Quote of the day

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 Release
What the MSM is serving
Calgary Home Sales
Saskatoon Thought Experiment
Spotlight Calgary Herald
Chicken Little

Update! (thanks tulipboy)

It appears the Vancouver Sun had "technical difficulties" with their comment section. By "technical difficulties" I mean the comments were overwhelming negative and are now disappeared.

Here is a link to some of those cached comments and the discussion has also been moved to Vancouver Condo info. Keep in mind the Vancouver Sun have the same overlords as the Edmonton Journal and the Calgary Herald, which makes it relevant to post here.

On sales mix and tinfoil hats

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 23
There's a higher percentage of low-end homes selling this year. Here are the numbers compared to 2007:

Criteria: single family homes

Total Sales % Sold Under $425,000 % Sold Over $525,000

April 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.

REALTOR Association of Edmonton Radio Spin

The REALTORS Association of Edmonton put out a Radio Ad discussing market conditions from the first quarter. I found it interesting enough to duplicate most of it below:

With three months of data to back it up I think we can safely say the market is stable.

And what do you mean by stable?
We had two years of unpredictable prices and sales volumes. By contrast this year we had slight fluctuations but no wild jumps. Prices are trending upward.

How have prices changed?
Since the start of the year single family homes are selling for an avergae of $5600 more and there is about a $10,000 difference in the average condo. So again, stable. Those are normal increases over a three month span.

And sales volume?
So far in 2008 we are seeing higher than normal sales. Keep in mind the two prior years were anything but normal and the first quarter is generally slower than the rest of the year so we expect sales to increase at a stable pace.

Your REALTOR will help you figure out how this stable market effects you....

1. "Prices are trending upward."

The only way to reach this conclusion is to look at only the numbers over this specific time period. It is my opinion that this is a shallow and disingenuous take on the situation. Are same home comparable sales actually increasing?

2. "So far in 2008 we are seeing higher than normal sales"

Absolutely amazing. I do not remember REALTORS ignoring strong 2006 and 2007 sales when pumping the boom. I stole the charts below from Sheldon and Sara at the Edmonton Real Estate Blog:

Sales are low when compared to listings as shown by the sales to listing ratio.
Sales are low when compared to inventory.
Sales are "about par" when comparing to prior years of 2003-2005.

3. Whats really telling is what is not discussed: Record high inventory, very low sales to listing ratio, large number of price reductions.

Chicken Little

Back in August 2005 now discredited David Lereah gave a presentation of the US housing boom. There is a slide refering to economists predicting a downturn as 'chicken littles'.

NAR Power point presentation

Sky is falling slide

The Calgary Herald just released an article titled Sky isn't falling on Calgary's condo market.

Are you reassured? Why or why not?

Estimated Calgary Condo Sales

From Mike's Stats

Total Sold March: 565
Total Sold April 1-13: 258
Estimated condo sales April = 258*30/13 = 595
Estimated increase over March = (595-565)/565 = 5.4%
Estimated condo sales YOY = -29%

Always Be Closing

Back in February there was a blog post on WorkingTogether offering "ridiculous discounts" on apartments in Millwoods (Edmonton).

Step 1: Create the appearance of a discount by comparing sales prices to some higher prices.

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.

Step 2: Manufacture urgency

He wants the first 10 condos in each building sold right away, and as such he’s offering a ridiculous discount on the pricing.

...

We are willing to place 4 day holds on condos for you to ensure that you can take advantage of these offers. We will also be having an information session on the buildings this Thursday night (--Feb 28), provided that we haven’t sold them all already!

Step 3: Hide these sales from the market so the higher price listed in step 1 remains the "market value". This move was worthy of a previous post here and an Oscar from the Edmonton Real Estate blog.

We WILL NOT be reporting these sales to the MLS system so that these sales don’t bring down the values of the buildings.

Step 4: Profit???

Several of these apartments are now on the MLS. The listed prices are much more comparable to the "ridiculous discounts" than the higher prices used in Step 1.

Also still found here and here.

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See also: Quote of the Day

Compare the words with the numbers

The Following are some recent statements from the REALTORs association of Edmonton regarding inventory and sales compared to the numbers provided in their press releases.

The 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. Condominiums are expected to become a stronger option (especially for first time buyers) because of the lower price point.

The total number of residential sales in 2008 will probably drop slightly from 2007 levels. Perras expects that 19,100 residential properties will sell through the MLS® in 2008. There were 20,544 sales in 2007.

Marc Perras,REALTORS Association of Edmonton, Jan 9, 2008

Dec 2007 Stats
Inventory: 7094
Sales: 857 (-20% YOY)

“Near record January sales indicate that housing sales will remain strong in the Edmonton area as buyers and sellers adjust to the new pricing levels,”

Marc Perras,REALTORS Association of Edmonton, Feb 5, 2008

Jan 2008 Stats
Inventory: 7352
Sales: 1227 (-21% YOY)

“We predicted that sales would be on par with the last ‘normal’ year that we had in 2005. So far the market is behaving as we anticipated.” The number of available residential properties listed on the MLS® at the end of February was up 12.7% from the previous month at 8,284 properties.

Marc Perras, REALTORS Association of Edmonton, March 4, 2008

Feb 2008 Stats
Inventory: 8284
Sales: 1287 (-32% YOY)

"Now is the time to be buying," said Marc Perras, president of the REALTORS® Association of Edmonton. "The selection of available homes is very high and prices will increase by year end as inventory levels drop.

Marc Perras, REALTORS Association of Edmonton, April 3, 2008

Mar 2008 Stats
Inventory: 9464
Sales: 1557 (-34% YOY)
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Any ideas how EREB determined how inventory will drop? And when? Sales/Listing Ratio is at 37%. Inventory is rising at a rate similar to last year which didn't peak until September. See chart from Sheldon's blog.

Quote of the Day

...It also says, "it has become a buyer's market." We've known that for eight months. It just emphasizes how long it takes to reverse people's attitudes.

Bob Truman, April 2 2008

However from Bob's What's New page there was no talk of a buyer's market. Only following the CREB mantra of a balanced market:

Feb 26
Balanced and stable market? Over the past 12 months, the median price has fluctuated within a 4% range of today's median price.

Feb 17
There
was lots of guessing last fall about where the market would go this year, from a complete crash to the usual spring frenzy of rising prices and quick sales. So far in 2008, it looks like the balanced market has returned. Homes are selling a lot faster than I would have predicted, and are selling a little closer to list price. In a balanced market, you could expect to see homes selling in an average of 45 days. While prices are up slightly, I don't expect them to go any higher. With all the inventory, it's surprising to see the prices rising at all. Affordability is an issue and we see the manifestation of that in the number of sales which are down considerably from the historical average.

Feb 6
As I predicted in 2007, we were going to have a balanced market this year, and that is exactly what's happening. There's lots to choose from, homes are selling in a reasonable amount of time, and there are very few bidding wars.

Jan 30
It speaks to the amazing strength of the Calgary economy that in spite of decreased sales and increased inventory, the price is remaining stable, or even rising slightly. If prices stay where they are now, and I fully expect them to, within a +/- 5% range, the buyers will appear. People have been waiting to see what would happen in January and now they know. My phone is busy, and many other realtors I've talked with, report plenty of interest. Sales will be down considerably this year compared to the frenzied activity of 2006 and 2007, but it seems to be a non-issue. When you compare this year's sales to the years when we had a normal balanced market, we're right on the average.

Jan 25
It's a nice change from the past two years for everyone. It's taking an average of 52 days to sell a house, and going down. Traditionally, it would take a house 45 - 50 days to sell. Prices should fluctuate slightly from month-to month, but I don't expect any dramatic rise or fall. March, April and May will return as the usual big months for sales. The balanced market, as predicted, is here.

Jan 21
Sales of single family homes are about equal with historical averages for the first 20 days of January. With 628 sales so far this year, we're one ahead of the 7-year average of 627. The last time we had anything close to a normal balanced market was in 2005, and that year there were 560 sales. The average price in 2005 was $268,306. That's a 69% gain in three years.

Jan 12
The average price of single family homes in Calgary has risen $10,000 in the first 11 days of 2008. The median price has dropped $4,000. Condo avg price is down $4,000, median is up $3,000. So far in 2008, it looks like the balanced market is here and functioning well.

And from 8 months ago:

Aug 13

If you're waiting to catch the bottom of the condo market, it's possible that you've already missed it. Condo prices are on the rise. Average and median prices are both higher than July. Condo prices dropped for two months in a row, but are now on the rebound Condo Daily Stats.