DailyStats.ca

i think inventory will rise a little bit due to the spring RE fever as for price i don't see doom and gloom but prices will drop slowly due to the economic situation. There is a lot of new first time home buyers entering the market but i think more will come if prices drop 5 to 10% more. that would be the max price drop by year's end, prediction  for dec.09  average price 385000 and median 350000

For more crazy fantasies and fabrications, visit the bubble blog...Hilarious!

Having said that, yes, lots of folks were and some are still predicting a huge calamity. But again, with every economic downturn, those same folks were out there screaming bloody murder...

Look for prices in Edmonton to go down a further 5% by end year before being stable in 2010 and going up at inflation rates in 2011.

It's sure easy to pick apart somebody's comments with the help of hindsight 6mths later isn't it.  Mind you if you would have formed a trendline using the stats avaiable then i can see why he would have made that prediction.  He also didn't have the benefit of knowing BOC rates would get knocked down to almost nothing.  However, if i would have shared his view i would have thought something like that would happen in Oct rather than this early.

I think you might be somewhat right about the poor selection part Bob.  Some of my friends who were searching for rental properties recently said it was the same garbage being recycled over and over and way overpriced.  They also commented that when a good value home hit the market it was gone within a few days if not THAT DAY.  I guess it goes to show pricing is still the key.  The one friend ended up buying something last month.

in addition to the last post, for the record i dont' believe the prices will get down to what Diabolo predicted either.  That is a predictive agressive prediction.  Just for the hell of it I will guess a median of about 370 by October and 240 for condos. Yes, very boring and not agressive I know.

Here are some facts:

- Jobs lost in Calgary everyday= 150 (500 jobs a day in Alberta, see article below).

- Maximum employment insurance coverage= 9 months

- Job shedding started = Oct 2008.

- RE price drop in Calgary even before massive job losses= 12% y-to-y

- Cost of living in Calgary is one of the highest in Canada (unemployed people will move out even without jobs)

- Historically Alberta entered every single recession 6-12 months after Ontario, and recovered 6-12 months after Ontario. Job creation will start there, and people will move out of AB for jobs before recovery starts here for the next AB boom.

You do the math. Here is my prediction: Foreclosures will skyrocket late summer/early fall. Before year end we will see another y-to-y drop of 12% or more.

I vote with Diabolo.

http://www.calgaryherald.com/Business/Calgary+number+jobless+doubles/1545011/story.html

We will see. But if this rigth - now med: 420 by October 370!!! It's 50K down isn't it?

Just heard a story on Global news about the upswing in real estate in Calgary. Hmmmm

Low sales? Poor selection? But sales are only slightly lower than last year (for the month of April) and as far as I remember last year the inventory in Calgary was the highest ever.

The way I see this, is that your buyers (just like many others) would love to pay $550k for houses listed at $750k in those areas and most likely consider the actual $550k range listings not worth the money. So, I don't think poor selection is the issue, but buyers expecting more (too much?) for the money they are willing to pay, not that I blame them, but these are the markets nowadays.

Better selection does not mean the $750k listings should be listed at $550k instead (or maybe they should?), that means lower prices.

Nearly one in four energy services employees let go since December: survey

http://www.calgaryherald.com/Business/Nearly+energy+services+workers+since+December+survey/1550567/story.html

Motley Fool ran an interesting article back in 2005 regarding price to rent ratios.  

"If a home is selling for 150 times the monthly rent (or less), it's generally a good deal. If it's selling for more than 200 times the monthly rent of a comparable property, you're better off renting."

From what they found, in markets where the price to rent ratios were 200X or more, they *always* came back down below 200X eventually.  During a bust, they usually averaged about 120X.

That made me wonder about the price to rent ratio in Calgary.  I dug up some data on rent prices in Calgary.  Unfortunately I only had data as far back as 1996.

Year - House Price - Rent (SFH) - Ratio

----------------------------------------

1996 - $134,443 - $850 - 160

1997 - $154,451 - $900 - 172

etc, etc (I'll just list the ratios)

1998 - 167

1999 - 168

2000 - 179

2001 - 175

2002 - 187

2003 - 201

2004 - 213

2005 - 238

2006 - 260

2007 - 332

2008 - 293

And here we are in 2009.  From what I can estimate, our ratio is 250  ($425,000 / $1700).  

I came up with the estimate of $1700 for rent by looking at the middle of the 45 pages of homes for rent on Rentfaster.ca (when sorted in order by price)

According to the Motley rule, we'd still be overvalued at $340k, and undervalued at $255k.  We'd be 'just right' at 175 X $1700, which equals $298k.

Basically, every time I've run an analysis on where we 'should be' based on long term fundamentals, I always end up with Calgary being in the $275-300k ballpark.  

CM

Thanks for the rent/buy breakdown. Very interesting. I believe prices are still way to high and am waiting.

CM - thanks for the numbers. It is interesting if correct your numbers for inflation. This link puts out everything in 2009 dollars....

http://www.bankofcanada.ca/en/rates/inflation_calc.html

E.g. Your ratios would be the same - but the $134K 1996 house should now cost you $173K or $1095 rent in todays dollars.

I think people forget this effect when reviewing historical data and can show bias - in both directions....

I can see prices moderating in Calgary, but the job loss talk is just that - talk. Most people who have lost jobs were on oil/gas contract - and generally earning a premium monthly pay packet. They may move away - but are they going to go and join the even longer job queues in Ont or Quebec for semi skilled? I dont think so - the likelihood of getting skilled work is still better in AB/BC/Sask than going to the east just due to pure volume.

People moving their capital away from AB will affect the local Albertan economy - but there are more industries in Calgary than oil/gas, and construction is still occurring (look at the university, LRT and roads projects in calgary). Maybe deflation will hit and things will really get shaken up - but i think the media is loving the flip side of a boom most of the time.

I'm just happy it will be warmer this weekend!

It's funny that people actually believe the real estate market is fairly priced.

Do any of you listen to the radio?  Tv?

'Use your RRSP for a downpayment!'

'Use your Boats, Cars, ATVs as a downpayment!'

yeaaaaaaaaaa, sounds like theres lots of buyers out there LOL!!!!!!!!

I know people involved in a lot of different industries here in Calgary.  Most of them are scared because there have been layoffs and paycuts at their companies or they have been layed off themselves.

We still have a long way to slide.  Diablo was right and still is right.

Take your eyes off whats happening at this exact second and look at the macro picture.