Friday, January 23, 2009

Phantom buyers

It seems "Alberta Real Estate Watch" is now mainstream. So now I feel like I'm kicking the industry when they are down instead of being some sort of renegade blogger. To see what I mean have a look at the comments the Calgary Herald article Calgary's MLS sales price to drop by 2% for homes, 5% for condos
Posted by 'Disgusted'
This article is completely irresponsible, wreckless manipulation aimed at coercing people into buying into a market that is headed for much lower prices. There are people who will be hurt by this - young people who have never seen this type of market before, older people who are hanging on in desperation seeing their retirement dwindle and others hanging on by a prayer hoping beyond hope for a recovery. Where are the facts to support this ridiculous prediction when all the facts point to a failing economy and lower housing prices. I am disgusted by the self serving message by the PRESIDENT of CREB and would urge everyone who feels the same to contact CREB to voice their complaint. At the very least I would like Ms. Wegewich to back up her comments with some realistic facts ilustrating her conclusions. Which of course she could never possibly do.
January 22, 2009 - 10:46 AM
So what does this mean for Alberta Real Estate Watch? I just put on some Vietnam jungle boots.

Yet again we are waiting for the buyers as we have since the boom ended. I put together a compilation of quotes from Calgary Realtors talking positively about interest from potential buyers.

Q: Has the market hit bottom?

A: All of a sudden we're seeing some buyers come out again and start looking for houses. I think they want to buy before the market starts to go up again.
Bonnie Wegerich, CREB president
Incoming real estate chief expects return to stability
Calgary Herald
Jan 21, 2009
(sales between Jan 1-15 are down about 60% from the same period last year according to Mike Fotiou)

Real estate agent Kristen McNaugton has been run off her feet. Instead of the usual winter slowdown, December has been the start of a real estate frenzy. "Well our phone is ringing off the hook. People seem to be getting off the fence and they're ready to buy"
CBC News Fail
December 10
(December SFH sales fell 47% YOY)

"International investors are definitely buying. Calgary and Edmonton real estate is hot in Europe and the U.S., more than I've ever seen before in all my years involved in real estate. The top banks in Ireland, for instance, are buying here. They see it as safe, secure and good for the long-term, compared to other options."

While he says the number of sales won't be anywhere near the record levels of the immediate past, "most cities in the world would cry for what is still forecast for here."
Don Campbell,
Calgary resale market seen as 'self cleaning'
Calgary Herald
March 1, 2008
(The bank of Ireland is trading at $2.12 down from about $60 in March 2008)

...Sales will come, he says.

It is already happening, says Tim Crough, a realtor with Prudential Toole Peet. "We're starting to see the starter home market pick up, predominantly in condos, but also lower-end singles."
'Breather' for market
Calgary Herald
March 1, 2008


squidly77 said...

phantom buyers and phantom upgraders its all but an illusion

as you correctly point out the truth is in the stats
everything else is spin and scam

btw..sheldon gives you a good plug on his site he also is predicting a price fall to $300,000 for a sfh
for a whopping loss of $151,596 or 33%

i see it going a little lower to between $260,000 and $275,000

who would have guessed huh !

Carioca Canuck said...

You cannot expect the mainstream media to take these people to task....because they are beholden to their advertising dollars.

The nightly news on Canwest Global Channel 7 is sponsored be REMAX....and the Calgary Herald would not be in existence today if it was not for the various RE companies numerous ads.

RJT said...

keep up the good work Bearclaw. These realtors are so dumb about economics, it staggers the mind.

They really thought that Irish banks were buying condos in Calgary??? Irish banks don't even buy banks in Ireland! Banks don't buy condos anywhere, they simply LEND to people. I don't know about you, but when was the last Calgarian you heard getting their mortgage from an Irish Bank!

Kevin said...

Even when prices do return to earth I still think it will take a while before sales return to traditional levels.

During the last three years they did a pretty good job of beating the bushes and giving mortgages to anything with a pulse. A lot of first time buyers that entered the market before they otherwise would have, which would result in a lull all by itself.

Then add to that all those who overpaid and won't be able to upgrade and speculators that got caught with their pants down, and there is bound to be a void.

But I guess these organizations need to blow some sunshine up their realtors asses too... they have to be realizing that the longer prices stay up the lower sales figures will drop... and because of the commission breakdown while high prices are a nice bonus, it's really transactions that drive realtors.

So at least sellers aren't the only ones getting hosed by the REB's... they're doing it to their own members too.

BearClaw said...


The Irish banks quote was bizarre. *Multiple* banks in Ireland buying condos in Calgary.... sure....

but what was going on with CBC in December? The most abrupt sales slowdown in a generation and they can keep a straight face saying there is a non-typical winter sales frenzy? It would be like interviewing someone who has just been laid off as if they won the lottery.


It would be interesting to see home ownership stats in Edmonton. Really most of the "pent up demand" would probably be in new migrants or those under 25 (not really pent up demand anyway). The vast majority of people over 25 settled here are most likely owning. I would be surprised if pent up demand is any higher than historic norms, even considering the low sales of the past few months.

Vacancy rates have actually eased recently which is contrary to the view that there are hordes of impatient apartment dwellers.

Snakes and Ladders said...

2014. 2014 is my bet when things start to get looking better...

CREB, well, CREB isn't a reliable source for stats anymore IMO. CREB is a discredited, sales pitch company with over 5,000 salesmen tring to sell a depreciating product in a bad environment.


Carioca Canuck said...

It is going to take at least a minimum of 10-20 years.

Why ?

Well, the last time it took 25 years (1982-2007).

You need a long generational cycle to cleanse memories and produce a whole new crop of naive young buyers.

squidly77 said...

in 20 years the creb will be gone
as someone will create a more efficient less expensive way to transact a sale

there should be no need to pay $25,000 to a middle man who does nothing of any value