Bob Truman, First Place Realty

Well, I think the new mortgage rule does affect the SFH market a lot. Sales go upward is becasue a lot people need 40 years mortgage for their dream house. If sales still go upward after Oct this year, it will be a different story...

I don't understand why many realtor are telling that current market is a buyer's market!

Since 2004 house prices in Calgary doubled ! Now if they fall 10% it is a buyer's market? For me a buyer market would be if prices fall bellow 50%! And if people who work at Tim Hortons can afford at least to buy 600 sf condo!No wonder there is shortage of workforce in Calgary when people who work in Tim Hortons .Mc Donalds ,Gas stations etc ,have hard time to even pay for rent !

Don't worry Bob, that will change. Man, you people are blind. It's over. Duck and cover.

Inventory reduction based on delisting activity. Come clean Bob. You know the truth. Your blog is starting to be a joke.

My blog was dead, at least according to you, a year ago. If it's now a joke, that's definitely an improvement.  Furthermore, why would you bother to give your opinion to something that you consider a joke?  - Bob

Bob, I would think that an inspector's work is directly related to "pending" sales.  Does that mean there are a ton of pending sales on the books right now?  Or possibly some homeowners are getting their home inspected themselves just before they plan to list it?

To address the main topic... Ever since I was inspired by others on this blog to pay more attention to inventory (well, not inventory, but the trend in inventory), I've noticed that the peak "weeks worth of inventory" occurred in late May, at 25.3. Since then, that figure has been slowly trending downward and today sits at 20.3 weeks worth. Keeping in mind that at the peak of the "frenzy" in 2006, there were only 16 days worth of inventory, which was just an insanely low number.

But although today's 20.3 weeks worth of inventory is huge in comparison, that number is falling at a slow steady rate. And since the number of new listings has always peaked in late spring (as have sales), I think the market is returning to what we would usually consider as "normal".

I get the sense that although we aren't feeling it today, there is an underlying pressure developing on the buyers' side. Prices aren't falling precipitously when most people were predicting a "crash".  What crash? The sub-prime disaster in the U.S. has absolutely no impact on prices in Alberta (other than adding some nonsense fear factor) and as long as the world needs oil, Alberta is not going to be "emptied out" by people moving back to Sask. or the Maritimes.

As I said in previous posts, I think this fall is going to be pretty busy with sales. And next spring will be most interesting spring to watch in years. I think realtors are going to be busier than hell, and if prices don't rise sharply next spring... that would be the first spring that they haven't in the past 450 years.

The high price of oil is really hurting everybody including Albertans. And that could get a lot worse with the U.S. beating the drum for a totally uncalled for war with Iran. That administration is insane!  But none-the-less, if they do make that unimaginable mistake, the price of oil will go through the roof. And that would be a double edged sword for Albertans that would probably have a neutral impact on real estate prices here. Alberta would prosper and be busier, but at the same time, the inflation that higher oil prices would cause for an ordinary Joe like me would make it harder to afford a home.

We keep hearing about all the thousands of condos coming on stream. Yeah, they're coming on stream priced at $500,000. So if there's going to be any falling prices, it will be the developers of those condos who're going to have to bite the bullet. Unless all those condos are sold through CREB, they won't even show up nor impact CREB's numbers. And let's face it, it's always CREB's statistics that we all look at.

So to answer your question... I think it going to be par for the course as we move forward. And that means a busier fall and a real busy spring 2009. We keep hearing people complain about realtors saying "now is the time to buy". In my opinion, the realtors are right.

I think lots of potential buyers have been sitting on the fence and watching for long enough, and they see the price won't drop any further after months of correction. Maybe they think it's the best time to buy since there are so many choices out there. After seeing months of US housing crisis, global economy slow down, etc ... but Alberta (especially Calgary's economy) is still strong, I think the buyers feel more confident to buy now than a few months ago.

Alberta's real estate market has one more price spike left in it as Ontario's economy hits the rocks and they all move out here.  

I've been thinking about buying a rental property in the Fall, so of course I would like to see prices continue to drop a bit :) However, it's good to see things aren't spiraling out of control.

Wow, what upbeat sentiment.  I commend all of you on being able to turn a blind-eye to the significant price corrections that have already occurred.  For your information when the USA real estate market began to crash it took a LONG time where prices were more or less "stable" (as they are now in Calgary) while inventory built considerably (and delists were a hidden 'pending' inventory).

To declare Alberta completely safe just because we have not gone the way of what is happening in the USA is too early in my opinion.  The all clear should not be sounded just yet...especially as the oil and commodities markets unravel (two big drivers of our western canadian economy).  

Economic projections are for a falling Canadian dollar, slowing Canadian economy...and like it or not it'll hit us invincible Albertans.  With production costs higher than Everest, alot of junior Oil and gas plays (you know the ones that have been popping up all over Calgary and Edmonton?) are going to either shut down or be bought out. and subsequently people will lose jobs.  If you don't think this can happen, please see the stock market capitalization losses in recent weeks.  Eventually word will get out about the new government infrastructure 6 billion dollar projects in Ontario, and Ford/GM will switch production to higher efficiency vehicles and will hire Ontarians once again.   In the end, the votes are in Ontario and we just might get the "green shaft"

Yes, those "high paying jobs" that we all like to tout may be lost as well.  Incidentally, I know a fellow who makes 200k/year, top 95% of Canadian's avg income... he's young, smart, and NOT buying in Calgary.  He's sitting on cash, renting low, and waiting for what he calls "the price-reduction train".  When I asked him when, he says everyone will know when it's here, and the time to buy is when all who are in the real estate industry finally say "it's over, it's a crash".  Apparently we are far from that.

Remember...sellers...right before the big price drops occur there usually will be a small upswing, use this chance to sell aggressively when some new buyers come back into the market.  This will ensure you get a decent price for your overvalued home.  Buyers who have the time, should wait until maximum pain is felt, such as where the USA is soon approaching, and then you BUY big when everyone feels homes are worthless.  These next few years are going to be another golden opportunity!

I noticed some facts:

in Thorncliffe the houses that are cheap at 369K, not at noisy streets, with 50 ft lots, all disappeared ( you know how picky I am :-). Now the similiar listings left are over 400K.

Sothwood LRT station area, those within 800 meters distance from LRT, with 50 ft lots, finished baasements, priced at 350K or so, are gone.

University Heights, only has 3 listings left.

St Andrews Heights has only 4.

I notice some good properties have been sold in the last few weeks. Eg. older bungalows with decent renovations were sold in the $480-$530k range in wildwood. Of course there are still lots of crappy properties that are still overpriced. I think the market is slowly getting back to normal. The US housing crisis was driven by sub-prime mortgages (eg. 100% or even 120% financing) to anyone who walked into a bank. Canada doesn't have this problem. With the oil price over $120 USD, who is making the big money? US or Western Canada? So I don't see the housing market in Canada (especially in Alberta) will be the same as US.

Nice try Worldclass...

You're scare-tactics are certainly entertaining! I especially liked the libs getting in and shafting us. True, they still have support in Ontario, but that's about it these days (maritimes, Quebec and even BC is waking up to the fact that taxation and more social programs eventually stifle us all). Besides, i'm sure the $3B Harper donated to infrastructure over the next 6 years will win some more Ont ridings.

Even if the libs did pull off a miracle minority, they're not stupid enough to choke Canada's only growth industry. The day the world doesn't need our energy, is the day humans cease to exist.

Have you kept up on any of the numbers lately?? $273 billion of major projects underway in Alberta as of June '08 ($90 billion more than last June). And that's just the 'major' projects... i wonder if that creates any jobs in Alberta?? You should be as ecstatic as the thousands of Canadians losing their jobs every week that they will have one to replace it.

As for the east's manufacturing sector, unless you can explain how Canada can somehow compete with Chinese and Indian car manufacturers over the next decade??..... my opinion, i think we'd have a better chance at profiting from the growth and exportation of coconuts. How much loss did Ford post this second quarter? ...am i reading this correct or was it 8.6 Billion?

Thanks for the latest posting. Your information is timely and always ahead of the media, not to mention accurate. Mario's story in the Herald today said nothing about the improving sales.

It's interesting to see the price of oil coming down. It will have a net benefit to us as long as it stays above $100. People will be able to buy houses instead of spending it all on fuel!

Been reading RE blogs across the country and I must say yours is one of the best. You always have the news about two weeks before anyone else. Too bad that trolls like FreeSpeech have to waste our time.

The Alberta Bubble blog is gaining notoriety acoss the country...I found this comment on the Saskatoon blog:

"RE blogs tend to be very polarized, and in many the comments threads devolve into lunatic taunting, with a lot of provocateurs and trolls.  The worst Canadian  example, bar none, is Alberta Bubble -- commentators with four sock puppets apiece and constant gibbering flamewars with vitriol galore."

Jim,

These are not "scare tactics" they are my opinion.  If you can post your opinions then I can post mine without fear of being reprimanded for employing scare tactics (which insinuates that I have an agenda or I am a troll and have reason to drive prices down).  As I said before I am a property owner free and clear...as prices fall I do not benefit in my net worth.  This does not matter to me since I am happy with my home and plan to live here for the most of my life.

Maybe you would have a similar point of view as myself if you knew as many people as I did whom bought during the hayday of 2007.  These are average income Calgarians who are feeling the pain because the media, real estate associations, CMHC, told them that "prices are projected to go up 12% again" and "now is the best time to buy".  While you can attack these people for being foolish and counting on the news to make major purchase decisions, you can't help but feel that the various aforementioned associations should be held accountable as well!

So why do I try to impart my opinion?  Because my experience and analysis leads me to believe in it.  And I want to let any readers willing to listen know that it is not all rosy in the realm of Calgary real estate.  If I can prevent some people who might be overextended from making a purchase that will put themselves and their family in financial turmoil, why not try?  There must be a reasonable amount of contrasting information on this blog, or it will degenerate into an extreme antithesis of the Alberta Bubble Blog.

To set the record straight, last year, after July average prices reached $505,000, the president of CREB said, "My guess is that prices are actually levelling right off and they may even slightly decline a bit." Calgary Herald  

As for myself, on my blog and in my "What's New" column, I had been calling for a price correction since early in 2007:

For example, I posted on Feb 26, 2007: "The combined average price has risen over 8% this year and is already higher than the CREB prediction for the entire year(7.5%). March will be the month where the prices start to stabilize. I'm expecting a gazillion new listings to take the upward pressure off. Demand will further decrease because many people have been priced out of the market and will give up the ghost of home ownership." 

I made repeated forecasts that I expected a price correction. Short of locking people up in a secure room, in this country everyone is free to make their own decisions. - Bob

Peek Oyle

But the Alberta Bubble blog is entertaining as hell. Funniest stuff I've ever read, hope they keep it up.

Hey Bob --

Well, I said on the Saskatoon blog that Alberta bubble had some of the most violent flamewars.

I didn't say that I thought the bears on Alberta Bubble were *wrong* -- they're not -- just that everyone on there, bulls and bears alike, was remarkably rude.  

I've always admired the politeness of the posters on Norm's Saskatoon blog(and I attributed it to the better attitude in Saskachewan) but I see that he's even getting some rude people lately. -Bob

For those still waiting for the "right time", Calgary median is approaching the expected median price I posted on Bob's Blog back in November. My suggestion is, if you find a good enough house, buy it now while you still have the choice of good construction and location.

Yes, most of the de-listed houses will be back on the market, at lower prices. But 1/ these houses were well over-priced to being with and 2/ most of these houses were of low quality.

In the long term, Calgary housing will not be going back to 2005 prices. Those were abnormally low prices. Wages have since gone up and AB economy is on fire. Plus I expect some in-migration from ontario next year.

Do your own research, find a good realtor, and stay away from fear mongers. I can not stress the "find a good realtor" part enough. Stay away from the realtors with "teams" and tons of advertising, and find one that works only on referrals and takes only a limited number of clients every month.

Despite the innuendos, fear mongering, or bull promotions, political posturing of sorts, environmental slogan hazards we hear in the news and rumour mills, the fact remains - that the world has changed since the 1920s, 1970s, 1980s and 1990s bear markets - at least as far as Alberta is concern. No one in the right mind would kill the goose with the golden egg (although its hard to predict political rightouness or for votes). The goose these days and going forward will be Alberta. Ontario will take about 2 years before the industry can retool and remarket its manufacturing sector. In the meantime, Canada is all about commodities for the next few years. Unless there's a drop in demand for commodities from India and China and yes still quite defintely the US. Is there such possibility - sure. As long as India and China contends and intends to turbo powering their economies with "cheap" energy sources such as coal, and of course oil, there will be demand. As for nuclear power which is another potential source of power, it will be certainly a consideration as well. Oil is a unique resource quite differentiated from coal and nuclear which is purely electricity as an end product. Oil can be everything from plastics, nanotechnology, petrochemicals (like household products), clothing and yes - even food.

What has this all got to do with housing demand? Simple - the only game going forward for the next couple of years for Canada is oil and gas producing provinces (BC,AB and SK) and Newfoundland. I work for the smartest guys in the room and they are putting their personal monies in infrastrutures and development like O&G pipelines, commodities storage, and yes enhance oil recoveries like like CO2. And guess what, the best and brightest minds will also be here (Alberta) thinking of a better mouse trap to extract those O&G resources out of Alberta's backyard. Not only do they have to think of a better mouse for extraction, transportation and storage - they have to do it safely, environmentally responsible and watching the cost. Only the best of the best can achieve something like this.

So think of this way, highly paid, brilliant, young, experienced white collar workers, in combination with blue collar workers experienced or inexperience, highly paid, young and eager to expand and grow their careers are here or going to be here - yes right here in Alberta. Where are they going to live - rent or buy? You can connect the dots.

There is a euphemism - A city with more than a million has the momentum in growing more than one ways. As a point of reference, the folks at Westjet are brilliant futurist who can see far into the future. I don't see them shrinking. In fact quite the opposite with Southwest Air. It's truly amazing when the clouds are dark for some (AC, UA and many more) while bright as a super nova for others.

Just gotta be able to look past the forest.

This actually isn't a forcast on prices, although it may seem so.  But I agree with Al's and John's comments above related to the inventory amounts, and I think that buyer's expectations for price reductions have caused a lot of them to wait.  However, realising that it won't happen any time soon, I actually think we will have pent up demand that will slowly show itself throughout the rest of 2008.  Im not saying that prices will start increasing... but that the market will remain relatively active throughout the rest of the year.

Just a guess.

I don't know how about you guys ,but I hate when prices are going up,no matter if it is gas ,food or real estate!

I would buy if I can! But beside that I am working everyday 10 hours except weekends ,I don't qualify for the cheapest house in town !And I am not working in oil industry !I think for me is the best solution to move out from Alberta ,I will wait for now but if real estate prices  go up ,I have no choice then but to move!I would miss Calgary thought

roks,

  I whole hearted agree. Actually the majority of Albertans don't work in the oil industry and their the people that can't afford to get in now. The average Joe Trade making $35 an hour on a 40 hour week can't get into the game even if he wanted. You don't get much for the astronomical prices either. A 1150 sq ft two story shoe box with a zero lot line in the burbs where the house on each side of you looks the same as yours.

Bob, as a realtor your livelihood depends on selling homes.

The problem arises when you look at reality of what has happened in Calgary:  Most homes here are worth around $180,000.  This is not market value but what the homes were worth when they are built.  Houses like this are now $350,000 easy.  What is the motivation for a person making $100,000 a year almost to buy one of these homes when they are better off renting?  None at all.  I am one of those people waiting patiently, and I am prepared to rent FOREVER if needed.  And that is just me.  The majority of your population doesnt make good money.  This is unfortunate for the economy, because it will become harder and harder to find staff to run businesses.  I also know for myself that while my job is great and I LIKE Calgary, I am seeking work elsewhere and once I find what I am looking for, me and my family are out of here.

Perhaps it would be better for realtors to reinstitute a boom by recommending that all sellers price their homes with only a $50,000 profit margin.  That, or lose everything, because that may very well happen after October 15th when the 40 year loan is slashed.

As it stands be prepared for a rude wake up call in the coming years as the market corrects itself severely.  That, or lower prices on the homes you sell because there exist many families such as myself, while not hurting, are quite disgusted by the currect state of affairs in Calgary and are quit willing to starve the bulls to death.

You'll get no argument from me that renting is cheaper. People buy for other reasons which we've been through on here many times. If you missed those topics, maybe some of the regulars can fill you in.

My livlihood depends on helping people who have made the decision to buy or sell a home. I do not put pressure on anyone. People can even sell/buy without a realtor. Just like you can do your own legal work, or fix your car, or prepare your own income tax. I offer a value-added service to those who feel they want it. - Bob

So according to some people the market is going to be spirally down, then some people say its just leveling off.

I'm in a situation that I will have to move very soon, so which is better. Is it better to pay $1350 a month for rent (have a disabled child no need 1st floor condo or bungalow, still close to their school) or is it better to spend $1450 on a mortgage (condo)? (I will need to find a place by Nov)

Hahaha! Yeah right! Sales continue to improve? Inventory continues to be at an all time high.

The all-time high SFH inventory was in May at 7099. It is now at 6039. That's down 15%. Sales for single family homes are are down 12% compared to July last year. The HaHaHa! is a very insightful remark .  - Bob

Interesting statistics you have posted.

According to this link, there are just under 15,000 properties listed in Calgary today:

(http://www.realtyexecutivesapex.com/search_mls_map_form1.php)

The correct inventory for the city of Calgary including condos and single family homes is 9282. I've had that link posted on here previously and explained that it includes areas that are not remotely near Calgary such as Lacombe, Olds, Gull Lake and Vulcan. It also includes acreages. What relevant information will you obtain from comparing an acreage in Three Hills to a home in Calgary? - Bob

Regardless of your statistics, there is definitely no feeling of urgency for the public to buy immediately. I have no statistical data to prove this, only subjective feeling.

I have two letter from a real estate agent who rents me a storage property. His tune has completely changed. Basically everything went from being hyped and people saying "You have to buy now, because prices are skyrocketing!" Now it is "There is so much selection out there, it really is the time to buy!"

This rise in inventory is exactly what I said would happen. Everyone wants a piece of the pie. Contractors want to make money. People with increased equity want to invest and flip properties. The market soared.

No you have speculators holding properties unable to make that quick flip. You have contractors with finished properties. Where are all of the buyers?

The market is too expensive for people to purchase a first time home in Alberta. The advantage of high Alberta wages is weighed down by high housing costs, making a move to Alberta less appealing.

The market has to find it's balancing point. The wages and cost of housing are not balanced. The prices are still quite high. Housing upstarts have slowed, so the inventory may start to be absorbed, but there are still many projects under construction.

You state that sales are down 12% from last year. I can not access the CREB stats, because they are updating for month end.

How many houses were sold last year in July? If I remember correctly there were not many homes available back then and inventory was low. Almost all inventory was sold.

Let's say there were 1200 homes available July last year and 1000 sold.

There were 4510 single family homes available, and 1495 sold. - Bob

 How many of those were by home buyers and not speculators? Now we have 15,000 properties on the market, but sales are down from when we had 1200 SFH's on the market. Therefore we have inventory that will last several months. In my opinion, the inventory will not be purchased until the prices drop.

There are many people with decent jobs, who can not afford to purchase a home in Calgary. The government will no longer be backing zero money down, 35 year old mortgages to people with bad credit. That means there is no longer easy access to huge amounts of money to buy overpriced homes. There is no doubt in my mind that easy access to credit, real estate hype and flipping of homes drove the price up.

If there is so much selection out there, logic would dictate that there is no longer a shortage. Prices increased, due to a housing shortage and crazy hype. There is no longer a housing shortage and the hype has died. The last chapter will be for the prices to drop.

You're tossing around a lot of inaccurate numbers. I hope nobody makes any decisions based on them. - Bob

Bob:

You dont need statistics to understand that unless you make around $150,000 per year you are going to have a tough time buying in Calgary.

So where exactly will you obtain your buyers?  Not from the common working class.

Its undeniable that its cheaper to rent.  Therefore, those that choose to wait will see prices drop, because there arent many being paid like the Premier who are migrating in droves to Calgary.

There may be modest sales, but buyers have time to realize that almost all the homes being sold are increased in price only through market value, nothing else.  

This is not New York City, and because of the discrepancy between earnings and home values, you have tons of potential clients who will sit there and wait until prices drop.  Unfortunately the prices wont drop to reflect the pre boom prices as they should, as most of the shacks in Calgary listed for $400k should really be priced around $200K.

Thank you for the actual statistics. I am not sure what the actual number of listings is and what is a reliable source. If the 15,000 number is inaccurate, then that is definitely no good. May I ask what your source is?

Calgary Real Estate Board MLS data base. - Bob

Although I may not share the same opinion as you at this point, it is important that we all have accurate stats to base our opinions on. We can all 'try' to predict the future, but at the moment we should all have similar statistics. How these statistics are calculated and utilized can be a totally different story... lol

Nonetheless, in my experience, business is cyclical. We can all try to analyze, but it is never predictable. Anything can happen unexpectedly. Would anyone have guessed that an airplane smashing into the World Trade Center would cripple the American economy and halt trade? I don't think anyone called that one... lol

I believe that based on cycles and an unaffordable market that prices will go down. If they don't go down I will be surprised, but that will mean that wages will need to increase.

Of course both of our opinions are biased, based on our situations and personal interests. It is normal and acceptable. I look forward to further discussion with you as frustrating as it may be at times for both of us.

Thank you for your time.

Wondering... You asked about whether you should look for another rental or purchase a condo to take possession in Novemeber.

I'm not an expert but we've been closely following the market since we moved here 18 months ago. While we didn't plan to rent, we're glad that we did and feel that it's going to be a while yet before it doesn't make sense financially.

Given that you're looking at buying a condo, I think you'd be wise to WAIT. If you look at the number of listings out there, the number of vacant units, and the number in the process of being built, I can't see how the current prices could be maintained. They have to come down.

Having said that, if you still want to buy, don't be afraid to offer less than the asking price. I'd offer 20% less than the going rate. Don't be afraid of offending people. Be more afraid of paying too much and making a decision that will bring unnecessary stress to your family. Best wishes!

Update for link http://www.realtyexecutivesapex.com/search_mls_map_form1.php

Simply click th lower right hand corner of the map labeled 'Select All Calgary' and you will get the Calgary numbers for available properties. Today's number is 10,440.

I just checked the MLS data base and it shows 8913 active listings in Calgary. The link you provided is using a different criteria than the CREB criteria. Which is okay as long as you compare it consistently, month to month and year to year. Why don't you contact them and ask what criteria they are using, and why doesn't it match CREB's criteria? They are including more than condos and SFH in the city of Calgary. - Bob