DailyStats.ca

That is positively mind boggling. Oh well, interesting time indeed.

Well, in Calgary SFH sales are down 15% month over month, and prices are down roughly $11,000 or roughly 3% for the month of July alone. Condos are flat price wise, and sales are down roughly 5% month over month.

Last month you compared sales to the month over month numbers because they were going up, you gotta be consistent when things go down.

No, I didn't. I believe it's more accurate and indicative of market conditions to compare year-over-year sales and that's the way it's done here on my month-end stats.

Here's what I said in my month-end stats summaries for the past four months:

July:

Sales of single family homes were up 21% compared to July 2008. 

Sales of SFH are up 15% compared to the historic average for July.

June:

Sales of SFH were up 28% compared to June 2008. 

Sales of  SFH are up 18% compared to the historic average for June.

May:

Sales of single family homes were up 16% compared to May 2008

April

Sales of single family homes were down 5% compared to Apr 2008. Year-to-date sales are down 26%.

You're probably reading the CREB month-end. I do my own thing here, so get with the program.

-Bob

SFH average prices are down $70,000 from their $505,000 high in July of 2007. Condos are down $47,000 from their May 2007 high of $332,000.

Overall sales volume ticked up in June and July year over year due to FTB’ers “walking the plank”, but there are only so many greater fools to go around.

Re-read the above to see what awaits them.

I removed the paragraph with the insults. You're welcome to post here, but you have to follow the rules .

BTW, how confident are you that the average price will be $313,049 in Dec as per your Prediction ("Calgary will go down 25% in 2009")?   - Bob

Very good article in the Herald regarding the pitfalls of buying US property:

http://www.financialpost.com/story.html?id=1850361

Does anyone have any info or links that would shed light on buying something in a place like the Dominican Republic?

Sorry Bob, I know you want to focus on Calgary real estate, but I thought I'd try slip this one past you.

Thanks.

Hey Bob,

Question for you. Do you think that buyers in the U.S. also felt that home prices would continue to go up in perpetuity?

You're making an assumption here which I don't happen to share. Ask me that question again, but omit the word "also." - Bob

Also, you seem so confident on the market not having a dramatic decline. Givin that you are a sell-side guy do you think that your opinion is biased? That is to say, much like the sell-side brokerage houses, your interst lies in the commission and not in the long-term viability of families?

You're making another assumption here. Where did I say that I didn't expect the market to not have a dramatic decline? Conversely, can you find anything I've said that implies the prices will go up? 

My opinion is not biased because I don't care one way or the other if 10 houses sell next month or 10,000 sell. I'm not in this for the commission, as you imply. I'm simply doing it for fun.

I'm all for the long-term viability of families. If people read the statistics, and are well-informed, and look at all the factors involved in purchasing or selling, they will have a much better opportunity to arm themselves with the information they require to maintain their "viability." - Bob

Come on, do  you really think that a $400,000 median home price is reflective of what an average family can afford in Calgary? Or, is it really a matter of fear? Fear really works in both ways, doesn't it Bob. Everyone is selling I better sell to. Or, everybody is buying so I better buy before I don't miss out.

You're making another assumption here. Where did I say that I think $400,000 is what an average family can afford? For the record, I don't think the average family can afford that. - Bob

Sorry to be harsh but I have found some of your blogs to be demeaning. Especially the "Ahh run for your life" blog. Try joking like that with Americans who have lost everything?

"Ahhh run for your life."  The purpose was to show how fast conditions can change. The person who said that back in January was implying that a housing crash was a foregone conclusion. Six months later we have higher prices and record sales.

I don't follow where that has anything to do with Americans, and furthermore, you have no clue how I feel about the Americans "who have lost everything." For the record, I have plenty of empathy, coming from a place where I have first-hand experience with people who have lost everything. Please don't ascribe feelings to me when you are not aware of the circumstances which I have lived through. - Bob

Here is a challenge for you. I would like you to post a graph showing Calgary historical home prices. Please go back as far as you have data. You can even adjust for inflation so the peaks and troughs arn't so pronounced. Post it and lets talk.

Collecting information, processing it, and making graphs takes a lot of time which I don't have right now. You're welcome to make a graph and send it to me, which I will post right here. 

You really should take a second look at how you use the information from this website. Just because I post information, and should that information say that prices are going up, it does not mean that I think it's a good thing. What you're doing is called "shooting the messenger." When I posted all the information about prices going down(which happens for six months of the year), where were you then? - Bob

MAC  

With recent sales numbers/activities (house sold/sales price etc), what is your educated guess of RE short and long (a year or 2) term?  Same predictions you posted on your blog in the past?

BTW, the bank I work for released 2nd quarter report & it is NOT good.  Don't expect any variable pay next year unless the economic make a dramatic turnaround in 3rd & 4th quarter.

Thanks.

I'll stick with my short-term prediction(which I made on July 5) of a 7.5% median price drop by December.

Long-term - get a dart board. One year ago, you would have been laughed out of here if you had predicted record sales in July, or condo prices being higher than last year. It's too volatile to make an accurate prediction.

There are many variables which will affect the housing market over the next year: Will unemployment go higher? What will happen to the price of natural gas and oil? How soon will the U.S. recover? Will interest rates stay low? Will we continue to have a shortage of inventory? If someone can give me a definite outcome for each of those factors, we might be able to make a wild guess. -Bob

It's been awhile since I've posted on any blog, simply because I've been far too busy with other things in life.  Also, I grew tired of reading the same old things over and over again by the same old people (bull or bear alike) who were unwilling to see the changes in economic climate upon us.

I stuck my neck out and said it was a good time to buy and to buy soon (2009/2010) and I stick to that statement.  Barring a worldwide economic collapse, we are now turning the corner to a world without the USA dominating all economic activity.  A weaker US Dollar (94 cents buys one CAD $ now) coupled with a USA devoid of major manufacturing ability means the rest of the world will now take over the role of consumer and producer (namely China).  This will lead to an ever devaluing USD, the eventual printing of more stimulus money, and the increased liquidity will make oil skyrocket in price.

We also must note, that peak oil (whether you believe it or not) has more and more credit now.  Looks like, no matter how dirty our crude here is, we will always find a buyer and hence Calgary's economic health will be sustained for the foreseeable future.

http://industry.bnet.com/energy/10001772/iea-economist-warns-of-oil-shortfalls/

http://www.independent.co.uk/news/science/warning-oil-supplies-are-running-out-fast-1766585.html

So, government stimulus + higher commodity prices + stable country = Canada is the "place to be".  No matter how crappy our city looks compared to places like Miami, Rio, New York, London, etc etc.  Skate to where the puck is going, not to where the puck has been.

Bob: thanks for the feedback.  Is it appropriate to post on your blog the area(s) you will pick to be living in, not in the suburb please.

Having some savings and house we living in is paid off.  We currently live in the hood and like to move to a different area.  Thanks.

I'm not sure if I get your drift. Are you asking what area of the city I prefer? Wouldn't your choice of location be dependent upon where you work, or what your lifestyle is, or where your kids go to school, or any number of other variables?  If you're looking at moving to the inner city, I think Sunnyside, West Hillhurst is a terrific area. - Bob

I forgot to add in the caveat that even though I say buying a home is a good idea in 2009/2010 with LOW interest rates... the buyer must be aware that the price of their home may still decline in the short term by a bit (maybe 7.5% as Truman is predicting).

So why buy even if prices can decline?  Well, first of all you can't time everything perfectly.  Secondly, if you NEED a house now and can afford it properly (20% down at LEAST), the risk of waiting vs. the risk of buying is starting to balance out.

I still think real estate prices are out of whack, but everything else is priced out of whack too.  Deflation?  The government will fight it was much as possible, and even Carney himself won't take the dreaded QE policy off the table.  Fact is, there are far too many people who are Keynesians, and far too many people with skin in the game now.  This is the reality that isn't going to leave us.  Go with the flow, bend with the times, and make some smart money along the way.

worldclass:

" Go with the flow...!!!" Depends on a PRICE you are

willing and afford to PAY for the house.Sometime

better to wait(100% sure) and get what you want.

Just to point out, this is a different Mike than the one who said "ahhhhhh...." - Bob

Of course it depends on the price Mike...that just makes sense.  Don't buy what you cannot afford.  If you cannot afford anything then rent and save the best you can.  Nothing wrong with being a life-time renter, but there is something wrong if you blow all your money on fancy cars, caviar, etc when you can't afford it.

Bob, I remember that "Mike" guy you are talking about.  Motorcycle forum, gave you his site space and helped you host your blog there.  Had many an argument with him (respectable ones) when I was more bearish and he was uber-bull (when he had a house to sell...hah).  Of course, he's renting now and just waiting to get back into the real estate game.  He needs the prices to come down so he can buy something on the cheap with the million he made on selling his Scarboro home.

You can be sure that when he buys a home he'll "pull a Radley" and become uber-bull again.  It's just so obvious but there is nothing wrong with that.

As for myself, why am I more bullish now?  Not because I bought real estate... actually I sold (too early too in late 2006).  I'm not even investing in it at all.  I'm more into the stock market.  Merely, I am just wanting to state what I think is happening in the market now so that all readers don't start thinking what Squidly thinks.  Just as a gung-ho realtor can push unaffordable homes to unsuspecting buyers....a gung-ho realestate bear can prevent some people from making what would be a "good move" in life (depending on situation).

How would Squidly feel if all of a sudden homes were back up to median 420k or something?  Wouldn't he feel "responsible" for keeping people out who NEEDED a home, could AFFORD a home, and found THE home for them?  Would he hold himself to the same standards as he holds realtors?  Who knows but time will tell.

"Would he hold himself to the same standards as he holds realtors?"

I remember some poor dude on the bubble blog last fall saying that he was selling his house "at a $50,000 loss" because squidly told him things were going to be worse in the spring...and he thanked him for the advice!

Bob, squidly thinks there's something wrong with people from Saskatchewan. He states on his blog that you are "a transplanted Saskatchewanite."

As a "transplant" from SK myself, I think immigrants and transplants are one of the reasons why Calgary is such a dynamic city. People who are willing to work have moved here because of the opportunities. I'd venture to say that 25% of Calgarians are from SK. You see them all at the Stamp's games!

It's easy to be unaccountable when you are anonymous. I wish I had some of his quotes from last fall so people could see the fear-mongering for what it was - fear-mongering!

JS said it well on the previous topic "the worst bears are highly emotionally invested in a crash so that others can be forced down to their level."  

Are you still a "Rider" fan? -Bob

Found this on Garth Turner's blog and is relevant to the discussion:

"Your predictions were wrong about a flood of listings in the spring with no buyers around, yet you preach the same thing over and over again. You know what? You will be proven right some time in the future and then you’ll be laughing at everyone because you were “right.”

You’ve probably made a lot of people miss out on buying opportunities because of your constant fear-mongering, yet you even admitted to buying another home!!"

"It all seemed so inevitable, your blend of self-assuredness mixed with short-term data appeared so incontrovertible. But you and the rest were wrong. You didn’t see the central bank committing to sustained record low lending rates… mean reversion be damned. You also didn’t see overwhelming pent up demand for housing amongst youngsters–enough perhaps to prop up the entire market."

Totally, I respect people putting themselves out there, accountable for what they say or write.  

Bob:  re your comment that you will stick with your predictions of 7.5% drop ...December.  What stats

you use to come to this number?

Also, what is the difference between your stats v. CREB (yearly v. monthly)?

My stats all originate from the CREB database, so there should be no difference. I go into a lot more detail, and give a lot of stats which CREB doesn't provide.

How did I arrive at a 7.5% drop? I took a number of factors and put them in the processor and that's what the result was. Some of the main factors were the state of the economy, the interest rates, the price of oil and gas, the United States' situation, migration, historical patterns, pent-up demand, and inventory.

How much weight would you give to each of these factors? Did I miss any that you think are important?

Regarding inventory, if we were in a normal market with historical interest rates, our inventory situation would be driving the prices up. There is a shortage of good product on the market.

There are supposedly thousands of new condos coming on the market. If and when will they materialize?

Interest rates are an interesting one. The fear of rising interest rates may have helped sales increase and kept prices high for the time being. If they stay low, will that continue to stimulate sales, or have all those buyers already jumped in?

-Bob

One factor that may affect the RE is the population aging between 26 to 40 (like echo-bommer?)in Calgary.  What do you think or is that already been included in your stats?

No, I didn't take that into account. What impact do you think it will have? -Bob

I made money by betting against fear this year.  When Alberta bubble was advising people to pull your money out of Canadian banks I bought shares in Canadian banking institutions.  I believed this sector was vastly oversold due to IMF ranking Canadian banking system the soundest in the world, that deflation fears were overblown, and that our banking system structure and mortgage insurance is totally different than the US.  Some of these shares are now up 100%.

It pays to use your brain.

Radley, congrats on the good stock market plays.  Like you, I have been in the stock markets as well and bought when the world was "going to end".  Aren't the banks stocks just great?  I'd caution against holding onto all of your shares though, it is a good idea to take profit from time to time.

As for calgary real estate...you may have bought a little too early but in the long run you'll do OK as long as you don't lose your job and you can stay in your home until Calgary's economy comes back.  There is a lot of consolidation being done in the oil and gas industry lately and people are losing their jobs because of this too.  Eventually when the dust settles, Calgary will be back on track and chances are home prices will be moving up again (since builders are all but quitting on new builds today).

My 2 cents:  

the echo-boomer will drive up the needs of RE.  Like the boomer, get married, starting a family, buying a car and a house etc.  The mid 30's to 40's will likely moving up.  Bob:  what is the population in Calgary in this age group.  Again just my 2 cents.

Bob: I think you have included the population factor i mentioned in your STAT, and it is the migration factor which in fact it is more in detail.  

BTW, there is a another group of people that maybe worth including in your stats (the number maybe too small by 0.xx% to affect the results anyway) is a group of young people (age 25 to 30) working and still living at home with their parents but is ready to buy a RE when they move out/getting married or just waiting for the house price to come down.  This is more of a cutlural thingie.

As you use the prediction based on stats including historical data etc, what is your range of confidence if you don't mind me asking.  

I have a friend who did a stat paper on oil/gas price.  He predicted the oil/gas price will up to $100+ a year and a half before it happened.  Everyone brushed him off and laughed at him, made some nasty comments.  I told him he should go back and throw his report at the face of those people.

New unemployment figures for Alberta out today...

http://www40.statcan.gc.ca/l01/cst01/indi02j-eng.htm

Up 0.4% to 7.2%

This is the flattest real estate market that most of us can remember. Do you think that the stars might have aligned to get us back to the point where people might buy houses just because they need a roof over their heads and not because they are trying to leverage their downpayment for a huge profit?

I think the days of real estate speculation are pretty much ending.  All the speculators have been spent out, or are spending their money on USA real estate (and currently still losing money).

Right now, the fundamentals in Calgary are actually supporting the prices.  People who are buying are doing so mainly because they need a home and have been waiting for some decrease in prices.  Coupled witht the low interest rates (and promised to be kept low for the next year or even longer), the first-time buyer or mover-upper is keeping this market afloat.

Affordability measures have also greatly improved according to bank economic studies, making Calgary one of the most "affordable" major cities in Canada.  Though it may seem like prices are still overpriced, they will stay that way for the foreseeable future whether we like it or not.  That's reality.

If peak oil hits, or the US Dollar has a currency crisis...then who knows what will happen.  At least those who own a home have something tangible like a roof over their heads or hard land, instead of paper money (I guess if you had enough paper you can build a little tent with it).

Hi Bob, Great post.  I am still amazed at the resilience in the Calgary market.  It sure is something.

RE: Garth Turner and Garth Turner buying a home.

I think that some people look too hard at this and try to compare apples to oranges.  It is a pretty good idea to buy a home if you HAVE THE CASH.  Where else can you find that secure of a source of return for your money right now.  Alternatively, and what Garth tries to bloat on his blog, is that it is a bad idea to "invest" in real estate right now if you can't put at least 25% down over a 25 year amortization period (and don't forget to budget at a higher interest rate when you do your math).  I think that he is a much needed resource in this land of do now, think later people.  Every time I meet with a realtor or mortgage professional, they always try to upsell me – convince me that I can afford more then I can.  Not one has even hinted at the idea that interest rates might go up (except for when they try to use scare tactics to get me to buy sooner) and that we should plan for the future.  There are a lot of "sheeple" out there that believe these people and are digging themselves into a good sized hole.  

Hi Newt:  exactly.  Besides the realtor/mortgage professional, there is one more industry that keep trying to encourage me to RING UP my liabilities...it is the credit card company.

All I called them was to activate our renewal cards, they tried hard to have me accept an increase of credit limit from $5K to $16K.  It was nicely said "you are a valuable customer, you always make your payment on time, your account is terrific blah blah blah and here you are approved for $16K".  They damm well know my husband and myself DO NOT have combined monthly income of $16K.  What is happening on this EARTH?  BTW, I told them to exclude us from any future automatic cli.  BTW again, do you know the agent will count as making a sale in his performance if I accept the cli.  The cc agent was professional and polite, provide a good customer service.  It is the bank who is pushing this, so Bank are flooded with $$.  

Bob: inventory level?

Inventory is 40% below last year for both SFH and condos.-Bob

Weird things are still going on in the RE market and honestly Calgary is a lot more restrained this year than some other Canadian cities where the economics make even less sense.

I noticed the average price shot up today - was that the 10 mil sale Bob? Of course the median is quite a lot higher this month too so who knows.

I'm probably one of the more bullish people on RE honestly and even I thought prices would be down over this year or at least flat. I always put more stock in price per sqft (its still down quite a bit from last year) than mean/median but we may enter a situation where even that is higher year-on-year soon (this fall maybe). I would never have expected us to be peaking again in August.

The condo situation is really surprising to me too. Starts were insanely high early last year. Maybe with all the cancellations that inventory has been "destroyed"

Those prices don't include the potential $10 million sale. It's still showing as pending.

The 30-day average price for a two-storey home today is $260. Last year was $264. -Bob

If you recall I said "now was a good time to buy IF you NEED a home" back in May 2009.  Since the rates were low, people had good choice of homes, and the prices could still be bargained down somewhat.  I also said that the government would be quantitatively easing like crazy (see the USA) and that Canada would be forced to follow suit (hasn't happened yet, but rates are being kept at 0.25% for at least June 2010 and Ben Carney recently said maybe longer)

Now it is mid-August.  Inventory is down, demand is unprecedented given this economic climate, sales are up, and prices are looking up, etc.  Also, those who are buying now are getting a higher interest rate (back in May you could get 3.5% fixed for 5 years, or even less).

I said 2009/2010 would be good times to buy a home to LIVE in (do not buy for  specuvestment).  Because it is something tangible that you need anyhow, and that you should be using your cash for something because the government is just throwing cash (and going to throw more) at the system.  You don't want to fight it because the world's central banks are are run by Keynesians.

So far, it would seem that I was right.  That's not to say I might look wrong in a few months, but even of prices come down a bit those who locked in a rate of 3.5% in May are still doing well.  Barring a worldwide economic collapse it looks as though the real estate market is stabilizing.  In the case of a economic collapse or currency crisis in the USA, all bets are off and I might be either INSANELY WRONG or INSANELY RIGHT depending on what our governments do.

Bob, change of mind? your predictions? Your last chance (lol)

I think this is an explanation for the mean/median increase this month: We know that the the large volume of houses that sold early this year were all the starter/low end homes that first time buyers and such would buy (also the ones that speculators might buy).

Now the people who sold all those homes are buying homes. They probably sold their homes at higher prices than they originally paid assuming they bought more than 2 years ago and are entering the market at a higher bracket. Once those people have bought those homes out, I would expect the median and mean to drop again into September, and resume the yearly decline through the winter. Inventory levels will probably still stay at historically lower than average levels though. We'll know if this is happening if the ab rates for the lower end get worse or stay flat while they get better at the upper end.

So basically instead of seeing the usual summer peak, it was divided into two this year (with a higher peak in August). I think that's why we might see our first "Year on Year" mean and median increase this month

PS the mean and median for August are already higher than last year (median is 8000 higher than August 08 as of Friday)and the 10mil sale is not even through so the mean will very likely be higher at month end.