Friday, May 30, 2008

Paid obfuscators




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 years

Market 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 listings
Lai 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 has come back just a little bit but it has stabilized."
Gregory Klump, CREA's chief market obfuscater

Reality:
People paid too much for houses last April in Alberta.

___________________________________________________________

But... but.. look at Fort McMurray!

"The one market where there's still a lot of price strength is in Fort McMurray (Wood Buffalo region). If you look up there, that real estate market still seems to be rising there,"

I also have a comment on the increasing prices in Fort McMurray. I can only present theory and conjecture but I still think it is useful. Here me out:

Even if the Fort McMurray's economy continues to boom, which many expect it too, it is still possible for real estate to stabilize or fall. Consider a $420,000 mobile home for a moment. Even a price of $320,000 would require an insane economy and more importantly insane rents. So even if you are sure the boom will last "at least another 10 years" there is an equilibrium price for a mobile home - and its not infinity. Look to Edmonton which has demonstrated a strong economy and falling prices.

I also want to hear from fort McMurray locals. I see "offer pending" on many questionable listings and I presume its some REALTOR method of creating hype and drama. What is a pending offer?

See previous post on Relaxing Housing Prices

Monday, May 26, 2008

Attention Comfree Sellers

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 number

Take for example this townhouse in Millwoods (Edmonton) listed at $327,900.



Find a similar listing on the MLS like the one here for $255,000. Same building same square footage.


Since this is on the MLS and hasn't sold yet its fair to say that it will likely sell for under asking. Average is about 97%.

255,000 * 0.97 = $247,350

Apply the extreme market conditions adjustment factor

247,350 * 0.95 = $234,983

round down

$234,900

Steps 1-3 are the most important. If there is a high inventory and low level of sales on the MLS why would someone spend significantly more to buy privately?

Saturday, May 24, 2008

Bob Truman is #1

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 Kyle
May 2006 Bottomed at 14
Dec 2006 Peaked at 43
April 2007 Bottomed at 24
Dec 2007 Peaked at 51

See 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 20
With 4690 single family homes on the market, we have more than double the inventory compared to Feb 2007, yet prices continue to rise and the time required to sell a house has gone down dramatically. Over the past week, it took an average of 37 days for a home to sell. In January, the average was 50.

DOM so far in May have increased to 51 for condos and to 42 for SFH from Mike's Stats. There is has been no mention of any increase of the DOM or of the seasonal pattern.

Earlier posts on this subject here and here.


Balanced/Buyers Market.

When the consensus finally arrived that Calgary was in a buyer's market (when it was written in Calgary Herald) Bob claimed to have been saying this all along. A look at his previous postings shows that he continually referred to a "balanced" market in step with the CREB. link.

Million Dollar Sales.

So far this year Bob has given the impression that million dollar sales are down. This is important because when prices were falling from their July 2007 peak there was extra emphasis on the impact reduced sales over $1million on the average price.

From What's New:

Aug 16
This is very interesting: There was lots of concern on my blog last month that sales of homes over $1 million were distorting the average price. When you delete the million dollar sales from the mix, average prices this month are the same as July. See Under $1 million stats.

Aug 17
The Calgary housing market, while down slightly, is weathering this so-called global financial crisis very well. I have been expecting a small decrease in prices for the past three months, and this is the catalyst that finally set it in motion. Depending on how you read the stats, prices have changed very little from July. It's just that there are fewer million dollar homes selling.

Aug 21
While average prices are down considerably, the SFH median price is only $400 below July at $434,600. The condo median price is $3100 over the July number. When you delete million dollar sales, the SFH average price is only $2,000 under July.

Sep 10
Despite sensational headlines that make it appear the sky is falling, the fact is SFH average prices remain unchanged from July when you take million dollar homes out of the equation. See Under $1 million. Sales of million dollar homes are very slow this month, with only 6 firm sales in the books.


Fast forward to 2008:

Jan 28
Sales of single family million dollar homes are going to be down this month compared to 2007. So far, there have been 21 sales this year. For the entire month in 2007, there were 34 sales.

Since total number of sales dropped considerably in 2008 I am going to compare the % +$million homes that sold each month (SFH% / Condo%) from CREB monthly stats. This will be a better indicator of how these sales skew the average price. In January he was indeed correct but it was fairly close.

Jan 2008: 2.12% / 0.22%
Jan 2007: 2.27% / 0.27%

Mar 2
Sales of high-end homes in Feb were down compared to last year. There were 27 sales for $1 million or more compared to 32 last year.

In fact there was a higher percentage of million dollar sales in February.
Feb 2008: 2.00% / 0.36%
Feb 2007: 1.50% / 0.34%

Mar 29
Sales of million dollar homes will be down dramatically this month compared to last year. 38 sales so far in March 2008 compared to a total of 61 in March 2007.

Instead of being down dramatically sales of $million homes increased slighly as a propotion of total sales,
March 2008: 2.75%/0.35%
March 2007: 2.69% / 0.00%

Apr 14
Total sales of million dollar homes is down this year. To April 14, there have been 110 sales. Last year, there were 146 sales.

Sales of $million homes doubled in April and were up year to date.
April 2008: 3.08% / 0.34%
April 2007: 1.50% / 0.36%

April 2008 YTD: 2.53% / 0.32%
April 2007 YTD: 1.99% / 0.23%

I conclude that sales of million dollar homes are having a greater impact on avaegr price this year so far than last.

See previous posts: here and here

He also started tracking sales below 425K as in the "low-end" range. I find it insulting to refer to sales below this amount in this way and it shows how out of touch REALTORS have become regarding the value of money. $425,000 is a lot.

Well-timed posts.


Apr 13
Last 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.
Here are the month end results for sales in April:

SFH sales 1363 -34.7% YOY / -3.9% MOM
condo sales 581 -30.8% YOY / +2.8% MOM

The intended impression of the post was to indicate a non-seasonal sales surge while what happened in reality is that sales were flat for the month and down considerably from 2007. Prices were basically flat except the condo median fell $3000. See post here.

Wednesday, May 14, 2008

Dare to Compare

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 Money
Edmonton from EREB
Calgary from CREB
Vancouver 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%
Decatur, IL $79,400.00 4.20%
South Bend-Mishawaka, IN $80,900.00 -5.50%
Elmira, NY $82,500.00 9.60%
Canton-Massillon, OH $88,500.00 -12.00%
Davenport-Moline-Rock Island, IA-IL $88,600.00 -17.00%
Ft. Wayne, IN $88,700.00 -4.00%
Toledo, OH $89,700.00 -13.80%
Lansing-E.Lansing, MI $92,600.00 -26.90%
Cumberland, MD-WV $95,000.00 -5.00%
Erie, PA $96,200.00 4.00%
Akron, OH $96,300.00 -13.20%
Buffalo-Niagara Falls, NY $96,600.00 5.50%
Dayton, OH $100,500.00 -7.70%
Cleveland-Elyria-Mentor, OH $102,100.00 -16.90%
Grand Rapids, MI $102,800.00 -20.70%
Topeka, KS $103,300.00 -2.80%
Waterloo/Cedar Falls, IA $104,000.00 0.10%
Springfield, IL $107,200.00 4.20%
Indianapolis, IN $107,300.00 -4.60%
Rochester, NY $108,500.00 1.50%
Binghamton, NY $109,700.00 11.80%
Syracuse, NY $110,300.00 2.60%
Memphis, TN-MS-AR $110,800.00 -18.50%
Pittsburgh, PA $111,600.00 2.40%
Wichita, KS $112,700.00 4.00%
Rockford, IL $115,200.00 1.90%
Charleston, WV $116,800.00 1.40%
Peoria, IL $119,000.00 10.40%
Kankakee-Bradley, IL $119,300.00 -8.00%
Springfield, MO $120,900.00 2.60%
Saint Louis, MO-IL $121,400.00 -9.70%
Appleton, WI $121,500.00 -4.00%
Amarillo, TX $122,200.00 8.20%
Beaumont-Port Arthur, TX $122,900.00 6.10%
Jackson, MS $123,600.00 -13.00%
Gary-Hammond, IN $124,000.00 -1.70%
Oklahoma City, OK $124,900.00 -7.10%
Chattanooga, TN-GA $125,200.00 -3.40%
Little Rock-N. Little Rock, AR $127,200.00 3.80%
Cincinnati-Middletown, OH-KY-IN $128,500.00 -6.10%
Mobile, AL $129,900.00 -0.40%
Cedar Rapids, IA $130,000.00 0.50%
Spartanburg, SC $130,300.00 10.10%
Columbus, OH $131,400.00 -7.20%
Shreveport-Bossier City, LA $131,500.00 1.90%
Louisville, KY-IN $131,600.00 -1.30%
Omaha, NE-IA $132,900.00 -1.00%
Montgomery, AL $133,700.00 0.80%
Lincoln, NE $134,000.00 -0.30%
El Paso, TX $134,600.00 8.50%
Sioux Falls, SD $136,000.00 -3.00%
Corpus Christi, TX $136,800.00 4.90%
Fargo, ND-MN $136,900.00 -0.40%
Green Bay, WI $137,000.00 -5.60%
Lexington-Fayette,KY $138,900.00 -5.80%
Gulfport-Biloxi, MS $139,000.00 -9.60%
Champaign-Urbana, IL $139,400.00 -4.10%
Kansas City, MO-KS $139,500.00 -4.30%
Columbia, SC $141,600.00 -0.60%
Greensboro-High Point, NC $142,300.00 -1.90%
Dallas-Fort Worth-Arlington, TX $142,400.00 -2.10%
Columbia, MO $143,900.00 -1.10%
Ocala, FL $145,500.00 -13.30%
Knoxville, TN $146,000.00 -2.70%
Des Moines, IA $147,900.00 1.70%
Houston-Baytown-Sugar Land, TX $148,400.00 0.80%
Reading, PA $148,400.00 5.00%
Yakima, WA $148,400.00 9.00%
San Antonio, TX $149,800.00 1.00%
Bloomington-Normal, IL $150,900.00 2.50%
Birmingham-Hoover, AL $153,200.00 -2.70%
Bismarck, ND $153,400.00 2.70%
Atlanta-Sandy Springs-Marietta, GA $154,000.00 -9.60%
Greenville, SC $154,500.00 6.00%
Pensacola-Ferry Pass-Brent, FL $156,300.00 -4.20%
New Orleans-Metairie-Kenner, LA $157,100.00 0.80%
Palm Bay-Melbourne-Titusville, FL $158,800.00 -17.00%
Glens Falls, NY $163,100.00 7.70%
Kennewick-Richland-Pasco, WA $163,700.00 0.20%
Baton Rouge, LA $169,200.00 -3.60%
Tallahassee, FL $173,300.00 -5.70%
Deltona-Daytona Beach-Ormond Beach, FL $175,600.00 -10.90%
Durham, NC $178,200.00 0.50%
Austin-Round Rock, TX $184,500.00 4.70%
Tampa-St.Petersburg-Clearwater, FL $184,700.00 -9.10%
Jacksonville, FL $185,700.00 -6.00%
Spokane, WA $186,800.00 2.80%
Gainesville, FL $188,300.00 -13.00%
Farmington, NM $190,000.00 6.30%
Albuquerque, NM $190,500.00 -1.70%
Charlotte-Gastonia-Concord, NC-SC $192,700.00 3.80%
Hagerstown-Martinsburg, MD-WV $192,700.00 -7.90%
Boise City-Nampa, ID $193,400.00 -5.20%
Albany-Schenectady-Troy, NY $194,100.00 -3.80%
Springfield, MA $198,100.00 -4.40%
Dover, DE $199,100.00 0.60%
Minneapolis-St. Paul-Bloomington, MN-WI $199,900.00 -10.20%
Charleston-North Charleston, SC $201,400.00 -8.20%
Milwaukee-Waukesha-West Allis, WI $204,400.00 1.30%
Colordo Springs, CO $208,900.00 -1.60%
Cape Coral-Fort Myers, FL $213,200.00 -17.00%
Pittsfield, MA $216,600.00 2.80%
Madison, WI $217,100.00 -1.80%
Salem, OR $218,500.00 -1.40%
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD $220,900.00 -0.70%
Tucson, AZ $221,000.00 -8.80%
Phoenix-Mesa-Scottsdale, AZ $222,200.00 -15.40%
Denver-Aurora, CO $223,500.00 -6.60%
Salt Lake City, UT $225,700.00 3.50%
Eugene-Springfield, OR $227,500.00 -3.90%
Raleigh-Cary, NC $228,100.00 2.40%
Orlando, FL $232,000.00 -13.10%
Portland-South Portland-Biddeford, ME $234,000.00 -0.30%
Allentown-Bethlehem-Easton, PA-NJ $237,000.00 -4.20%
Virginia Beach-Norfolk-Newport News, VA-NC $237,600.00 1.60%
Kingston, NY $237,800.00 -4.30%
Norwich-New London, CT $244,900.00 N/A
Hartford-West Hartford-East Hartford, CT $247,300.00 -3.00%
Las Vegas-Paradise, NV $247,600.00 -20.20%
Worcester, MA $248,200.00 -8.30%
Chicago-Naperville-Joliet, IL $249,600.00 -6.60%
New Haven-Milford, CT $255,500.00 -9.50%
Sacramento--Arden-Arcade--Roseville, CA $258,500.00 -29.20%
Sarasota-Bradenton-Venice, FL $262,300.00 -22.20%
Providence-New Bedford-Fall River, RI-MA $262,900.00 -8.10%
Baltimore-Towson, MD $270,500.00 -3.00%
Atlantic City, NJ $277,400.00 4.80%
Reno-Sparks, NV $283,700.00 -12.90%
Portland-Vancouver-Beaverton, OR-WA $286,600.00 -1.10%
Riverside-San Bernardino-Ontario, CA $287,100.00 -27.70%
Trenton-Ewing, NJ $288,200.00 1.60%
Miami-Fort Lauderdale-Miami Beach, FL $318,900.00 -17.20%
Barnstable Town, MA $354,600.00 -4.70%
Boulder, CO $355,700.00 -4.00%
Boston-Cambridge-Quincy, MA-NH** $357,100.00 -7.80%
NY: Edison, NJ $361,200.00 -0.60%
Washington-Arlington-Alexandria, DC-VA-MD-WV $371,800.00 -13.10%
Seattle-Tacoma-Bellevue, WA $372,300.00 -2.10%
Edmonton $372,500.00 -6.60%
NY: Newark-Union, NJ-PA $409,300.00 -3.40%
Calgary $420,000.00 -2.80%
Bridgeport-Stamford-Norwalk, CT $439,300.00 -6.70%
New York-Northern New Jersey-Long Island, NY-NJ-PA $445,400.00 -3.90%
San Diego-Carlsbad-San Marcos, CA $459,000.00 -22.90%
Los Angeles-Long Beach-Santa Ana, CA $459,400.00 -21.30%
NY: Nassau-Suffolk, NY $462,200.00 -3.50%
New York-Wayne-White Plains, NY-NJ $491,900.00 -5.70%
Anaheim-Santa Ana, CA (Orange Co.) $597,900.00 -14.30%
Honolulu, HI $620,000.00 Unch
San Francisco-Oakland-Fremont, CA $701,700.00 -6.10%
Greater Vancouver (benchmark) $771,321.00 11.00%
San Jose-Sunnyvale-Santa Clara, CA $780,000.00 -1.00%

Monday, May 12, 2008

Calgary: High-end homes

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 / 474,564
Mar 2008 446,274 / 474,513
April 2007 458,611 / 474,250

Note 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 from CREB numbers. You can spin or doom and gloom it yourself.

Is anyone tracking a benchmark home in Calgary or Edmonton?

Friday, May 9, 2008

Calgary Stampede


"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 high
Calgary Herald, May 9, 2008

Kudos 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.

Wednesday, May 7, 2008

Relaxing housing prices

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, 2008

MLS® housing sales and prices remain stable in April
Realtors Association of Edmonton, May 5, 2008

Feel free to add your own.

Tuesday, May 6, 2008

Edmonton price weakness limited to Q2?

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 eye

Q: 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 fourth quarter.

Below I determined the frequency of varying rates of appreciation over each quarter going back to 1980. Quarterly appreciation was determined by calculating the difference of the average residential price from the last month of the quarter compared to the last month of the previous quarter.

For example take Q2 2006
June 2006: $254,240
March 2006: $220,124
change: 15.5%

So this is put in the Q2 chart below at 18%, representing the frequency of quarterly appreciation above 15% up to 18%. A histogram.



Source

Note that going back price weakness generally occurs in Q3 and to a lesser extent in Q4. In fact for Q3 there has been only 4 instances of positive quarterly price growth. While Q2 is the opposite with only 3 price decreases.

After this I wonder if the argument presented in the article is a genuine conclusion based on some sort of analysis? Or was it conjured out of nothingness to promote sales?

Monday, May 5, 2008

Edmonton April Report



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 - 1823
2007 - 2441
2006 - 2026
2005 - 1802
2004 - 1805


Also, consider some choice words from the Realtors Association of Edmonton over the last few months regarding inventory

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.

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

“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


"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
Inventory = 9,464

The Edmonton housing market is stable and buyers and sellers seem to be coming to a realistic view of housing prices,” said Marc Perras, president of the REALTORS® Association of Edmonton. “In this market, with a very high inventory, pricing is a key component of a successful sale.”

Marc Perras, REALTORS Association of Edmonton, May 5, 2008
Inventory = 10,606