DailyStats.ca

Wow - this is kind of cool, lol.  Thanks for posting my topic Bob!

What are your thoughts on price reductions Bob?  If a client decides to reduce their price to generate more buyer interest, do you encourage them to advertise that price reduction or not?  Or is it a case specific sort of thing?

Do you advise them on how much to reduce?  Do most sellers tend to reduce too much or not enough?

Warren; Nowadays, with the internet and the availability of information such as this website, the public is very aware. Overpricing a listing, then hyping "price reduced" won't fool anybody. When the public is looking at listings on mls.ca, they will decide if a price is accurate, regardless if it states "price reduced" or not.

The more likely scenario is that a realtor will pick up on it before the public sees it. As realtors, we have price points flagged for automatic notification when a listing is reduced. When you reach the level where the home is perceived to be in the correct price range, it's amazing how fast the calls come in from the other realtors.

Pricing properly has been a moving target for most of the past three years. As a seller, it's a difficult decision trying to arrive at an accurate asking price if you want to sell quickly. If you price it too low, you'll always wonder how much you left on the table. -Bob

As we are in the market to buy right now as we sold price is EXTREMELY important. We are no longer thinking "What will this home go UP to" but "what can this home go DOWN to" and covering the down side, not the win side. It's a complete flip of thought from 2 years ago.

So, price reductions in the listing are noted. Once a home price is reduced below 2008 assessment pricing then we will consider it. We won't see homes OVER 2008 assessment at all. So we basicly "ignore" those homes we checked before that were over. But if it lists "Price reduced $XX,XXX" then we take notice and re-assess it.

We went to 3 houses this weekend in Patterson and 1 in Signal hill($800-$1 million). Big 3,000 sq/ft, river/city view types to consider. It's the same story as last week, VERY few people showing interest (3 all day in 1 of them), desparate sellers and realtors. I've never seen that before this year, I just hope things improve for both parties. Weather being a factor of course, but it was the same story last week when it hit 22°C out.

We spend hours on the MLS checking homes vs. 2008 assessments and maybe 15% of them are priced at it. Realtors (or the sellers) are NOT pricing correctly at all. Do they still think it's 2006 when you can get away with $100,000-$200,000 over assessment?!

Also, we have record inventory, but WHERE is it all?! There just still in not enough inner-city unfortunately. I'd love to know the percentage of suburb/inner-city for inventory.

Mike

ugh inner-city unfortunately. I'd love to know the percentage of suburb/inner-city for inventory.

Mike

Bob, do you share those price points with the selling realtor, or share any feedback whatsoever on a property?  I think that most realtors do not provide feedback, but I certainly see how much more efficient the market would be if realtors compiled large numbers of price points on a given property.

Ether; Any realtor can access that information about his/her own listings. For example, the realtor can tell you exactly how many searches are looking for your exact property. Here is an example of what the report looks like:

 The above information tells me that this listing met the criteria of 376 auto-searches. 854 emails have been sent from realtors that included this listing, of which 437 were actually read by the recipient.

Bob 

Mike, you said

"We spend hours on the MLS checking homes vs. 2008 assessments and maybe 15% of them are priced at it. Realtors (or the sellers) are NOT pricing correctly at all. Do they still think it's 2006 when you can get away with $100,000-$200,000 over assessment?!"

This is quite an interesting statement.  I guess the main question here would be, how does the city calculate their assesment?  I believe they take into account size of house , size of lot, number of storeys, basement dev.  But they do not take into account the quality of finish and other add ons that a house may have.

Take 2 houses in inner city:

-House A has 1900 sq ft, but nothing added on.  City Assessment is $700,000.

- House B has 1900 sq ft, same sized lot.  City assesment $700,000. But it has all the additives - meaning custom millwork, infloor heating, heated tiles, 8" custom stained baseboards, wet bar, steam showers, custom stairs/railings, grohe/toto fixtures, 10' ceilings,  mature trees, custom solid core maple doors, granite throghout, three fireplaces finished with stone, alarm system, hi-tech wiring throughout.

So in reality house A is really worth $650,000, while house B is really worth $750,000-$800,000. How does city assesment look now?

Now if listings would be $675K and $725K respectivelly,  based on your criteria of comparing to city assesment, house A would be priced correctly and house B would be overpriced.  

Thanks Bob, but the report doesn't detail what other realtor's price points are for a property.  I guess my question related to your comment that you had "price points" flagged for a given property, and I wondered if you shared that with the listing agent, or just waited to see if the price reduced into your range naturally.

Ether; No, you can't see how many searches there are at a specific price point beforehand.-Bob

I think realtors dont share that information, but I could see the benefits of sharing price point data to make the overall market more efficient...

Mike, checking 2008 assessments is actually a fairly good idea, but I've gotta express *some* concern on that one.  

Personally, Im not convinced that the city's assessments should be the 'gold standard', but rather a 'thumb to the wind'.  Sure, if the seller is 10-15% above city assessment, that is probably a concern. But I think that there is some level of discretion that needs to be applied when comparing those numbers.  Just my thoughts.

One of my coworkers is currently looking for a house.  I was shocked to hear from her "The house we are looking at is priced below market!"  and that was the criteria of it being a "good deal".  She being a very educated person and her husband as well who makes even bigger money you would think they would do a bit more research.  I told her that there probably aren't that many houses that AREN't listed below assessment right now.  Now in terms of how much below it should be probably differs from each house.

if the average DOM (days on market) are 30 for similar properties and after 30 days the seller has not received an offer then definitely a price reductiion is in order. in my experience sellers tend to see price reductions negatively "we're not desparate, we're well priced compared to other listings, we're not in a hurry, we won't give it away". Buyers see it as a positive, the lower the price the more motivated the seller, the more it saves the buyer. it is good marketing to contact all the agents and buyers who have viewed the property and let them know about your "exciting price adjustment".

Vinny:

People in Calgary are very busy with their lives and jobs.  It doesn't surprise me to hear such comments from very intelligent people.  Hell, I just paid $44 for an oil change.  Why?  It was convenient.  We are living in a world of specialists: most people can do very few things, but they do them extremely well.  That's why good real estate agents are worth their weight in gold to a lot of people.  Ideally, agents' advice should be taking into account the best interests of their clients, even if that means pulling the trigger on a deal nine months from now.

In my opinion, price reductions are justified to accomodate supply/demand rule but when a house is $100,000 or more reduced and there is still no offers I can say that this property is overpriced. Regardless of how we look at this, the R/E market is sentimental, constant +/- news from the press can impact the market in either directions. I don't blame the educated buyers who are sitting on the fence and waiting --they should be. The market has entered into volatile phase even though fundamentally it should not. I don't see a drastic downward move on avg price or median price so I don't think the market is in correction mode or it should be. What I afraid is that buyers are holding out (self-fullfillling theory) for too long and as a result creating major bidding wars which will drive affordability even worse than now. By the way, interest rate will drop again tomorrow!! (Lets wait and see)

Mike, I think it was you who said there aren't many inner city homes, well there is one who is bang on with the 2008 Assessment of $470,000 in Dalhouise added on $80,000 in renovations (really is a total renovation) and it is currently on the market for $549,900 Can you tell me why this hasn't sold. It is a fantastic location, priced right (most other's in area in same condition sold for $569,900 - 574,900), feeback on the house is excellent and people love it but still no bites....anybody have any feedback/advice??

MLS®: C3318163

A question for the experts on price reductions.

I've been hearing the 30-day rule.  How does that apply to different price ranges.  From my understanding if it takes an avg house 40 days to sell, how does that compare with a house that is worth twice the avg (lets say 900K)? would it be 80 days to sell?  60?  Same?

So if you have a property at the higher end of the market, you have a more limited client base, and it takes you longer to move it.  So if it takes you longer to sell, do you also extend how the time how long you keep it before a price reduction if there are no offers?

Candy:

That's funny, because I'm looking in Dalhousie for a place.  The house is nice (renovations look good), but at the end of the day it's $550,000 for a 1300 square foot suburban bungalow.  Way overpriced.  What homes sold for previously is irrelevant - look around Dalhousie and there are LOTS of very similar homes available for less.

Additionally, you will never (repeat, never) get your money out of renovations.  There are articles ad nauseaum about this available online (I believe kitchen reno's are the best "value" and they are only worth about 70 cents on the dollar at resale).  So the basic math of assessment + reno's is flawed.

Going off the 2008 city assesment is not a wise move (in my opinion).  Most of the homes I've been looking at are at 5 - 15% below city assesment (and they're also still sitting unsold).  Even the bulls will admit that the 2008 assessment was taken at the absolute bubble peak of the market last year.  Since we're still a good 5 - 10% below that peak, on average, the assessments should all be high by 5 - 10%.

If that house was at $495,000 it might generate some interest.

For reference sake, take a look at this place.

Also in Dalhousie, not as attractive from the curb, but similar square footage, double garage, new deck, fully developed basement, etc.

http://www.mls.ca/PropertyDetails.aspx?PropertyID=6902967

Listed at $464,800 (assessed at $434,000) and still sitting...

Luke, I'm by far the expert on price reductions (or real estate for that matter!) but I think a number of factors may limit the client base for a given house, and thus make a house take longer to sell due to non-price related factors:

 - Busy Street,

 - Price Range, and

 - Basement Suite, to name a few

Some limiting factors are strong attractants, some are deterents, but at the end of the day, they limit the number of potential buyers, and the realtor is really tasked with finding 'that right buyer'.  

So to your questions I would expect that there isn't a magic formula to say "well, its been 30 days, time to price reduce".

Warrren,

As a seasoned licensed renovator in Calgary, I would like you to please do a little more investigation before you type any words on a public site. The house you sent Candy which is inner city, "not suburban"and the house she was referring to (inner city) are yes close, but totally different too. A new deck and something like a roof may be new to you but does not equal to a totally renovated home, there is a huge difference bewtween totally renovated and well kept. That is the case in these 2 homes. For your information a reovated home at this time in Calgary is going for $400.00/sq/ft.+ depending of course on location, etc. So please do your math. I can promise you this, if people only made 70 cents on the dollar spent to renovate, we will all be living in houses with asbestos in the drywall and wood chips for insulation in the attic. No person in there right mind would put in the kind of money it takes to renovate a home to loose money. Obviously you should stick to what you do and let people like realtors (hopefully one that knows the facts I have just stated) buy your house for you. Because if you think you will get fully renovated in a GOOD LOCATION for under 500 thousand, have fun. Maybe if Calgary hits a nose dive like the US. But god help us all if that happens. To respond also to all the price drop issues, please dont drop unless you have too, it drives the city into a tail spin. Thats when you get all these issues with people thinking that they can get a 800 thousand dollar house for 500 thousand dollar price. Keep your price based on what has sold in the past 1-3 months and you will be fine. Just be patient. It will sell!! Banks just dropped interest rates again. Its going to be a strong selling spring.

Our house has been listed now for about a month in Rocky Ridge.  We just reduced our price by $10,000 last week.  The traffic has seemed to pick up somewhat, but still no offers.  We are averaging about 4 - 6 viewings a week.  In this kind of market, does that seem reasonable, or should we be looking at another price reduction?  We have not advertised the first reduction, but it did seem to still create more interest.

Warren,

"What homes sold for previously is irrelevant - look around Dalhousie and there are LOTS of very similar homes available for less"

Bob, Correct me if I am wrong, but I dont think I have the only "stupid" realtor in Canada who uses this meathod of previously sold homes (ie: in the past month or two not 2 years ago) in the area that are very similar ie; sq footage, condition and location, to price their clients houses?? If I have the ONLY REALTOR who uses this method, boy am I in trouble. I was under the impression that this it was the market says your house is worth??

Warren also "look around Dalhousie and there are LOTS of very similar homes available for less" can you please send me a house that is very similar to the one I had posted?? The one you had sent me is not even close, it has had no renovations at all?? I am not saying were not getting any traffic through that house, nor are we desperate to sell for $395,000. I was only showing MIKE that there are renovated inner city homes, that are not $100,000-200,000 over priced. Dalhousie is "inner city" not suburb according to the real estate map that my realtor had showed us, UNLESS he made that up as well????

Candy; Inner city borders are very "elastic." It seems to be getting farther and farther out. I would consider Dalhousie to be right on the fringe of inner city. There is no one who officially designates an area as inner city. If you look at the Calgary Real Estate News,  they have selected communities that compose inner city for advertising purposes, and I disagree with it. I believe areas such as Charleswood and Collingwood would definitely be inner city, but they are not on this map. -Bob

(long post sorry)

Luke said: So in reality house A is really worth $650,000, while house B is really worth $750,000-$800,000. How does city assessment look now?

I'm not even 100% sure if the city ever actually sees your home and I for sure do not know anyone who actually knows how the city really comes up with the figures. How much for a busy road, what is a view/backing on to green space/siding on an alley worth, etc?

I give a lot of weight to city assessment, it's an apples to apples thing. House X is $, House Y is $. If House Y is reno'd and at/under assessment I'll look at it, if not I won't even bother looking at it. I'll take some liberty for a reno, lot, green space or location, but not much. I look to either make money or protect my money. If I can get a reno'd home in comparable location for under assessment, bonus. I'll agree with Ether that City assessment is a tool to accomplish that, not the only tool. So realtors, price over it, but there should be a very good reason to do so (or you'll wonder why you don't get showings/sales). Especially if you are using 2008 assessments, which we all know, were at the peak of the market.

vinny said: "The house we are looking at is priced below market"

I read those words in a listing too and laughed. That realtor would be the only one in the city who actually knows where the "market" will end up apparently.

Candy said: "Mike, I think it was you who said there aren't many inner city homes"

Well, I should offer an explanation on that. There is a good selection of inner-city homes but vs. the suburban inventory (%) it's not nearly as many on offer. Inner-city inventory is growing though, just not at the same rate suburban inventory is.

Dalhouise (MLS®: C3318163). Many (inc myself) do not consider Dalhouise to be inner-city. For me, inner-city NW communities end at Confederation Park, 32nd Street N/SE, Shaganappi Trail and 16th. Inner-core  communities at 16th ave NW, Crowchild Trail, Deerfoot Trail and Memorial Drive.  In the SW communities it's inner-city of Sarcee Trail, Glenmore Trail/Heritage Drive, Ogden Road and inner-core to be Crowchild Trail, 34 Ave SW, MacLeod Trail and the Bow River.

Dalhouise has a lot of good priced inventory right now, and one of the "good deal" communities to look at (not everything in there is a good deal though).

IMO, after looking at hundreds of homes on the MLS, here are my thoughts on MLS®: C3318163 = 6116 Dalmarnock Cres NW. HOUSE - Very good sized bungalow (1323sq/ft), 3 bedrooms (great), 3 bathrooms (great), good (not cheapo) reno (great), developed basement (great), new HE hot water tank and furnace, new roof and electrical (big bonus!). LOT - South backyard (very good), low traffic street (great), facing a park (great), end of a T-road (not so good), traffic noise from being "200m" to intersection of John Laurie/Saganappi Trail (unknown), 562 sq. m lot (great). Assessed at $461,500 asking $549,900 ($88,400 over), would be the reason it's not moving at current price IMO. I unfortunately find in this market people are not paying a premium for renos, green space or views, it helps to sell the home quicker, just not at 100% reno price. I'd look at it at the $499,999 price point, not before.

Warren said:  "Most of the homes I've been looking at are at 5 - 15% below city assessment"

Lucky dog! You must not be looking at the same communities as Carol and I or at the same price price points (around $550-650k and 1m+). I imagine with Suburb inv as it is, there would be some smoking good deals out there right now.

Mike

Candy,

About this listing MLS®: C3318163

Bad Feng Shui. You won't get any asians or ppl who are tune to house orientation and simply at the end of a T-intersection buying this property. Ppl are picky.

How far do most of you consider "inner-city" to extend to the south?  Glenmore seemed to be the limit in the past. Now Im seeing many homes listed in communities extending to Heritage being called "inner-city".

DBH- "Bad Feng Shui. You won't get any asians or ppl who are tune to house orientation"

I find this really funny, as it was an asian who was the interior designer on this home, and whom is very well known and highly recommended.  

Lol, I thought that might get some responses.

First off (this is a rarity), I agree with Mike!  Dalhousie is not inner-city.  Easily accessible due to the train (which is why I'm looking at it), but not inner-city (I would agree that definition ends when you cross 16th).  But that's just my opinion (albeit shared by many), it does vary person to person for sure.

Gary wrote:

"So please do your math. I can promise you this, if people only made 70 cents on the dollar spent to renovate, we will all be living in houses with asbestos in the drywall and wood chips for insulation in the attic. No person in there right mind would put in the kind of money it takes to renovate a home to loose money."

Wow, it all makes sense to me now!  Nobody renovates their house to make it more livable or more enjoyable - they all do it just to try and make a buck.  Please stop watching TLC "Flip This House", okay?  Some people buy a "home" to live in.

To prove my point to the "seasoned licensed renovator", I pulled numbers from OntarioContractors.com:

http://www.ontariocontractors.com/roi.htm

Turns out I was wrong, bathroom renovations return 96%.  Kitchens are around 75%.  But none of them (except paint) return more than the investment.  Explanation, Mr. "seasoned, licensed renovator"? I would say that obviously you should stick to what YOU do - but it doesn't seem like you know a lot about it?

Gary wrote:

"Keep your price based on what has sold in the past 1-3 months and you will be fine. Just be patient. It will sell!! Banks just dropped interest rates again. Its going to be a strong selling spring."

I know it's a little schadenfreude of me, but you sound like a really desperate flipper saying that.  How much longer are people going to say that there'll be a spring bounce??  Ignoring the weather outside, isn't it summer in a little over a month??  Maybe it'll be a "strong summer season", lol...

Candy wrote:

"I was under the impression that this it was the market says your house is worth??"

You're absolutely right.  Your house hasn't sold.  Hence, the market says your house is not worth what you're asking.  Seems pretty simple to me.

Yes, comparing to previous sales is generally how homes are valued, but this method does not work in a rapidly changing market.  There is a HUGE difference between "sold" (past tense) and "selling" (present tense).  Three months ago, there were 4,000 SFH on the market.  Today there is nearly 7,000.  Do you think that's comparable??  If things had went the opposite direction and there 68% fewer homes on the market instead of 68% more (that would be 1,257 homes on the market instead of 6,737) - you would also not be able to go off of previous sales as prices would most likely be increasing.  It's pretty basic economics.

And I did not claim that the listing I posted was EXACTLY the same - I said it was SIMILAR.  And it's almost $100,000 less.  A person could do a LOT of reno's to make the place exactly the way they want it, and still have money in the pocket at the end.  You're never going to find an exact house to compare, I picked one of similar size in a similar location with similar features in similar shape.  Gary may be right about the difference between renovated and well cared for, but again, that's what that $100,000 difference is for.

So thanks for all the sarcasm, lol.  You asked for feedback/advice, I responded.  The market says your house is overpriced, and the market is not what it was three months ago.  Don't get testy at me that you can't sell.  I never said try $395,000 - I said there might be some interest at $495,000.  Go with the market or get out and don't complain about it.  Or take some people's advice and stand firm on the price - let us know how it works out for you...

Mike wrote:

"You must not be looking at the same communities as Carol and I or at the same price price points (around $550-650k and 1m+)."

Very correct, can't afford the inner city like you or Carol (first time homebuyer, remember, lol).  The suburbs are definitely getting hit harder, and that's where I've been looking.  Just a thought, but if you're willing to look at the North, I know there are a lot of listings in West Hillhurst - I don't know how well priced they are but it's very close to downtown.

Then you have other aspects like houses with 4s in the house number or 8 in the house number.  4s will drive away almost any chinese and 8s will attract ALL of them

Bob - thanks for the mix info.  Do you have the numerators and denominators for those percents?  That would allow us to tell if the 4% and esp. the 1% difference really mean anything statistically.

Carol; April 2007: Sales 2073, under 976, over 500.
          April 2008: Sales 1059, under 541, over 239. 

Re Mike's comment about inner city properties - higher ranges.  I agree that we have a ways to go for many of those properties to be priced 5-10% below 2008 city property assessment.  But a few have had dramatic reductions. And though inventory is higher further out as a reasonable generalization - there are many exceptions.  Note about 80 listings in Hillhurst and Killarney, only 20 or so in Scenic Acres.  It would be nice to have the total number of properties in each community so the listings could be compared properly across communities as percentages of total housing stock.

Re: Candy's house in Dalhousie - price is important for sure though I am not commenting on whether it is priced right or not because i dont' know, and it looks really clean and modern - just seems a little cold in the photos - maybe some more color, candles, flowers, throws - for a warmer feel - so potential buyers really feel themselves being comfortable and enjoying living there.

One more thing - in our experience city assessments can be quite far off.  They are one piece of info to include in the mix for sure - but we dont' feel we can rely on them very much.  Price per square foot is also misleading and may keep you from getting a very high quality home with good flow vs. a large home with poor finishings.  The only way to get a sense of the fair market value for a home, esp. in this very odd market, is to try to look at as much as you can - to follow per property price changes and inventory in the communities of interest, and pay attention to detail in workmanship, upkeep and finishings.  We are still seeing quite a few properties that to us are overpriced for the current market conditions.  The sellers that are reasonably motivated will eventually have to bring them down.

Candy, I think the house is absolutely stunning...be patient someone will see the value in it...

I noticed yesterday that my neighbor who was asking 3.5% above city assessment has a "C/S" sticker on the listing sign now...meanwhile other neighbor who is asking 15.5% below city assessment still sits?  Crazy, I guess you can chalk it up to the "right house for the right person"?

Carol, you mentioned Scenic Acres - what do you think of that community?  Good place to buy?  It's one I've been keeping an eye on (and I agree there are not a lot of listings).  If you think it's a good buy, what do you like about it, so I know what to look for?

And the "4" and "8" thing is crazy, lol.  I remember when I found out that the Wynn in Vegas (in addition to not having a 13th floor) does not have floors 40 through 49, lol.

In regards to Candy's listing, I wonder if posting the amount of money spent on renovations, is the best thing to do, much like advertising price reduction. As a buyer, from her mls listing, I get the fealling that she's trying to pass all the renovation costs to me (the buyer), plus some. In order for me to consider paying the asking price I have to like the house layout 110%. However, I can also think of buying something similar in the same area, for $80k/$100k less and spend maybe $50k/$80k and have it done my way.

The question: is it worth spending big money on renovations, if you plan to sell, or better just go for some touch ups here and there and have it priced at a more competitive price?

Thank you Carol and Mike for your honesty and ADVICE!!!  

Mike,

Looks like you've been moonlighting on the AlbertaBubble blog.  I noticed that you're now considering renting after selling your home for 800K.  You are even considering renting the home you just sold for 4000 dollars a month vs. buying.

Excerpt from "other blog":

"Sold my home. $800k (no mortgage)

Option to stay in my current home and rent. Rent $4000 per month+Util (That's what they charge next door) Or buy a home (for $700k via low ball) and hope I don't lose as much as I would pay in rent. I figure the market will be more predictable in 2 years so rent for 2.

Renting will cost me $82,000 for 2 years. Will a $700k low-balled home lose $80k in 2 years?

What would you suggest?

Mike

See, now that you are in the situation that many other renters were in you now seem to better understand their "rent vs buy" rationalizations.  I could remember the good ol' days when you would exuberantly proclaim that "it's always better to buy, because you can't time the market, so just buy and you'll be up in the future anyways".   Sounds to me like you are "timing" the market and expecting price reductions.  Maybe thinking renting is better for now until prices come down?  You sound a lot like....like.... Radley back in the day...or Warren right now.

Nothing against you Mike, I like your posts quite a bit.  Your participation has always been a fun read.  Just thought that someone should bring this to light as I believe it is an interesting situation.

Cheers.

I looked at MLS# C3318163.  It's obviously a flip with all the usual staging.  After having watched the 'flip' type shows, I find it a bit of a turn off and I'm likely not alone.  The idea of someone buying a house and setting budget and time constraints to resell makes me nervous.  And as Gary has made it obvious, there's an expectation that the buyer is willing to pay full price for the renos.  This could be the reason the place is slow to sell.

Warren, i'm assuming you do understand the significance of 4 and 8 in chinese right?

There are several other combinations.  Like 148 is homonynous in Mandarin with "want my dad to die".  I swear Chinese are the most superstitous people in the world (at least from what I have seen from my relatives).

That house on the T-intersection looks awesome.. I don't know whether it's priced right but I can guarantee you my wife would want it.

Vinny:

I don't know the importance of 4 and 8, what are they?  I always just assumed it was unlucky, and left it at that.

I hate to generalize, but I will agree with you - Chinese are superstitious.

That house is amazing, and good price to...we are actually looking in dalhousie/brentwood but in the $600,000+ in comparison to those houses you are about $50,000 under priced....very nice reno.

Bob, if you dont mind sharing, will you look at the city assessment when a potential client asks you to do an evaluation on their home?  How accurate is the city generally?

Ether; We look at it but it is barely ever a factor. Comparable sales is much more important. -Bob

I'll chime in on a couple of things.  First, I'm surprised that anyone puts so much weight in the City assessments.  While on AVERAGE, they may be accurate, they are way off base in some cases. So I can't understand whey Mike would say "We won't see homes OVER 2008 assessment at all."  It's only anecdotal evidence, but I know people that phone in every year when they get their assessment and get it pushed down (it's easier for the staffer on the other end of the phone to say 'ok' than 'no').  This might mean you won't even look at such a house.  On the flip side, a good example of a mkt. assessment that must be way way out of whack -- MLS C3320675, price at 374,900, and 2008 assessment is 563,500.  I live in, and watch the market closely in, Montgomery and I can't fathom why the assessed value is so high down there (it's b/w 16th ave and the river, though this lot backs onto the businesses on 16th ave. It's much much higher than houses elsewhere in Montgomery, even great view lots).

Second, I'll offer one more opinion on Candy's home. It won't help at this point, but you did ask... I also find the staged look a big turnoff, and at least to my eye, the reno fits with the 'staging' feel -- it's a safe reno, with neutral colours.  I personally would way rather spend the reno money myself -- and far differently than it's been spent in that home.

Love your site and blog Bob; even if I'm usually a silent observer.

For those that don't already know the number 4 in chinese has a very simliar sound to the word Death in most Chinese dialects.  If you go to China, HK or Taiwan you won't even see a 4 in the elevators.  The number 8 sounds simliar to the word Fortune so everyone wants that.  If you are born overseas and came here you would know this 100% guaranteed.  There are some of the newer generation Chinese born here that might not care as much but their parents would probably freak out if they found out they bought a house with the number 4 in it....especially if it was 444.

Okay, now my curiousity is piqued - who's asking for comments to be deleted??

I haven't checked on the bubble blog in a while, but if that actually is Mike talking about renting, that's crazy!  I've always thought that Mike is one of the biggest bulls on this blog.  But I was kind of wondering what he was going to do about living accomodations - he never mentioned anything about possession dates on his sale.

I don't know about renting for two years, but one year will only cost $48,000 in rent (utilities are a wash, you pay either way), and that would only be 5%-ish on the price range Mike is looking at.  And I've always thought Mike's $4,000/month rent is ridiculously high.  You can get a mil plus home out in Bearspaw for less than that - that's a heck of a premium to pay for inner city location.

http://www.rentfaster.ca/listingview.php?listingID=21780

Anyways, it's a crazy situation.  Candy's listing (and all the mysterious posters saying what a great buy it is, lol) I think is typical of the mentality of a lot of the sellers in this city.  "Yeah, there's almost 10,000 homes for sale - but mine is special!".  "Why should I drop the price, my realtor says it's worth that!".  "Sales are gonna pick up, I promise!!!", lol.  Etc, etc, etc.

Listings are certainly slowing down (that 10,000 number keeps teasing...), but sales aren't picking up.  And historically speaking, sales peak in either March, April, or May.  So this could be the best sellers could ask for this year - even if listings start to trend down, sales could drop faster causing the months of inventory to rise even higher.  This doesn't mean the price will go down - it should have been falling since the end of last summer (the start of Calgary's buyers' market), but there's gotta be a limit to how long the market defies basic economics (or so I hope, lol).

Anyways, as has been mentioned before - too many sellers (and/or their realtors) seem to still think it's 2006 and there is only two weeks of inventory on the market.  I honestly think it may take until next year for many of them to start to understand what's going on around them.  In which case, Mike renting might make good economic sense.  I'm still planning on buying at the end of summer (mostly to shorten my commute), but I'm not 100% sure - I'll see when it gets closer.

So I took a look at Mike's page to see the daily stats and also to compare how is April-to-date versus last month. From what I can see, the avg and median price have not changed much. What I can draw from this is that the market really hasn't gone south like most of the media suggested. I took a look at the houses in Panorama and I can say that 7/10 houses there are overpriced which IMHO explains why there are so many listings in that area.

Darco:

Great comments, you hit the nail on the head:

"I personally would way rather spend the reno money myself -- and far differently than it's been spent in that home."

As strapped for cash also pointed out:

"In order for me to consider paying the asking price I have to like the house layout 110%. However, I can also think of buying something similar in the same area, for $80k/$100k less and spend maybe $50k/$80k and have it done my way."

This is the basic reason why you will never get 100% return on renovations.  Why pay full price for someone else's dream home - why not pay for it yourself and do it the way you want it?

Back to the original question of my post though - I personally think it's better to advertise the price reduction.  I didn't know about realtors having alerts when houses fall into a certain range (thanks to Bob for that info), but as a potential buyer - a nice fat price reduction certainly does catch the eye.  I've seen houses that I've been following drop their price 10% and not advertise it and still they sit.  I've also seen houses drop their price 10% and say it in the listing and they go in a couple days.  Just anecdotal evidence, but that's my experiences.

The whole anti-flipper thing is also very interesting, I'd never thought about it before.  Ebay is like that, my experience has always been that buyers would much rather buy something from "an honest joe" like themselves - as opposed to some of the professional sellers (who the buyers expect are trying to make a profit off of them).  I guess flippers like this house are like that?

One more point about city assessments - these use crude values like square footage, lot size, neighboring properties.  They don't as much use quality parameters like design, flow and finishings.  So if you really feel the value is there in the house but the property assessment is _lower_ - it can actually be a good thing - because your property tax payments will be lower.

Warren - you asked about Scenic Acres - we've lived here since 1990 and have loved the community.  We are looking to move fairly soon but only because of a job change that has resulted in a long commute.  There are 3 vintages of housing in here - the earliest dates back to late 70s/early 80s on the north and east edge.  The bulk is late 80s e.g. 20-25 years old, but there are some areas that were finished last - with houses only about 10 years old.  This is one of the lowest density NW communities - with much less multi-family development compared to the 3 adjacent communities.  The best things are the vast amounts of green space - with a ravine running right through and parkland to the south and west.  You can walk right down to the wild end of Bowness Park.  And of course the views of mountains, COP and even downtown from many lots.  Both elementary schools are here and the vegetation is becoming more established.  It is suburban for sure, but access to DT is really much better than most people assume since all the overpasses have been built on Crowchild.  Also there are two routes in and out - 16th and Crowchild - so its often possible to bypass traffic problems.  Its a great community for kids (Twin Arenas, ball diamonds, play grounds etc.)  Once people come they mostly stay - some of the buying and selling represents internal moves.  The north and east parts have smaller, more affordable houses - some with a lot of space for the money - perhaps just a bit higher than starter price but not much.  The west and south are the higher end - many million+ homes but some good move up prices too - 600-700. The number of listings has been quite low and very stable for many months.  But the prices, in my opinion are very good. There is a steady turnover - but the reason I think some houses are sitting is that many have quite dated interiors, yet sound structures.  Cosmetic updating is relatively inexpensive - so I believe that  buyers can get houses in here for very good prices, and can increase the appeal and value fairly easily on their own.  The houses are not so old as to need major structural work.

Anyway - I also know the current listings and previous sales very well - but prefer not to discuss specific listings publicly.  If you want to chat off-line - you are welcome to get my email address from Bob.

We recently bought a house and had been through many open houses and many of those were being "flipped."

We were turned off most of them rather quickly.  People throw in granite, stainless, and some laminate floors and raise the price to a premium level.  But when you take a close look at the house, you notice that corners were cut everywhere; no attention to detail and a lot of stuff was obviously done on the cheap.  

As for MLS®: C3318163

1) The house looks cold and uninviting.  The staging looks like a sparse furniture showroom.  Additionaly, the kitchen seems cold and harsh with the colors used; the granite, stainless appliances, and cabinets, may be expensive but together they dont seem to work. Same goes for the master bath.

2)  The inside is fresh and modern.  BUT the outside looks old and original from the 1970s.  It looks like theres even an aluminum door on the house. New doors, a modern railing on the stairs, a modern mail box and house numbers, and maybe some landscaping in the flowerbed in front of the house would be quick ways to make the outside give you a bit more of an indication of what you'll see on the inside.

This home is very typical of many of flip jobs weve seen.

Warren...

I forgot to mention one key thing about Scenic Acres - the C-train extension will reach the community this Fall - and there is some evidence that when rapid transit comes to a community, house values increase.

Hi Bob...

Thanks for the numbers above - I will do the calculation but I am otherwise occupied for the next few days.

Very interesting to read everyones comments on the market values. I do have a couple of comments based on previous reads....

Market Comparables: it does make sense to base valuations on the latest information. The key thing to remember is that valuations on prior price points are useless if there is a "structural shift" in pricing. Thus comps two years ago are irrelevant.

Also basing pricing only by using "City Assesments" is completly wrong and flawed. One should use this as a guage or a price point. In most instances I have seen this used as a marketing tool. "Great value priced BELOW city assesment". Why would I rely on a value generated by the city, not an expert, who places values based on generating tax revenue for the city. Besides these are out of date and not in tune with current market values.

What Calgary is seeing now is price volatility. Nothing more nothing less. Homes are a semi liquid asset.  Buying and selling is an act of price discovery. Remember any asset has some risk in it. Nothing is risk free. Prices in Calgary have been rising constantly for the last few years. Why is it beyond anyone to recognize a "softening in the market". The marginal buyer will dictate price. Calgary is still robust and growing but the market will dictate prices. Distressed sales are part of the equation but are limited in determining actual market prices (ok except for structural shifts like the US).

Interest Rates: future interest rate cuts will affect the variable mortgage rates. Fixed mortgages are base on longer term corporate bonds. Also, interest rate cuts are dependent on the Canadian economy. With the high inflation rates due to food and energy prices, I think the Canadian govn't will (sooner or later) have to take a stance and fight off inflation with, you guessed it, higher interest rates.  Worst case scenerio for any country is Stagflation (high inflation with a recession).

Rent or Buy: suggest using a rent vs. buy calculator. Or use this as a proxy (actually called the market extraction method). MV = NOI/(r-g). You say that you can rent for $4,000 a month x 12 = $48,000 per year. $48,000/$800,000 = 6%. Assuming a 4% growth rate (rent and appreciation) that means the required return to the owner is 10%. Seems a little bit high to me in this market. Other house renting comps I have seen are closer to 7% (assuming 4% growth).

Just my thoughts....

Bob and others, I am a bit confused.

I thought I read that inventory numbers (old criteria) were at approximately 14K. I reviewed Bob's old criteria and it shows March numbers at approximately 11K.

Did I miss read something? What am I missing? Was the number changed?

Jimmy; You might be looking at total MLS. The old criteria never did include total MLS. For example, acreages and rural land were never included in the "Old Criteria," but they are included in the "Total MLS" which you see now. Today, the old criteria inventory is at 12,912. My website is the only place that I know of where you can see the true old criteria numbers. -Bob

Finally - 10,000 listings (10,045 as of Saturday)!!  It just rolls off the tongue so much nicer, lol.  And for all the surprising strength this month, SFH sales look like they will have peaked in March after all (condos will finish a few percent above last month).  Both sales numbers will be down about 30% year over year.  Again, when that "strong selling spring" gets here, can someone let me know - I don't want to miss it!

And of course, because price is the only thing that matters to some people (the nearly six months of inventory is just inconvenient I guess) - three of the four price measures are down month over month and all four are down year over year.

Mike has the following article posted from the Herald on his site:

http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=9fbf00d5-579f-4bdc-a92b-d3ac89f47ba1&p=1

Why do people keep interviewing the same tired "sources" for all the real estate news?  Can anyone tell me??  This article is full of such gems as Adam Legge, vice-president and chief economist for Calgary Economic Development saying "I don't see a lot of price decline on a year-over-year basis in Calgary".

Really, Adam?  Is that because you don't want to see them or because you've just stopped looking at the numbers??  Because last time I checked, condos are down $17,500 on average (5.3%) and $16,000 at the median (5.2%).  But I should take his word, he's an "expert"!

Apparantly Lai Sing Louie, the David Lereah of the CREB, says there is going to be a "revised" forecast for Calgary put out in May.  This ought to be good, lol - I'm guessing price increases of some ridiculous number like 0.4%.  Anything but predicting a decrease - that can never happen!

Oh, and Don Campbell says anyone who buys now will look like a "genius" in a few years because he predicts average house prices to increase 11% this year.  That would be ending the year at $493,694.  Have you noticed there are 10,045 homes for sale, Don???

The only possibly useful insight into the market comes from Garth Turner, who compares the American situation to Canada where:

"The first thing that happens is a decline in sales, not prices, says Turner. The reason for that is people keep buying and are "oblivious" to the fact sales activity is going down. And the sellers don't know it's a buyers market until it's too late. Prices don't go down as much as six to nine months later."

Notice how he makes no ridiculous percentage predictions??  How he just makes a general statement about the way the housing market works???  Good thing that can't happen here though!  We all know that people aren't oblivious to the changing marketplace - no sellers still think that it's 2006!!

But it's seriously so aggravating when the local media runs these puff pieces, they're ridiculous.  It's like the article earlier this week where the CIBC economist predicted that oil will reach $225 in five years.  Nobody can accurately make that prediction and if they could, then they wouldn't be talking about it -they would quietly be buying ridiculous amounts of options on crude.  Seriously though, the last settle on a barrel of crude for Dec 2012 was $106.67 on the NYMEX.  That's a hell of a potential profit.

I honestly don't understand the point of printing ridiculous opinion pieces like these and pawning them off as news.  The Herald could just as easily find someone who will predict that crude will be $45 by 2012.  Global recessions, unknown rates of depreciation of existing wells, political instability in many oil producting states, increased funding of alternative energy, the black hole that is OPEC - there are literally hundreds of unknowns that far out that will determine the price of crude.  I have an opinion on where I think it will be close to, but I don't think the Herald would publish it as news.  It's funny to read an actual source of news, like The Economist, and compare the way the articles are written.  

The problem with all these real estate pieces is the same thing.  Nobody knows where the market will go, especially when we're in new territory like we are now.  Yet the Herald keeps trotting out the same "experts" who give the same lines about how the increased selection makes it a great time to buy and the market is returning to a more stable 5 to 10% growth b.s.

And then I have to deal with people who don't know any better (mostly sellers, lol) saying how "they say" houses will increase 10% this year.  Really??  Well as long as "They say"??  I wonder how much faith the people who bought a condo a year ago have in articles like these now that they've lost almost $20k?  And there are 3.5 times the condos for sale with another 9k being built.  

Warren; I don't share your infatuation with Garth Turner. He has a lot of credibility problems, and he'll say or do anything to sell books. -Bob

Carol:

Thanks for all the helpful info on Scenic Acres!  I've been having a hard time deciding on a neighborhood.  My problem is that I want the best of both worlds; the inner city for location to work, but the suburbs for the quality, age, and size of my house (and lot).  I won't live in an infill, having grown up on a farm with nothing but space for miles, I think they're almost comical.  And I won't live in a "fixer-upper", and spend my free time doiing work that I don't enjoy.

So my compromise is the C-Train line.  I've been looking at Collingwood, Charleswood, Brentwood, Dalhousie, Arbour Lake, Scenic Acres, Silverspring, and Varsity mostly.  But Dalhousie and Scenic Acres have caught my eye the most.  I was looking at the City of Calgary's Community Profiles that Bob has a link to (which are a fantastic resource) and Scenic Acres is certainly very desirable.  92.7% of dwellings are detached SFH with 97.2% being owner-occupied.  Flipping apparantly never caught on, lol.  And only 13.3% of the community is spending more than 30% on shelter (almost 1/3 of the Calgary average), so even in the event of a downturn it should be pretty well insulated.

I agree that sales do seem to be pretty steady there (at least in the price range I've been watching).  There isn't anything right now that really catches my eye, but if something comes up I'll get your address from Bob.  Thanks for the help again, I appreciate it!

Warren said:  “But it's seriously so aggravating when the local media runs these puff pieces, they're ridiculous.  It's like the article earlier this week where the CIBC economist predicted that oil will reach $225 in five years.  Nobody can accurately make that prediction and if they could, then they wouldn't be talking about it -they would quietly be buying ridiculous amounts of options on crude.  Seriously though, the last settle on a barrel of crude for Dec 2012 was $106.67 on the NYMEX.  That's a hell of a potential profit.

Here is the link to the 12 page CIBC World Markets article “The Age of Scarcity” dated 24 April 2008:

http://research.cibcwm.com/res/Eco/EcoResearch.html

If you’re bothered by the newspaper article, why not go to the source itself when you’ve got the internet access?

Table 1, Global Oil Supply Forecast, estimates that West Texas Crude, specifically, would be US$225 by 2012.  Page 4 of the article states that global oil prices would likely increase to an average of US$150 /bbl by 2010 and US$200 /bbl by 2012.

In brief, there won’t be much of an increase in production of the crude oil that is needed to produce transportation fuels.  And there will be a huge demand for transportation fuels from developing countries.  

For more information, keep reading, or better yet, go to the CIBC report itself and decide what you think.

According to the CIBC analysts, natural gas liquids are included in most reports of oil production.  Natural gas liquids such as butane, propane and hexane are hydrocarbons.  However, it is not economical or viable to use these hydrocarbons as feedstock to produce transportation fuels such as gasoline, jet fuel and diesel.  Propane is used as a transportation fuel, but in less than 2% of motor vehicles in the world.  

So when you hear about reports of increases in “oil” production, you need to realize that in the past 2.5 years *crude* oil production - most of which is used for transportation fuels - has not grown and instead the increase in oil production has been from natural gas liquids.  The report says that the ratio of natural gas liquids to total “oil” production has been rising steadily and is likely to continue to rise for the foreseeable future.

The article goes on to explain that demand for transportation fuels will outstrip the supply.  And for the first time, there will be significant demand for transportation fuels in developing countries where inexpensive vehicles are going to be available e.g. in India the Tata car will sell for $2500 US, a price within reach of millions of households.  (Now this isn’t in the article, but India has over 1 billion people, but it’s middle class is just 200 million maybe, but that’s still a huge consumer population.)  

I just went out and bought a copy of "Greater Fool" written by Garth Turner.  I have read books written by him about investing back in the mid 90s.  I hardly ever read books but find his books a fantastic read. Why is this?  As some people might question his theories and hypothesese, I read his books for his historical facts and statistics.  I do agree with some of his theories but some I take with a grain of salt.  What I do recommend is people read what he has to say for his factual information and you can use this information to aid your own decisions.  Some people might even take everything he has to say and form a conclusion that the markets are still going to go up a lot this year.  I'm not here to convince anyone of anything nor whether Garth is credible or not but there are facts in his books that are consistent with many writers out there even though his views might not be.

"Provincial Forecast" from CIBC.

Migration flows from East to West. (To Alberta mostly)

Happening now.

In the Chart 5

http://research.cibcwm.com/economic_public/download/pfoct07.pdf

"I read his books for his historical facts and statistics.  I do agree with some of his theories but some I take with a grain of salt.  What I do recommend is people read what he has to say for his factual information and you can use this information to aid your own decisions."

That is a prudent way to treat anything coming from Garth Turner. As he has shown, he is simply an opportunist. Here's a quote from a blog:

"Garth Turner was a shill for mutual fund companies, always recommending the funds of those who paid his fee, and giving very bad, and potentially disastrous, advice that people borrow to invest and use that investment to pay the interest on the loan."

Bob:

I'm not saying this to be disagreeable, I'm just curious about your logic...

So Garth Turner will say or do anything to sell books?

And I suppose the CREB won't say or do anything to sell homes?

Warren; There are plenty of avenues to disagree with CREB(media, blogs) but first and foremost, people need to understand that Garth Turner has a track record and an agenda. He is not an objective analyst by any stretch. People need to be aware. If people want to believe CREB without any due diligence, that's their prerogative. If they want to do some research and form an objective opinion based on facts, that's possible, too.-Bob

Should we go over the ridiculously absurd statements that the CREB has made?  Or the ever-changing criteria??  Because if "They Say" that you'd be better off waiting to buy a home - the realtors the CREB represents (who all get paid on volume) would revolt.

I'm curious how this is different?  At the end of the day, even Mr. Turner will tell you that his advise is only his advice - people are more than welcome to either take it or leave it.

Ditto with CREB -Bob

Hi Bob...

Re: the values you reported on What's New %'s sold under 425 and the % sold over 525 - way above.  The difference in percents under 425 from 07 to 08 (51% vs 47%) is statistically significant but the difference over (23% vs. 24%) is not.  This means that the latter value is probably just a chance fluctuation in numbers, but the former value is unlikely to have happened by chance.  The best way to really know what is going on would be to look at the shifts in the full sales distribution.

Re: Garth Turner, Creb.

Who, pray tell me, is objective? Everyone seems to have an axe to grind. At least with CREB, you don't have to pay $29.99.

"Re: Garth Turner, Creb.

Who, pray tell me, is objective? Everyone seems to have an axe to grind. At least with CREB, you don't have to pay $29.99."

Hi Janice,

I would rather fork out $29.99 of my hard earned money to gain a further understanding of the "other" side of real estate. The side that warrants caution and promotes research and education on the real estate market. Better to learn about my biggest purchase of my life than jump into something head first instead of feet first. In summary, I would pay $29.99 now rather than ~$450,000 for a lifetime of debt. Only to possibly pay ~$300,000 a couple of years later.

one thing that is very obvious in Garth Turner's messages is that he is a stronger believer in mutual funds than real estate.  This view is also strongly echoed by several financial planners (as i had a few that suggested I remortgage my house to buy mutual funds).  It is apparent everyone wants to promote what they have to sell.  Maybe that's why Turner is so against real estate too...nevertheless I found it a very good read.

Hey Vinny, Free Speech, Janice, all

Don't you just love the salespeople (of all types) that recommend loading up on a particular investment when the key to long term financial planning is diversification.  Own your home, but buy when it makes sense.  Have some stocks if you can, low MER mutual funds if you can't.  A GIC or bond (simple fixed income) is part of the mix too.  But don't put all your money in any one type of investment, no matter how many 'experts' tell you to.

I'm curious to know where Al Bundy sits on the Herald / Turner / CREB issue...

The Calgary Real Estate Board (CREB) picks the data it wants to support it's members (Realtors). Bob is not immune, he also stated the fact this blog is for his profit and to promote his business (of selling homes).

Mike; This blog is for its readers to exchange information and gain greater insight into the housing market. -Bob

Once we start to see past the CREB and Realtor bias, only then can we see what "real" is. CREB showed it had last year (and was caught) by manipulating the historical data of prices and inventory. Now we have a "new" system, which is better than the old system. Better for who...?

What "manipulation" are you referring to? -Bob

If I didn't already have a Realtor who cared less about commission but cared more about helping you find the deal out there then I would never use a Realtor. If you are going to look at Real Estate as beneficial to you, then you better have a Realtor who cares more for you and your interests than his/her commission check.

Mike

Turner may just end up being right at this time, not because he's smarter than everyone else, but because he's lucky.  The housing cycle is starting to end soon all over the world.  In which case, many investors will start moving their money to the stock markets again, which should cause quite a bit of appreciation in the mutual-fund market.

Sheeple will chase "whats hot" and what the MSM and other "boards and advisors" tell them.  Well if you can't fight it....join it before the boat leaves again.  The realestate boat is slowing down, not capsized however.  But the boat that is about to take off is the stock market, starting about fall of 2008 or beginning of 2009.  About ten years from now you might want to start moving money back into realestate again as the cycle starts over.

Play the momentum people.  There is no "best investment for life"...everything is cyclical and influenced by both fundamentals and emotions.

Just as an aside...if you had bought into the last financial crises (with financial stocks) in 1990 with the bail-out of COMMERCIAL realestate... you would have made 100%+ returns on your stocks.  Fast-forward to 2008.  Bail-out of financials, RESIDENTIAL realestate this time... financial stocks are down, it is time to buy them.  XLF sector spider is a good start.

Al:

Kudos - probably some of the best advice ever given on this blog.

worldclass:

I love the comment of "sheeple" (so very true).  Here's an interesting page on that ide