"There is "slow erosion" of optimism that perhaps can be attributed to the slowdown in the natural gas side of the petroleum industry, where layoffs and idle equipment have been witnessed over the past six to eight months," according to a survey of 727 Albertans.
The poll completed by PricewaterhouseCoopers and Leger Marketing measured consumer confidence in Alberta and showed that nearly half of Albertans think that now is not the time to buy a home.
These kind of polls can become a self-fulfilling proficy…it doesn’t matter whether they are right or not, just by saying it makes it so. If everyone is talking about how great things are, everyone starts to believe it and behaves accordingly…. the opposite is also true.
The poll shows people are feeling cautious about Alberta’s economy… caution can move to doubt awfully quickly. I believe people should always exercise caution when making big decisions.
Lower interest rates, lower prices, less competition, and lots to choose from, make now a better time to buy than last spring, but confidence last spring was way higher than it is now.
Perhaps sometimes feeling confident can be a bad thing.
Very interesting about a Consumer Confidence taking a hit.
There are a lot more industries in Alberta then just oil and gas. The high wages (for some) and related cost of living (for all) has not benefited everyone. A week ago Monday Tolko Industries in High Prarie shut down their OSB manufacturing plant (they had stopped construction on another in Slave Lake a couple months back). Dell moving out (1000 jobs lost). The company I work for no longer leans towards hiring in Alberta (IT related) because the “Alberta advantage no longer exists.
For many of us the biggest change in the last couple years has been higher prices and more traffic.
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Being confident is always a good thing. Being imprudent is what usually causes issues. When investing a prudent research is very important as I have posted here previously:
http://edmontonrealestateblog.com/2008/02/weekly-update-2.html#comment-102844306
Also factoring appropriate risk into the price of one’s investments is a must:
http://edmontonrealestateblog.com/2008/02/bought-at-the-p.html#comment-102069826
If one wants to treat their house purchase as an investment then the above applies.
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From the same article…..would not every thing be relevant?
“But people who have the option of staying in their current homes are wondering if they would risk paying too much by buying a new one instead of waiting to see if real estate prices drop”, he added.
Here is another poll just released by Angus Reid
http://angusreidstrategies.com/uploads/pages/pdfs/2008.02.19_AltaEcoEnergy.pdf
Forgot to add, you can sure tell there’s an election coming.
This goes to show how much the general public really knows whats going on. The public always seems to lag reality and this is partly because of the media. We have companies showing up in the oilsands who have never ever been there before today. So there is no weakness there. The gas industry has been slow but if you did not notice gas is now at a 15 month high! The USA’s surplus of natural gas has taken massive hits this year due to a normal winter. The media paints this as a colder than normal winter but it is really more of a normal winter than we have seen in a few years. I do think this is the year when things start to turn around in the gas industry. As for OSB and lumber that may take longer due to the USA housing slowdown but it will turn around sometime. Analysts and companies who depend heavily on natural gas are just waking up and realizing they should buy contracts now before prices start climbing. Natural gas probably will drop a bit this summer but heading into the next winter prices are going to be higher than they were this winter. I already see the natural gas industry is showing more signs of life. The future looks decent to me but then again the herd thinks things are bad so that may be self fulfilling. In time the herd will wake up and realize the end isn’t near and it is not soo bad in Alberta.
Sara said, “These kind of polls can become a self-fulfilling proficy…”
I don’t think so. One analysis does not a trend make. PWC is not that influential, not to mention that CHMC is always pumping the RE market.
I believe that people are more influenced by real life examples. For example, they feel less confident when some people they personally know lost jobs, or some people cannot sell their houses for an entire year, etc.
I am waiting to buy myself. As I mentioned before, I know several families with up to 4 investment houses. I will be more confident to buy when these people start to unload.
Hear, Hear Anon.
Bunny,
These polls can become a self-fulfilling proficy. The theory is the same reason why you don’t see any negative economic housing price forecasts. Everything is always up-up-up or positive-positive-positive. You don’t forecast a price correction if your going public with the same.
Why do you think “people can only determine that we’ve been in a bubble after it’s past”. Any trained employed economist worth an ounce of gold can pick out a bubble. It’s “irrational exuberance” or more simply “how is that worth that?”.
Another simple rule is that if your hearing about everywhere; and everybody is making gobs of money at it (including your dumbest-black-sheep-in-laws); it’s most likely a bubble. Everyone looks like a genius when they’re riding the market on the up swing.
Oh yeah, and hats off to Sheldon and Sara for putting this on the blog for comment! Lessor RELATORS might have downplayed and “deep-sixed” this.
Anon,
I don’t think people are negative on buying a house because of economic fears. I think people, especially ones who have been in Alberta for longer than 2 years, want some convincing that these prices are here to stay. Want to see the run flat or slowly appreciate. Myself included. When the SFD price stops falling and runs constant or better yet appreciates constantly over 6-8 months I’ll believe that this “new level” is the “real level”. Until all the EREB and Economist news media (which has all been positive) wont convince me.
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No wonder consumer confidence in Alberta is declining.
“In a speech given Friday morning in Minneapolis, Gary Stern, the regional Fed president, said the current excesses in residential construction, housing market decline, and credit crunch all resemble the “headwinds” environment that prevailed 17 years ago.
If that is the case, the economy may be in a slump for some time.
“While such an environment will not be permanent, it could well persist for an extended period,” said Stern.”
http://money.cnn.com/2008/02/19/news/economy/minneapolis_fed_speech/index.htm?postversion=2008021910
If it persists for extended period time it will impact Canada and Alberta significantly. With housing inventory already high this may spell bigger correction in RE prices than anticipated.
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BAD,
If one was inclined one could easily spin that a different way. The rest of Canada will be highly impacted and lose lots of jobs. When that happens they will be forced to migrate where the labor shortage is(Alberta) and therefore increase housing demand.
You have to take into account how short Alberta is on Labour. There are so many unfilled jobs right now that a straight up recession would just make these companies cut unfilled positions having no effect on employment. In Alberta right now, every able bodied man woman and child could be working if they wanted to. Period.
BAD
Here’s some more good news for you.
http://www.mmdnewswire.com/kosovo-independence-2973.html
More bad news:
Not sure if this has hit the media or not but TD has just closed its edmonton call centre.
Looks like a trend is starting -first Dell, now TD.
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Neil,
Then I suppose a fallout shelter in the basement could be a nice selling feature of a house☺
Didn’t we utilize this before?
http://www.badfads.com/pages/activities/bomb.html
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There was a self fullfiling prophecy, i.e., when everyone got in, especially the dumb people.
Now they are sitting on a property that is hard to rent and harder to pay property taxes on.
My colleague came to Edm a year ago and decided not to buy. The reason: realtors. He is a smart shopper so he dealt with about 10 agents. He found out, and I am not exaggerating, 7 of 10 had a condo/SFD or more.
The fix was in. He waited and he is still waiting. He will wait until a stability is reached and he is certain that he won’t be losing his money just in case the housing bubble unravels.
Yeah the ‘the voice of masses is the voice of God’
Last year the media created the hype and everyone wnated to buy and now it is other way.
Thanks Sara and Shledon for putting this on your blog..
I know ” business is business and a cup of tea is a cup of tea” but….the realtors have and acted as a hustler (playing goof and made innocnet poeple fools). These realtors are still displaying “Market is hot” sign on their adds…God bless them as he is the only one who can do as the people who have been bitten by them will never get near to a realtor.
Well, I am from oil and gas industry and the last year was bad and this year is not good either because of the slack in natural gas. But people in the different service companies are predicting2009 is going to be a record year for natural gas. It seems that everything is linning up for record drilling next year cold weather in US drying up all the excess natural gas, drliing of less number of wells in 2005(25000) 2006(20000) and 2007(16000) projected for 2008 is 14000. If we are not drilling we are not producing. If everything goes the way it is 10-15% growth in the real estate is not out of question.
And coupled with oil sands it seems edmonton is going to show stellar growth for 2009.
Has anyone considered the basis of this poll and weather these were 727 qualified participants?
For all we know, a good number of these people are home owners already that are just bitter at the “slowdown” and not perspective homebuyers that are actually facing the buying reality. They’re just owners that were used to boasting with friends just 1 year ago how “silly” it is that their house is worth “this” much and they’d never pay this for it now.
Either way, I take results like January more to heart than polls like these. People are starting to buy. 2 close friends that have had listings on the market (one for 10 months, one for 2.5 months) have just suddenly sold this week to people from Eastern Canada. Neither of these buyers were apart of this “poll”. Things are picking up for spring/summer. Keep in mind my friend with the 10 month listing was not a pretty one. My friend with the 2.5 monther had some pretty amateurish upgrades as well. Both of the listings went for almost list price.
People in Alberta have not gotten it through their heads that if it doesn’t sell in 6 days with multiples in November, then it’s a disaster. People are very impatient now-a-days and that 45 days on the market constitutes a normal thing, not a looming disaster. People are just bitter that they can’t phone up family in Toronto anymore and boast about how crazy quick their house sold.
For example, the market in Kelowna is very strong still. Did you know that they have a “strong and booming” market and the average days on the market is 83?
Want to sell in Edmonton now?
- Count on two months.
- You have to -actually- finish upgrades WELL and consider staging your house. People HAVE choice now.
- Put the for sale sign on your lawn, try to forget your exciting plans until it sells, continue on with your current boring schedule for two months.
These aren’t abnormal things, how things were a year ago were abnormal.
People were just too used to packing the moving truck AS the for sale sign with the sold sign on it already went on the lawn.
The January sales numbers were the second best on record, better than 2006 and only less than last year. There is some resiliency in the market and I personally know of many that are currently waiting in the wings to buy a home. Some of these people have been saving for a downpayment and felt left out for the past two years as prices outscaled their savings. They have been renting for a long time, have the itch to finally own their own home as dealing with landlords has not been a pita. Now that prices have been reduced and there is more choice they are actively looking again.
What about the fact that Barak Obama is Nostradamuses prophesized Mabus? When he gets wacked and WWIII starts what is that going to do to Edmonton real estate prices. Comments please.
“What about the fact that Barak Obama is Nostradamuses prophesized Mabus? When he gets wacked and WWIII starts what is that going to do to Edmonton real estate prices. Comments please.”
This post made my day, thanks jesse haha
Jesse said “What about the fact that Barak Obama is Nostradamuses prophesized Mabus? When he gets wacked and WWIII starts what is that going to do to Edmonton real estate prices.”
Edmonton RE is isolated from the rest of the earth. The price can go one way only and that is up.
“Edmonton RE is isolated from the rest of the earth. The price can go one way only and that is up.”
Yes! Let’s start pricing our shacks at $1M and soon our RE will become more desirable than Manhattan’s!
More bad news:
Not sure if this has hit the media or not but TD has just closed its edmonton call centre.
Looks like a trend is starting -first Dell, now TD.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
I don’t ever post on this blog but I have something relevant to add. When Dell closed down, I called them to inquire about hiring 2 people to fill positions and the woman who answered my query said we were 100 and something in line. She could have been rounding up by my point is that the economy is still strong in Alberta.
Neil said:
“BAD
Here’s some more good news for you.
http://www.mmdnewswire.com/kosovo-independence-2973.html”
So do we really believe “press releases” that are thinly veiled advertisments for hiring a speaker?
I really hope this was posted as tongue in cheek and not as a “credible” source.
mackb
Yes ☺
Here is my totally unscientific prediction, which is based on greed and human nature: As soon as prices trend upwards again, which appears already be happening, there will be a sudden stampede of buyers jumping into the market to catch that “$50,000 wave” to try and make quick gains as prices climb. This isn’t going to be a stagnant market for long, and when it moves, it will be fast and furious. Another interesting note, the credit crunch seems to be easing. Closed variable mortgages are now at prime less .6, or 5.15%. When the BOC meets in March that will likely mean a 5yr closed variable rate of 4.90%.
Comeon Ken,
You will see that this month sales will close with 70% of the last Feb sale and inventory will be 50 % higher.
You are talking about which buyers….last year a lot of people came to Alberta and also a lot of prudent investors and ameature inverstors bought properties.
So who is backing the bonds in California? Are they junk too like in New York? Is there a possibility that California goes bankrupt ? How does it work here?
http://www.johnbeckseminar.com/
So Dell is leaving and TD Bank is closing their call center. But now there will be layoffs in the Oil/Gas sector.
http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=acc9ee2f-530e-4fe7-96e4-df3dd693fa3b
Ziff energy could lay off potentially 50,000 employess this springtime.
jackson,
Too early in the day for doom and gloom. I read another note on this blog referencing TD closing their call center, and I for the life of me can’t find any truth to that at all. The only thing I could find was a reference on Ellenroseman.com about TD running a pilot project in India but no job losses in Canada and they are in fact still hiring. That was posted from a TD rep on Jan.11/08
As far as possibly, maybe, sort of, if, 50,000 gas workers get laid off I have a couple of points to make. Natural gas is up 20% in the last month alone…I see today at $9.14 up another 25 cents. There have been many stories on BNN, about a resurgence in optimism in the oil and gas drilling sector because of increasing prices and lower rig rates, including a story in the Journal or Globe and Mail (can’t remember which one) yesterday intimating the same thing.
Uncle Ed has already said that he was open to changing some of the royalty increases because of “unintended circumstances”. And finally, guess what…THERE’S AN ELECTION ON. Can you think of a better time to come out with something like that in hopes of getting your gripe to the top of the agenda? After all, think of all those voters (oil and gas workers/plus those indirectly involved in the industry) who will be voting for the first person who stands up and says, we may have gone too far and unintentionally hurt a large segment of Alberta’s economy, especially since they’ll be out of a job apparently.
I like to read between the lines, of course you can tell me “I told you so” when we’re all standing in line at the soup kitchen!
Ziff is a consulting firm, they aren’t laying off anyone.
They’re predicting those layoffs in the natural gas sector, despite prices already having risen 40% and looking like they will continue to go up.
Calgary is up about 10000 for Avg. Res. Prices from December, I understand the whole sales mix but that’s got to be a good sign for the province that we’re still in good shape….doesn’t it??