Edmonton’s skyline will see its first new high-rise in two decades. Epcor has announced a new 28-story head office will be built in "Station Lands." The EPCOR Tower, to be completed by 2012, will be located on 101st Street, between 104th and105th Avenue, Northwest of the CN Tower and North of the surfaceparking lot at the corner of 104 Avenue and 101 Street.
EPCOR Tower will use new environmentally friendly design with a system that collects rainwater from the rooffor other uses, large windows to maximize solar heating and a way torecycle exhaust air to heat the garage.
At the same time new home construction has slowed considerably in Edmonton, which I think is great news for our housing market. With current inventory at high levels, and many new listings expected this spring, there has been a lot of concern about the rate of new construction in Edmonton. As we previously reported on the blog, many builders are starting to back-fill the holes they’ve already dug for basements, and with new starts on the decline concerns about new construction adding to housing inventory are lowered.
Yesterday Canada Mortgage and Housing (CMHC) reported that housing starts declined by 42% from last November. Housing starts for the year are still slightly ahead of 2006 numbers, we’ll have to wait and see what happens in December.
CMHC did not include a chart with their stats, but luckily I have one from a couple of months ago which helps put things in perspective. This chart below shows the number of multi-family housing starts in Edmonton for the past three years, the two bright pink bars are ones that I’ve added in, from the monthly releases of the two past months since they haven’t published any graphs in a while:
As you can see, last November’s numbers were way above the norm, so comparing this November to last is not really fair. So, while some people have already posted their "doom and gloom" thoughts on these stats in the comments for previous articles on this blog I see them as both positive and negative. While slowing construction typically is an indicator that there is a downturn in the economy, I see November’s numbers as fairly normal historically – they are only down compared to last November. If the numbers were lower still I would be happier, since there would be even less inventory coming on the market in the coming months.
when do you think market will take balanced shape and come out of boom and doom phase?
Good update here Sara, I agree with your statements. My thoughts when I heard about the high rise were that Epcor would not make such a significant investment if they thought the next 10 years looked bleak in the energy sector. This project will translate to a number of jobs – possibly making up for the losses that might occur in the new home building sector….
Just my observations as a buyer… I’m trying to buy right now in the 300K range. The deals in this entry level range are snapped up in an instant. Few people including myself can afford 350K+ for a starter home, so as soon as a seller reduces the price to around 300K, it is gone in a flash.
The market is not dead and the competition for a decent property in the 300K range is fierce. Another observation of mine is that 3/4 of the current inventory is overpriced junk that will languish on the market until it is rented out or the price is reduced. The availability of affordable inventory is still very tight. There are tons of dreamers who are still hoping to unload their plain old 40 year old bungalow for 400K, but nobody is buying that stuff. I’ll wait for a fair deal for as long as it takes.
Florida give aways.
http://www.ushomeauction.com/
smart move tryingtobuy
Time is in your favor.
tryingtobuy,
Yes, if you are looking at SFH and hoping to get something around 300K – you are in a tight spot unless you are okay living in some of the “seedy” parts of town. If I was single and looking to buy and wasn’t too fussy – as a male I would be okay with some of these unsavory places, but my girl wouldn’t feel safe in these parts of town.
However, if you are not in a panic to move you will find something. Look for a property that is priced higher than it should be, vacant, up for sale for longer than 60 days, and start with a low offer – if you are patient the seller will work a deal with you – good luck!
This is a very strange blog indeed… If you backtrack only about 2 months, you see the general tone being “Good good good!! Thumbs up! Buy now, market suggests Nov and Dec are best times to buy”. Just where did you get that information? The last time I looked, if I bought in November/December, I would have LOST MONEY. Obviously, real estate agents make money from the sale of home… therefore, it would also seem obvious that real estate agents (like those authoring this blog) always comment with strong “buy” signals, and VEEERY vague “do not buy” signals. Take the latest comment this month… Something along the lines of, “Telling you the price would go up would be like trying to predict snow next christmas”. Huh? Yeah thanks, well sure glad I never took your advise LAST MONTH. This is pure garbage people… Take some advise from someone who approves peoples mortgages for a living (without comission income)… REALTORS ARE FULL OF IT. Period. Its like asking car advise from a used car salesman.
A couple interesting bearish articles.
http://www.financialpost.com/story.html?id=161312
http://www.financialpost.com/story.html?id=163415
Royalty review didn’t hurt as much as some people anticipated. Removing that uncertainty is liable to instil more consumer confidence. Keep your eyes peeled.
Jesse,
I wouldn’t call the first article bearish – more bullish based on the increased investment that will be going on up north. As for the second article – I would call it neutral as it is at least positive compared to early projections, but it is still a lower investment in Alberta compared to this year…
Overall though – I agree, it should restore some confidence for Albertans.
Oops I meant to say bullish. I agree the second is fairly neutral but leaning toward bullish as quite a few of these companies put the fear in people with saying they were going to pull vast amounts of investment but now they are all going back on the amounts.
Bottom line, Edmonton just isn’t worth it. To each their own though
I read one of the letters to the editors section of the Calgary Sun today about a man that asked Ed Stelmach to pay for his mortgage if their was fallout from the royalty review.
Is that how it works now? Blame the government for household budgeting that is unable to handle economic shocks.
Or has anyone paid attention to the $800 million bailout for Alberta Treasury Bank’s by Alberta Finance? SSShhhhhhhhhhhhhhh, don’t tell anyone.
While we’re at it let’s continue to screw the banks here in Alberta! Don’t worry, someone will be there to bail you out if something goes wrong. BUY, BUY, BUY!
People are losing focus.
The issue of consumer confidence is is tied fairly loosely to what investment news is happening in Alberta.
Reality Check:
Not everyone in Alberta works in the Oil/Gas industry.
Consumer confidence is driven by the REALITY that AFFORDABILITY is eroded to a point where no average 50k salary can no longer afford a house. When your average teacher, firefighter, can only qualify for a 300k mortgage (which can only afford a less than average condo in Edmonton), that’s what affects consumer confidence.
You are correct 1sttime – heck I don’t work in the Oil/Gas industry. However, the O/G industry is a major stimulus to our provincial economy – more so in the rural districts than the urban centres. Continued investment in major projects effects everyone – hence everyone can be a little more confident about the future prospects of Alberta.
If you are upset with your salary – find a better paying job, take a second job or move somewhere else where housing is “more affordable”….
Rhettro,
I’ll pick door number 3, if it isn’t froze shut. lol
LOL – not today! It actually hit +1C! I think I saw people out in short sleeve shirts and sandles!
RE prices are still cheaper here,than say, in Toronto or Calgary or Vancouver by at least $100,000 or more (several hundred thousand, if you compare Vancouver)
Montreal and Ottawa a bit more affordable, but that’s about it.
You can not compare Edmonton to Regina or Saskatoon, because we are not in the same league.
Why everybody wants cheap prices here?
This is a big city, it’s growing and so do the prices.
Surely, when you move to Toronto, you are accepting their level of RE prices and not trying to wait out, that they’ll go down, so why do you wait here?
So,I say go ahead and buy!!
The best time is now!!
Rhettro,
Really? +1 C
Gee, it would be nice if it lasted for when I come home on Friday. Got my fingers crossed!
Karl,
How is it that Regina and Saskatoon are “not in the same league” as Edmonton, yet Edmonton is somehow in the same league as Toronto and Vancouver?
In any event, just because Vancouver is in a (even bigger) bubble, doesn’t mean Edmonton isn’t in a bubble as well.
So firefighters, teachers, nurses, paramedics, respiratory techs, police officers ext. should just “get a better paying job” or move somewhere “more affordable”. Wow…I really hope your house doesn’t burn down, you need protection from something, you don’t have a serious accident, you don’t spend time in hospital or you don’t have kids that need an education. This city already has a serious nursing shortage…I really hope they all don’t decide to “get a better paying job”!! Affordability is important for a society to function.
Karl,
You are so full with your own beans…….
2007 and 2006 price was the price of ‘crunch’…less houses and more buyers+specualtive activity. Now the market is getting to its normal and you will see that it will fall more to find its buyers..
Just search Toronto Suburbs i.e. Mississauga, Brampton etc and you cant find a 1970′s crapy row house listed for 280-300k…it is only the price in edmonton..
Cheers..
Although starts may be down for November, units currently under construction is at a very high pace. The lag time between lower housing starts and less units coming online might be nine months. As a comparison, there were 16,472 units under construction in October 2007 compared to 12,614 units under construction in October 2006 (a 31% increase).
Full data from CMHC available at:
http://www.cmhc-schl.gc.ca/odpub/esub/64171/64171_2007_M11.pdf
As an aside, thank you Sheldon and Sara for all the brilliant work you do writing and researching articles! W00T! W00T!
Posted Above -
“Why everybody wants cheap prices here?”
There are a few reasons why people want “cheap prices” here. Some people want the cheaper prices so they can afford a place of their own, while “Investors” want to be able to keep making the easy money on flipping.
Bottom line is that these crazy RE prices aren’t good. They increase the risk of unstable future prices, and they put huge pressures on consumers who are cutting back on their spending; more alarmingly their savings.
The long-term damage that is going to result from this BOOM (local and worldwide) is going to be felt by many people.
Ponzi schemes don’t last forever.
I’ve been posting on this blog since last fall. I finally moved to Edmonton in November. I work in O/G and I have met a lot of people here in the last month and a half.
What astonishes me is the fact that I have met SO MANY people who own Investment Properties…many have multiple.
I cannot believe the amount of speculation in this market. I have read about it, but now I am discovering it first-hand. Has anyone seen the number of For-Sale signs out there?
Some of these RE Investors have made money in the past, and I see/hear every day about the bullets they are sweating in this market. Over-leveraged to the Eyeballs. Yet some are still convinced that its only UP, UP, UP.
I even had a conversation with a colleague about how his 4 investment properties are going to double in 3-5 years. I can’t imagine being able to pay (or banks lending) $800,000 for an old single-detached bungalow in a crappy part of town. Sounds extremely overly-optimistic.
I consider my colleague to be very intelligent, but when greed gets in the way, people will gamble dangerously.
I currently rent (for now), but I think my short term suffering would be much easier than 40 years of regret. I am determined to wait until the time is right. At the very least, I refuse to be someone else’s Greater Fool.
Anyone catch the article in the Edmonton Journal for Dec 11?
http://www.canada.com/edmontonjournal/columnists/story.html?id=dfd0b0e8-c376-48ae-bde4-9500daf9b482
Bloom is off the boom in Alberta’s formerly red hot economy.
Pockets of trouble starting to appear all over once you look past the oilsands.
Gary Lamphier, The Edmonton Journal
Published: 1:35 am
EDMONTON – As Albertans prepare to bid adieu to 2007, it’s clear that the province’s once-torrid economy is already in slowdown mode, with the cyclical peak of 2006 fading fast in the rear-view mirror.
There’s no denying it: Alberta’s most recent economic boom is history. Although the economy shows no signs of falling off a cliff in 2008, the once-isolated pockets of economic pain have become too numerous to ignore.
Housing markets in Calgary and
Edmonton have softened and the once-mighty stampede of migrants from other provinces has slowed. In fact, more Albertans are now moving to Saskatchewan or British Columbia than the reverse.
The natural gas sector is struggling in the face of low prices and a strong loonie. Many drilling firms are in deep trouble. Roughly half of Western Canada’s rig fleet sits idle and thousands of workers have been laid off. Alberta’s forest products industry is also awash in bad news. With the U.S. housing market in the ditch, the mountain pine beetle chewing its way eastward and rising shipping costs hurting pulp producers, there’s little relief in sight.
Alberta’s manufacturing sector also has been sideswiped by the high loonie, as has the province’s tourism sector. Beef exports, a mainstay of Alberta’s agricultural sector, are hurting also.
In fact, if not for the red-hot pace of development in the oilsands, one has to wonder what kind of shape Alberta’s economy would be in.
On the bright side, unemployment remains low, well-paying jobs remain plentiful, oil prices are high and are likely to remain high in 2008, and the inventory of unsold homes is starting to moderate.
Still, the headline numbers can be misleading. Often, if one takes the time to scratch below the surface, the top-line figures mask even more troubling signs of looming economic weakness.
Consider Alberta’s migration numbers. As almost everyone knows, Alberta’s population continues to grow at the fastest rate of any province in Canada.
According to Alberta Finance, the province’s population grew by nearly 3.1 per cent during the year ended July 1. By comparison, the population of B.C. — Canada’s second-fastest growing province — grew by just 1.4 per cent, and Saskatchewan’s grew by less than one per cent.
But here’s what the top-line figures don’t show. The number of temporary workers who are moving to Alberta is skyrocketing. And few temporary workers are likely to buy new homes, condos, cars or appliances. Many live in work camps or in overcrowded rental units.
During the first two quarters of 2007, temp workers accounted for almost 9,000 of the nearly 32,000 net newcomers who moved to Alberta. That was up more than 150 per cent from the prior-year period.
Overall, temp workers comprised 28 per cent of all new net workers who relocated to Alberta in the first half of 2007. For all of 2006, the total was just 8.5 per cent.
The trend is clear. Alberta’s economy, long based on oil and gas extraction, now depends on extracting workers as well.
That may be the quickest way to staff an oilsands project in a province with chronic labour shortages. But it’s no way to build a strong, diversified economy where there’s healthy, sustainable demand for housing and a multitude of consumer products. The gains are short-term only.
Now let’s take a look at Alberta’s retail sector. At first blush, it looks rather robust.
Year-over-year sales are still running in the seven-per-cent range, notes Todd Hirsch, senior economist at ATB Financial.
Although that’s well above the national rate, it’s some 10 percentage points below the sky-high growth rates of a year ago, when ex-premier Ralph Klein issued his infamous $400 “Ralph Bucks” cheques to provincial residents. But even the current seven-per-cent growth rate is a tad misleading. First of all, it doesn’t take into account Alberta’s inflation rate, which is currently north of five per cent. Nor does it factor in population growth. Excluding temp workers, that’s running at about two per cent.
In other words, Alberta’s retail sales are now basically flat, on a per-capita, inflation-adjusted basis. “In some cases it might even be negative. And now we have the high dollar, which is inducing a lot of cross-border shopping too,” says Hirsch.
Alberta’s auto dealers, appliance stores and high-end clothing outlets are likely feeling the most pain, he figures.
“Judging by what we’re seeing, particularly among the auto dealers, they’re really trying to offer whatever discounts they can, or they’re lowering their financing costs or whatever,” he adds.
“So I would think it’s the higher ticket items that are getting hit the most, the types of things you’d buy maybe once every five years. I don’t think it’s the Wal-Marts of the world that are getting hit.”
To paraphrase that Alberta bumper sticker from the ’70s, I hope you had the good sense during the latest oil boom not to piss it all away.
Karl,
I think you need to get over your obsession with comparing Edmonton to Vancouver and Toronto. This is not a valid comparison. You’re talking about one of the world’s most beautiful and sought after cities and the financial centre of a G7 country. Edmonton is neither. And as Justone mentioned, you can still get a nice property in the GTA for less than in Edmonton. Now living downtown in Toronto is a different story but see my argument above. Edmonton is a mid-tier market similar to Ottawa and once the correction is over, I predict similar prices to those in Ottawa.
Michael,
Yours was one of the best posts I’ve seen on this site. The problem with many of these amateur investors is that they missed the boat and are holding cashflow neutral properties that are quickly losing any equity value they once had. Too many people see real estate investing as a quick cash grab but just like any other investment, reward comes with risk. Sure, huge payoffs are possible but at what level of risk? For any seasoned investor the first and most important step in creating an investment plan is to layout your goals in terms of return AND risk. Anyone can create a portfolio with an expected return of 15% with no regard for the level of risk required to achieve that return.
There was an article in the Financial Post and Canadian Press yesterday about how Calgary and Edmonton were just rated the #1 and #4 spots in Canada to live.
Looks like Alberta’s major cities are still perceived as great places to live. Calgary even made it into the top ten places to live in North America.
Link to the article is below:
http://canadianpress.google.com/article/ALeqM5i33aOcZwOvBbwpftigsqzz9P9BWg
M:
Doesn’t matter that some official organization portrays both Alberta cities as top and fourth. The naysayers will tell you here that you made up those stats… and that the market sucks, that Edmonton sucks, etc.
Remember: this weblog should be renamed to:
http://www.edmontonrentersthatcantaffordahouseandwishthemarketwillcrashbolg.com
That way it will better reflect who posts here…
As per the article above referring to Calgary:
“Calgary ranks high in education, environment is in the middle of the pack, on health they are near the top, EVEN HOUSING AFFORDABILITY IS A SURPRISE, so Calgary doesn’t fail in any of the (categories).”
Doesn’t this statement kind of conflict with RBC’s SEPT2007 Housing Affordability report?
http://www.rbc.com/economics/market/pdf/house.pdf
“Affordability levels in Calgary are now comparable to levels reached in the late 1980s at the peak of the housing market bubble…”
“Edmonton’s affordability levels had already surpassed peaks reached in the late 1980s in prior quarters. There is also concern that this market may be in unsustainable territory.”
Hmmmmmm…
centralbanker,
How do those sayings go…
“the early bird gets the worm”
“last one in holds the bag”
Hey Ray,
Your blogs always make me laugh. Why must you always resort to whackin’ people in the knees? Me thinks you’ve got nothing of substance to defend your market stance. Whether the renters are actually bitter about current prices or not, if they can’t afford housing – they’ve got two options:
1. Keep renting, which causes local house prices to go down
2. Move away, which causes local house prices to go down
Don’t diss the renters – you and I both need them to afford current housing prices and enter the market if we want those prices to be sustainable.
Michael:
Good take on what you’ve observed by moving to Edm. and how many friends own RE. In my circles, most of my buddies don’t work in the O/G sector – they are AB gov’t employees, firefighters, warehouse managers, machinists, mechanics….what you would call “normal” 9-5ers.
I find this blog interesting for 2 reasons:
1) The RE sector is changing and as someone made the comment earlier, there is a 9 month lag from when housing starts are “announced” to be in decline to when they actually are. Some of my friends put down payments on investment RE in Nov of ’06. They are still under construction, and they figure they may break even when time to sell in Feb. The simple fact is that I know way more people that invested in 2nd properties because the increase in valuations meant they now “could”. To me, simple greed factor. Tons of people own investment RE and it’s a ticking time bomb. How many of them can hold out, not sell, and not send this market into a tailspin? I don’t know, but most of these RE investors are not what you’d call seasoned investors. These are simply people that ran some numbers and, holy shit, we can afford a second home, honey!
2) I’m not sure why RE agents even care if the market declines. For example, they always claim they want to get you the MOST for your home. BS! They want to churn it over as quick as possible. If your home is worth $350 K and you list it for $385K, it will probably sit. The difference in the $35K is huge as a home owner, for the RE agent it means about $1400 (@4%) of commission. I know quite a few agents, and none of them would sweat over $1400 to keep your dreamhome on the market for 6 months. It’s a headache for them, so I don’t understand why RE agents (Sheldon and Sara included) even care if the market is in decline. There will always be people that need to move and list, so what’s all the fuss?
Sheldon and Sarah personally moved up to a bigger home back at the peak and paid over list price to get that home. Read back in the blogs.
I want to make one other observation, and perhaps some of the banking people can respond:
I know a few people that got themselves into financial stress over the last couple of years doing foolish things. They weren’t RE investors….they just ran up personal debts on credit cards, etc…
So what they did was “consolidate their debts into 1 low monthly payment” by refinancing their home. One guy told me that when he bought his home in 1998, his debt to equity ratio was 5:1, meaning he put 20% down.
So he does some stupid things with money, refinances, and today tells me that even getting into debt by some $70K, his debt to equity ratio is now not 5:1, but 3:1. He’s convinced that he can keep running up credit cards because his home just keeps climbing.
My thoughts aside, I’d like to hear what others think of this. I know we’re all too proud to say we don’t do those kinds of things, but surely there are people doing it. During a market of rapid appreciation, the stupidity of spendthrift is shielded – I guess we’re all “richer than we think”.
From Mike Fotiou’s site…
Investors Alert: Just received word that Cardel Homes now has a clause in their contract not allowing buyers to sell within 1 year of purchase without Cardel having the option of re-purchasing it at the original price.. View the contract here.
Anyone know of any other new homebuilders with similar contracts? please email me
jim_s
The ex bought a new Audi early this year and just added it to her mortgage. I guess she qualifies.
Apartment vacancies up slightly
edmontonjournal.com
Published: 9:39 am
EDMONTON – Apartment vacancy rates in the Edmonton region increased slightly in October, reversing a trend that started in 2005, Canada Mortgage and Housing Corp. reported today.
The vacancy rate increased from 1.2 per cent in 2006 to 1.5 per cent in October 2007.
CMHC attributes the “modest up-tick” to slower net in-migration but predicts vacancy rates will remain low in 2008 because few new apartments are being constructed.
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Font:****The average rent for a two-bedroom apartment in the Edmonton region hit $958, up $150 a month from October 2006. Rents are expected to continue rising in 2008, with the cost jumping another $140 a month by October 2008 to about $1,100.
Ya! Will see about that CMHC, lately you have been batting .000 or a big fat zip!
Moonbeam,
Please don’t assume that I am belittling the job that these professionals do – they are an important part of society and I admire their work.
My point was that everyone knows that these professions are not the highest paying jobs – so, living in a free enterprise economy allows us the “pursuit of wealth”. I myself had a moonlighting job for a number of years as I built my insruance business – I never complained about not making enough money to afford this or that – I went out and FOUND ways to make the money. The same goes for everyone else – and the last time I check there are still a lot of “for hire” signs everywhere….
There – I’m off my soapbox.
“Sheldon and Sarah personally moved up to a bigger home back at the peak and paid over list price to get that home. Read back in the blogs.”
Ahh….now I see – they are emotional attached to the market, not subjectively evaluating it. I was wondering why I keep reading Sara’s comments about people being DOOM and GLOOM. I prefer to be called a realist. And the realistic nature of todays market is lower prices.
***You are right, we did by at the peak. We also sold at the peak which wipes out any emotional attachment. The difference between the price of the two properties would have been about the same no matter when we bought and sold. Sara***
Jim_s,
The situation you describe happens way more often than people think. In the Bank of Canada’s eyes, this type of spending behaviour has been one of the most important upside risks to the inflation climate in Canada. And it’s no secret that inflation is much higher in AB than in the rest of the country and a large reason for this is the home equity spending.
When prices rise as quickly as they did in Edmonton, taking out some of that equity can be perfectly ok if you manage it carefully. But the case you describe is horrible financial planning. What is the point of owning a home if you always carry a mortgage? By overspending continuously as you describe, these people may live the good life for a while but it has to stop somewhere.
I have to admit that my wife and I followed this approach while putting me through school. We bought a home even though we knew the end result would put us over our heads. Luckily we sold the home three years later at a good profit and paid off all of our student debt and had enough left for a new down payment. That is not always the case and I certainly don’t recommend this approach to everyone…we were lucky.
But in the end, some people can get away with this their entire lives if the timing works out for them. But for me, I’d rather have a mortgage free home at some point…and then you can live the good life in a more responsible manner. I guess it’s a matter of the level of risk you are willing to accept.
And you have to wonder how willing lenders will be in the future now that everyone has again been reminded that the almight housing market is not always up, up and away. Corrections do happen, in every market.
Many posters here think the Real Estate market in Edmonton is crashing or going to crash. The odds of this seem slim considering the recent price correction and most economic media and analyst coverage has been quite postive. We are also seeing some oil production/investment announcments from companies that far negate the companies who have reduced spending in Alberta. The RBC report on affordability is based on 2nd Quarter data. Alberta has become much more affordable since then. It is probably closer to the Q1 data than the Q2 data. I don’t follow Ontario Real Estate much but I think it has been rising all year long. When the new RBC report comes out and if it shows that Alberta is again more affordable than Ontario then what are the negative posters going to say? I’m sure they’ll think of something.
Bob:
I don’t think there are alot of negative posters here, I think there are people that are trying to identify a trend. Some wish to defy the trend, which leads to an argument. With inventories at huge levels and prices correcting, what would you say the trend is?
I look at it this way: In November of ’06 if I would have posted that prices are falling and everyone should sell, you would have called me an idiot. The trend was upward.
Today prices are falling and inventory high, the trend is downward, yet no one wants to admit it. Why? I think it goes back to what got us these high inventories in the first place: Greed!
Looking back, November of ’06 would have been a good time to sell. Yet, most here would have called that timing insane. Now we have claims that prices will rise with snowfall and Santa.
They may……. Hmmmm…….
I have been unable to find any data on housing relating to Santa.
Bob,
I may be wrong but I haven’t seen too many people predicting a crash. Mainly a continued correction through early 2008. There are so many variables to consider in real estate and a big one is market sentiment. People are sometimes afraid to buy while prices are falling and this can cause larger corrections than are justified just as the craziness this pasy summer causes a larger upswing that what the market could handle.
There is not doubt that even if some reports forecast a drop in economic activity for Alberta, that drop will only bring things back to normal levels. I don’t see a crash but that all depends on how the amateur investors who got in way over their heads react. Long term buyers will still buy good properties but so many of the listings today are not good properties. They are former rentals or flips gone bad. And when those houses finally do sell (if they do) it will drag down the average price more than is necessary but I think you are right in predicting a final price level close to the end of 2006 or early 2007.
Jim,
It’s called the denial stage. Look at the graph.
http://www.irvinehousingblog.com/wp-content/uploads/2007/06/bubble-psychology.jpg
Rather offensive post Picasso. How does that add to the discussion in any way? Maybe find a more appropriate site to post your racist BS, I’m sure you won’t be missed here.
Centralbanker,
You keep comparing Edmonton to Ottawa. I had a look at prices in Ottawa. They don’t seem much different from Edmonton. What numbers are you looking at?
First time poster, I really enjoy this blog. Kind of a fence sitter right now. Not too sure if prices will rise or drop here. I am wondering what the average household income is in Edmonton and Calgary. I would like to know where I am at. ( I bought a house in Aug. 2006, so far I am glad I did) Thanks.
Are you saying, that these immigrants will not buy our highly priced houses?
Geo
The prices will go up!!
Incomes are the highest in the country!!
That’s where you are at!!
Centralbanker makes a good point that so many listing are not good properties. How many we really don’t know? If these sell they can pull the average down. This does not mean all houses dropped by the same amount just because the average dropped that much. It could mean more sales were made on the low end or even less sales on the high end. If prices did drop another 5% then prices would be very close to January 2007 levels. Speculators are gone or going fast. Current buyer activity is mostly homeowners buying. This is from my own poll of the Mortgage Brokers I know. There is a few long term investors still though. So current prices have not stopped homeowners from buying and I thought November sales were higher than September? Isn’t that a good sign for this time of year? It could also mean that buyers are more confident at these levels. I think prices are going to be flat for the first quarter of 2008 and then rise slighlty.
Piccaso 1881
No wonder,the RE market crashed in your city.
he-he-he-he
Geo,
I have read a few different numbers on average household income. These range between mid-70,000 and mid-80,000
My city is Edmonton sadly.
Picasso1881,
well, than you come back and buy a few cheap ones here!!
Piccaso1881,
That must be Edmonton, USA that you are talking about!
Karl:
You’re in such deep denial…..let me guess:
You bought a house in June ’07. Put a minimum down, and now can’t bear to see your personal net worth approach insolvency.
Keep ringing the bell that we have a labour shortage and our economy is sky rocketing.
The labour numbers are a double edged sword. My sister has been unemployed now for 3 years. Why? Because she will not go flip burgers. She’s a queen….drives a Mercedes with the slutty sunglasses and blonde hair streeked to crap.
Labour shortage is due to everyone’s personal view of how things should be in Alberta and the fallacy of how everyone is doing. Gotta keep up with the Jones’s…..and the Dow’s. It’s a high income, hyper consumption province headed for some major social changes.
My nephew is 24, works in Cold Lake, makes $46 an hour. Uneducated, unskilled, but willing to leave town and live a hard life. He knows nothing of economic downturn…his reference is “how many weeks holiday he gets at his job vs. someone elses.”
The housing market is reliant on so many economic factors that to pin it to one thing would be remiss. You can’t have prices continue to rise, or else what ends up happening is everyone goes out and buys investment properties to join in on the greed. Then, the market is flooded with inventory and prices need to correct.
Wait a minute….haven’t I seen that somewhere else?
Nope, that’s good old Nowheresville Edmonton, Alberta. The land of hyper inflation and bitter cold. The land where it costs $10.50 for a pack of smokes, where it cost’s $50 to fill your (small) gas tank, where it costs it costs $150 for a grocery cart full of groceries, where it costs $10,000 to $15,000 more for the same sports car and you can only drive the thing half the year, where it costs $250,000 more for the same 3 bdr bungalow. And all for what? It’s the furthest thing from paradise I know and I have been around the world twice.
If your wondering why I’m posting so much? I’m just killing time, entertaining myself before my flight leaves tommorrow morning from Fort Lauderdale, FL back to Edmonton, AB. Home for Xmas and renew my TN Visa, then I’m out of there January 6th.
I’ll stop the mud flinging for a second. I do have a positive chirp for up there! That’s where my two companies are registered. One’s xxxx Telecom Inc. and the other is xxxx Telecom Ltd. Alberta does have a low corporate tax rate and I do like that.
The younger generation cannot consume products without worrying about losing their house. High housing prices is in the process of leading us to a major Canadian spending recession. My wallet book has already slammed shut.
Mammonish investors will receive their comeuppance shortly.
quote:Why haven’t the Mexicans clued in to Canada. I mean there is a ton of low paying jobs to be had. They live 10 to an apartment and save every penny they make and then send it home. Maybe it’s just to cold for them and the money isn’t worth freezing to death. Joke.
It’s racist because you assume that Mexicans WANT low paying jobs. You also make the assumption that they can’t handle a cold climate and insinuate that they would freeze to death (maybe not literal, I sure hope not). How ignorant and arrogant to discount an entire race with such mental drivel.
I think if you have trouble illustrating your point without being derogatory to an entire race, maybe you could refrain from posting.
And if FL is so great, why are you spending all of your time on this blog? One would think if you were truly in paradise, you would have something better to do than sit in your hotel posting racist BS. You may be where the weather is nicer, but I feel pity for you.
Personally I think that we are experiencing a healthy correction, but if people are staying on a sidelines too long, they might miss the bottom. Same with the stock market, nobody wants to catch a falling knife, on the other hand there is the good opportunity to take a position before the rebound. The most hurt ones are the one that bought close to the top, are over leveraged, and just cannot afford to wait. I would compare the RE market in Edmonton with a good stock, with good fundamentals which is experiencing a pullback from two reasons: 1) overbuying frenzy and 2) profit taking. If one is not leveraged over his head and can afford to wait, this stock will rebound. A year, two? Who cares?
Everyone looking to buy has to decide for himself when is the right moment. Surely, they hope the market will crash heavily, but is this a realistic scenario? Personally I don’t think so and I won’t go into rationale since I would just repeat pretty much what non-doomers said here. Just one reason that wasn’t mentioned: interest rates. It looks like in 2008 BOC will lower interest rates at least once more. Not only that but 5,7,10-year bonds are steadily declining, and expect to see close long term mortgages to do the same in the first half of 2008 to the very least.
In a nutshell, if I were in the market to buy a house, this would be a time when I would be seriously looking, specially if you’re looking for a “home” not an “investment opportunity”.
Oh my god Jesus, enough of this bleeding heart rhetoric.
You think my few posts are slanderous? Ever watch Lou Dobbs, you could tune into that boy a year ago or a year from now and he would still be beating a dead horse on illegal immigrants. Guess who those illegal immigrants are? Yup!
Sheldon, Sara;
I think everyone will agree when I say please block picasso. I am an educated person of color and am not too impressed by his comments. I will not sink low to his level and insult him.
Thanks fencesitter. I am about 2mm away from hitting that block button, making Picasso the first person blocked from this blog. Any other votes for blocking Picasso?
I wouldn’t block Picasso at all. He may talk about himself (or someone he knows) of being a certain race, but at least he doesn’t slam the Creator of all human-kind and publish vain remarks about The Lord on the internet.
Way to go BC Skunk.
I think you would like to block me for other reasons Sarah. I’m negative on Edmonton real estate prices.
I vote for blocking Picasso1881 permanently.
Yours sincerely, an anonymous bear.
I’m not the first person blocked from this blog either Sarah, tell the truth now.
You blocked 64_corvette during the frenzy early this year for being negative on the Edmonton real estate market.
That’s why the Alberta Bubble Blog is great, it isn’t administered by a real estate agent.
Sara, while you’re cleaning up the internet and all its’ silly comments, please go ahead and block all the porn, while you’re at it.
C’mon….block somebody? This is an open forum, isn’t it? Or is this a crying circle for RE investors who bought in summer of ’07 and now want to convince each other their timing was OK?
It has come to my attention that someone has been publishing vain remarks about me on this blog. I’ll make sure Santa gets wind of this. Me and the old fellow are pretty close so if I have a say in the matter, don’t expect any presents for Christmas this year.
P.S. I eat children.
Hey we need some more of those cute Mexicans to put some fire in our cold Canadian blood!
Sara,
Maybe you could just delete the previous dozen or so comments? This off-topic squabbling is pointless.
Later, fellas. Can’t stomach this stupidity.
When the sharp turn-around happens for December and prices rise 28%, and continue to rise throughout ’08 at 40% per month, maybe I’ll come back.
Okay here’s a joke just to lighten everybody up a bit….
This was written by a guy by the way so girls please have a sense of humor!
I never quite figured out why the sexual urge of men and women differ so much. And I never have figured out the whole Venus and Mars thing. I have never figured out why men think with their head and women with their heart.
FOR EXAMPLE:
One evening last week, my girlfriend and I were getting into bed. Well, the passion starts to heat up, and she eventually says, ‘I don’t feel like it, I just want you to hold me.’
I said, ‘WHAT??!! What was that?!’
So she says the words that every boyfriend on the planet dreads to hear…
‘You’re just not in touch with my emotional needs as a woman enough for me to satisfy your physical needs as a man.’
She responded to my puzzled look by saying, ‘Can’t you just love me for who I am and not what I do for you in the bedroom?’
Realizing that nothing was going to happen that night, I went to sleep.
The very next day I opted to take the day off of work to spend time with her. We went out to a nice lunch and then went shopping at a big, big unnamed department store. I walked around with her while she tried on several different very expensive outfits. She couldn’t decide which one to take, so I told her we’d just buy them all. She wanted new shoes to compliment her new clothes, so I said, ‘Lets get a pair for each outfit.’
We went on to the jewelry department where she picked out a pair of diamond earrings. Let me tell you… she was so excited. She must have thought I was one wave short of a shipwreck. I started to think she was testing me because she asked for a tennis bracelet when she doesn’t even know how to play tennis.
I think I threw her for a loop when I said, ‘That’s fine, honey.’ She was almost nearing sexual satisfaction from all of the excitement. Smiling with excited anticipation, she finally said, ‘I think this is all
dear, let’s go to the cashier.’
I could hardly contain myself when I blurted out, ‘No honey, I don’t feel like it.’
Her face just went completely blank as her jaw dropped with a baffled, ‘WHAT?’
I then said, ‘Honey! I just want you to HOLD this stuff for a while. You’re just not in touch with my financial needs as a man enough for me to satisfy your shopping needs as a woman.’
And just when she had this look like she was going to kill me, I added, ‘Why can’t you just love me for who I am and not for the things I buy you?’
Apparently I’m not having sex tonight either
Let me correct everyone here….
Piccaso1881 is not racist…..
because Mexican is not a race, it’s a nation.
He is Xenophobic and such tendencies tend to beget other ill attitudes. Remember how it started in Germany?
Picasso is a fine example of the bigotry the US media is breeding with their illegal immigration problems.
If he did more than post the same home made graph on housing bubbles (they never play out the same way) and talk about how cheap florida is (how can you compare miami to edmonton?) I would just recommend a warning…
(ps, I don’t think that “mexican” is a race? Inappropriate stereotyping either way)
I know, what’s piccaso1881′s problem:
He bought a house down in Florida (after years of waiting ) for a much depleted price of $195.000 US
and now….nobody wants to give him more than $160.000 US ( or Canadian, all the same )so he wants to talk down the prices here, in Edmonton, Canada.
To funny!
This blog has never seen so much action.
Hispanic is a race. Mexican is a nationality. I also believe that there was some inappropriate stereotyping going on to a certain degree. But isn’t labeling all renters as bitter bears and doom and gloomers also stereotyping? Just because it isn’t taboo, it doesn’t make it right. The word “double-standard” comes to mind.
I don’t think piccaso deserve to be blocked, maybe a warning for more careful wording, but generally, he says, what he sees in the real life in his town and as an immigrant myself, it’s true, that we do the dirty and low paying jobs and there is nothing wrong with that, after all somoone has to do it. He was wrong to single out mexicans (but, again,that’s what he sees mostly in his everyday life )he should have said “immigrants” and that includes every race and nation of foreign origin present in a country.
(Sorry, this is not related to any real estate.)
Hey piccaso1881.
It’s “too funny”!
and not “to funny”!
Ok…i don’t know how a real estate blog went down this road but it did so here we are. Jim, this is not an open forum. This is an online community where we expect the participants to be respectful to each other. As the author of this blog when there is profanity, name-calling and generally disrespectful comments it makes us all look bad, and we are held accountable for it. As I have said before, if I have to repeatedly go in a delete comments from a commenter I am going to block them. Piccasso, you are right, I did block one nasty commenter last year. I thought I’d open it up to our online community to help me decide whether or not to block you, and you certainly haven’t given a good reason for me not to.
So what do people on this blog think about real estate these days?
Hi I’m back everyone.
Sorry I hit my head and lost all memory.
But I am slowly building it back up.
I vote NOT to block anyone on this blog.
It’s about free speech Sara, and if you start blocking people you lose credibility all together.
I can understand if someone is spamming the blog but just because of Pocasso’s negative sentiments on the market are no reason to block someone.
Let free speech reign supreme.
Eventually the off topic posts will eventually dissipate and we will return back to topic: which is about Alberta RE.
Last year it was “skyrocketing”.
Last spring it was “leveling off”.
Last summer it was “stabilizing”.
Last few months it’s been “correcting”.
November saw largest 1 month drop since 1994.
I say we’re due for at least double digit growth every month ’till 2032.
I am not a big fan of top-down real estate analysis (a la Alberta Advantage). But here goes:
TD has significantly ratcheted back their 2008 GDP growth estimates for Alberta from their last forecast (from 2.8% to 2.0%). I think this is reflective of the +$1 billion cutbacks in capital expenditures.
Alberta Annual Average GDP Growth
1997-2006: 4.3%
2005: 4.6%
2006: 6.8%
2007E: 4.3%
2008F: 2.0% (revised from 2.8%)
2009F: 2.7%
October 22, 2007 Forecast
td.com/economics/qef/prov1007.pdf
December 13, 2007 Forecast
td.com/economics/qef/qefdec07.pdf
By the way, the December 13, 2007 economic forecast somewhat debunks decoupling and forecasts the TD commodity price index to decline in 2008 and 2009.
Canadian economy expected to cool next year after red-hot 2007, analysts say
1 hour, 35 minutes ago
By Steve Rennie, The Canadian Press
ADVERTISEMENT
OTTAWA – Canada’s economy is charging toward the new year, but analysts say problems in credit markets, labour productivity and parts of the manufacturing sector threaten to trip it up in 2008.
Two reports released Thursday by Statistics Canada point to sluggish labour productivity and a mixed performance in the manufacturing sector, while TD Bank (TSX:TD) economists warned that problems in credit markets are more serious than initially thought.
“We’re heading into the new year with a fairly good degree of momentum, but the economy is slowing,” said Bank of Nova Scotia (TSX:BNS) economist Adrienne Warren.
“I think as we go into the new year, the risks to growth in Canada are growing.”
Overall labour productivity advanced 0.2 per cent in the summer quarter, with the only growth occurring in services while manufacturing output per hour of work declined, Statistics Canada said.
The third-quarter productivity growth rate was the same as in the second quarter and down from 0.6 per cent in the first quarter. And it was far behind the 1.6 per cent third-quarter increase in U.S. productivity.
http://tinyurl.com/ysedba
———————————-
It’s happening like a script.
We are not immune to what happens down south just delayed.
Where is AA these days? I remember that he was pumping the Alberta economy really hard. But everything coming out of the press lately is more realistic on the true happenings on the Alberta economy that every average person is living and experiencing.
http://www.canada.com/edmontonjournal/columnists/story.html?id=dfd0b0e8-c376-48ae-bde4-9500daf9b482
I’m sure someone has posted this article already but it basically destroys the arguments that AA had about the every so prosperous utopic Alberta economy.
I enjoyrf reading the article and learning that most of the people “moving” to this province are all temporary workers.
How every on the surface looks ok but once you scratch the surface, there is a more relistic and truthful represenation of what is happening in our province.
Picasso,
Just because we disagree on your take on the market doesn’t give you the right to degrade anyone. Know matter what your position is.
To say we want to block you because of your take on prices is absurd, just like most of your comments. We have let thousands of comments stand deleting only a handful.
There are plenty of people I disagree with and we have not deleted their comments.
You have crossed a line and I think if you have any sence of decency you will recognize that. Apologize and then everyone can move on.
There is no entitlement to free speech in this forum. We have been overly tolerant and far more than most blogs. So Post your comments with respect. Last warning. Thank you.
An Ottawa-Edmonton comparison. At the higher end, the two cities are close although you get much more for your money in Ottawa by my evaluation.
Edmonton (Rutherford)
MLS®: E3121484
1990sqft, 4500sqft lot, standard finishings, $514,000, about 30min commute to DT.
Ottawa (Stonebridge)
MLS®: 675007
2300sqft, 6000sqft lot, high-end finishings, $515,000, golf-course lot, about 30min commute to DT
What does $310,000 get you in Ottawa:
http://www.grapevine.ca/cgi-bin/listing.cgi?id=16331
1900sqft semi-detached with high-end finishings.
In Edmonton $320,00 gets you:
MLS®: E3115046
1300sqft with basic finishings
Of course these are list prices so you can discount each as you like to estimate a selling price. In Ottawa, homes typically get about 97% of list. Not sure in Edmonton.
As for deleting Picasso, what is the point, he’ll just come back as someone else. I really don’t even want to give him the satisfaction that I have even read his comments, as I will never get those moments of my life back.
There is a balance on this blog between free speech and the crossing the line. Picasso is a simple fellow who revels in the anticipation of opportunity to conjure up some cleverly conceived remarks in hopes that he hopes will illicit the ire of the good natured posters on this blog. If he is banned from here, then he has achieved what he wants, which is a reason to trash the forum, and Sheldon and Sara. In all honestly let him stay. He is only a threat to your mental sanity, and is constantly educating us in uninformed, illogical, and often biased arguments that persist in regards to real estate.
It is not Picasso who is offending us, it is that we choose to be offended. My personal opinion is I said before, let him stay, but just ignore the rhetoric.
I use to read the Alberta Bubble Blog to gain some balance. That forum where there has been more allowance for personal expression, has resorted to a pissing contest, with little to be gained for myself. My fear that if this forum were to remain unregulated, that there could be deterioration in quality of posts. Many people don’t want to belittled when they blog, and it is important that we don’t resort to that. This blog will be ok as long as good people continue to call out certain individuals and their negative content. Eventually they will probably get tired of posting.
Picasso, I know you are giggly at the sign of this post. But dude, chill a bit. I actually think you got something to offer, you make a good post now and again. I am a curious as to whether you will heed my advise, or you will stoop to some low brow comment. Go ahead and bash me if you like. But Goshdarnet, if you respond to me, do a damn good job. I want to see what your made of. Oh crap I think joined the pissing contest!
If somebody cannot imagine prices going up further they should talk to their grandparents. If you told somebody in the 50′s that the house that they were buying for $14,000 would someday be worth $100,000, they would say that you were crazy. Even if the pessimists are saying that those houses are only worth $250,000 now, what percentage increase is that. With inflation of 3% a year, twenty years from now, a $400,000 house will be worth $722,000. This does not take into account that the world is only so big and the population is growing. People do want to live indoors. It is a little bit like musical chairs.
This is mostly relevant if you are looking for a home or a long term investment.
This will not help short term investors, or people who can’t handle fluctuating investments. For the person who is looking for a long term home this might help with perspective.