Here is our weekly update on the Edmonton real estate market. (Last week’s numbers are in brackets, and the week before after that). For the past 7 days:
New listings: 823 (869, 780, 574)
# Sales: 336 (272, 284, 235)
Ratio: 41% (31%, 36%, 41%)
# Price changes: 679 (567, 550, 450)
# Expired Listings: 181 (125, 408, 83)
# Canceled, withdrawn and terminated listings: 65 (65, 60, 39)
Net loss/gain in listings this week: 241 (407, 28, 217)
Active listings for single family homes: 4063 (3888, 3694, 3649)
Active listings for condos: 2921 (2851, 2692, 2669)
That’s the highest number of sales in a week since we’ve been doing the weekly update (over 6 months). That’s also the highest number of price changes. Average price is holding steady at $333 and change. Current inventry is 10,597 and there have been 1052 sales so far this month. Price per square foot according to Bob Truman’s site is basically unchanged.
Got to wonder by the looks of the chart…. are we near the inventory peak?
Have to like this weeks direction of new listings and sales.
Since Edmonton is done for, where is the place to be? Everybody is selling, where are they moving to? Does everybody have a spec house and are trying to sell both? Where can I buy a home that will not plummit in value by 20% in 6 months leaving me trapped owing more than I owe? Saskatoon? They cost 10% more for the same house, yet pay 30% less in my field of work (engineer). Ft. Mac?, costs double but does not pay double… Ontario, can not find a job easily, not like here, not for anywhere close the pay. B.C. Kelowna? Has the same ratios, but hasn’t crashed yet, actually went up in price?? Pays like crap… Am I missing something? Is there a promised land I do not know about? or is Edmonton just screwed up. Everybody I know who is selling is just following the herd. No plans on what to do if they sell. They just feel they have to. They are completely convinced that Alberta is the place to work, buy a new car, spend money like crazy, but no not a home…. What happened to buying a home to live in, not trading like a stock? I could rent, but I want something to call my own, hammer a nail in, raise my family etc.. Where can I do this and make a good living? Without losing 20% in 6 months… Is everybody moving there and not telling me? Where are you all moving too?
I think you need to do what you think is right for you. Prices I think are at the turning point. If you invest now it may decline a little more – so what, especially if you plan on raising a family.
1) Saskatoon will be at it’s wit’s end soon enough. If these prices were unsustainable in Edmonton and Calgary, they sure as heck are for a city that’s just over 200,000 people and nothing really special other than being the “New Alberta” for this year.
2) I think you just answered your own question for Ft. Mac.
3) Ontario’s housing prices are softening a little, but again answered your own question if you couldn’t find a job easily.
4) Kelowna is an interesting one – it’s the one I chose to come to this time last year. Expensive, yet a safe haven due to real money and people coming here for lifestyle and work. Increasing technology field. A lot of international attention and investment. YLW’s runway being extended for direct flights from London, England and Syndey, Australia this year. Both those markets consider Kelowna a bargain basement still – and yes, they are buying. Anticipated 15-20% increases from now until 2010 regardless of what’s happening. Consider the economic turmoil and March saw 9.18% increase to $542,236 and two $7,400,000 homes sold. More celebrities are discovering Kelowna every year and are investing. Yet, it’s a very hard market to break into. My logic a year ago was seeing how hot Edmonton was and the fact that I could ACTUALLY buy a nicer place in Kelowna for $110K LESS at the time was mind boggling and a no-brainer. I thought it was a once in a decade opportunity. So I made the plunge. I couldn’t do it now.
5) If you’re looking to break into the market and looking for boom appreciation, you should go to WINNEPEG for a few years. Houses starting out at $25,500 haha but I’m sure those are real “gems”. Go buy a nice one for your family and a revenue propery to rent and hock later :p
Good luck!!
I am so gald to see the Market going down. We are going to buy a house in the next year. Will the prices go up or will they go down? Or will we see a big jump like in 2006? Here’s hoping they stay low, so people who are buying their first homes can get into the Market. I’m sure kicking myself for not buying a house before the big boom. Anyway tks.
“Price per square foot according to Bob Truman’s site is basically unchanged.”
Really? A drop by $8 dollars in price per square foot is a difference of $16,000 on a 2000 square foot home. I’d say thats a SIGNIFICANT change.
***It changed by $1 since last week***
Whether prices go up, stay the course or go down, nobody knows for sure.
If you think prices will go down, wait a bit.
what we know is that Edmonton home prices on average are 20% cheaper than Calgary and Edmonton has the same employment benefits, jobs, etc.
Right there, Edmonton has the edge to attract buyers.
The folks that sold in my area that I know of actually got offered 5% under their list price and sold.
So… If a house was worth $400K last fall in October, they listed at $375K after January and sold for $355K recently. That’s what the average of a few here in my area have done…Not bad.
The buyer has a cushion if prices go down a bit more but remember: short term gains are unlikely. Live in the house for 10 years are yes there will be gains and equity.
ray,
Edmonton has always been 20% cheaper then Calgary and always will be.
Once again, self-dealing industry obfuscates the housing market facts
My contention is that within a few months, maybe a handful of weeks, Canadians will be caring far more about the value of their homes than they will about antics in the House of Commons, immigration legislation, boycotting the Olympics or the revenue-sucking GST cut.
Today families in this country have more than 80% of their entire net worth in one asset, their homes. This is even more undiversified than the Americans, where a real estate collapse has swept through the middle class like a fatal contagion, and brought the world’s greatest economy into recession. And do you hear about this in Parliament? I didn’t think so.
Meanwhile our compliant and institutional media, combined with self-dealing industry spokesguys are papering over the symptoms of a disease we’d best all talk about treating. A good example is this week’s assertion by Royal LePage, given prominence in unblinking publications such as the Globe and Mail, that the Canadian housing market is strong and vibrant, as witnessed by continual price increases.
“Canada’s housing market remains on solid footing. With the notable exception of a handful of small western cities, the country has returned to an environment characterized by moderate price increases,” says Phil Soper, LePage CEO, in a single-voice media article.
Sadly, this is not the case. Let me give you some reasons.
Let’s take the country’s most expensive real estate market, Vancouver, where the average house price has been sitting north of $700,00 now for more than a year. That means the average Vancouver family cannot afford the average home there. It also means that to buy a piece of property takes, on average, more than 70% of the entire income of a family – which is ludicrous and unsustainable.
This is, needless to say, the highest home price in history, suggesting we are at the top of a cycle. After all, US home values collapsed because of asset inflation (and not subprime mortgages), and the inability of new buyers to get in, even with a lowering of the financial bar.
But here’s the rub. LePage tells people we are into a “more agreeable” era for homebuying, where we are really in red needle territory.
Fact: Across Canada, house sales have been collapsing at an annualized rate of 70% since 2008 began.
Today Canadians have more invested in real estate that anything else. RRSP contributions have not increased. Family incomes have stagnated. Most Canadians do not have company pensions. Energy costs have increased dramatically. Utility bills, insurance charges and property taxes are all higher, driving up the carrying costs of residential real estate, which itself is more expensive by 70% than it was after Nine Eleven. Worse, we have hundreds of thousands of recent buyers with giant mortgages, virtually no equity, and the distinct possibility of soon having home loans worth more than their homes.
Is this a recipe for financial disaster? Well, it was in the United States, and the blowback from the real estate excess would have come sooner, and less painfully, if they had not relaxed mortgage lending practices, to keep the party going.
But in Canada, we’re smarter, right? That’s why we have prudently allowed 40-year mortgages with lower monthly payments and ballooning debt. It’s why we routinely sell young couples houses with virtually no money down. It’s why our cautious banks approve loans based on postal codes, not appraisals. It’s the reason we let Royal LePage’s CEO got unchallenged when he repeats the industry mantra: “Buy.”
And it’s why this is all unsaid, on Parliament Hill.
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cripes, perhaps they are going to Hawaii:
“”We have quite a few Canadians who have used us to purchase properties,” said John Papazian, owner of Haiku Properties. “For realtors, the mantra here all during Christmas when it was slow was, ‘Wait until January and the Canadians will come. They’re going to save us’.”
Vernette O’Neill is among the Canadians answering the siren call of the islands. The president and chief executive officer of Toronto-based Computer Security Products has in the past been renting homes for her stays on Maui, but has decided now is the time to buy.
“It is a really good time for Canadians to buy,” said O’Neill, who has opened a U.S. branch of her company in Hawaii.”
http://www.canada.com/vancouversun/news/business/story.html?id=60bb1a37-03a4-4ec6-a746-6be91087e747&k=70519
Meanwhile… is BC bubble cracking?
http://www.canada.com/vancouversun/news/business/story.html?id=ae1540ab-f543-43b3-b459-0e9ac081bbf0
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brent…
Good grief, the apocalypse is upon us! Everybody is in cahoots with the real estate industry…in fact they probably shot JFK! All in good fun though.
Bottom line for Edmonton …interest rates have been declining, house prices are off nicely from the highs (maybe even a little more this fall), nat gas sector looks like it’s poised for a rebound, highest wage growth in North America, and full employment. The only thing working on the downside is high inventory which the market is correcting in the way of pitiful starts. I saw today in the Journal that new SFD building permits were 21 for the last week (and I thought the 200 a month for the last 3 months was brutal, lol). Add it all up and we are getting improved affordability every month….and judging from prices, the market agrees.
It used to be said that America sneezes and Canada catches a cold. Now it would be more correct to say America sneezes, parts of Canada catches a cold, and Alberta hands them both Kleenexes.
Brent,
You are being greatly bothered by the fact that what is happenning in the US is no longer necessary happens here.
In fact, you can make a statement:
It will not!
That’s why it’s unsaid on the Parliament Hill.
karl,
I don’t know what kind of glass bubble your living in but it’s over my friend. You can keep living in dreamland if you want, but your not living in reality.
Cheers,
Brent
Was in withdrawls when the stats were not posted on Friday
336 sales, that is an increase, but when you put that next to the 823 new listings it is still pretty obvious that sales are still insignificant compared to new and existing listing. 679 price changes, well I think we all know that those “changes” were not prices going up. Almost three times the new listings to sales, large number of price drops (or changes) as we go into the prime time of the year… Can’t wait until those monster condo developments that are finishing up near down town start trying to unload. What was it 10,000 new units?
I’ve said it before, for most of us nothing good has come from this boom, maybe as the housing market and influx of people into Edmonton slows so will the crime, inflation and traffic.
Enjoy the snow.
Brent,
Couldn’t have written your comments any better myself. You have got it 100% right. Those not listening will get blindsided because they listened to those forecasting that the commodity bubble will continue on endlessly. House prices have peaked globally and are turning lower globally. This won’t all happen overnight, but it has begun. The times of mass leverage and easy credit are over.
Let me add a few of my own stats to the discussion:
In June 2007, I started tracking the inventory of single-family detached homes, in Edmonton (excluding St. Albert, Sherwood Park, etc.)
On June 3, there were 1581 SFD properties for sale. The number peaked on October 3, at 3696.
As properties expired or were withdrawn, inventory dropped to 2220, on January 3. Since then, the inventory has steadily increased, and we hit a new high of 3712 on Friday, and today we are at 3743.
Here is how the inventory in the various areas of Edmonton compares today to the peak of Oct 3, and the low of Jan 3 (in brackets). [The current inventory is in square brackets]:
Northeast: 104% (180%) [774]
Northwest: 101% (180%) [545]
Central: 84% (151%) [187]
West: 108% (168%) [606]
Southeast: 86% (159%) [716]
Southwest: 114% (166%) [915]
Especially in the Southwest and West, the inventory seems to create quite a challenge, especially since a lot of high-end homes there seem to stay on the market for a very long time.
I am not tracking condo data or comfree, and therefore this is only one aspect of the overall inventory picture.
Many of the SFD homes above 600K that came on the market since January 3 had been taken off the market, previously.
Now add to that any new properties coming on the market for the first time, and you may expect that the inventory has not peaked yet,this year…..
TWZ, thanks for the comments. Is there panic in Kelowna like there is here? The inventory vs sales ratios are almost identical, but here we go down in price, there you go up? I too was going to make the move last year… wish I did now, but I couldn’t find work, not at the same level, not even close in pay. 3500 listings for a 150k population? Yikes… So is the average Kelowna person Panicing or are they optimistic? I’m seroiusly thinking of moving there because no matter how good Albertans have it, they drive me nuts with their negativity and herd mentality. Worst city I’ve lived in. Like living with a bunch of rich spoiled brats who complain they have to drive a non turbo porsche…. Paid top dollar, an idiot can get a job, you get a better jobs than you would elsewhere due to less competition and lack of skilled people, and you can afford to buy luxury items galore… but a 20 year old out of school has to buy a condo.. oh my god…. you have it so bad.
Winterpeg.. no thanks. property taxes dwarf ours, plus more utilities… cheap prices, but about the same monthly cost all in, with no return off the extra bills…
There is no bubble in Alberta. Comparing Alberta to US or UK is not objective and does not do justify a crash. For the last few months I did not see any convicing argument about a bubble in Alberta. Brent, you can wish what you want, but there will not be a crash in Alberta. Alberta is the richest part of the world and will continue to be for the next few decades.
BTW, I started to see cars with Saskatchewan license plate again. Looks like they are coming back, LOL
Mike,
Alberta being the richest part of the world, I wish Alberta would share some of it’s riches with me.
I find the place ridiculously expensive.
Kelowna is an interesting comparison. I was born and raised in Edmonton, been here all my life and will continue to. Not too happy with how our city has changed the last couple years (wish we could go back to pre-boom) but I love the place so what can you do.
Kelowna is more of a resort type “life style” city, better weather, better location, longer summers (golf), hardly a winter. Beautiful lakes, etc. etc. etc. if you compare both locations strickly on “location”, there is no comparison, Kelowna is in demand because of its environment, Edmonton is in demand (so say some) because you can get a job. So for many Edmonton is a place to work for the time being.
Places like Kelowna will always be in demand as a place to live, Edmonton not so much.
There’s not panic, that’s for sure.
The market is very optimistic out here. The $7M homes that sold last month and the almost double digit increase in the midst of the crap in the US has people secure in the market. The $7M homes selling were on the front pages of the newspaper. I’ve talked to long time home owners out here that observed that prices really don’t drop, they just stall and stay stagnant for a few months and just keep going up slowly.
The panic is because Edmonton’s still reeling from 6 DOM expectations – Kelowna’s been consistant about 60-80 DOM and a more leisurely pace – there’s no unreasonable expectations, no knee jerking or crazy price adjustments.
The Realtors control this smaller market quite well, especially prices…
With investors and all the stuff in Edmonton, “investors” think they are so business savvy and demand price changes for liquidation purposes, so it’s harder for Realtors to control their clients. Sally and Joe Smith that are 60, no mortgage, no job, will sit, drink wine and wait until it sells confident in the prices that this lifestyle will fetch.
The older population is NOT happy about the crazy growth going on. That really limits any price decreases, to keep new people out. It’s a strange small town mentality and anyone that has lived here will confirm that. You get a real burst of the class system out here that’s for sure.
All venues and attractions are to attract high end people from other countries – other venues like Wakefest that are not sophisticated have been eliminated.
The number of listings is because of the anticipation of 30C within the next month – best time to sell and show off the house to buyers, just like ant other city.
But I’ve noticed this particularily in Kelowna – inventory in Winter is more of an indicator as far as health.
Kelownaites are completely indoctrinated to this market and it’s value, almost to a snobby level. If you can make ends meets out here, it’s one of the best places to live. People are always talking about how much they love it here.
When I bought, I noticed a few things.
Coming from Edmonton:
-The unit I bought was on the market for 30 days-ish. I got excited and told the Realtor to low ball them…I got a strange look…it was well within expectations.
-There are TONNES of conditions on contracts out here.
-Land Titles is lighting quick and done in an afternoon.
e-mail me at tory@uptowninteriors.ca if you want to talk further about this, cripes.
Cheers.
Tory
I could see Edmonton being more of an expensive place to live if it had a beautiful climate or was in the mountains or was ocean front.
People say it’s because of jobs, but the help wanted signs I see are all on the low end. Clerical, labourer, warehouse, retail, etc.
These jobs aren’t going to get you in a home in Edmonton.
I truely believe that the real estate run here was based on speculation more then anything and that’s why it won’t last.
Well, we have the Valley Zoo here…
..”a beautiful climate or was in the mountains or was ocean front..”
It’s not a beautiful climate? Take a look out your window – its April 19, it’s -8 and its bucketing down with snow!! And to boot it will get to be a balmy -1 at some point next week! What’s the weather in Toronto this weekend?? +25C?
The beautiful climate definitely keeps me here
– or maybe I’m kept here because (as posted by Mike)the Edmonton economy will be a world unto itself for the next three decades!
…and Zoos warrant high prices.
I mean, how many places you can see snow leopard??
roadrunner,
I didn’t mean more of an expensive place then Edmonton already is. I mean’t I could justify todays prices if Edmonton was more of a resort type city with a resort type climate and wasn’t just the cold praire city that it really only is.
But you knew that right? lol
Brent,
can’t we get those super rich oil companies to make all that stuff for us?? maybe we could turn the city into the next Dubai..
Roadrunner,
rich Dibai guys invest now in Malta (in Europe), where a new ocean front appartment cost mere $200k and salaries in IT are in $40-70k
http://www.smartcity.ae/malta/index.html
And NO winter, the lowest is +5C, average winter is +15C, average summer is +30C.
This fall would be interesting to watch. There are few things happening, if they all come together, then Edmonton will turn crazy again and it will look like the perfect storm:
- Strong increased drilling activity for fall/Winter 2008/2009 due to commodity price increases and the royalty break for deep well drilling. This is expected to be big and expected to bring the good old drilling. We are talking about big dollars here, really big.
- Regulatory Approval, Board Approval and the start of site work for Petro Canada Fort Hills complex near Edmonton.
- Funding and continuation of work for both Synenco and Northwest upgraders. Both companies have the regulatory approvals in-hand but are looking for partners. The Alberta government is still working on an incentive to upgrade to the bitumen in Alberta, once the policy in place; I think both projects would be a go.
I better go load up on houses now then..who cares about the price, I can borrow it all from the bank, and no problem if I can’t afford it, I’ll get the bank to amortize it over 40 years, or even 50 years. What am I saying, might as well buy as many as I can and amortize them over 100 years…after all, I can later sell for big profits as there will always be some greater fool who will pay more, no?
“The Realtors control this smaller market quite well, especially prices…”
I didn’t realize that Kelowna realtors had economic shifting power in Kelowna. That must be one hell of a real estate course!
roadrunner,
Or you could buy a house you can afford. I can’t quite figure out why the complainers on here are always griping about having to buy houses that they can’t afford. If you can’t afford an average house at 380,000 or whatever, buy a condo at 200,000. If you can’t afford that, then rent. There’s markets for both. If you can’t afford any of it…change jobs….I hear real estate agents are rolling in money (sorry Sheldon and Sara..I had to).
itcy,
you are missing my point…the only reason the average price is $380,000 is because the “market” is being driven by extreme levels of borrowing largely supported by easy credit (now over),extended amortization periods, no money down etc and a buying herd mentality that I better buy today because real estate prices only go up and that there will always be a greater fool who will pay more. Why would I pay $380,000 for something if its not intrinsically worth $380,000? Was Nortel worth $120.00 back in 2000? If you asked “the market” before it crashed, they would have said, “of course it is – it’s building the information superhighway. It’s worth $200.00 not $120.00.” Well I say real estate prices in the city are not worth it at current levels. That stands not just for Edmonton – but real estate globally – obviously some places more than others.
roadrunner,
Yup, I caught your point, but if you can find any of the 5000 or so buyers this year that thinks prices only go up, especially after the last 8 months or so, I’de be surprised. Also your example of Nortel doesn’t wash. To get Nortel stock you had to pay 120.00. You had no choice to pay less. In Edmonton the average price of a SF house is 390,000.00 but you have the choice of paying what you can afford. I also don’t agree that this market was being driven by 40 year ammortization. This market was going through the roof prior to that being widely available. In fact that length of ammortization was started in response to market affordability, not the cause of it. As far as the percentage of people that have those kinds of mortgages….I have no idea, but I wouldn’t expect it to be a huge percentage of mortgages in Edmonton since it’s a relatively new vehicle. I have plenty of co-workers that have moved here from other provinces over the last 6 years and none of them have one. Who’s to say 40 year ammortizations are bad anyways….it works for many, and it will be a noose for some. Ask yourself a few questions.
1) Can you reasonably expect your house to be worth more in 40 years than it is now? Of course. If you aren’t going to live in it long term, then that type of mortgage probably isn’t for you.
2) Will your wages rise significantly in that time frame? You would expect so wouldn’t you? If you’re not very secure in your career, then maybe that type of mortgage isn’t for you.
3) What are interest rates expected to do. This is really the 1 wildcard that is increasingly guesswork the further out you go…..but there are ways of lessening the risk. Go very short variable rates until there is significant upside risk for rates then lock in for as long as you can
4) Are you willing to make lump sum payments when you have the money available to lessen your principle? This means you have to be fiscally responsible and stick with your plan.
If the answer is no to any of these questions, then rent, or buy a cheaper place. You are right though in the sense that there are some that won’t have thought it out that much.
Finally, I would just like to say that you’ve solved your own problem with the market. If credit is so tight now, people won’t be getting no money down 40 year mortgages, and you’re worries will be put to rest. Incidentally, sales are very close to what they were in 03/04/05…so somebody is still lending out some cash, so they must be very high quality mortgages right.
itcy,
the nortel example does wash – no, I didn’t have to pay $120.00 for nortel at all. I simply said I’m putting my money elsewhere. Just like now, at these home prices, I put my money elsewhere because home prices are too inflated – brought about by cheap and easy credit and people’s shortsightedness to only look at the amount of their monthly payment as opposed to the amount of debt they are exposing themselves to. No-one thinks twice about carrying $300,000-$500,000(or even higher) of mortgage debt.
Roadrunner,
Prices won’t come down dramatically until we get a bit of a slowdown in oil patch activity. They’re the main driver of the price increases over the last couple years. As costs for projects got out of hand the costs for other types of construction like housing got caught in the updraft (contractors kept charging more and more). So new home prices shot up dragging resale prices up with them (i.e., a higher cost to replace existing properties). This spurred huge speculation in the market, which is unwinding as we speak, It’s only a matter of time before the huge capital expenditures slow down(a handful of people hold all the power and can turn the taps off on a moments notice). I certainly wouldn’t buy now unless you absolutely must. This is just the last boom all over again.
“Prices won’t come down dramatically until we get a bit of a slowdown in oil patch activity. They’re the main driver of the price increases over the last couple years”
I somewhat disagree, I would say the main driver was sudden influx of people that inventory could not handle. *However* the cause of that sudden influx of people was the oil fields and projects coming online.
This is all speculation though
the big picture everybody is missing is the conventional drilling for natural gas in 2005 we drilled over 20000 wells (approximately) 2006 drilled over 20000 some wells, in 2007 we drilled 15000 wells and in 2008 we expect to drill close to 14000 wells. alberta’s economy is based on conventional and unconventional oil and gas. unconventional is oil sands which is going great and the only thing that let down alberta was unconventional drilling i.e gas for last 2 years. Prices of natural ags has rebounded from the lows of 3.5$ to close at 10.5$. At the peak in 2005 the gas was sitting close to that mark and I am convinced that 2009 is going to be a great year for conventional drilling. we will see the same hectic activity as we have seen in 2005 and 2006 in winter. It will attract more and more ppl from other provinces and we will see more job post signs and it will create a great atmosphere of euphoria ideal for the property price increases. I can bet ppl who do not buy now will regret in the fall of 2009, everythng is linning up for record increase in property prices in 2009 and 2010. I hope people see the writing on the wall and instead of waisting there time bickering on this blog think analytically and take the best deals available in market. There is nothing that can stop alberta not even a recession in usa, with china and india fuelling the growth of commodities i see alberta full of richies.
analytical,
China means nothing to Canada, are relationship with China is nil and getting worse. China has a paultry $350 million invested in are tar pit. We export 90% to the U.S.
If I was an outsider and got a job in Alberta in the junior oil patch, I still wouldn’t buy a house here at these prices. I would rent until I see the tsunami of listing get cut at least in half. Right now the amount of listings increases daily. It’s economics 101, real estate is over priced in Alberta and everyone knows it.
itchy,
I did have an option with Nortel stock. I didn’t have to buy it at $120 a share during the peak of the dot com bubble. I could have waited until the dot com bubble burst 2 years later and bought Nortel stock at 50 cents.
analytical you said…
“There is nothing that can stop alberta not even a recession in usa, with china and india fuelling the growth of commodities i see alberta full of richies.”
Here is some info for you…
China Stocks, Once Frothy, Fall by Half In Six Months
The sharp decline in Chinese stocks is approaching a milestone: With a 4% drop Friday, the market has fallen by nearly half since its peak last fall. The decline has wiped out nearly $2.5 trillion of wealth and is testing the government’s apparent resolve to let the market find equilibrium on its own.
The plunge has slashed the savings of millions of Chinese investors who jumped into the market as it rose six-fold in two years. It is crimping expansion in the country’s nascent financial sector and may put a squeeze in corporate coffers.
The benchmark Shanghai Composite Index has lost 49% since topping out, along with other global markets, last October. The slide was triggered by the global economic slowdown combined with the lofty valuations of Chinese stocks. It accelerated recently as investors became convinced the government would not intervene to stop the fall. The index finished Friday at 3094.67, down 4%. While Chinese shares have been among the hardest-hit anywhere, some other emerging markets have also had a tough time, falling 6% so far this year after rising an average of 32% a year over the past five years.
The other big loser is India, which was the other big winner over the past few years. The Mumbai Sensex Index is down 19% so far this year. Arjun Divecha, an emerging-markets specialist who manages about $20 billion for GMO LLC, says that until recently, investors bought pricey stocks in both markets because these economies were seen as the fastest-growing. “But with U.S. and global growth expectations slowing, it’s the markets that were bid up the most that are getting hurt the most now,” he said.
How you can say with a straight face “I can bet ppl who do not buy now will regret in the fall of 2009, everythng is linning up for record increase in property prices in 2009 and 2010.”
Man buddy, you are living in dreamland if you believe what you spew. How can Alberta real estate continue to be an island of paradise in a sea of red is beyond me.
Brent, I was simply responding to the example roadrunner gave about 120.00. At that particular moment in time it cost 120.00 for Nortel stock….if you wanted it, it cost you 120.00. Not so in the housing market….a house will cost you a wide range of whatever you’re willing to pay….and that’s all I was saying. I love the pessimists who try and connect the present housing market to everything from dot com bubble bursts, U.S. housing woes and my current favorite just like the last boom. Pete, when the last boom ended in 1990, mortgage rates were 14%…..do you see that on the horizon? Do you see 20.00 oil on the horizon? Do you see falling wages, or rising unemployment? What about affordability…is it eroding or improving? Usually when I hear someone say prices are too expensive, it means they’re too expensive for me.
roadrunner said
“Why would I pay $380,000 for something if its not intrinsically worth $380,000?”
What’s the intinsic value of a diamond? Explain to us why people will pay a million dollars for a piece of carbon.
itchy and ferret,
Jump in with both feet then.
Good luck!
brent,
I’m in. Been in for 5 1/2 years, but I only put in 1 foot.
itchy,
Your in pre boom, no worries of being upside down staying where your at.
Cheers,
Brent
ferret said,
“What’s the intinsic value of a diamond? Explain to us why people will pay a million dollars for a piece of carbon.”
You tell me what it is? Greater fool theory? Do those that choose to part with their “surplus” cash that way take on massive debt to fund that purchase as people do with their real estate purchases? Remember leverage is a double edged sword. Its all fine and dandy when prices are going up – but when they start going down, it doesn’t take much of a drop in price for you to quickly owe more than your propety is worth. Why do you think real estate has performed so well. It’s all about leverage. At these prices, buyers (particuarly, first time buyers) are very much at risk of that.
The story of China and India is sure starting to sound a lot like the “building of the information superhighway of 2000″. That too was destined to go on and on endlessly. We know now how that ended.
“Interest rates were 14%…” This is the other shoe that could drop for those that think interest rates could never go to double digits again. The one big negative thing that the “China & India” story (that everyone keeps harping on about) is producing is “inflation”. If that picks up steam, you watch how those interest rates will start climbing. Furthermore, with the amount of “debt” out there, high single digit interest rates could have the same impact as those double digit rates that were around in the early 80s.
Kelowna is a bubble waiting to burst, you wait and see. The prices can only go so high until it reaches its peak and people panic and sell.
Do you guys think this awsome weather is having any impact on the number of sales?
Yup, thanks to this weather, we have something to blame slow sales and reduced prices on.
Yup, its the weather slowing down sales
If only man had some device that could protect one from the elements and also transport them to available properties, something liken to a horse-less carriage.
Read the term “Murderton” as it refered to Edmonton today in the Sun, and would’t you know it the headline on the six o’clock news was a body found in someones back yard.
What is going on???
Sunday is a slow day anyways.
Edmonton has quickly become a big city – with big city problems that we have not dealt with such as crime, transportation, affordable housing, cleanliness, etc…
With these problems comes great opportunity – low unemployment, higher wages, diversity in industry, higher property values, new business opportunities etc…
It is time to grow up Edmonton – stop living in the past and welcome the future!
I have question. Does somebody know how will be the “rental marked” in the nearest future. We are the home owners and will have to leave Canada for at least one year and are thinking about
renting our hause during this time. I have heard that large investitions planed at the north of Edmonton will attract many people from outside Alberta, which will raise up the demanf for hauses (for sell of for rent) in the next couple years. Is this true?
Natural Gas is a big part of Alberta economy. It was very slow last year. Expect this winter to get very busy again. I see ads for food servers for $14! Thats good money if you ask me? A good server can make as much or more in tips as their wages. In Edmonton no one eats at home anymore! Ha Ha. I know a food server who made $58,000 last year! Thats darn good money for a job that does not require any schooling. 3 years from now anyone saying prices are going down is going to be eating their words big time. This is the year Alberta takes a breather. After that the market is up at normal pace again. 2 years ago I predicted $120 oil by 2010 and many people laughed their faces off. I now think we are going to see at least $170 oil by 2013. Natural gas is a little tough to call but I’m thinking at least $16 by then as well. Alberta’s boom isn’t going bust anytime soon. The world is choosing Alberta to migrate and invest in and that is only going to intensify in the next few years.
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The effect of too high oil prices:
http://www.financialpost.com/story.html?id=461463
Once our customers go into recession they will buy less oil and even if prices stay high selling less oil mean less revenue and stalling growth.
Also high oil prices may lead to higher inflation and that would translate into higher interest rates.
Both are not good for Alberta real estate market.
Continuing credit crunch seized mortgage lending in U.K. as the banks grapple with liquidity and solvency problems regardless of the interest rate cuts. This is leading to price reductions and exacerbating the problem.
http://www.bloomberg.com/apps/news?pid=20601068&sid=a.Z_8SsA8fDg&refer=economy
Canadian banks are tightening lending standards and that will also affect RE prices as some of the prospective buyers are unable to secure financing.
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I think it’s stupid that people want to see real estate prices soar again.
It’s like saying gas or food prices going up is good, yah, not for the buyer who has to fork out more money but for the people who own the stock it’s great. Sure.
It’s great news when home prices go down because it means more people can afford it without worrying about being buried in debt up to their eyeballs. Lower rent and home prices will mean Edmonton will be a more lucrative place to live and work for lower wage migrants that this city so desperately needs.
BAD,
Banks here, in Edmonton are still begging for my business to take a loan, so I don’t see any problem.
hey common its not us that we want that real estate price soar it is demand and supply………….
have some common sense with job market so strong and the drilling for natural gas intensifying we are going to see strong demand for housing……once this inventory dries down or come to more reasonable levels which is going to be end of this year or mid of next year then we are going to see up and up i see the peak of 2007 getting repeating again in 2009…..bank of canada is decreasing the interest all the centeral banks in the world are trying to decrease the interests except for some ppl on the this blog who are continuosly trying to create a scare……….i am an engineer by profession and take things analytically and i see now as an opportunity for buying but the market is not going to crash it is going to increase its just a matter of time……everything is lining up perfect low sfd starts low interest rates ecxellent job market…………time for the investors to buy and make money next year…….thats what i think
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karl,
Banks wouldn’t exist without customers as they need people and businesses to deposit their money into the bank accounts and they need people and businesses to lend to. That’s how they make money if you didn’t know. The tightening of lending standards means that they are more careful to whom they are lending and for what assets. Lately the mortgage market is not perceived as the safest (all the losses) and that translates to less mortgage lending and more conservative lending as compared to the recent past.
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There are some nice bargains on Kijiji/Craigslist lately. You can see some desperation.
Say what you want, but prices HAVE dropped and continue to crawl down.
We probably won’t bust, but it’s definitely a buyers market and inventory growth is speeding up, not slowing down.
The longer it lasts, the further away speculators run. Without speculators, you won’t see this market runaway, you’ll see stagnation like we had in the 90′s.
Unless of course we get another sudden influx of 100,000 people in under a year. But how is that even possible now that housing has doubled in price? The alberta advantage for workers was a low cost of living combined with high wages. That was the payoff for living this far north. That advantage is long gone… We’ve ended up with the highest wages in the country paying for the highest cost of living.
BAD
The tightening of lending means higher borrowing costs for some not less lending for all. Banks are simply repricing risk at the moment. It will cost borrowers with less than stellar credit scores more, hence the perception of less credit. People/business start complaining when it costs them more. Check out credit growth in Canada, it’s actually increasing and has been increasing for years.
PS: Most growth now a days is in the Mortgage market so your statement that it isn’t, is simply not true.
Friends I know who moved back to Ontario last year are moving back to Alberta this year. They had been here for around 10 years and were from Ontario. Not sure what their reasons for going back to Ontario were? Now that they have had a taste of Ontario again they are moving back to Alberta. They said they like Alberta and the people here more than Ontario? Come on Ontario can’t be that bad? He said to me “I just can’t stand it there” Not sure what that means or why but he has come home to Alberta yet again. Are they an exception or do other people from Ontario (and other parts of Canada) like living in Alberta more and why? I do think that Albertans are very hard workers and that is part of the reason so many industries do well here? If your from out of province do you like/dislike Alberta? Since people are buyers and make the Real Estate market I would be curious to here from Inter-Provincial migrants. Do you think Alberta Real Estate is too high and is that enough to make you leave Alberta?
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Neil,
The keywords are ‘has been’. The credit growth especially in the mortgage market has been phenomenal in U.S. and U.K. as well. It has changed there and it is changing here. The financial crisis is dampening the credit growth, especially in the mortgage market.
http://www.thestar.com/Business/article/294835
Some “non-conforming” lenders stopped lending altogether:
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2007/12/moneyconnect-ha.html
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Kelowna is very over rated. Terrible infastructure and extremly expensive to live. Gas, for example, is always 11 to 20 cents a liter more ther than Edm. Some one wrote that they could buy a home in Kelowna at one point for less than Edm, what? In the getto of Rutland compared to Riverbend maybe. Average home price in K town right now is $515,000. try that on for size Edm whiners. Jobs pay significantley less and taxes are way higer, oh, and don’t forget the sales tax on every thing of 7% and then there is that funny little property transfere tax of 1% and 2% on top of the $515k for a 30year old box. I have a nieghbour friend out there who is moving to Edm as a dairy rep. Company offered him a $150k a year salary increase to move to Alberta. If those who constantly complain about Edm want to complain about something just move to Kelowna and find out what tough really is. New Hells Angels club house, Independant Soldiers gang problems every night,drug crimes through the roof, super expensive everything, terrible service and understaffed businesses everywhere. Edmonton is a dream by comparison. Live here and vacation there, now that is the way to go.
Bad
Read these… then tell me if you think the credit market is still shrinking in Canada.
http://www40.statcan.ca/l01/cst01/fin20.htm
http://www40.statcan.ca/l01/cst01/fin21.htm
http://www.bmonesbittburns.com/economics/focus/20080328/feature.pdf
BAD
The Keyword is “is” and “will be” instead of “has been”.
BAD
That star news article you posted is about earnings growth not about consumer/business credit restriction. It’s just stating the obvious that Banks will earn less due to the write downs they have to take on loans/ABCP/derivative loses. Banks make money by lending it out, so they will have to lend a lot more to make up for those losses.
So if your in the market to buy Canadian Banks, do it now, great dividends and all the BAD news has already been factored into the share price. The worst is behind them now.
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Neil,
The year 2007 already was. We have had quite a growth in the credit and the statistics for the past show that. Again, the current financial crisis is dampening the credit growth, especially in the mortgage market.
The same applies to the housing market. We have had a phenomenal growth over the past few years and it is not an accident that it coincided with the mortgage market growth. The year 2007 WAS, as WAS the 2006 and it IS the 2008 where we have credit crunch and a weak real estate market.
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BAD
The current financial crisis is dampening credit availabilty for banks that want to borrow against assets with unknown values, it’s not dampening consumer credit availability. That Star news article explains it very well, try re-reading it. Consumer credit is still growing and will continue to growth but at a slower pace, but still grow none the less.
As far as the current real estate market situation in Alberta, it was caused by rapid price appreciation over a short period of time, rather than the availability of credit. As with anything that raises rapidly, time is required to balance things out. Once things are balanced, normal market conditions will return.
Jeremy,
Well said. I agree that high housing costs do not benefit businesses that rely upon discretional spending.
It will likely become more evident just how much spending came from Home Equitly Line of Credit withdrawals or Refinancing.
And yeah…looking at Kijiji, it is definitely starting to get a little ugly with desperation. Free gift cards, furnishings, vehicles…first born next?
Now that the infinitely positive RE news is no longer being played on in mainstream media and being replaced with the ugly truth, people are crapping their pants. How bad it gets is anyones guess.
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Neil,
Current credit market conditions:
“With tight crediting conditions continuing, the Bank of Canada said Tuesday it is injecting another $2 billion in cash into Canada’s banking system.
The liquidity infusion follows two similar interventions by the bank in December and March, when the bank twice pumped $4 billion into the financial system in a co-ordinated action with European and U.S. central banks.
(…)
As an indicator of how tight credit conditions have become since the summer’s subprime mortgage meltdown, Grauman said the spread between three-month government treasury bills and inter-bank lending rates have elevated from about 20 basis points before the crisis to 120 basis points currently.”
http://www.cbc.ca/cp/business/080415/b041566A.html
“”What people miss is that in last six months with the financial instability, the rates that borrowers actually pay has not been coming down, they’ve been going up, and (loans) are much harder to get,” says David Laidler, an economist who sits on the C.D. Howe monetary board.
“So the cuts you’ve seen in the overnight rate have really just held the tightness of money to firms and households about where it was last summer. You might even have seen a net tightening.””
http://www.canadianbusiness.com/markets/headline_news/article.jsp?content=b0421111A
The rapid price appreciation did put home ownership out of reach for many. The credit crisis and tighter lending standards are not going to help in clearing the current inventory glut, just the opposite.
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BAD
I guess we will have to wait for the actual data.
As far as the inventory glut goes, I think the current and future economic conditions, in Alberta, will take care of that.
Mike said: “BTW, I started to see cars with Saskatchewan license plate again. Looks like they are coming back, LOL
Posted by: Mike | April 19, 2008 at 06:39 PM”
A friend in the Regina, Saskatchewan housing construction industry said that there are guys with Alberta plates working on the same site he is at right now.
It really isn’t such a big deal about house prices being so high anyway.
Our Federal gov’t is basically going to trade our tax dollars for crappy investment paper (ABCP) that our big banks can’t get rid of or sell to each other.
End result: wasted tax $, which will ultimately lead to higher inflation in Canada when our canadian $ slides and our import costs rise.
Take a look at the Gas Pump and the Grocery shelves! Do you think this is going to get any better when it costs more to import these goods and to make gasoline?
I don’t give a rats ass if we pull the oil out from beneath our feet here. We aren’t being subsidized with our oil, so we have to buy it like everyone else as a traded commodity. And bet your ass that it isn’t going to go down any time soon. Nor will the price of food.
I am not starving by any means, but I hate the fact that my purchasing power is being eroded…not to mention all of those people out there now who can barely afford to eat as it is. I wonder where they are going to get those extra $ from to feed their families and survive.
Not a surprise that crime is on the increase. This is a bad social situation the world is entering into right now.
Economic power is shifting to the 3 Western provinces. Ontario and Quebec are in for a very rough ride. While commodity prices are part of the reason power is shifting West it is not the only reason. All 3 provinces have been cutting personal or corporate taxes in one way or another for the last 5-7 years. Does not matter if it was Liberal, NDP or Conservative they have all been doing it! This is the real reason the West will surely come out ahead in any economic slowdown. So if Alberta is not the place to be the where is the place to be? If your answer is not BC or Saskatchewan then it is probably wrong. No matter how you slice it the 3 Western provinces have made changes that will surely put strong support under the economy. Ontario is on a crash course unless they seriously cut taxes and spending very soon. Yep Alberta is not the place to be. Everyone better get out now! Give it a rest people. Alberta will be a leader for a long time to come. Get over it. If you seriously think there is a better place to live then move. If you like it here then Rent buy whatever. Who cares? Are your predictions and ranting going to change Real Estate prices? Buyers and sellers are still closing deals so there must be some balance to the market. Yes inventory is high but that is the only negative in this part of the country. I think we will see demand rise within the year.
by your logic, Ft. Mac should be paradise?