The 1 bedrooms normally range in price from $179,900 to $190,900. The 2 bedrooms range from $204,900 to $227,900.
...
The developer, for these first 10 units only, is selling them at $150,000 for a 1 bedroom and $160,000 for a 2 bedroom.
| Year | SFD Avg | Inflation | Justified Appr | ||
| 1999 | $150 | 2% | $3 | 1% | $2 |
| 2000 | $155 | 2% | $3 | 1% | $2 |
| 2001 | $159 | 2% | $3 | 2% | $3 |
| 2002 | $166 | 2% | $3 | 2% | $3 |
| 2003 | $172 | 2% | $3 | 2% | $3 |
| 2004 | $179 | 4% | $7 | 5% | $9 |
| 2005 | $195 | 4% | $8 | 10% | $20 |
| 2006 | $222 | 4% | $9 | 10% | $22 |
| 2007 | $254 | 6% | $15 | 10% | $25 |
| 2008 | $294 | 6% | $18 | 5% | $15 |
| Total | $55 | $89 | |||
$87,000 of speculative mania built in to current prices? That would bring detached house to $300,000 to purge the built in excesses. I dunno, my gut says more like $325,000 - I guess I am a timid bear.Single family home sales volume, after being down 34% for the first five months of 2008, showed an 18% drop in June, and July sales are down 12% compared to 2007.What Bob fails to mention is that some of that difference is attributable to the deteriorating conditions throughout 2007. So while the may have been some seasonal improvement late this spring there is also the fact that we will begin to compare to sales at the beginning of the downturn. See this chart showing how sales in 2007 compared to 2006. Consider also that smaller year over year losses still show year over year losses!
Despite the decline in sales for the first six months of this year, "on a month-over-month basis sales have increased in Calgary in the last two months," said Gregory Klump, the real estate association's chief economistLooking at the data sales have increased in Calgary from Mike's Stats:
But Klump said the trend has been for increasing sales in Calgary on a monthly basis.How is it clear Calgary prices have stabilized?!? From Mike's Stats"It's clear looking at the data that I'm looking at, that in terms of the prices, they've stabilized," he said. "Anyone expecting a continued decline in average price will be surprised and disappointed."
Dear potential home buyers - Mr. Gregory is not your friend."The resale housing market continues to be a story that features the West and the rest," said CREA chief economist Gregory Klump.
"Tight markets make for sizeable price gains, and nowhere is that more true than in Calgary, Edmonton and Saskatoon, where year-over-year increases remain lofty. In keeping with that trend, CREA forecasts that price increases in 2007 and 2008 will be biggest in the Prairie Provinces and British Columbia."
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.
| 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% |
Stunning remarks from Ed Jensen appearing in the Calgary Sun's article - Mortgage Rule Change Dismissed. I don't expect Ed Jensen to go Housing Panic on us, but it would be nice to at least recognized basic realities when forming arguments. Don't take it from me, a bitter renter, that the statement is absurd, rather look to the financial industry. There is a broad consensus that these now defunct mortgages were popular among first time borrowers and helped stoke demand in real estate.The Canada Mortgage and Housing Corporation, the Crown corporation providing mortgage insurance on behalf of the government, eased the rules in 2006 to encourage homebuying.
That change, Jensen said, had little impact at the time.
"We didn't notice it in the market place," he said.
"So I believe in reverse, I don't think we're going to see a large impact on sales."
"About 60 per cent of first-time buyers are opting for a 40-year mortgage," says Craig Alexander, deputy chief economist at TD Bank.Stretched buyers fuel boom in housing:
"If these longer amortization mortgages hadn't been around, the housing market would have cooled down a lot sooner."
....
There's a "huge adoption" of 40-year mortgages in Toronto, Calgary and Vancouver, where people stretch for affordability, says Catherine Adams, vice-president of home equity financing at Royal Bank of Canada. "I think it's given the housing market a boost and allowed prices to go up further than they would have otherwise."
...Mortgages with longer amortizations grew to 37 per cent of new home loans – and 9 per cent of outstanding mortgages.
"That's phenomenal, considering they have been around for only the last two to three years," says association president Jim Murphy.
Legions of first-timers are adding years of extra mortgage payments so they can buy a house, or putting little or no money into a down payment, a Re/Max survey revealed yesterday. Nearly two-thirds of buyers in major centres now favour extended amortization periods of up to 40 years, while putting little or no money down was prevalent in 38 per cent of regional markets surveyed across Canada.
...
"The reason we think the market has been staying hotter much longer than anyone anticipated was because of these newer amortization mortgages," said Craig Alexander at Toronto-Dominion Bank.
...
Longer amortization mortgages "have had a very profound impact on the Canadian housing market since they were introduced" in 2006, he added.
Bank of Canada Governor David Dodge is raising a red flag about housing prices in Canada, saying that increasingly loose lending rules may be helping overheat the country's real estate market.
Lofty prices in the country’s hottest markets, particularly Western Canada, would likely take a much bigger bite out of new construction if it weren’t for longer-term mortgage products, said Derek Holt, assistant chief economist at Royal Bank of Canada.
Last year, the federal government extended the maximum amortization period for mortgages from 25 years to up to 40 years.
Consumers have embraced these products, which raise the cost of a mortgage over time but lower the entry hurdle to buying a home because the longer payment period allows for smaller monthly payments.
“It’s my belief we would be 10 to 20 per cent below 200,000 housing starts next year if it wasn’t for the impact of these mortgage innovations,” Mr. Holt said.
Economist Derek Holt does warn, however, that the increasing popularity of long-duration mortgages to reduce monthly expenses could cause problems later on.
"Alberta, and then Ontario, lead the country on the take-up rates for new mortgage products introduced over the past two years," he said yesterday. "In fact, the 40-year mortgage is now only about 15 months old and already dominating mortgage purchase applications."
Homes in Edmonton, Saskatoon most overvalued
A rise in the number of extended-amortization mortgages, which lengthen the time it takes to repay a home loan to 30, 35 or 40 years from the traditional 25, have bolstered the recent strength of Canada's housing market, Ms. Warren said. These mortgages are stretching affordability for first-time home buyers, but because they are seldom combined with zero-down or interest-only structures, she does not seen them as particularly risky.Canadian housing boom over, says RBC
“I don't think this is a major risk, though it is supporting the housing boom more and we probably would have seen things level off this year instead of reaching a new peak,” Ms. Warren said.
Credit squeeze hits 40-year mortgages"The delayed arrival of softer housing markets can be partly attributed to recent mortgage innovation that has seeped into the Canadian market during the last two years," it said, citing higher loan-to-value ratios and longer amortization periods of up to 40 years, which opened the market to a wider range of buyers and prolonged the boom.
The mortgage-market innovations, which make housing more affordable in the short term, also heighten the risk of default in the long term, it said.
Markets in the West, which have risen the furthest above their underlying values, are the most at risk of an increase in defaults as a result of recent mortgage innovations, the report's author, RBC economist Amy Goldbloom, said in an interview.
Feisal Panjwani, a senior mortgage consultant with Invis in Cloverdale estimates that 85 to 90 per cent of his first-time buyers have chosen the 40-year option.
...
"That zero-down program has been quite popular," Panjwani said.
The lottery is a nice touch as it is a well known marketing strategy used by developers.
Under the new program announced Tuesday, 85 townhouses in the Greenview and Canon Ridge communities will be sold at a cut rate to qualified first-time home buyers.
In order to buy one of the 85 townhouses, applicants must enter a city-run lottery. There are strict guidelines on who can enter the lottery. Potential buyers must have a combined family income of $69,000 to $88,000 per year.
* Must be first-time home buyers in Canada
* Must be Canadian citizens or have permanent resident status
* Must be able to obtain qualify and have pre-approved financing (based on 5 % down payment, 40 year mortgage amortization, 32% gross debt service ratio and 42% total debt service ratio)
* Must be employed and have a combined income between $69,000 and $88,000, see your financial lending institution for more details.
* Must have a net personal worth less than $15,000, excluding a primary vehicle, locked-in or group RRSP and the 5% down payment required for the condominium unit.
* Applicants must agree to be full time occupants and residents of the condominium unit for the first five years.
Calgary's residential real estate market in the first half of this year has been marked by declining sales, increasing listings and stabilizing average sale prices compared with a year ago.
And the average sale price in both markets is close to a year ago - up by 0.20 per cent for single-family homes ($472,163) and down by 0.76 per cent for condos ($312,460), according to statistics released by the Calgary Real Estate Board on Wednesday.However looking closer look at the trend prices are decreasing compared to a year ago not stabilizing. From CREB stats
In a news release, CREB president Ed Jensen said the sales numbers "reflect that more buyers are finding a home that fits their family's needs. As we move into the summer months, it's an excellent time for buyers to capitalize on the wide selection of homes, rather than waiting for the fall when things start to pick up again."
This clearly demonstrates that Ed Jensen is creating a false sense of urgency to promote sales instead of presenting information in a useful way. "The inventory could normalize very quickly," says Jensen. "There are several double listings out there -- people who have listed both their existing home and their new home -- and if one sells, they would pull the other one off the market."
“Some buyers seem to think that further discounts are possible and are delaying their buying decision unnecessarily. The market finds its own level and has varied within a three percent range over the last six months. REALTORS® have buyers who are staring down the sellers but sometime soon someone will have to blink.”
Aug 7, 2007
“Buyers have a large selection of homes to choose from and they are taking more time to make a
decision,”
Panicked home buyers were forced to make decisions quickly from a severely limited selection of houses and condos. At the end of the third quarter of 2007 buyers are more relaxed as they contemplate slightly lower prices and three times the choice of a year ago.Oct 3, 2007
“Buyers, on the other hand, took their time selecting a property to purchase in theNov 5, 2007
hopes that prices would drop further.”
The author put the hiccup label after referring to an economist that noted Canada's price trends are similar to the US with a time lag. The author clearly did not look at price trends as 'hiccup' can only be identified after a recovery has occurred. There is a difference between wanting a recovery and seeing one in trends.For example, one widely followed U.S. measure, the Case-Shiller index of average prices in 20 large cities, is now down 15 per cent from a year ago. Some cities, like Miami and Las Vegas, are down as much as 27 per cent.
It's true that a few Canadian cities are showing much smaller price declines - Edmonton down by 4.9 per cent in the past year, Calgary down 2.4 per cent and Windsor down 5.5 per cent - but only in Windsor does this reflect economic distress. In Alberta, the price reversals look more like a hiccup after huge runups.
There was little if any such lending in Canada, where banks are much more conservative, and only minor signs of speculative buying.
Alexander believes that the surge of sellers just reflects the fact that as homeowners saw prices reach higher levels than they'd ever expected, any who had been thinking of selling - perhaps because of impending retirement - decided to grab the money right away. And of course, as price gains weakened, more sellers had the same motivation.
But there are very few distress sales in Canada and voluntary sellers usually refuse to sell at much of a loss. And since banks aren't auctioning off large numbers of foreclosed homes, there's no reason to believe that any meltdown is coming.
