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Toxic Alberta

June 5, 2008 – 11:43 pm
Alberta Bubble There was a very interesting link left on Sheldon's blog - The 14 part documentary (it's not too long though, each part is 2 to 5 minutes long) on Alberta oil sands and the social and environmental impact it is causing in the Fort McMurray region. Although a lot has been mentioned about the environmental fall out and the side effects of the 'dirty oil', it's the first time I've seen something this graphical and detailed.If you haven't already seen it, do take the time to watch it-just to broaden your perspective and to see the source of the boom and the cost being paid for it.As others have mentioned here before, in case a not so oil friendly regime wins power in the US, there could be some interesting implications for our province. Go to Source

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10 Reasons why It’s a bad time to Buy in Alberta

June 5, 2008 – 11:43 pm
Alberta Bubble A lot is happening around us at this time in the financial markets that will probably impact consumer psychology. But here are some 'micro' level reasons why it’s a bad time to buy in Alberta right now: 1. High levels of inventory and it’s only January. Sales to new listing ratios at close to several year lows. 2. Clear pattern of falling sales and prices. 3. Historically poorest levels of affordability. 4. No shortage of land. 5. No shortage of building materials and falling prices of timber. 6. With impending recession, shortage of labor to ease in a few quarters. 7. ...

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Where are the buyers?

June 5, 2008 – 11:43 pm
Alberta Bubble Real Estate buyers in Alberta sure seem to be taking longer than expected vacations. While close to a hundred properties are being listed every day since the beginning of the year, the buyers are simply not showing up. The sales to new listings ratio is sitting at a pitiful 20% in Calgary and below 30% in Edmonton. It's very early days in the new year, but it still makes you wonder. What could be the reason? Those who frequent this blog obviously know the answer. Prices are expected to decline. This is what the buyers expect. And you can’t find fault with that. Last year at this time, you just couldn’t keep the buyers contained. There were ‘bands of investors’ , borrowing money from anywhere to get a piece of the action. Then there were those who had seen it all, ‘seen banks go ...

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Edmonton numbers for December 2007

June 5, 2008 – 11:43 pm
Alberta Bubble are out...and as mentioned earlier, don't look too bad.But, when combined with over 20 per cent decline in sales volume (and a change in the product mix), the price increases are not unexpected.Since we don't have the 'representative property' available for Edmonton, we have to rely on the less accurate numbers such as overall median and average for different property classes.This release from EREB didn't have a whole lot of spin and they compared the December 2007 values with the peak values. Even after the December increases, we are closer to December 2006 prices than to the peak prices.And while the sales are falling in Edmonton, competition amongst realtors is likely to get more intense as a lot of people (including truck drivers) are joining their ranks. Perhaps, this should be shown to all prospective realtors before they think of switching careers.On a different note, If you are a ...

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Final thoughts for 2007

June 5, 2008 – 11:43 pm
Alberta Bubble 2007 is coming to an end and before starting the New Year, let’s do a quick assessment of the Alberta Real Estate situation. Let’s start from ground realities. It’s still a lot cheaper to rent than to buy. Our ‘flipper’ friends make it abundantly easy to rent a brand new house/condo at less than half the total cost of ownership. Take this example: Rent for $1700 per month (will probably rent for $1500 to good tenants) “Brand New 1466 sq ft in South Terwillegar, 3 Bedrooms, 2.5 Bathrooms, 6 Applicance, Great Living Room and Dinning Room, with a Double Car Parking pad, located in the much desired, charming neighbourhood of Riverbend, close to all Shopping amenities, Parks and many Walking trails, easy access the 23rd Ave, Whitemud and Anthony Henday, no smoking and no pets, $1700/m plus util, move in any time, call ...

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Negative Interprovincial Migration

June 5, 2008 – 11:43 pm
Alberta Bubble It's official now. Fewer people moved to Alberta than those who left as per the latest release from Stats Can. Alberta had a negative inter provincial migration of around 3300, the first negative reading since 1994. From the release:"On the other hand, the main engine of Alberta's demographic growth—interprovincial migration—has lost some of its importance. Alberta, which has led the provinces in population growth for the last few years, has started to lose more people to other regions than it has received. Over the third quarter, Alberta recorded a net interprovincial migration outflow estimated at 3,300 people. The last time the province recorded a net outflow to other jurisdictions occurred in the fourth quarter of 1994."It's hard to say if this is a definite pattern, but for the last few quarters, the net inter provincial migration number has been falling. This time it's into the negative territory.I guess when ...

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Unobfuscating May Stats

June 5, 2008 – 11:43 pm
Alberta Real Estate Watch The monthly numbers are out for Edmonton and Calgary and there is a lot to cover.From Edmonton's report: Never been a better time to buy a home, says REALTORS® AssociationMay sales exceeded same month sales in 2003 and 2004 but were below May sales for 2005-2007 when the market was super-heated.WRONG. May sales were in fact below those of 2004. There were 1961 residential sales during May 2004 compared to 1821 May 2008. From archived stats.The title is laughable. What was the REALTORs Association saying last year this time? From May 2007 report:“Rising prices are forcing buyers to explore their housing options. People are being priced into the condo market,” said Pratt. “May figures demonstrate that the trend has not yet abated.” She urged both buyers and sellers to consult a REALTOR® before venturing into the market. “With the average price ...

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Paid obfuscators

June 5, 2008 – 11:43 pm
Alberta Real Estate Watch Obfuscated definition:Darkened or cast in the shadow or background; obscured by withholding proper light or emphasis; hence, confused, bewildered or lost sight of. Obfuscation refers to the concept of concealing the meaning of communication by making it more confusing and harder to interpret.Lets look at the Calgary Herald:MLS sale price falls first time in 12 yearsMarket eyes stability amid higher listing...average price increases peaked for the province in close to mid-2006 and they've become smaller ever since." The province is following a general trend being experienced in Calgary as well with falling sales, stabilized prices and increasing listingsLai Sing Louie, senior market obfuscater in Calgary for Canada Mortgage and Housing Corp.Reality:Average price increases have become smaller, then reached zero and are now negative.___________________________________________________________"The reason you've got a month-over-month decline (in Alberta average prices) is that the sales price in April last year was extraordinarily high, It ...

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Attention Comfree Sellers

June 5, 2008 – 11:43 pm
Alberta Real Estate Watch If you want to sell you need to lower your price. Follow the steps below to arrive at a more reasonable asking price.1. Find a similar property listed on the MLS. By similar I mean the same number of bedrooms/bathrooms in the same location.2. WRONG. That house is better than yours. Pick a slightly less desirable one. Your house is not as special as you think it is.3. Write down the listing price.4. Multiply this number by 0.97 - listings on the MLS that are selling are averaging about 97% of asking.5. Multiply this number by 0.95 - this is an additional adjustment factor due to the high number of listings and low number of sales in the current market.6. Round down to the nearest cool sounding numberTake for example this townhouse in Millwoods (Edmonton) listed at $327,900.Find a similar listing on the MLS like the ...

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Bob Truman is #1

June 5, 2008 – 11:43 pm
Alberta Real Estate Watch By critizing Bob Truman I let him know that he and his website are #1. It is my way of showing appreciation of a Calgary REALTOR for performing structured queries on a database I do not have access to and posting the numbers on his website.Mostly I find that he has a 'sophisticated' way of presenting stats to lead readers to some pre-determined conclusion, with some examples below.Days on Market.First let's look at some history from Andrew KyleMay 2006 Bottomed at 14Dec 2006 Peaked at 43April 2007 Bottomed at 24Dec 2007 Peaked at 51See a pattern? As this number fell from its December high following the seasonal pattern of the last few years Bob Truman posted the following in What's New:Feb 20With 4690 single family homes on the market, we have more than double the inventory compared to Feb 2007, yet prices continue to ...

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Dare to Compare

June 5, 2008 – 11:43 pm
Alberta Real Estate Watch Below is a table comparing American median detached home prices from Q1 2008 to Edmonton, Calgary and Vancouver. Canadian prices are median from April 2008, Vancouver is benchmark instead. Edmonton includes the region, Spruce Grove, leduc, Morinville etc. Calgary is for Calgary city only. I did not do currency conversion Can$ worth 99.7 today.US numbers from CNN MoneyEdmonton from EREBCalgary from CREBVancouver from Mohican's blog Metro Area Median Price 1Q 2008 (in thousands) % Change (1-yr) Saginaw-Saginaw Township North, MI $65,400.00 N/A Youngstown-Warren-Boardman, OH-PA $67,700.00 -13.50% ...

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Calgary: High-end homes

June 5, 2008 – 11:43 pm
Alberta Real Estate Watch There was higher percentage of high-end homes sold this April. Here are the numbers compared to 2007: $1million +April 2008: 3.08%April 2007: 1.50%These sales skewed the average price upwards. This is shown in Bob Truman's stats for single family homes here.--Excluding $Million / All Sales April 2008 442,488 / 474,564Mar 2008 446,274 / 474,513April 2007 458,611 / 474,250Note that these stats are open to interpretation in many different ways. I'm an apocalyptic doom and gloomer so I think it might be possible for home that was sold for 430K last year to be sold for 415K this year. One could call this a low-end sale instead. Anyway I broke it down here ...

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Calgary Stampede

June 5, 2008 – 11:43 pm
Alberta Real Estate Watch "Those are the people that went out and bought four, five, six, seven condos in a building that wasn't going to be built for two years. All of those buildings are now being completed. Those people did not want to be landlords. They were going to buy the condo, hold it until the building came due and put it on the market," said MacLean. "Well the problem is of course we have the highest number of condos in history for sale."MLS home for sale inventory hits record highCalgary Herald, May 9, 2008Kudos to the Calgary Herald for printing another viewpoint. Did Squidly get a REALTORS license just to talk to the press? I think it was about three weeks ago they released the article Sky isn't falling on Calgary's condo market. Go to Source

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Relaxing housing prices

June 5, 2008 – 11:43 pm
Alberta Real Estate Watch Below are some interesting ways to describe falling real estate values in Alberta:"Relaxing House Prices"Edmonton Journal, May 07, 2008"Softening In Prices"Edmonton Journal quoting Marc Perras, May 06 2008"The market is no longer bearing the prices that it did a year ago"Ed Jensen, CREB, May 1, 2008MLS® housing sales and prices remain stable in April Realtors Association of Edmonton, May 5, 2008Feel free to add your own. Go to Source

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Edmonton price weakness limited to Q2?

June 5, 2008 – 11:43 pm
Alberta Real Estate Watch Mr. Perras was one of the experts quoted in the article How real estate went from boom to buyer's market in the blink of an eyeQ: Should I buy now or wait?Perras: "I think it's a great time to buy now. If we're going to see any softening in prices, it's going to be in the second quarter, which is right now. This kind of inventory is going to thin out as we get into the fall."First off why was the title of the article changed from boom to bust to boom to buyer's market? (Just speculating) So here we have yet another call for decreasing inventory, granted this is probably getting more and more likely as time goes on.More importantly, I am not sure where the idea that the price correction is limited to Q2 came from. Last year prices and inventory fell in the ...

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Edmonton April Report

June 5, 2008 – 11:43 pm
Alberta Real Estate Watch From the Realtors Association of Edmonton April report:April sales of all types of residential property through the Multiple Listing Service® were lower than the two previous years at 1,823 units but higher than the more typical years of 2004 and 2005.It's technically correct by ignoring a few years sales are up. Compared to 2004/2005 they are up 1%.RESIDENTIAL SALES:2008 - 18232007 - 24412006 - 20262005 - 18022004 - 1805Also, consider some choice words from the Realtors Association of Edmonton over the last few months regarding inventoryThe current inventory of residential properties is now 7,094 homes. The inventory will decrease through the year but the wide choice of properties will have a dampening effect on prices offsetting increased demand from in-migration and economic growth. Marc Perras,REALTORS Association of Edmonton, Jan 9, 2008“We predicted that sales would be on ...

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CREB Buyer’s Market Update

June 5, 2008 – 11:43 pm
Alberta Real Estate Watch The CREB has cooled down somewhat and acknowledged the buyer's marker in their most recent update. Let's look back at one indicator they have been using to track the market, and how it has been changed over time.Below are some charts showing absorption rates from the CREB monthly reports. The absorption rate is the number of months it would take to clear inventory assuming sales remain constant.Absorption rate = Total inventory/monthly salesHere is the July 2007 report. Note the blue band indicating a balanced market. Between 2-3.5 months inventory.In the August 2007 report the absorption rate just exceeds the balanced market.For September 2007 the absorption rate heads up as sales decline and inventory increases. As this value goes way outside the balanced market range the label is conveniently moved up.Update:For April 2008 the top of the previous balanced market range has moved up to 4 ...

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An Old What’s New

June 5, 2008 – 11:43 pm
Alberta Real Estate Watch 'Bear' with this cheap post while I wait for Realtor board press releases. They will be juicy.From Bob Truman's What's New:Apr 13Last year, sales of SFH dropped from March to April. This year, April sales are 7% ahead of March sales. Condo sales are 24% ahead of March. Condo prices are on the upswing this month, and looking at SFH pending sales(avg price is $500,243)SFH prices will be heading that direction soon as well. Prices were basically flat except the condo median took a $3000 hit compared to last month. Sales are down slightly with 16 more condos and 55 fewer SFH compared to March. Prices and sales are down year over year. Data from Mike's Stats.How much time is left in spring? Don Campbell, where are the top Irish Banks? (From March 1st)"International investors are definitely buying. Calgary and ...

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Quote of the day

June 5, 2008 – 11:43 pm
Alberta Real Estate Watch From 15 real estate myths and realities:Generally though, British Columbians, and Lower Mainlanders in particular, are pretty savvy about their property, the experts believe, with so much information out there about real estate, between Real Estate Weekly, the real-estate sections in newspapers, the realtors' Multiple Listing Service posted online and Home and Garden TV.People in Vancouver are saavy because they listened to Realtors and HGTV!?!. I'm sure if more people in the states did that they would have absolutely no problems right now (sarcasm).I know this is not Alberta, but this come from one of CanWest Global minions, the Vancouver Sun. It just reinforces how those set of newspapers are 'pro-establisment' and lustful for juicy ad cash. Other posts examining CanWest previous doses:Power of the Press ReleaseWhat the MSM is servingCalgary Home SalesSaskatoon Thought ExperimentSpotlight Calgary HeraldChicken LittleUpdate! (thanks tulipboy)It appears the ...

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On sales mix and tinfoil hats

June 5, 2008 – 11:43 pm
Alberta Real Estate Watch When prices decrease a larger percentage of lower-priced homes sell. Low-priced may not mean the same thing as low-end in a environment of decreasing prices. I don't know whether to interpret this as useful information or a sophisticated way of implying that the sales mix is responsible for decreasing prices. Thats what the tinfoil hat is for. From Bob Truman's What's New:Apr 23There's a higher percentage of low-end homes selling this year. Here are the numbers compared to 2007:Criteria: single family homesTotal Sales % Sold Under $425,000 % Sold Over $525,000April 1-23, 2008 1059 51% 23%April 1-30, 2007 2073 47% 24%All other sales would be in the price range of $425,000 - $525,000. Go to Source

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