted Warren, it's interesting Huston vs Calgary... Maybe it will be oil that saves us from the true recession? Or will it just delay the inevitable.

Bob: Headlines in the business section today: U.S. loses most jobs in 5 years. Alberta economy sets employment record.

Chopper said:  Re: Headlines. I can't think of a better place to be than Alberta. It shows that we are "different."

Agreed. It does really show the black and white "difference" between Alberta and the rest of Canada. Will it remain so? Maybe.

Larry Hann" Re NL market. My advice? Buy as EARLY in the booming market as possible, for as much as you can (2 homes even better). Get out within 1 year and then proceed with caution.

Mike

To Mike,

You don't happen to post on Stockhouse.com do you?  There's a fellow under the handle of Mikerosoft a very intelligent poster on some companies in Calgary.  He is also into motorbikes.

If so I would like to talk more about the investments you are into as I would own the same equities.  It would be interesting to pick eachother's brains as it were on both equities and real estate in Calgary.

As for St. John's NL, I have an assistant from there and she said that the mini-boom is indeed due to the offshore oil prospects.  As well, there are a fair bit of people moving back to the maritimes from Calgary due to cost-of-living and being unable to adapt to the "big city" mentality.  She is thinking of moving back... I hope she doesn't.

Riskiest housing markets.

http://www.economist.com/finance/displaystory.cfm?story_id=10974135

Jimmy; Interesting chart. It shows the “house-price gap” is greatest for Ireland, the Netherlands and Britain, where prices are about 30% higher than can be justified by fundamentals. In the U.S., the gap is just over 10%. Canada is shown as one of the least-riskiest housing markets, and that our recent price increases can be accounted for by fundamental factors such as lower interest rates and rising incomes. -Bob

Interesting that the Old Criteria shows a drastic decrease in average and median prices, but the New Criteria shows that prices continue to slowly increase.  I guess inner-city properties hold up much better.  I think Mike has always towed this line in the past, and clearly correctly so.

I can only shake my head in some level of bewilderment at this point on the resiliency of inner city values.

Ether, if you look at the new criteria as of today or go to Findcalgary.ca you will see the average house taken a pretty big dip this month so far and the median price is the same as it was at the end of last month and is slowly being pulled downwards as well.

The thing that surprises me is that how slow it is going down considering the amount of listings out there.

Prices for real estate are always sticky on the way down.  We'd also likely get a small bounce-back lasting about 1-2 months in duration, after which the bigger price reduction will come.  This is the typical course of many real estate markets around north america.  Of course, Calgary's drops will be small compared to what has happened in the states as we are insulated somewhat by high energy prices and a strong economy.  We will drop but not as much.  Look out below though in Edmonton...

It is actually good that the prices don't drop too fast.  We need a healthy correction in prices and then some moderation as the market returns to balance.  If there is a big drop many of the good people will get hurt.  Those hard-working families who bought into the hype in the recent year are already upside-down on their mortgages (esp. those who bought in July 2007).  To see further large drops in quick succession will cause panic and mass exodus via foreclosure and other means.  

Those with a 40 year mortgage will realize that they don't actually want to live in said house for 40 years (or even 30 years with accelerated payments), especially if that house is worth far less and may be dropping further. All of a sudden the 40 year mortgage seems more like a 40 year agreement to rent the house from the bank. These people will choose to walk, and who can blame them...it makes sense.

Let's all brace ourselves and hope there is not a snowballing of price reductions.  Healthy correction is good, overcorrection is very very bad.

True Vinny, average price is slipping.  I have tended to view the median as the better indicator, but your right in that we cant ignore the averages.  I also share your surprise at the speed of the drop considering the listings out there.

I ask the question a little while back, and Im still curious if anyone is willing to share their experience on if they have ever had more then one realtor assess the value of their property, had a large difference in the proposed value, and then what their actual sale price was after they listed and sold.  Anyone have any experience in this?  

Very interesting stats so far this month...sales are a little stronger than I expected, but will still be 35% or more below last year.  But listings - wow!!  Almost 1,000 SFH in the first week alone!!  Everytime that I think it has to plateau, another surge comes.  If this is going to be a "normal" year and act seasonally - then this will get very, very ugly soon.

I realize that a lot of listings early in the month may be re-lists from last month - but if we continue at anything close to this pace, April will end by passing not only 10,000 but 11,000 total metro listings!!!  Does anyone still believe in a "spring bounce"??

Vinny:

Home prices are notoriously sticky (which is why housing corrections typically take sooooo long to play out and often negate part of the benefit of waiting as you may spend as much in rent as you will save on the price).

I remember reading a survey this spring that said 3 out of 4 Americans think that their home stayed flat or went up in price (?!?!?) over the past year, lol.  In the midst of the biggest housing crash in the history of the United States, most of its citizens seem to believe that it's only happening to other people.  The sad reality is that most people are horribly uninformed (this would be where I could go on a rant about how the mainstream media spends more time reporting on Britney than on the actions of the Federal Reserve).

What I find interesting (and Bob would have much more insight on this subject that I would) is how uninformed are most realtors??

The March CREB release stated that "Sellers should rely on their REALTOR for help while deciding on a list price, your REALTOR has an arsenal of tools at their disposal to analyze the market and find a fair and reasonable price point for the seller". (Note: I didn't capitalize the word "realtor", the CREB does).

Read that statement again, lol.  An "arsenal of tools" to "analyze the market"??  I'm sorry, but the market is clearly showing the vast majority of list prices are wrong.  According to the stats this week, 97% of condos and 94% of SFH list prices have been wrong.  I'm curious how much of the overpricing is a result of realtors telling sellers that it's still a hot market and how much is stubborn sellers ignoring their realtor and just thinking it's still a hot market?

Ether,

I took view the median as a very important measure.  Although this was not a factor yesterday, today's month-to-date median for April is now at 414,500.  

I think this could get interesting if it continues at this pace.  Once it hits the newspaper next month we could really see some drops.  Luckily there are people who want to get into the market and those people will prop the prices back up for a bit but this might be similiar to what Worldclass's thoughts are too.  Then you might see a bigger drop to follow.  Of course this is just my speculation and I am often wrong.