For the past three years, the October median price has averaged $395,967, almost exactly where we are today($395,000), and the market continues to be uneventful. Perhaps we've finally reached equilibrium after years of volatility. Shrinking inventory in the fall of 2005 was the precursor of the huge price increases of 2006. It was a roller coaster for a period of time thereafter.
The median price in October 2005 was $258,500. Today it's $395,000, a 53% increase. Compared to the peak which was reached in June 2007, the median price is down 10%.
Over the past three years, the price has fluctuated around 8-9% from the year's high to low. Compare that to the preceeding years when it was as high as 26%:
|
Year
|
Fluctuation in price
|
|
2011
|
8.5%
|
|
2010
|
9%
|
|
2009
|
8.9%
|
|
2008
|
12.6%
|
|
2007
|
15.5%
|
|
2006
|
26%
|
|
2005
|
13.8%
|
Sales for Oct will be right in line with the average of the past three years, as will inventory. Balanced conditions with reasonable expectations of stability is healthy for sellers and buyers alike.
For the first eight days of October, sales are up 25% compared to last year. Going back a little further, compared to the past three years, sales are up 8%.
The Oct median price is up substantially at $398,250 compared to $366,750 last year.
If you're selling, there's even more good news. New listings are down 9% compared to last year. Compared to the past three years, they're down 18%.
While fewer listings is not such good news if you're a buyer, our inventory increased last month and there's still a decent selection of homes for sale.
Pendings are showing a 29% increase over last year on this date.
"countless Americans threaten to move to Canada if their preferred candidate does
not emerge victorious. Of course, few follow through with a move north. Maybe it is time to
reconsider."
It turns out we are different here after all. Forbes Magazine has picked Canada as the best country on the face of the earth in which to do business. We moved up from #4 in last year's ranking. Completing the top 10 behind Canada were New Zealand, Hong Kong, Ireland, Denmark, Singapore, Sweden, Norway, Britain and the United States.
With upbeat publicity like this, the big crash will be delayed again. People from around the world will be moving here in droves to participate in our vibrant economy.
Read more Forbes the best countries for business
Here's a sneak preview of the Sept 2011 numbers.
First, though, let's look at a bold statement made exactly one year ago, on Sept 30, 2010. CIBC said Alberta house prices are overvalued by 12.5%
After all the predictions of gloom and doom, the September market was surprisingly robust. Sales are up 8% compared to last year, and down 7% compared to the 3-year average.
Inventory has finally started to improve and is almost identical to last year. It's up 7% compared to the 3-year average.
New listings are the same as the 3-year average.
Median price - same story - almost identical to last month, but up $10,000(+3%) from last year.
Pendings are up 37%, so October will start out much better than last year, but the price will be down slightly from September.
According to CIBC, the median price should have dropped to $341,000. It's at $400,000 today.
In this time of turmoil in the world's economy, it will be interesting to watch what's happening to sentiment among the buyers and sellers of Calgary real estate. The CC Index takes into account sales and new listings. If it continues to drop, I could see some rain clouds in our future. An increase in pending sales bodes well, however, the median price will be going down. What will the forecast be like one week from now?
The more fanatical they are, the harder they fall
Just when things were getting boring around here, we have some unbelievable news. Many of the former bubble bloggers changed their minds and bought a house, realizing it was the right thing to do. One person who I never imagined would buy a house is our old friend, Calgary Rip-Off.
After not hearing from the dude for over a year, I mentioned his name earlier today(see previous post) and look what shows up on the GreaterFool from Rip-Off himself:
Garth. I bought a mortgage. Im now a mortgage owner. $30K off the asking price, down the street from the rental(easy move), 25 year term and $23K down on the place. My payments are a little bit more than my rent with the taxes.
My realtor asked me if I am excited. What is there to be excited about? All the houses in Calgary are overpriced and remain so. The rentals are also overpriced. I will remain at my stable job for many years, healthcare, so it is foolish for me to subsidize yet another landlord idiot that did nothing other than buying at the correct timing to profit off of my money. Ive already given him $80,000. Enough is enough.
I still retain my view that Canadian real estate and most real estate for that matter is a pain in the ass and overpriced crap. But you need a place to live right, so better to buy with a proper downpayment and doable mortgage terms than finance some idiot landlord.
Ive joined the club of mortgage owners. I dont own the place until the mortgage is paid. That commercial “homeowners helping homeowners….” makes me want to puke what a bunch of idiots. You arent a homeowner until the bank isnt lending you the cash.
So I plan to get the thing paid off sooner rather than later and hope that there isnt a war or the house gets struck by lightning etc…
If you're new here, let me bring you up to speed. Calgary Rip-Off said stuff about Calgary that would curl your hair...
My wife hates it here, and Im beginning to see the wisdom of what she has been telling me all along that its overrated, claustrophobic, too cold, etc, etc, not to mention having an extremely ignorant political climate. One last note, people in Calgary move slow, like cows. Maybe that is why they call it cowtown: Dumb and slow."
It just goes to show that anything is possible.
Welcome back!
After seeing the comment yesterday from Yeebs(on the previous post), I thought I better leave the summer behind and get on with it.
Following the real estate market in Calgary is like watching paint dry. You missed nothing if you didn't check the stats or the real estate blogs for the past two months. Things seem to have settled into a predictable pattern...Spring up, fall down. I had an inkling that nothing significant would occur over the summer months, so I put my time to better use. Nothing to see here could have been the title of this post. Calgary, and Alberta, are well-positioned when it comes to weathering the real estate storms.
Unlike Toronto and Vancouver, we've already experienced a correction here, and that bodes well for continued confidence in our housing market.
Is anyone surprised at the backtracking among the doomers? Even Garth Turner has stopped beating his head against the wall and now realizes he was wrong to predict a "possible average price in Calgary of $180,000." His Road to Damascus conversion has resulted in reassurances that nothing terrible will befall us. Since the dramatic turnabout, he seems to get more enjoyment insulting his loyal followers rather than taking it out on me..."Rude, abusive, petulant and usually juvenile... Hard to know if these people are impassioned zealots blindly consumed with their own ideology, or just pricks."
As I get time, I'll update some of the stats which are unique to this blog(CC Index, First-time buyers) so check back. As always your comments are welcome.
As we near the end of the first half of the year, Calgary's real estate prices are nowhere near the predictions. Except for CREB's and CMHC's.
I'll be posting a mid-year predictions update, but I wanted to ask my readers if anyone has seen a concrete prediction from Garth Turner for this year? I may have missed it. He did make one for spring, but I didn't see one for year-end. I don't have time to search, so if anyone can find a prediction from Turner for Dec 2011, let me know. It would be a shame if he wasn't included.
Sad to say, the Vancouver riots didn't surprise me. Read a real estate bubble blog any day of the week, and you'll plainly see these people are out there. People lacking any decency and any respect for society's norms.
I caught Rex Murphy's take on it last night; eloquent as always, but Rex was impassioned as he delivered his take on the riots, with which I completely agree:
"Those clod poles, ne’er-do-wells, vandals, punks, thugs and assorted clueless dolts who smacked people around, piled on others, fought with and sought to injure police, set fire to cars, broke into stores, trashed and looted at will in Vancouver last night – are all a pathetic pack of cowardly destructive losers. An older generation, not bent by the winds of political correctness would rightly have called them the scum of the earth.
There aren't any excuses for they did. None. None. At. All. If these whiny, pampered, useless sacks of skin even try to claim it was because their team lost, then they haven't got the intelligence of a ball of mud. Fools don't need a motive to be fools and destructive and threatening fools, such as those who rioted last night in Vancouver are no exception to this rule. This kind of fool will riot when “his” team wins as easily as when it loses, the game was just a convenient trigger.
The damage was one thing. The insolence is altogether another. Consider what they did.
These vulgarians defecated on the reputation of one of Canada's first cities. They hurt the stores and the employment of honest city-caring people in Vancouver. They sprayed dirt and worse into the face of every half decent sports fan in all of North America. They turned what was – even with the loss – a moment of intense national interest and pride into a world-class embarrassment, an ugly, bloody, ignorant and arrogant stain on the city that hosted the Olympics.
They trashed our country's reputation as well.
Those who can be identified as participating in the riot; those who in any way had a hand in instigating or spreading it; those who damaged property; those who hit and hurt other people; those who scorned and savaged the police, set cars alight - all of the vandals and hooligans, within the confines of what is absolutely legal, should be sought out, named, charged, and offered real, substantial penalties.
Riots should not be written-off as pranks. Mayhem shouldn't be passed over as the actions of a violent few. Tearing the heart out of a city, ripping up its stores, despoiling its reputation and setting its citizens for a while in a state of fear - should draw the just, angry and full attention of the state. Those who riot should learn the hard way that it's not a free game. That their violence and lawlessness isn't a freebie – they have to pay for it. And ringleaders, if ringleaders there were, should be pointedly named and shamed.
Vancouver deserved better last night. Canada deserved better. Even the Canucks, who had a long worthy go of it up to the final games, deserved better.
The rioters are a third rate band of losers who still managed to cast a shadow on what should have been – win or lose – a wonderful night for all the country. Everyone in Canada who loves hockey and Canada despises these people.
For The National, I’m Rex Murphy."
CBC Rex Murphy
Internet vandals
Is he describing these bubble-bloggers?
“hehe..
your gonna lose it all”
“thy
are gonna lose it all and that makes me smile”
“burn baby burn. I
cannot wait for it to be like 1982 again.”
“your a worthless human being”
“ha ha. you don't own anything. the bank owns you bitch lol.”
“the future is good..not for you
but for me and my family”
“these people typically are at the low end of the gene pool”
"it's going to be fun to watch this pig unravel."
“and i laugh in your face”
“screw the suckers!”
“i feel pleasure as they experience pain”
“you will get exactly what you deserve your an idiot”
"round them up and break there knee
caps"
"i say cut his hands and feet off or
better yet kill him"
Whether hiding behind a mask, or the cloak of internet anonymity, it's the same mentality.
With almost half the year under our belts, it's safe to say that events have not transpired as we expected when the year began. The 30-day median price, at $423,000 is higher than it was last year at this time.
The SFH sales for Jun 1-15 are 31% higher than last year, and 5% higher than the 3-year average. New listings are down 9% compared to last year. The inventory did not "swell" as some pundits predicted. It's actually lower than last year.
First-time buyers are re-surfacing.
Garth Turner and his gang were 100% certain that we'd be seeing the crash this spring. I didn't predict a crash but I did predict a lower price, and I'm sad to say I was wrong. I would much prefer to see the median price at $387,000. At one time, according to the bubble bloggers, I was able to make the price rise or fall on a whim. That power seems to be greatly diminished if not completely gone. I guess we're back to the days where the market determines the price.
As is the custom with bloggers, I'll "postpone" my prediction, and blame it on the low interest rates. That's another "guarantee" which bit the dust. It was a slam-dunk that we'd have much higher interest rates by now, and it looks like they'll remain where they are for the remainder of the year.
Vancouver
There's no end to the press coverage of Vancouver these days. I don't keep statistics for Vancouver, but can anyone calculate the appreciation on this Vancouver house which was NOT puchased two years ago?
June 25, 2009, this comment was posted on the Greater Fool:
So
today I find myself eyeing a lovely renovated, post-and-beam home(in Vancouver)
for a mere $900,000 and thinking that maybe it is good value. Garth, help me
back on track; there’s no one I can turn too.
Garth’s advice:
get out of town before you spend 900
large on anything.
How smart was that advice? How much
did prices go up in Vancouver in the past two years? I heard on the news yesterday that detached home prices are up 26% in the past year alone.
BMO: "...Calgary’s house prices stand
a reasonable chance of growing alongside incomes in coming years.”
Read more: Calgary housing market recovers more than half its losses
The headline is misleading. To be precise, Calgary has recovered 82% of its losses.
The average price fell 18% between Jul 2007 and Jan 2009. At the end of May 2011, it was down 3%.
The article goes on to say, However, valuations have improved since 2007, with prices at 4.2 times income, less than the national norm. Barring a sharp pullback in energy prices, Calgary’s house prices stand a reasonable chance of growing alongside incomes in coming years.”
"Nationwide, prices are 5.1 times median family income.
While Calgary's prices are up 127% in 10 years, the report said...
Vancouver prices have tripled
...Vancouver’s house prices have nearly tripled in the past
decade as it rides a wave of wealthy immigrants.
Demand from China has been strong, supported by fewer travel restrictions,
stricter purchase rules and high prices in China. The average priced home in
Vancouver is now 11.2 times family income, more than double the ratio of a
decade ago
The following comment was made in response to the above story:
The biggest threat to affordability in Calgary in the coming years is foreign
investors. Billions of dollars from Chinese investment in oil and gas and the
recent announcement of two of China's largest banks setting up shop in Calgary
is the writing on the wall. Tack on the shift in Canadian economics from eastern
manufacturing to western resource exports, and there will be a steady influx of
eastern Canadians looking for jobs and housing in Alberta and Saskatchewan.
We think prices are high now. Is this just the beginning? Is there any chance that Calgary will follow in Vancouver's footsteps?
Sounds crazy, but then very few prognosticators predicted prices in Calgary would have increased 8% since Jan 1. I didn't expect to see any increase. Many expected a crash.
This comment was submitted in response to the article Driving ourselves mad
"This cannot be truer of an article. I've moved inner city and the fact that I can get to work in 5-10 minutes is just a quality of life perk I cannot do without. What doesn't make sense is those who live out in Chestermere and drive to the west-side of the Calgary for work. What are you thinking? Not only is that environmentally unfriendly, but they spend about 2 hours a day or more driving. 10 hours a work week or 40 hours a month. 480 hours a year plus gas money. I guess the ring-road will help.
Now that Deerfoot is going to take until october to be finished resurfacing the calf-robe-bridge, have fun driving in from Auburn Bay, Mahogany, etc. Gong show.
People should live closer to where they work, it just makes sense for society, the environment, and an individual's own quality of life. Wouldn't it be something if you could get a property tax-break from the City of Calgary based on Kilometers from where you work?! You'd have to prove you work at a certain location from your home. Call it the "Calgary location based road maintanence tax credit" or something."
(Thanks to Innercity for the comment).
This is always a topic where both sides can give good reasons for their to decision to live where they do. Was commute time a factor for you when deciding where to buy?
Like many situations in our society, we seem to have it all backwards. When a couple is starting out, your income is lower, you're trying to raise kids, and there are brutal demands on your time. Isn't this the stage of your life when you shouldn't have to drive so much? Yet the homes in the inner-city where you could raise a family are considerably more expensive. Maybe we have more energy and patience to fight traffic in our twenties and thirties?
The hockey season is way too long. I can still remember when there were only six teams, and I recall watching the Leafs win their last Stanley cup - in April! Come to think of it, what do the Leafs and bubble bloggers have in common?
A: Both on long losing streaks.
For five long years we've been listening to the doomsayers and their predictions of crash and burn. For five long years they've been wrong.
It's different this time
All the stars were in alignment for the perfect firestorm this spring. No more 40 year mortgages. No more 35-year mortgages. Minimum 5% down. Higher interest rates. Government bailouts gone. Recession here. First-time buyers have evaporated. Home ownership at an all-time high. No buyers. Panicked sellers. Bad weather.
One fear-pumper said in eager anticipation in March 2010, "come spring(2011) when it becomes painfully obvious that their is no hope of a recovery due to rising interest rates, falling sales and continual monthly price declines, the entire Ponzi shim sham scam will collapse."
We can sum it up with this line from the infamous, anonymous fear-pumper himself:
"They became stupid and got carried away making silly unsubstantiated
guesses about the future"
Here's a few more of his hallucinations:
2010
Apr 13: "Mortgage rates are rising faster than I thought, if the trend continues, the 5 year rate will be about 9% by years end" (Update: 5-yr mortgages available for less than 4%)
May 9: "Any one retarded enough to still be in stocks should seek addiction counseling immediately"(Update: TSX up 18%)
May 22: "Alberta's heading for 10% plus unemployment,its gonna get very ugly very fast" (Update: 5.9%)
May 28: "Alberta set to lose 56,000 residents"
Jun 3: "A housing price crash is now imminent."
Jun 3: "sooner or later those 1-3 million dollar homes will stop selling" (Update: Calgary luxury homes sales up 51%)
Jun 6: "Prepare to dive greedy bas _ _ _ds, prepare to dive, shes going down"
Jun 11: "its all downhill from here. "
June 14: "She’s gonna blow soon "
Jun 16: "this bitch is gonna blow."
Jun 21: "Calgary average home prices will be $160,000 when all is said and done"
- 2009
"we are finally here. the bust will happen this year"
“The atrocities of WW2 will seem timid when compared to what lies ahead.” (I'm not making this up)
- 2008
"the great unwinding is virtually at hand"
“you can see and smell the sheer panic and fear in the air"
"a total and complete collapse"
“very dark and very bad”
- 2007
“shes all over now
shes toast
it couldnt be any plainer to see
prices wont fall to the 300,s
try $160,000 for an average sfh”
“it realy is coming to an end”
- 2006
"I think Calgary is going to crash, because I think people are running very high debt loads"
In Jun 2006, CMHC made zero down available, and it elicited these comments:
"this shows that (CMHC) fears the current bubble is coming to an end"
"This is the equivalent of giving morphine and cocaine to an ailing horse, in order to get a last sprint out of him before death." (This dead horse is still being flogged five years later, but the CMHC nag is still running)
This year will be different, though. And the Leafs will win the cup.
This comment was worth a posting of its own(thanks, Moneyman). Most real estate blogs get pre-occupied with the investment aspect, whereas there's plenty more to consider when deciding to rent or buy:
I'm in finance, and money should be all that matters to me.... but then again life is more than just money. Running a calculation and saying rent or buy based purely on the money you have left over after 10-20 years isn't realistic. You can always make more money but you can never buy back the time you have on this planet. That being said, Foxxnews fellow there has a point. We are remarkably happier as a family now that we are home owners vs. renters. My wife is happier and I am happier. We garden and make improvements to the home because it is ours. When we were renting, it was "to heck with doing anything to the house.... it ain't ours and the landlord gets it in the end". So the yard was overgrown and the walls had holes in them that we didn't care about. Living in the rental wasn't very appealing.
What decisions have you made that may not be the most financially astute, but are an "investment" in your happiness and well-being?
This spring was supposed to be the start of a long-awaited correction in house prices. I predicted that we'd see a price at the end of June of $388,000, but today the median price sits at $420,000, and I'm surprised, to say the least. That would be a drop of 7.6%. Once upon a time, the monthly median price increased by 11.2%, so it's still possible but highly unlikely.
This year, we had no more excuses. The mortgage rule change on March 18 created a brief flurry of activity, but that is no longer a factor. Sales are down compared to long-term averages. Lots of indicators and obvious signs of a correction, but still, the median price has risen 8% since Jan 1. It's what drives Garth Turner crazy when he thinks no one is listening to his warnings and he says in frustration, "what the hell is the matter with folks? - man up, people."
There's an explanation for this, however, according to Margaret Heffernan, the author of Willful Blindness: why we ignore the obvious at our peril. She explains why red flags go unnoticed and the consequences.
...Ms. Heffernan is chiefly concerned with the dangerous effects of this blindness. She offers a wide range of examples, including spouses who ignored evidence of a partner's adultery, homebuyers who took on excessive mortgage debt, and companies whose compliant employees assumed "levels of risk beyond their ability to recover."
The author goes on to offer solutions, but in my opinion, she’s fighting against a powerful infrastructure, innate behaviors, and social pressures which make it almost impossible to change. As always, the majority will see it only when it's too late.
It will be fascinating to watch how real estate shakes out over the coming year. While I believe Alberta is positioned better than any other place on the globe, I still think we have a correction in prices coming down the road. Toronto and Vancouver will get hit hardest, but I'm sure we'll experience some fallout here, too.