CBC News Fail

This clip from CBC News Calgary discusses the local real estate market. Instead of objectively looking at the data they let misinformed brokers tell the story.

[go to 18:00 mark]

Mark Carne is trying to jump start the sluggish Canadian economy and as Peter Akmen tells us that strategy appears to be working in the Calgary Real Estate market.

...but now with falling interest rates Baine is seeing an opportunity in real estate to secure Kaylyn's future.

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"

[prices have dipped..] but McNaugton says thats not the only reason for the resurgence of sales. She says the bank of Canada cutting interest rates has opened the doors for buyers. "...this is an awesome time to purchase".

...

This mortgage broker says unlike markets in eastern Canada he expects a huge rebound in Calgary real estate prices this spring.

"The stock market isn't the place to go right now, a lot of financial planners would like to hear that to much but its the fact. If anyone has any liquidity right now they are looking at real estate."

Now both real estate agents and mortgage brokers agree the safest investments are right here in Alberta. They are telling their clients to avoid some Canadian cities and most of the U.S. because they say they haven't hit rock bottom

The CBC interviewed two brokers and put together this. Sales so far this December have been slow. From Mike Fotiou's site the first 9 days of December there have been 155 SFH and 71 condo sales. If they continue at this pace it will be the slowest month in YEARS. Note that December may be worse than this estimate as I am assuming the same rate to continue through Christmas.

Estimated December sales
SFH 534 (-37% YOY)
Condo 245 (-37% YOY) *edit*

I don't know how many agents are being run off their feet. According the CREB there are 5700 Realtors which means that so far in December there have been less than 4 homes sold per 100 members. The number is likely higher than that because the sales numbers I am using are for Calgary city only.

strategy appears to be working?
December the start of a real estate frenzy?
Run off her feet?
Resurgence of sales?

epic CBC fail

You Should Buy!

The faulty buy vs. rent calculator has showed up once again, this time on the RE/MAX of Western Canada site. This calculator always returns "You Should Buy!" no matter what inputs are used.

This calculator was covered in the first post on this blog and was originally found on mls.ca but has since been removed.

Here is an example of the calculator currently found on the RE/MAX site where I used some absurd numbers.



Press Calculate...

You should Buy!

It looks like you should Buy based on the assumptions you have given us.

Why? If you buy for $1940723.70 (the maximum you would qualify for) you will pay down your mortgage of $1690723.70 by $443034.79 over 10 year(s) with your Principal and Interest payments of $9833.33 per month, plus your property will increase in value by $0 for a total investment growth of $443034.79.

This total is greater than your total investment growth from renting, which is approximately $297690.39 after 10 year(s). This was calculated by growing the monthly savings from renting ($10000.00) plus your current downpayment of $250000.00 at a standard after-tax rate of 4% per annum.

Wow! According to this calculator buying a TWO MILLION DOLLAR house that will not appreciate is a better option than renting for free. The problem is the same as before the savings from renting are fully accounted for. Saving $10,000/month under a mattress will amount to $1.2 MILLION over 10 years.

Totally broken. Again.