Marc Perras Radio Ad

Some more radio ads from Marc Perras of the REALTORS Association of Edmonton

October Ad 1

While average residential price was down in October the average price of single family homes was up.
Really so where is the decrease?
Condos. Condo sales prices had the biggest single month drop of the year. Down by 5.8%.
So single family homes are up condos are down.

Average price of single family home increased by 0.3% from $362,097 to $363,274. Median price decreased 0.8% from $345,500 to $342,750.

October Ad 2

Global unrest, economic uncertainty most major markets are feeling the effect of fnancial instability....

Unlike most major markets there is still a high degree of consumer confidence in Edmonton and thats being reflected in the housing market

So we are maintaining an even keel?

As compared to a typical fall, absolutely.

Sales generally slow at this time of the year and we have seen that predictable slowdown. Its safe to say that the stronger sales in the third quarter of the year contributed to reduced demand in October?

Which is normal?

It is. This October's resale figures were lower than last year but well with the norm. We're also seeing inventory levels continuing to decrease, heading back towards normal levels.

So all in all the Edmonton market remains stable.

More than most major markets in these strange economic times. I'm not going to use the 'R" word.

Unless you mean REALTOR

Instead of being 'well within the normal range' sales are lower than each of the the previous five years for October.

Notice that there was no mention that the decrease in inventory is also part of a regular seasonal pattern just like sales.

The sales to listing ratio dropped from 55% in September to 40% in October which indicates a deterioration in the market independent of seasonality.

Another Marc Perras Radio Ad

Here is the ad.

"The average price of single family homes was down by 1.9% since August. Condos on the other hand were up 11.7%.... When you factor in all types of residential property the average price was down 1.3%"

Probably a simple mistake but it is rich that at the beginning of the ad the questioner said "Anybody can read statistics off a page and give you numbers". The average price of condos in Edmonton increased by 0.5%.

The price drop was explained by change in sales mix:

"It has a lot to do with the mix of homes on the market. The average factors everything from entry level homes to estate homes. Right now there are more entry level, lower priced homes on the market, so that brings the overall average price down despite the strong sales we are seeing."

A different perspective comes from the Edmonton Real Estate Blog. Keep in mind that this is also referring to the first half of October as well.

As you can see from the chart below, this is not just a case of fewer high end listings selling, as the average price per square foot has dropped.

Sales price/square foot chart.

Marc Perras - Spinning like Clockwork

From the latest round of radio ads on the REALTORS Association of Edmonton's site:

August Market Facts - Prices Up
August Market Facts - Sales Up

First off a comment on the titles. Sales were down compared to July and up compared to last year. Prices were down both to last month and last year. Anyway I had the misfortune of listening to these...

Just like the swallows return to Capistrano every year after winter the buyers return to the Edmonton real estate market after summer.
It happens every year like clockwork and we expect it to happen again - Marc Perras

This is simply a fabrication by Marc Perras and is not supported by reality based arguments.

Look at this sales chart again from the Edmonton Real Estate Blog. Compare June, July and August numbers with those of September, October and November. With a few exceptions fall tend to be slower than summer. The only thing happening like clockwork is desperate spinning from the REALTORS Association of Edmonton.


*Chart From Edmonton Real Estate Blog

There is more...

But we usually see softer prices in August because people have so much on the go. That pattern held true this August as the average residential price dipped by about 1.8% from the previous month.
So prices fell slightly as expected...

He then goes on to say how prices are expected to rise in the fall. Using their own numbers I determined the % month price changes for August and September going back to 1990 (from REALTOR Association stats).

	Aug % change	Sep % change
1990	1.37%	-2.61%
1991	0.44%	-1.61%
1992	1.46%	-1.31%
1993	-1.03%	-3.22%
1994	2.70%	-1.80%
1995	-3.85%	-2.04%
1996	2.79%	-2.03%
1997	-0.92%	-0.69%
1998	-0.85%	-0.94%
1999	-4.41%	2.72%
2000	2.07%	-3.43%
2001	-5.72%	2.51%
2002	-1.26%	-0.62%
2003	-0.40%	1.19%
2004	0.79%	-0.92%
2005	0.12%	-2.77%
2006	5.56%	2.95%
2007	-2.80%	-0.15%
Average	-0.22%	-0.82%

Generally September has had higher price drops than August. And the drop of 1.8%, while not devastating, is worse than average.

Also remember when the price drops were supposed to only occur in the second quarter? This statement I covered in a previous post.

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."

Marc Perras, May 6, 2008.

I don't mind bullish arguments and would expect them from REALTORs. But when they totally make stuff up that is not supported by the numbers they need to be called on it.

Upset Customers

From the Financial Post - Alberta leads national drop in home prices:

The situation has left brokers like Ken Shearer, of Edmonton-based Royal LePage Noralta, trying to explain the market to upset customers. "People who bought in the last 12 to 15 months are angry. I'm telling them we have an oversupply of listings inventory, the largest in history.

Why would people be angry?! What type of advice was the Edmonton Real Estate Association giving out last year?

In only the first three months of this year, average home prices have climbed 12.4 per cent, so Pratt has abandoned her earlier forecast of a 15 per cent increase for the full year.

"We're predicting that prices will continue to rise until August, at four to five per cent per month, then at two per cent per month," she said today.

April 4, 2007

“Price increases may moderate slightly as the market returns to pre-boom levels but I do not anticipate that actual prices will decrease.”

May 2, 2007

“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 of a single family dwelling rising by over $400 a day, you need the latest market figures that only a REALTOR® can provide.”

June 4, 2007

I wasn't going to bring those quotes up again but decided to after hearing this ad from Marc Perras of the EREB.

It's sort of like driving around on fumes with your gas guage on empty just waiting for fuel prices to go down.

Marc Perras of the REALTORS Association of Edmonton

There are homebuyers waiting on the sidelines of the market anxiously waiting for housing prices to drop.

But there is nothing to suggest that a big drop is coming?

There is still a lot of inventory on the market but sellers have adjusted already. The near record number of sales in July suggests the market has really stabilized.

So there is not much ground to be gained by waiting?

The average price of a single family home fell 0.5% in July. If you consider that amount to an average month's rent...

..Then your sitting there paying rent waiting for prices to drop...

Then you are not gaining any ground. You are just missing out on all that selection.

...

First, if I was living under a bridge and had the cash available to buy a house then the gas analogy might make sense. But I'm not, so it's stupid.

If your rent is cheaper than the mortgage then you gain that difference plus the depreciation each month. I'm not even including if the furnace breaks down or city taxes.

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.