News

High Energy Prices and Inflationary Pressures

June 23, 2008 – 11:05 pm
CALGARY REAL ESTATE BUBBLE BLOG Bank Of Canada Jolts Economists With Stand-Pat Rate Decision Amid Inflation Risk"Holt said one possible explanation is that the Bank of Canada and the U.S.Federal Reserve are co-ordinating policy in an effort to bolster the Americandollar and "take the froth" off of commodity prices."Back in March I blogged about Serfdom Life and the continuing risk of interest rate slashing in the US and it's influence on Bank Of Canada to do the same. Times have changed. From the housing bubble evolved the food bubble and now the energy bubble. Some bullish real estate "investors" were in the mindset that in the new financially reformed 21st century, it would be impossible for interest rates increase as we now live in a "credit society." Those who can't realistically afford an object of desire could purchase on credit.In the big picture, the pendulum which swung the way of big ...

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Inflationary Scenario

June 23, 2008 – 11:05 pm
Alberta Bubble Quite a lot has happened in macro economic world since I wrote the ‘deflationary scenario’. While there are still quite a number of deflationary proponents holding there ground, the mainstream economists and pretty much all the central banks are getting perturbed over rising commodity prices. And for once, their words have some meaning as demonstrated by Bank of Canada holding interest rates steady, increasing the probability of rate increases in future. Just a couple of months ago such a scenario would have been unthinkable amidst all the talk of the global credit crunch. Clearly, Central bankers in Canada, UK and the US are afraid of 1930s style deflation, but they are also not comfortable with the 1970s style stagflation. I guess they are stuck at a Morton’s fork point- raising rates will further worsen the housing market and create problems but keeping status quo will further raise ...

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More on ridiculous discounts

June 23, 2008 – 11:05 pm
Alberta Real Estate Watch Some more on the ridiculous discounts offered back in February:The second building is located in Aldergrove, not far from West Edmonton Mall. It’s a terrific location, with walking trails on 2 sides of the building and with easy access to everything. Prices int his building normally range from $199,900 to $214,900 for a 2 bedroom and $178,900 to $188,900 for a 1 bedroom. He is asking us to sell these first 10 units at $155,000 for a 1 bedroom and $165,000 for a 2 bedroom. We WILL NOT be reporting these sales to the MLS system so that these sales don’t bring down the values of the buildings.Some of the condos in the west end are still on the MLS and asking $167,500 for a two bedroom. Anyway I found the google cache of the original offer on Feb 23rd here. ...

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Millwoods condo follow-up

June 23, 2008 – 11:05 pm
Alberta Real Estate Watch Anyone remember these condos? The ridiculous discounts? The 1 bedrooms normally range in price from $179,900 to $190,900. The 2 bedrooms range from $204,900 to $227,900....The developer, for these first 10 units only, is selling them at $150,000 for a 1 bedroom and $160,000 for a 2 bedroom.Well over 3 months later these condos can still be found on the MLS; $155,000 for a one bedroom and $165,000 for a two bedroom. I wonder where that original price range came from? I guess they really were ridiculous discounts. Go to Source

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Comfree Success Rate

June 23, 2008 – 11:05 pm
Alberta Real Estate Watch The new Comfree is here as described in the monthly report:Further assisting sellers with pricing, ComFree launched the “New ComFree” with a bang. Thursday June 5th ComFree played host to a day of fun-filled activities including special appearances from the Edmonton Esks cheerleaders, Edmonton Rush, Joe FM live on location, and best of all our friends from Big Brothers and Big Sisters were present to take in the fun.With all the celebration the private listing company now charges $947, up from $699! They also re-animated the corpse of "sales success", now called "success rate" (See previous posts here and here) We expect our success rate to jump from 73% to the high 80’s maybe even 90’s with the New ComFree.” says Travis Holowach, “Just another reason that the ComFree Advantage works for buyers and sellers in this market.”I cannot fathom what type of twisted process could ...

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CMHC freedom day

June 23, 2008 – 11:05 pm
Alberta Real Estate Watch Notice how when offering as an incentive they disclose how little money you are putting towards principal."Remember 95% of your payments in your first year could be interest"Marketers are creative with numbers! This inspired me to look at the 40 year mortgage more creatively myself.With a 5% rate and 40 year amortization 14% of your payment goes toward repaying your debt in the first year. Not quit as depressing as the ad would imply. Leave it to me for some positive spin.How much do you pay off in the first year? $805 for each $100,000 owed as shown below. The first two charts neglected CMHC fees. From the last post we determined that with a 40 year mortgage and 5% down you need to tack on 3.35% to the loan amount. While the last generation celebrated being mortgage free, we ...

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What the ads don’t say

June 23, 2008 – 11:05 pm
Alberta Real Estate Watch Here is a builder ad for new condos in Edmonton I got in the mail:Wow! $824/monthThe fine print:4.15% with a $9875 down payment & combined income of $51,364.On the back:*Based on a variable rate of 4.15%, OAC, clients to qualify at a 3 yr posted rate with 5% ($9,875) down. Own with a combined income of $51,364. Rates subject to change without notice. E&O apply.So I assume the payment is based on the lowest priced unit at$197,500 at a low variable interest rate that is subject to change.What's not on the ad:1. 40-year amortization. The only way to get this type of payment is to use an extended amortization. Not surprisingly, this is pretty much standard for first time buyers now.2. CMHC fees. When putting down less than 20% CMHC fees apply. This is a percentage of the loan ...

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Has Calgary real estate inventory peaked?

June 23, 2008 – 11:05 pm
FindCalgary.com Blog For the past 2 weeks in June SFH inventory in Calgary has fluctuated around 7100, and around 3300 since the beginning of May for Condos. Has the influx of new inventory peaked?    (A special thanks to Matthew for compiling all the daily stats and providing us with the graph!) To view the month-end inventory level numbers:  click here Last year, it seemed that it peaked around June/July as inventory levels remained steady.   Then there was another surge of listings in September/October.   Finally, as winter approached many listings were left to expire to be relisted in the spring (which caused for the abnormal inventory reduction in December, seeing that sales didn’t coincide to the drop of inventory) If you believe inventory will continue to surge later this year, feel free to post what month this will happen in (ie.  Will it be similar to last year’s cycle?) Poll: Has Inventory peaked? Yes, it will slowly drop from here No, ...

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#1 Reason to Get an Appraisal

June 23, 2008 – 11:05 pm
Edmonton Real Estate Blog I recently had a client referred to me who had put an offer on a million dollar+ property being sold privately. They put their offer on the property with the hope that they would sell their own property and everything would be hunky dory. The only conditions were a standard financing clause and the usual inspection. It turned out that the seller was asking $200,000 more now, than when their listing had expired on the MLS. The buyers thought that they were getting a steal of a deal at $200,000 below their current asking price. When I met with them to review the value of their property and the current market conditions their eyes got a little wider, that's when they asked for some information on the property they were buying.  Since they weren’t being represented by someone else I could put my two cents in ...

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Weekly Update on the Edmonton Real Estate Market

June 23, 2008 – 11:05 pm
Edmonton Real Estate Blog Here is our update on the Edmonton real estate market. (Previous week's numbers are in brackets). For the past 7 days: New listings: 686 (627, 757, 660)# Sales: 310 (257, 280, 287)Ratio: 45% (41%, 37%, 43%)# Price changes: 693 (628, 617, 671)# Expired Listings: 74 (202, 625, 103)# Canceled/withdrawn/terminated listings: 290 (62, 62, 73)Net loss/gain in listings this week: 12 (106, -210, 197)Active listings for single family homes: 4415 (4382, 4287, 4371)Active listings for condos: 3111 (3105, 3061, 3233) That's the most number of sales in a week since I've been keeping track (October '07). Sales to new listings ratio is solidly in a balanced market, and the average price is up slightly from last week at $345,740. Last week we suggested we could be nearing the peak of inventory, and this further suggests we could be close. On the street, things definitely seem busy - Sheldon and ...

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Mr. Snowman Tells No Lies

June 23, 2008 – 11:05 pm
Edmonton Real Estate Blog How do you look at me with those lumps of coal for eyes and tell me you're sitting in front of the hottest most desirable property on the market?  It’s obviously not hot enough to melt the snow on your front lawn! No, indeed it is now June and pictures of snow laden properties with enough snow to build an extended snow family still adorn the MLS and other private sites.  Much debate has circulated on vacant properties and spec homes but what about the snow homes? How many are there?  Now I must admit that the Real Estate weekly is pretty up to date, but some catalogues are continuing to grow in size, loaded with pictures of properties that don’t sell and looking more like a sun 'n fun vacations booklet with pictures of wonderful ski resorts. Are they hiding something under the snow? Nothing says ...

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Modern Architecture Meets Edmonton’s History

June 23, 2008 – 11:05 pm
Edmonton Real Estate Blog   Everyone has seen all the crazy condo construction that has been going on in Edmonton.  There are mega-projects to be completed all over the city. More of the same old, same old, where you walk from one unit to the next you can’t remember the differences between each one since they're all the same. If  one is truly wants something different then there is always the loft condo concept. I know, I know, the term loft has been much maligned (aka Cambridge "lofts" downtown). While cubicles are great for students they are rarely something special but that’s another story. One of Edmonton’s challenges is that few of its historical buildings have been preserved. What I wanted to introduce everyone to is a fantastic award winning loft by renowned local architect Gene Dub. The Seveth Street Lofts won an Urban Design award of excellence. You can ...

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Weekly Update on the Edmonton Real Estate Market

June 23, 2008 – 11:05 pm
Edmonton Real Estate Blog Here is our update on the Edmonton real estate market. (Previous week's numbers are in brackets). For the past 7 days: New listings: 627 (757, 660, 608)# Sales: 257 (280, 287, 245)Ratio: 41% (37%, 43%, 40%)# Price changes: 628 (617, 671, 572)# Expired Listings: 202 (625, 103, 205)# Canceled/withdrawn/terminated listings: 62 (62, 73, 57, 55)Net loss/gain in listings this week: 106 (-210, 197, 101)Active listings for single family homes: 4382 (4287, 4371, 4303)Active listings for condos: 3105 (3061, 3233, 3210) If the pattern holds up that we've seen over the past few months, we should see even fewer new listings next week and sales somewhere between 250-280. We may be nearing the peak of inventory. The new listings to sales ratio for the month so far is 42%, just like the past few months. The average residential selling price so far for June is $343,547 (up from $340,499 in ...

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Don’t Sweat The Small Stuff and Other Gems

June 23, 2008 – 11:05 pm
Edmonton Real Estate Blog It’s a market full of hard decisions and sometimes tough love is necessary, especially when examining your home's value compared to last year. Last weekend when one of our listings sold the seller said to me "that’s the most excited I've heard you get." The deal was done, so why not share in our client's excitement?  We’ve certainly had plenty of reasons not to be excited as we have had to sell and resell a number of properties several times over. Perhaps it's just that I’m not the cheerleader type. Why (you might ask) have we had to sell a number of properties multiple times? Its ususally that we haven’t found the right buyer, or found out later that the buyer or the other agent weren't honest with us, or there was a legitimate problem with the property. In any case conditions weren't removed and ...

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To rent, or not to rent

June 23, 2008 – 11:05 pm
Edmonton Real Estate Blog To rent or not to rent? That is the question. I can see the fingers getting ready to type their rapid responses to this article already, but chill for now because the question is actually for home owners.  Many of the people who have properties on the market today have to consider all their options in this market. So the topic today is: Rent or Sell? If you are one of the many people around Edmonton with a beautiful new spec home you built with the sole purpose of turning it over for quick cash I’ve got news for you: put a tenant in it and immediately deduct at least 10% off of the value. Think of it like driving a new car off the lot - part of the value in a new home is that it is new, and that newness is going to fade ...

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Weekly Update on the Edmonton Real Estate Market

June 23, 2008 – 11:05 pm
Edmonton Real Estate Blog Here is our update on the Edmonton real estate market. (Previous week's numbers are in brackets). For the past 7 days: New listings: 757 (660, 608, 709)# Sales: 280 (287, 245, 299)Ratio: 37% (43%, 40%, 42%)# Price changes: 617 (671, 572, 605)# Expired Listings: 625 (103, 205, 192)# Canceled/withdrawn/terminated listings: 62 (73, 57, 55)Net loss/gain in listings this week: -210 (197, 101,163)Active listings for single family homes: 4287 (4371, 4303, 4223)Active listings for condos: 3061 (3233, 3210, 3147) We haven't seen that many expired listings since the last week of 2007! I guess that means a lot of people signed 6 month listings and didn't get sold? However, with that many new listings and not a lot of sales it didn't have a big impact on inventory, and we can expect most of those expired listings to come back on the market in the next two weeks. Happy ...

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Americans’ net worth falls $1.7 trillion in Q1

June 6, 2008 – 2:56 pm
Posted Jun 6th 2008 3:55PM by Joseph Lazzaro Americans net worth declined by $1.7 trillion in Q1 2008 - - the biggest drop in wealth since 2002 - - as declining home prices and a sluggish stock market took a toll on portfolios and asset holdings, CNNMoney.com reported Friday. U.S. household net worth fell 3% to $56 trillion at the end of March, according to the U.S. Federal Reserve's flow of funds report, CNNMoney.com reported, with the amount of home equity declining to 46.2% - - the lowest on record. Economist Peter Dawson told BloggingStocks Friday the net worth and home equity statistics aren't surprising, given the U.S. economy's current fundamentals. Further, he said the economy is now approaching "the danger level" regarding several key economic metrics. Trends moving in wrong direction "The two biggest concerns for the economy right now are a lack of job growth across the spectrum and stagnant wages for segments ...

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When Owning Is as Cheap as Renting

June 6, 2008 – 11:48 am
Downsizing the American Home by Shawn Tully Friday, June 6, 2008 provided by During the housing bubble, KB Home priced out first-time homebuyers by building bigger. Its new, more modest model provides a glimpse of what the return of the housing market may look like. In the history of real estate there are a handful of legendary homebuilders - William Levitt, who created Levittown on Long Island, being one, and then there's Eli Broad, who became a billionaire building tract homes throughout the Midwest and Southern California. More from CNNMoney.com: • Homes in Foreclosure Top 1 Million • Lenders Foot the Bill for Abandoned Homes • Where Home Prices Are Headed Next Surrounded by the famous Jasper Johns series "The Seasons" in his office 11 floors above Los Angeles' Wilshire Boulevard, Broad does not miss much. The 75-year-old real estate pioneer has seen bull and bear ...

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Small Pool of Buyers Remaining

June 5, 2008 – 11:43 pm
CALGARY REAL ESTATE BUBBLE BLOG According to Statistics Canada's 2006 Census of Population and Housing, 73.1% of Albertans own there "dwellings."What does this mean?It translates into the fact that the pool of remaining buyers in Alberta's real estate market is small. During the boom years of 2006 and on, many Albertans were "hyped up" to purchase properties to catch the fad of eternal property appreciation. It was a vacuum phenomenon, pushing home ownership levels to new highs. The real estate marketing machine was huffing and puffing, sucking in all buyers, qualified or not.Now that the market is softening, speculators are in a state of debt shock. For sale signs are sprung up in a weed like fashion to attract potential buyers. The problem is the negative sentiments realised by the public towards home ownership. Reality has set in. House prices do increase forever and ever.With sales already down 30%-50% yoy, and ...

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Here Is What $320k Will Get You

June 5, 2008 – 11:43 pm
CALGARY REAL ESTATE BUBBLE BLOG Real Estate Type : Single FamilyBuilding Type : HouseBedrooms : 1Bathrooms : 1Interior Floor Space : 925.70 sqftStoreys : BungalowBuilt in : 1926Land Size : W:8.840m D:36.580m Shape:RECTitle : FreeholdLocation : 112 9 Av NECalgary, AB T2E 0V2MLS®: C3322995Aren't post grow-op properties supposed to be a good deal?This is more evidence that the Calgary real estate market is out of touch with reality. The seller of this property is looking for $320k for a post grow-op establishment. The house is most likely extensively damaged and is currently being evaluated by the Calgary Health Region. The MLS listing makes reference that the purchase would be more land motivated (even though the lot is in an ambiguous location).It's still astonishing to see the level of denial that still exists in the marketplace. Go to Source

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