Canwest Global: Buy Now!

CanWest Global reported on the Calgary housing market.

Oops, that was Canwest stock price. 45 cents.

The story is here somewhere I'm not saavy enough to embed or link it. Go find it.

Reporter:

...falling prices and lower interest rates are creating a perfect storm for homebuyers. As Vindu Surri reports some lenders are even sweetening the deal to help you cash-in on the cooling economy

....

Mortgage guy:

"..Its almost like a free downpayment, where the lender actually supplies the borrower with the downpayment for the mortgage. Interest rates just a slight bit higher maybe 1 point 1 and a half points higher than normal and that downpaymnet is forgivable after 5 years."

...

Reporter

The free downpayment is unlike the zero downpaymnet which was eliminated last year.

Adding 1 to 1.5 to the rate over 5 years will end up costing 5.0-7.5% (neglecting compunding interest) so assuming the downpayment is 5% it is certainly not free.

Also the mortgage broker in the story reminded us of a very important fact

Canada Mortgage and Housing and there are some other mortgage insurance institutions that will protect the lender if someone defaults on their mortgage.

Looks like mortgage originators are able to shift the risks of "innovative" mortgage products. hmmm... sound familiar? Volker had it right (paraphrased) The best innovation in the world of finance was the automatic teller.

What is Normal?

According to several CanWest publications Western Canada's real estate market it normal.

Victoria real estate market gets 'back to normal' as industry sees signs housing boom is over
CanWest Global's Vancouver Sun

"We're also looking over the last five or six years and what we're finding is things are just coming back to normal,"
-Victoria Real Estate Board President Tony Joe

Lower Mainland real estate market returning to 'normal' levels
Canwest Global's Vancouver Sun

"We're experiencing a return to more normal market conditions," Kelvin Neufeld, president of the Fraser Valley Real Estate Board said in a release.

Regina housing market back to normal
CanWest Global's Regina Leader-Post

The housing market in Regina was at a frenzied pace earlier this year, but during the third quarter, prices have cooled down and flattened out, says a report by Royal LaPage Realty. More available listings and less demand from buyers means the province's housing market has returned to more normal conditions, the real estate company said Monday.

Condo market returning to normal
CanWest Global's Calgary Herald

"In 10 to 12 months, the supply and demand in the condo market will be normalized. It's starting to shrink already."
-Calvin Buss, president of Buss Marketing

Levelling in real estate market sets stage for stronger 2008
CanWest Global's Edmonton Journal (from August 2007)

"I don't really want to use the word 'softening' because I think this is more of a normalizing market. We were super-heated, and now we're coming down to something that's more reasonable."

Saskatoon home prices stabilizing
CanWest Global's Saskatoon Star Phoenix

This fall, Janzen forecasts a real estate climate more in line with Saskatoon's "normal" residential sales market.
"We're more on par with 2003, 2004, 2005 - so we're indicating a return to a more normal, stable environment," he said, adding the market is expected to stay in a similar state for some time.

See previous post

Saskatoon Spin

I know this is an Alberta blog but this article from the Saskatoon Star Phoenix demands attention.

Saskatoon home prices stabilizing

More homes are up for sale in Saskatoon and their average price is headed for a plateau.

I am not an expert in geology but I'm pretty sure a plateau is flat and not a decline of more than $30,000.

"We're more on par with 2003, 2004, 2005 - so we're indicating a return to a more normal, stable environment," he said, adding the market is expected to stay in a similar state for some time.

This August sales were at a 10 year low. And clearly not on par with 2003, 2004, 2005.

	August Sales
2003	240
2004	296
2005	319
2006	349
2007	397
2008	224

This comes shortly after a desperate article (4 pages!)tackling the Merrill Report stating that Saskatoon is 50% overvalued.

Star Phoenix is one of CanWest minions along with the Edmonton Journal and Calgary Herald. See previous post on Saskatoon here.

Lies, Damn Lies, and Statistics

Apparently prices in Edmonton in Calgary are stable. This from the Edmonton Journal Article Housing-start decline not a sign of dying market

First, consider overall housing prices in Calgary and Edmonton. In both cities, prices in June are off only slightly from the peak record highs reached last July. They're down 3.6 per cent in Calgary, and 3.8 per cent in Edmonton -- hardly a sign of collapsing prices. In fact, for a full year now, prices in the resale market have been remarkably stable.

Let;s look at Edmonton here. The statistic used is for average price for all properties which dropped from $354,718 to $341,376. However a look at prices by most any other measures would totally invalidate the article.

Some other numbers of price drop July 07 - June 08 from

Realtor Association of Edmonton (Edmonton CMA)

SFH Average $417,150 to $381,384 -8.6%
SFH Median $395,000 to $365,000 -7.6%
Condo Average $271,908 to 262,365 -3.5%
No Condo Median available

From Bob Truman's site (Includes Edmonton, St Albert, Sherwood Park, Spruce Grove, Stony Plain)
SFH Average $442,753 to $399,604 -9.7%
SFH Median $410,000 to $368,000 -10.2%
SFH Price per square foot $321 to $280 -12.8%
Condo Average $275,905 to $261,318 -5.3%
Condo Median $269,000 to $245,900 -8.6%
Condo Price per square foot $285 to $257 -9.2%

Here is a breakdown of Edmonton regions YOY price change. I didn't hav access to July 2007 regional prices.

Edmonton Regional Prices for June 2008 (detached)
		2008	2007
NORTHWEST	AVERAGE	338135	346172	-2.38%
NORTHWEST	MEDIAN	318000	348000	-9.43%
NORTH	AVERAGE	356462	405401	-13.73%
NORTH	MEDIAN	346250	385000	-11.19%
NORTHEAST	AVERAGE	297946	355189	-19.21%
NORTHEAST	MEDIAN	295450	343000	-16.09%
CENTRAL	AVERAGE	290966	278306	4.35%
CENTRAL	MEDIAN	252500	270000	-6.93%
WEST	AVERAGE	428566	511958	-19.46%
WEST	MEDIAN	402500	430000	-6.83%
SOUTHWEST	AVERAGE	457560	566179	-23.74%
SOUTHWEST	MEDIAN	419600	515000	-22.74%
SOUTHEAST	AVERAGE	356244	431395	-21.10%
SOUTHEAST	MEDIAN	339000	399950	-17.98%
ST. ALBERT	AVERAGE	449903	514678	-14.40%
ST. ALBERT	MEDIAN	424000	478700	-12.90%
SHERWOOD PARK	AVERAGE	443069	480363	-8.42%
SHERWOOD PARK	MEDIAN	423500	451000	-6.49%
LEDUC	AVERAGE	347915	401140	-15.30%
LEDUC	MEDIAN	330000	373450	-13.17%
SPRUCE GROVE	AVERAGE	377174	418583	-10.98%
SPRUCE GROVE	MEDIAN	361324	402500	-11.40%
STONY PLAIN	AVERAGE	390452	401990	-2.96%
STONY PLAIN	MEDIAN	364500	395000	-8.37%
MORINVILLE	AVERAGE	354745	345309	2.66%
MORINVILLE	MEDIAN	353000	335000	5.10%
FORT SASKATCHEWAN	AVERAGE	371281	381228	-2.68%
FORT SASKATCHEWAN	MEDIAN	355000	370000	-4.23%

Remarkably stable.

I wanted to rip on the article more... but I really don't think anyone takes the Edmonton Journal seriously anyway.

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.

Saskatoon Thought Experiment

Just wanted to comment on the following from The StarPhoenix in Saskatoon

Housing starts keep building

"The longer people wait the more it's going to cost them in the future through both interest costs and purchase price," he said. "If they want to act, they have to act soon before they price themselves out of today's market."

For the anxious first time buyers in Saskatoon do the following thought experiment. Assume while saving for a down payment the assertions in the article become a reality. At some point in the future you become priced out as interest rates and prices increase. Consider this hypothetical future seriously. The new market will reach equilibrium with a balance of buyers and sellers, higher interest rates, higher prices and you being priced out. For this to occur there will have to be a set of buyers that will be able to (and choose to) support these higher prices and higher interest rates. They will have to be in numbers to match the increased residential construction. Since you have saved up while waiting these new buyers will have to either have a higher income and/or a larger down payment to leave you behind.

Where will they work and where will they come from? Will there be enough of them to absorb the new construction? Is this scenario likely?

This thought experiment is similar to a proof by contradiction. Assume the statements to be true then attempt to identify a contradiction. This is not a formal proof - just something to think about. Who knows - Saskatoon may end up getting the 2014 winter Olympics and become the next Vancouver. I may think that is unlikely but I definitely did not disprove it!

Also the StarPhoenix is part of CanWest's empire.
See: CanWest holdings

Ctrl+C Ctrl+V

Talk about media access! Royal LePage put out a press release Jan. 31 and it has been copied and pasted in many of Canada's major papers.

Canmore retreats hot property
Calgary Sun

...housing market uncertainty in the U.S. is prompting more Canucks to buy winter retreats in Canada...

Tight market fuels winter retreat boom
Globe and Mail

While a $650,000 condo or $1.4-million chalet in Whistler sounds pricey, their comparative affordability has Europeans buying, Mr. Soper said

Slick chalets replace weekend snow forts
Globe and Mail

“High levels of demand combined with limited inventory have pressured winter recreational property prices upward — a trend expected to continue well into the future,” said Lisa da Rocha, vice-president of marketing communications at Royal LePage.

Winter vacation properties in Canada a hot market
Edmonton Journal

...Canadians in search of winter recreational properties are casting a jaundiced eye on the subprime-tainted market south of the border. Instead, they are favouring properties in Canada, which is helping to drive up prices across the country...

Canmore condo prices soar
Edmonton Journal

"We expect to see strong demand from three types of purchasers over the next few years: baby boomers approaching retirement or inheriting wealth, professionals who are able to work from satellite or home offices and foreign visitors looking to get away from crowded cities, Hawker said.

Canadians nervous about buying U.S. real estate
Calgary Herald

... the uncertainty clouding the U.S. housing market now has many Canadians favouring properties north of the border.

Canadian winter recreational properties a hot market
Financial Post

Canadians in search of winter recreational properties are casting a jaundiced eye on the subprime-tainted market south of the border, according to a study by Royal LePage Real Estate Services.

Recreational market in flux
Toronto Star

Canadians aren't just looking south for real estate this winter, with recreational properties across the country seeing relatively strong demand, according to a report released yesterday by Royal LePage Real Estate Services.

Snow the hot ticket in recreation homes
Vancouver Sun

Canadians are homebodies when it comes to their winter recreational property desires, particularly in these times of U.S. economic turmoil, according to a Royal LePage survey.

The Calgary Herald, Edmonton Journal and the Vancouver Sun are all owned by CanWest Global Communications. Here is an extensive list of CanWest Holdings in case you are concerned about media concentration.