2007 review

The MLS Rent vs. Buy calculator which had always advised to buy has been removed. See original post.

Edmonton Real Estate Board removes false information from their June 2007 press release without correction.

Confusing Comfree sales statistics sold to listings change to sales success and removed afterwards.

Calgary Real Estate Board spinning seasonality and changing graphs but nothing too overt.

Edmonton Journal uses quote from 2005 'Bubble Watch' study in 2007 article. The 2005 study referred to Edmonton not being a bubble before prices doubled. Small two line correction put into print afterwards but not online. See article and the study from 2 years earlier.

Alberta mortgage brokers encourage not reporting income as described by revenue Canada and setting up illegal basement suites to GIT-R-DONE.

CMHC encourages gambling.

Cheers! Have a safe and happy New Year!

NEWSFLASH: It's not 1992

There is an article in the Edmonton Journal titled Buy sooner rather than later. The writer was bold enough to buy a townhouse in Edmonton for $55,000 in 1992 and uses this example to make the case for first time buyers to get on the property ladder.

Regardless of the boom and the city you live in, buying your first home is always tough.

However, In the 1990s buying a home in Edmonton was easier. And if you waited a year or so it was no big deal. Below is a chart of % after tax household income dedicated to mortgage payment from RBC Housing Affordability study. Note how all property types are currently less affordable now than at any other time in the chart range.


This number takes into account wages and interest rates so it is a good picture of relative difficulty of getting into the market. It assumes a 25% down payment which is much more difficult to get now because of the appreciation of the last few years. The author of the article was prudent enough to save $10,000 or 18% down payment in 1992 and gives the following advice:

Buy what you can afford: I know you might think it's tough in this market but don't push yourself to the limit.

Too many people are stretching amortization periods and putting down very small down payments.

The cheapest 2 bdrm townhouse in west Edmonton is currently about $200,000. An equivalent 18% down payment today is $36,000. How is it possible to buy sooner rather than later and save up that kind of money? To illustrate see the following average price chart for Edmonton showing both nominal and inflation adjusted prices. A certain percentage down payment will be proportional to the nominal amount and its relative size in terms of buying power would be proportional to the inflation adjust series.


Bottom line is the article is simply not applicable in 2007 Edmonton.

keep scrolling, you'll find them

Below is a table of median single family homes across the U.S. with some Albertan locations thrown in. No adjustment was required in currency. Alberta info from November MLS reports. US data from CNN.

Also interesting is Canadian interactive pricing map (These stats are averages and include condos).

City	State	Median
Youngstown-Warren-Boardman	OH - PA	$81,600
Saginaw-Saginaw Township North	MI	$84,900
Decatur	IL	$85,900
Elmira	NY	$93,300
South Bend-Mishawaka	IN	$95,200
Ft. Wayne	IN	$101,300
Erie	PA	$103,800
Toledo	OH	$107,100
Cumberland	WV	$107,700
Buffalo-Niagara Falls	NY	$110,900
Springfield	IL	$111,200
Davenport-Moline-Rock Island	IA - IL	$114,600
Canton-Massillon	OH	$115,700
Waterloo/Cedar Falls	IA	$115,800
Topeka	KS	$117,100
Wichita	KS	$118,800
Binghamton	NY	$119,600
Dayton	OH	$121,400
Rochester	NY	$123,000
Amarillo	TX	$123,100
Charleston	WV	$123,400
Indianapolis	IN	$123,500
Akron	OH	$124,700
Syracuse	NY	$124,900
Rockford	IL	$125,100
Peoria	IL	$125,200
Springfield	MO	$127,000
Pittsburgh	PA	$127,700
Appleton	WI	$128,500
Grand Rapids	MI	$128,600
Beaumont-Port Arthur	TX	$129,100
Oklahoma City	OK	$130,000
Little Rock-N. Little Rock	AR	$131,600
Cleveland-Elyria-Mentor	OH	$132,700
Chattanooga	TN - GA	$133,200
Lansing-E.Lansing	MI	$133,700
Spartanburg	SC	$134,400
El Paso	TX	$135,800
Mobile	AL	$136,300
Lincoln	NE	$138,800
Shreveport-Bossier City	LA	$140,200
Corpus Christi	TX	$140,500
Memphis	TN - MS - AR	$141,300
Louisville	KY - IN	$141,900
Kankakee-Bradley	IL	$142,100
Champaign-Urbana	IL	$142,600
Omaha	NE - IA	$142,800
Detroit-Warren-Livonia	MI	$142,900
Gary-Hammond	IN	$144,300
Cincinnati-Middletown	OH - KY - IN	$145,300
Jackson	MS	$145,400
Fargo	ND - MN	$145,700
Dallas-Fort Worth-Arlington	TX	$146,800
Sioux Falls	SD	$147,100
Montgomery	AL	$148,400
Columbia	SC	$149,500
Lexington-Fayette	KY	$150,100
Saint Louis	MO - IL	$150,500
Columbus	OH	$151,600
Des Moines	IA	$153,900
San Antonio	TX	$154,700
Greensboro-High Point	NC	$155,500
Bloomington-Normal	IL	$155,800
Houston-Baytown-Sugar Land	TX	$155,800
Kansas City	MO - KS	$157,000
Knoxville	TN	$158,400
Gulfport-Biloxi	MS	$159,200
Greenville	SC	$159,600
New Orleans-Metairie-Kenner	LA	$160,200
Ocala	FL	$160,800
Bismarck	ND	$161,600
Green Bay	WI	$162,900
Reading	PA	$162,900
Yakima	WA	$163,200
Birmingham-Hoover	AL	$165,900
Pensacola-Ferry Pass-Brent	FL	$170,000
Glens Falls	NY	$170,700
Kennewick-Richland-Pasco	WA	$172,300
Tallahassee	FL	$174,300
Atlanta-Sandy Springs-Marietta	GA	$175,300
Baton Rouge	LA	$176,700
Palm Bay-Melbourne-Titusville	FL	$182,400
Durham	NC	$186,900
Austin-Round Rock	TX	$188,200
Jacksonville	FL	$189,200
Farmington	NM	$190,400
Deltona-Daytona Beach-Ormond Beach	FL	$195,000
Albany-Schenectady-Troy	NY	$204,500
Albuquerque	NM	$204,800
Gainesville	FL	$206,600
Spokane	WA	$206,800
Hagerstown-Martinsburg	MD - WV	$208,400
Boise City-Nampa	ID	$209,000
Charleston-North Charleston	SC	$212,300
Springfield	MA	$214,900
Pittsfield	MA	$215,300
Tampa-St.Petersburg-Clearwater	FL	$218,300
Dover	DE	$219,800
Charlotte-Gastonia-Concord	NC - SC	$220,100
U.S.		$220,800
Colordo Springs	CO	$222,400
Raleigh-Cary	NC	$229,500
Minneapolis-St. Paul-Bloomington	MN - WI	$229,600
Milwaukee-Waukesha-West Allis	WI	$231,100
Madison	WI	$234,500
Salem	OR	$235,400
Cape Coral-Fort Myers	FL	$236,700
Richmond	VA	$238,800
Eugene-Springfield	OR	$241,900
Philadelphia-Camden-Wilmington	PA - NJ - DE	$243,000
Tucson	AZ	$244,800
Portland-South Portland-Biddeford	ME	$245,900
Salt Lake City	UT	$246,700
Denver-Aurora	CO	$254,100
Virginia Beach-Norfolk-Newport News	VA - NC	$255,000
Phoenix-Mesa-Scottsdale	AZ	$255,500
Norwich-New London	CT	$266,000
Orlando	FL	$266,800
Kingston	NY	$269,500
Hartford-West Hartford-East Hartford	CT	$270,100
Allentown-Bethlehem-Easton	PA - NJ	$272,900
Atlantic City	NJ	$273,100
Worcester	MA	$282,800
Chicago-Naperville-Joliet	IL	$286,400
Sarasota-Bradenton-Venice	FL	$287,400
Providence-New Bedford-Fall River	RI - MA	$291,000
Baltimore-Towson	MD	$291,400
New Haven-Milford	CT	$292,400
Las Vegas-Paradise	NV	$295,500
Portland-Vancouver-Beaverton	OE - WA	$299,700
Reno-Sparks	NV	$317,300
Trenton-Ewing	NJ	$328,600
Sacramento--Arden-Arcade--Roseville	CA	$335,700
Miami-Fort Lauderdale-Miami Beach	FL	$346,800
Edmonton CMA	AB	$355,000
Boulder	CO	$367,500
Riverside-San Bernardino-Ontario	CA	$377,000
NY: Edison	NJ	$391,800
Seattle-Tacoma-Bellevue	WA	$394,700
Barnstable Town	NA	$400,600
Calgary City	AB	$407,500
Boston-Cambridge-Quincy**	MA - NH	$414,700
Washington-Arlington-Alexandria	DC - VA - MD	$438,000
NY: Newark-Union	NJ - PA	$459,700
NY: Nassau-Suffolk	NY	$470,000
New York-Northern New Jersey-Long Island	NY - NJ - PA	$476,100
Bridgeport-Stamford-Norwalk	CT	$491,100
New York-Wayne-White Plains	NY - NJ	$550,900
Los Angeles-Long Beach-Santa Ana	CA	$588,400
San Diego-Carlsbad-San Marcos	CA	$589,300
Fort McMurray (Average)	AB	$635,325
Honolulu	HI	$649,900
Anaheim-Santa Ana	CA	$700,700
San Francisco-Oakland-Fremont	CA	$825,400
San Jose-Sunnyvale-Santa Clara	CA	$852,500

CMHC forecast changes

Here are some forecast changes by CMHC over 2007 in the following reports:

CMHC Housing Market Outlook Spring 2007
CMHC Housing Market Outlook Fall 2007
CMHC Rental Market Report 2007

CMHC has changed their forecast(s) for Edmonton a couple of times this year.

Vacancy and two bedroom rent:

This spring the outlook on vacancy was 0.7% the actual vacancy was 1.5%.

Spring 2007 Housing Outlook
2007(f) 0.7% $970
2008(f) 0.5% $1115

Fall 2007 Housing Outlook
2007(f) 1.0% $950
2008(f) 0.8% $1090

October 2007 survey
2007 1.5% $958

MLS Sales

The forecast for sales in 2007 was cut by almost 3,000 and may be lower after December's count.

Residential Sales

Spring 2007 Housing Outlook
2007(f) 24,000
2008(f) 22,600

Fall 2007 Housing Outlook
2007(f) 21,200
2008(f) 20,000

November EREB YTD sales 19,687, assuming 1000 sales in December:
20,700

The forecast change for listings increased from 28,000 to 38,000.

EREB - Edmonton Average Price and Analysis

Below is a chart which takes a few quotes from the Edmonton Real Estate Board and places them on a Average price chart.


March - “There are lots of stories about the slowdown or reversal of certain American housing markets,” said Pratt. “But all markets are local and Edmonton is unique in that the fundamentals of low interest rates, strong demand, low inventory, steady in-migration and high consumer confidence are still driving our local economy.”

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

May - “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 - “The fundamentals of the Edmonton market are still strong and should sustain steadily rising prices for all classes of property,”

August - “REALTORS® are optimistic and see any price dips as temporary and within the normal range for this market.”

November - “As the current listings become sold or are withdrawn the current inventory will drop. As we move into the spring with a more normal inventory, we expect that prices will again begin to rise slowly,"

Update (thanks rj):


Added another chart based on the quote found in the Edmonton Journal April 4, 2007.

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.

This chart compares the prediction made by the EREB after March stats were released to what has actually happened.

Typical Spin

Typical season slow down comes to the MLS(R) during the month of November 2007, according to figures released by the Calgary Real Estate Board (CREB(R))

Single family Calgary metro sales for November 2007 were 1,103, a decrease of 21 per cent from the 1,397 sales recorded in November 2006...

link

Sales in November 2007 21% less than November 2006.
Sales in November 2006 11% less than November 2005.
CREB Nov 2006

It's getting cold out there.

Pent-up supply

It seems the recent "softening" of the Edmonton real estate market has been framed as a short term event as a result of hesitant buyers. This article in the Edmonton Sun quotes three REALTORS: Housing to heat up: Realtors

ReMax realtor Simon D. Hunt

"I don't think we'll continue to see much of a dip because there's still a lot of demand,"
"Peoples' perception is that the market has crashed, but that is skewed."

ReMax realtor Len T. Wong

"There's no urgency out there to buy at this time of year," he said.
"But the spring markets will be a lot more stable."

Jon Hall of the Edmonton Real Estate Board

"There's just been so much steam in (the house market) that the top is loose and the steam is getting out a bit,"

However, their are also people waiting for the spring "bounce" to relist. And consider the quote from John hall in this article

He noted that one builder has built 100 basements, but has now capped them waiting for things to improve.
"He's just going to wait for the market to turn," said Hall

To me this does not make sense especially considering that the recent downturn is small compared to the boom as pointed out in the article:

Hall said prices had dropped 6.5 per cent over the last five months after a 74 per cent hike over the previous 17 months.

So after a combined 60-70% increase is it reasonable to hold out for more? Are sellers reasonable to wait until spring to sell after such an incredible long term run-up? Is the spring going to be a market of pent-up demand or pent-up supply?

An Alberta Real Estate Story

This is a story of a client that gets their home appraised by a REALTOR A. REALTOR A tells REALTOR B of the same firm all the juicy details of this new listing including the sellers motivation (Family illness) and their minimum price. This REALTOR fails to informs the sellers of the value increasing zoning of the property.

REALTOR B submits an offer to the seller with another company he owns using this confidential information. REALTOR B sells the property one week after taking possession to developers for a profit of $55,000.

Almost 5 years later REALTOR B is required to pay a fine of $10,000 plus costs of $7,000. Net profit $38,000.

Real Estate Council of Alberta - Decision

Morale of the Story: Avoid being caught in shady deals because you might need to pay a fractional amount of your ill-gotten gains.

Real Estate Council of Alberta Other Decisions
Real Estate Council of Alberta - News Releases

*Picture of Wolves inspired by shadow company REALTOR B used to buy the property "Wolf Willow".

Conflict of Interest

Global Edmonton aired a story of a local REALTOR that sold a property to one of his clients without disclosing he was the owner or problems of the buildings condition. He sold this property after owning for 6 months at a substantial profit. Also interesting to note the $40,000 'cash-back' deal involved on the buyer's part.

Global Troubleshooter story BUYER BEWARE

see also: NO BURN, FIRE PROTECTION

Fort McMurray: triple REIC filtered for your enjoyment

I am having trouble finding MLS stats for Fort McMurray. I suspect year over year sales are down but I can only find information heavily filtered by the Real Estate Industrial Complex.

The Edmonton Journal qualifies any downward indications with quotes from a local REALTOR.

'Seasonal slowdown' for home prices in Fort McMurray

"It's a seasonal slowdown, which is normal before Christmas," Milly Quark, president of the Fort McMurray Real Estate Board, said Wednesday.

Prices in this northern Alberta centre also dropped slightly in October 2006 -- then rose for 11 consecutive months. "Canada Mortgage and Housing Corporation is predicting a price increase next year," Quark said.

On the supply side, "land is at a premium," Quark said.

Building lots are selling for $345,000.

"I understand they are going quickly," she said.

Then there was another news item linking to some real estate investment site:

News Release

Capital appreciation is currently very high at around 20% pa meaning investors are faced with a wholly positive real estate outlook. Investing now will allow them to ride the wave of success that Ft. McMurray is enjoying and should guarantee very significant returns.

Executive Suites

Gross yields up to 26%
1-bed Apt (56sqm) = C$ 350,000 (~£176,768)

With average prices for SFH at $625K is it still reasonable to assume that the 20% yearly appreciation will continue? Is there an equilibrium price even with fast-paced oils sands development or do prices continue upwards?

Based on the price for this investment the gross yield is extreme. With a price of $350K the rent would need to be over $7500/month or $250/day for the stated 26% yield. Rents and even hotels rooms are far below under these amounts.

Still looking for monthly stats i stumble upon more advice

An Important Note for Fort Mcmurray Real Estate Buyers

Many times Fort Mcmurray Real Estate buyers avoid using the services of a REALTOR under the mistaken belief that it costs them money - or that they will be able to negotiate a better deal directly with the seller or seller's real estate Broker. This can be an expensive mistake when buying a home.

Are there any Fort McMurray stats published online? Just numbers.

Update: Thanks Laura for the link http://www.woodbuffalo.net/AboutCostHouse.html

Consider the source

(Not my video but enjoy the tunes.)
LRT boosts house prices, says study

The Sun cites Don Campbell from the Alberta Real Estate Investment Network.

Network president Don Campbell says research from across Canada shows the value of residential property rises from 10% to 20% when it's located near transportation-improvement projects.

Don Campbell is a real estate guru and leads hordes of speculators throughout Alberta.

Consider that prices already have increased above and beyond any transportation effect.
Consider that it is not normal to look at any development in the city with the real estate lens. These include the ring road, LRT or several bitumen upgraders in Edmonton.

This is not the first time the mainstream press has given Don Campbell free advertising:

Transit effect a boon to homeowners
Ron Chalmers, The Edmonton Journal
Published: Wednesday, November 14

Campbell said he expects Edmonton home prices generally to rise nine per cent in 2008 and 12 per cent in 2009. Homes that benefit from transportation improvements will outperform the market by an additional 10 to 20 per cent, he said.

What subprime crisis?
Don Campbell, Financial Post
Published: Saturday, September 08, 2007

Consider the source.

The Magestic Loan Goddess of Calgary

The mysterious and powerful loan goddess summons the power of credit to help shelter mortals. We read from the passage of testimonials:

http://www.loangoddess.ca/testimonials.html

"Thank you Rae for all your wonderful help! You made the process of obtaining our first mortgage a delight. We can now afford our dream home."

Where in the past mortals used "documented incomes" to afford homes, this can now be conjured by the loan goddess.

http://www.loangoddess.ca/my-accessible.html

For entrepreneurial Canadians like freelancers, consultants, commission sales professionals or business owners, keeping taxable income low is just plain smart. And that means your T4 should not be an indicator of your ability to carry a mortgage.

With good credit, we’ll qualify you based on the income you tell us you make. This accessible mortgage approval process works for those who worry about proving exactly how much they earn.

Edmonton Comfree Sales

Comfree recorded 146 sales for the month of October in Edmonton. There is currently 21 months of inventory on Comfree with 3108 active listings at current sales rate.

21 months.

Compared with September's total of 201 sales are down 27%.
Compared with last October's total of 354 sales are down nearly 60%.

Comfree moved less than half the homes as they did the same month last year.

October Report

With current inventory at 3108 Comfree has over a BILLION dollars of inventory and 52 million dollars of sales in October.

Note that they do not include the mystery stats "sold to listing" or "sales success".

Oil Detour

There is an article from Calgary's Real Estate News site discussing the impact of the royalty review.

At the end of the day, it doesn’t matter how you look at any news scare. Real estate prices have and will be increasing in the future for a simple reason; supply and demand.

The day when I am writing this article oil prices are sitting at $90 which is considered to be quite cheap according to many economists. Obviously Alberta has the second largest oil reserve in the world and that creates a lot of excitement among oil companies, especially when other sources become unstable due to political reasons and when global demand is growing twice as fast as supplies can keep up.

Alberta produces many types of oil and Nov 2nd prices range from $52 for bitumen @ Hardisty up to $91 for Edmonton sweet synthetic. Link - prices converted using 6.29 barrels per cubic meter.

Also, it is a recent development to include Alberta bitumen as proven reserves. Usually only convention crude is included in this report. From Wikipedia:

The addition of 174 gigabarrels of the vast Alberta oil sands deposits, mostly in the Athabasca Oil Sands, to proven reserves by the Alberta Energy and Utilities Board (AEUB),^[4] was controversial at the time because oil sands contain a semisolid form of oil referred to as bitumen by Canadian government authorities, rather than conventional crude oil.^[4]. The existence of the deposits (historically referred to as "tar sands") has been known for centuries since major rivers cut through the sands to reveal the bitumen in the river banks, but their development had to wait for high prices and the invention of new technology. In recent years technological breakthroughs have overcome the challenges of producing it and most Alberta oil is now non-conventional production from oil sands rather than conventional oil fields. The AEUB estimates that by 2016 Alberta oil sands production will triple to amount to 86% of the province's total oil production, and Alberta will by then be one of the largest oil producers in the world.^[4]

The difference between crude bitumen and crude oil is somewhat arbitrary since bitumen is really just an unusually thick and viscous grade of crude oil, and many U.S. oil refineries have been modified to handle it in recent years as domestic U.S. oil production declines. The main problem is that it must be heated or diluted with solvents before it will flow through pipelines.

If it is possible for Canada to add significantly to proven reserves in one year due to new technology and higher prices is it possible for other sources to develop in the future? Venezuela has a similar tar sand deposit to Alberta but it is not included as proven oil reserves. Why would a REALTOR look at the narrow view as energy being from the two reported sources - convention crude and Alberta tar sands?

Venezuela tar sands
Coal to Oil in China
Oil Shale
Ethanol Fuel in Brazil