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Fair and balanced comment on the Calgary real estate market from Bob Truman and Dailystats.ca
14% of SFH sales yesterday were at list price or higher.

Nobody expected this

A sale of $19,000 over list price? This is just another in a long list of surprises this year. A few other notable occurrences that most of us weren't expecting:

New listings of SFH down by 46% this month. The popular consensus was for a huge number of new listings this spring.

SFH Inventory down 27%.

After starting the year with Jan SFH sales down 49%, sales have picked up considerably and March sales were down 23% compared to last year. April sales are down 12%.


Condo sales were down 50% in Jan, but are down 4% for April.

Last year, the absorption rate in April was 5.1. This year it's at 3.7 and dropping. The supply of homes for sale is considerably lower than it was last year.

Most surprising of all, condo median price went up $6,000 since Dec.  

I never dreamed I'd be involved in a multiple-offer situation this year, but it occurred last weekend.

By the way, 3 condo sales were at list price or higher yesterday.

40% of yesterday's "new" listings were actually re-lists. Listings which had expired and are now back on the market.

Posted: Saturday, April 18, 2009 7:28 AM by Bob Truman

Comments

Glenn said:

The bidding process is an interesting emotional process. I've observed people in auctions and it's interesting to watch. Once they become emotionally committed to winning they start bidding up the price past what is reasonable because now they want to win. It's not about value anymore.

At the auctions, average people would pay close to new prices for office furniture! I couldn't believe it. I've seen the same impulse in myself and others on ebay and I have to resist the urge to keep going up.

I still think real estate is way overvalued relative to all historical norms.

# April 18, 2009 9:51 AM

Dame Edna said:

Hmmm...

Sales in calgary seem to do as good as up in Edmonton.

Is this:

a) spring rush delusion?

b) first time buyers jumping on the band wagon?

or:

c) finally we've hit bottom for leverage?

d) have builders finally come to their senses, build less so availability is balanced?

I'd say we'd have to see what happens thru September because of slower sale activities in July & August

# April 19, 2009 6:08 AM

Bob Truman said:

One of the over-list sales which was finalized yesterday was the house which my buyers tried to purchase last weekend. Our comparables for the area showed the house was worth exactly what my buyers offered. It ended up selling for higher than list price, and substantially more than what my buyers were prepared to pay. They were quite prepared to go higher, but I didn't think the value was there. There were a total of three offers on the house.

# April 19, 2009 7:26 AM

Bob Truman said:

Inventory is down 37% compared to last year, but price reductions are down a whopping 61%. There were 166 price reductions per day in April 2008, but this year there are 64 per day over the past week. Could we attribute that to homes being priced more accurately this year?

# April 19, 2009 7:37 AM

Bob Truman said:

When the term "Absorption Rate" is mentioned to most people, it is met with a lot of rolling of the eyes and blank stares.

To make it simpler to understand, think of it in these terms:

It's the number of months that it would take to sell all the active listings if no new listings came on the market.

Today's absorption rate of 3.7 translates into a 111-day supply of homes(3.7 x 30).  If we had no more new listings, theoretically those would all be gone by Aug 8.

In January, there was a 258-day supply of homes. Last year in April, there was a 165-day supply of homes.

Back in 2006, it was common to have a 20-30 day supply. We saw what that did to prices. It is commonly believed that a 54 - 105 day supply of homes produces a balanced market, where neither the buyer nor seller has an advantage.

If you're still with me, take a look at the Absorption rate by price range table. You can see that homes priced below $400,000 are in balanced market conditions. Homes priced above that range are still in a buyer's market.

# April 19, 2009 7:57 AM

Bob Truman said:

Get ready for a jump in the sales volume for the home stretch in April. Pending sales have shot up dramatically in the last couple days, and are now 24% more than last year at this time(includes SFH and condos).

As I write this,  SFH inventory has just dipped below the 4300 mark. That's fewer than we had in March.

Although we're seeing a definite improvement in sales compared to the beginning of the year, keep in mind that April's SFH sales are still 33% lower than the historical average, going back to 2001. The historical average for the entire month is 1708. It's looking like we'll end the month with about 1200 SFH sales.

# April 20, 2009 11:47 AM

Newt said:

Hi Bob,

This is sort of an odd question, but how many pending sales go through to sale... 95%?

Thanks,

Newt

It would be a time-consuming job to figure it out precisely, so a quick educated guess would be 85%. -Bob

# April 21, 2009 6:19 AM

12th floor said:

Hi Bob,

I am just trying to understand the significance of the pending number. Could you please provide some historical number for us to compare? for example, the Apr month end pending number for 08, 07, 06, 05

Thanks

The only one I have available is last year. On April 29, there were 346 SFH pendings, and 137 condo pendings. -Bob

# April 21, 2009 7:40 PM

Rob said:

Thousands of mortgages now in Calgary are maintained on employment insurance payments. It's a matter of few months and people either move elsewhere for work and sell, or run out of EI.

I expect in the second half of 2009 inventory will rise to 7000 SFH priced desperately low to sell (maybe another 10% off), either by people avoiding bankruptcy or by their banks.

There is no one I know who haven't seen layoffs among their family, friends, companies, or neighbors; and numbers are still growing. Those who evaded layoffs, have taken pay cuts of 10%-20%.

# April 22, 2009 8:37 PM

Albertan said:

Re: Rob

"Thousands of mortgages now in Calgary are maintained on employment insurance payments. It's a matter of few months and people either move elsewhere for work and sell, or run out of EI."

Move where for work if I may ask? No one ever said life's easy. Stay positive - it's not the end of the world.

# April 23, 2009 10:47 AM

Newt said:

It looks to me that the market has switched from a "buyers" market to a "sellers" market over the last month or so.  If I had any thoughts of selling a home, I would be throwing it on the market asap - you never know how long this sellers market will last.

# April 24, 2009 10:34 AM

Heather said:

Hi Bob

I did that comparison again for the number sold.With of course the end of April number sold being an educated guess using the information of avg per day sold so far so it could change slightly...

I wonder if we do sell that number of condo units in April will the newspapers compare that number to April of 08 and speak about the increase in number sold even though it's small or will the more sensational story be to compare it to 2007? That is of course a rhetorical question.

As I said before I'm not looking at prices I'm merely looking for my own peace of mind to see health in the number being sold on the market. People buying their own homes. I love my home, I'm in it for the long haul.

SFH sold sold -/+

Mar-06 2049 Apr-06 2040 -0.44%

Mar-07 2272 Apr-07 2073 -8.76%

Mar-08 1418 Apr-08 1363 -3.88%

Mar-09 1086 Apr-09 1220 12.34%

Condos

Mar-07 1026 Apr-07 839 -18.23%

Mar-08 565 Apr-08 581 2.83%

Mar-09 446 Apr-09 589 32.06%

# April 25, 2009 8:00 AM
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