Bob Truman, First Place Realty

Don't forget to include the cost of buying and selling. if you sold the house for the same price as you bought it, you took a loss - unless your real estate agent and lawyer happened to do the work for free.

I didn't forget. I thought it would be obvious, but thanks for pointing it out. I noticed for most of these transactions that the sellers used the same realtor for both the purchase and the sale, so my guess is that you have it correct.

I can't speak for the lawyers. - Bob

Its also probably reasonable to assume that at least a couple of those places were "flips", and underwent extensive renovation and thus additional (and unknown) expenses for the purchaser.

The property which went from $190,900 to $375,000 was a remediated grow-op. -Bob

I think by the time you factored in selling costs, that would have wiped out any gains from all but approximately 17 homes in the chart above.

$300k sale, subtract $13,000 + lawyer fees

$400k sale, subtract $19,000 + lawyer fees

$500k sale, subtract $22,000 + lawyer fees

And let's not forget how HGTV crazy the last 4 years have been.  I think a 'couple' places undergoing renovations (let's say couple = 5 out of the 60 in your data, or 6%) would be estimating on the low side.  Who do you know that HASN'T renovated since '06 ?

And of course we'll ignore property taxes, insurance, and the cost of maintaining those properties for their 2010 sale which would have wiped out gains from all but a couple.

Hey Bob,

Just wanted to say thanks for the straight up and honest presentation of the stats and facts without the spin.  Have been following a few blogs the last few months and I always find yours to be a good place to get Calgary market place info from.

Cheers

Once again, This stats. is very favorable for the sellers. Good time for sellers. Good job, bob.

remediated grow-op: Does that mean they upgraded the grow-op equipment? :D

CM:

For balance sake, you should also count any rental income that some owners might have derived from the property over the last 3-4 years. We could go on and on but I agree that Bob's numbers are probably skewed to the upside.

His point is interesting though in the face of so many arguing that we are as underwater as the RE market in the US this could not be further from the truth.

An important statistic, highly underreported, at the beginning of 2008 was percentage equity in the home in Canada vs the US. In the US it was 40-45% (horrible). In Canada it was over 70%. It's about 68%here now despite all the debt out there. Meanwhile in the US I don't the number but its probably 10-20% or even negative according to some.

Mike Fotiou has an interesting post on his blog about the long term RE appreciation in Canada of 2-3% and the fact that we lagged in the 90s before we "bubbled" in the 2000s. Maybe Canada's market got back to where it "should" have been last year and we'll see a more normal 2-3% pace of growth going forward.

all this talk , but it all comes down to jobs ! no job = underwater . So things are stable now and the housing seems to be OK.

We were lucky this time , things could of got really bad, so I am for one am happy things are in recovery mode. Would like to see housing stay at this price level.

Even though we rent we would like to buy one day but if things get higher we will have to forget it.

Thanks Bob,  Enjoy your posts and local content.

Hi Bob,

Thanks for the loss/gain chart.  Is it possible to show this same chart with an extra column showing the actual gain after buying/selling costs that the land owner would have incurred?  I’m sure that it would be a semi simple calculation for someone like you who knows what they are doing.  Your current chart is misleading (I know it has already been pointed out) if you are trying to show if a homeowner has made a gain or loss.

As for the absorption rate.  I have a feeling that there are going to be a lot of people buying this year compared to last year.  They better buy now or risk being priced out forever! ;)

Thanks,

Newt

Yes, some good points Jimmy.  At this point though, I still feel the playing board is unfairly tilted in one direction.

If that playing board becomes balanced, and Canadians have proven to be as responsible as you think, then I will eat my humble pie.

Personally, I think we were just as greedy at the trough as our neighbors but just approached it in a different way.

Thanks Bob for posting the above compare.

CM i think if you factor in how much money the people that bought these houses saved on rent they would still be ahead.

average 1200 dollars a month for 2 years = 24000 dollars.

the problem with this is you really don't know the variables so it's easier to just do a compare of the actually numbers that are recorded and not guess at the other variables.

"you really don't know the variables"

Thanks for bringing that up. It's just a guess, but I would bet on a lot of these sales, the listing realtor received little or no commission(if he/she was the realtor when the house was purchased). That's why I didn't make an additional column, but left it to my readers to make their own. -Bob

Yes, eventually this will just turn into the rent vs buy argument with someone suggesting a good calculator to plug all the variables into.

I think overall in general we can safely say that...

Bought in mid 2006 or earlier - feeling great

Bought in 2007 - perhaps a little nervous or apprehensive

Bought in early 2008 - feeling fine

Bought in second half of 2008 - too early to tell

Overall, arrears are far from atrocious (although Alberta leads the way) and I'm sure most Albertans feel like they're doing just fine.

But the alcohol is still flowing at this party, and the hangover doesn't begin until you've stopped drinking.

It was pretty obvious to me that Bob was giving the straight numbers 1. purchased for 2. sold for, with the belief that his readers were intelligent enough to know that they did not mean what the seller netted.

Newt said

"Is it possible to show this same chart with an extra column showing the actual gain after buying/selling costs that the land owner would have incurred"

If you want a column showing the actual net after buy/sell costs. Then one could also argue to get a true picture you'd have to factor in what mortgage rate was the buyer at. How much was paid down on the principal, what did they pay in property taxes, how much did they spend on upgrades etc etc. Then take those numbers and factor in what they would have spent on rent that same 2,3 4 years. In order to get a true net.

I've never seen Bob claim to be a Financial advisor he just gives the numbers and we are to be intelligent enough to work out the rest. Take it for what it is. Purely a chart showing that real estate is recovering.

Hey Bob,

I haven't been on this blog for awhile but I like this chart.  It also gives us a chance to draw our own conclusions on what is happening.  Thanks

I see March inventory for condo's is higher on a year over year basis which I think is very important.  Any large increases in inventory from March's numbers will certainly lead to a decline in price.

Thanks Bob for providing this information!

And it seems to me that we're almost back at 2007 prices. Missing only a few points now. I just did a basic rent/vs own comparison, and on the properties that I selected, rent/vs own is pretty similar when taking into consideration the base rent and mortgage payments. So you're talking insurance and property tax as the only real difference. Oh, and value fluctuations. Still want to buy at some point - seems like a hard decision at this very moment though, with rule changes and possible rate changes coming our way.

Heather said;

"Lot’s of stuff"

True enough, there are a lot of factors, and one could argue all day long on what was important and what was not.

Newt

Hey Will, just curious what type of property, amortization period and interest rate you are using in your comparison.

From comparisons I've done, using a 5 year fixed rate at 25 years (assuming %10 down) in a few inner city neighborhoods like Bridgeland, Inglewood, Renfrew, Windsor Park for single detached homes it is quite a bit cheaper to rent even before taking into account property taxes, insurance and r+m.  Even at 35 years just the mortgage payments would still be a couple hundred dollars a month higher.  

http://www.greaterfool.ca/2010/03/28/condo-cowboy/#comments

Just wondering, how many people (regular visitor of this site) are visiting Garth in Calgary?

This is just a start in Calgary..

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

This means you’ll have $120,000 cash into a condo with a $313,000 mortgage, which is worth $335,000. The instant loss: $98,000.

RBC has sharply turned the rudder on mortgage rates.

At 8:00am ET it hiked its posted 5-year fixed rate 6/10 of a percentage point, to 5.85%.

That’s the biggest one-day jump in posted rates since 1996.

TD followed shortly thereafter, and other banks are probably not far behind.

-- canadianmortgagetrends.com

It just goes to show how home price statistics can be misleading. The numbers are always telling a different story, depending on how you spin it. There needs to be a better method of calculating actual price gains or losses other than average/median price or price/sqft.

What you have shown here Bob is probably closer to reality than average or median house price, but obviously does not take into account renovations, financial situations, mortgage rates etc.

What every city needs is a database, where every home/condo has a new assessed value every month, based on comparable neighbourhood sales, market conditions, mortgage rates etc. etc.

Then you could take averages for each neighbourhood, home style or quadrant or any combination and use ALL OF THE HOMES, not just the ones that are sold.

I realize this would be a somewhat tedious task, but it would sure take out a lot of the uncertainty due to the statistical methodology alone. The city does it for us every year already. Why not do it monthly and have realtors contribute their info to it? What else does CREB have to do with their time anyways?

When rental rates are dropping ( based on stats posted by other readers), how can home prices be going higher?

Were there that many qualified home buyers renting and waiting to buy at home prices now near back to all time highs?

Frnk:

Rental rates have, according to CM's method, been dropping for months while house prices rose. CM has not incorporated seasonal effects into his/her data but I assume there has actually been a drop in rates since it was reported in the MSM earlier this year. CM has only been measuring this data since late last year.

That being said, rental inventory was way down according to CM so it's possible there will be a rise in rental rates, an increase in listings of SFH (this is already evident) and an evening out of home prices.

The increase in house prices this spring has mostly been seasonal and when adjusted for seasonality, prices are actually just a bit higher than flat. Listings on the other hand are ahead of seasonal pace.

Many people assume this link between rental rates and house prices. It is highly variable between different neighbourhoods and cities and it obviously has not held for the last several years in Calgary.

It might have some relevance in the long term but from month to month it makes no difference. When rental rates go up btw I doubt that the bears will be so interested in that figure :)

I guess it's like that post you made a while back about the Dow dropping below 10000, causing negative buyer sentiment in March. Things don't always work out like we think they should!

@Frnk:  Rental rates were dropping in Fall/Winter, but in early 2010 they stabilized.

Inventory dropped dramatically around this time, and still hasn't come back. From what I can estimate, it's currently down about 30% from fall inventory levels!

This caused an immediate shift in the median price of a SFH rental from $1550 to $1600/month.  I haven't really seen any price movement either way since early 2010.

To me, the 'buying' housing market in Calgary has been fairly boring this year, except maybe for somewhat higher inventory levels as Jimmy points out.

But the rental market has been a little more interesting.  Where did these properties go?  Was there a mad rush in early 2010 of people looking to rent, and they are now rented, or are those properties now the bulk of the new listings on MLS?  

With median rent at $1600, and median SFH at $420,000 (March), the price/rent ratio has actually edged up a little higher to 264 (from the 250's).  

About 25% higher than the long term average.

Garth Turner is in Edmonton tonight. I read his book "After the Crash." I wonder if anyone will remember he said "an Edmonton home which sold for $400,000 in 2007 could be changing hands in 2010 for $160,000 or less...I may be too conservative in my estimates."

According to Bob's Edm stats, the average price of a sfd in Edm on Mar 23 is over $400,000.

you have any tickets to Garth's event?  Can I have two (2)  LOL

It's free but I hear it's full with a long waiting list.  I gave his Calgary talk a free plug on here a few weeks ago, so it's no wonder it's full. LOL -Bob