A number of new articles in the Edmonton Journal yesterday and today with some interesting opinions on what is happening to real estate in Edmonton.
Gary Lamphier writes: Our housing market’s correction is not a calamity
Bill Mah writes: Edmonton house-price hike Canada’s 5th lowest
And the ever optimistic Neil Waugh of the Edmonton Journal writes: Housing Starts Spell Gloom
All of this comes from press releases by CMHC and StatsCan.
CMHC’s press release showed that housing starts are down, waaaaaay down (yippeee!). Multi-family starts are down 63% and single family starts down 71% from a year ago.
The Statscan release showed that new homes increased in price in Edmonton by 1.6% – I’m surprised they increased at all and wonder if the average was skewed by more high end sales and fewer condo sales. Just a guess there though.
Enjoy the articles….by your comments we’ll know which newspaper/author is your favourite.
Gary Lamphier writes
“Sellers may choose to take their properties off the market in hopes that buyers will flood back in the months to come. But that won’t change reality.”
He is commenting on Vancouver, of course, but does that not exactly describe Edmonton, as well?
What is happening to all those listings that “expire” and don’t get relisted immediately? Don’t they represent latent inventory, much of which is bound to pop back up, sooner or later?
Edmonton Comfree stats are out for July.
Sales have been pretty flat, since April, but the inventory is taking a dive.
The single-family home average price is down 7.6% over June, and Condos are down 4.3%
This doesn’t seem to dampen the spirits of some sellers.
We visited a Comfree Open House, last week. The place had a half-decent location, but was a complete mess with dirty dishes, laundry, a number of uninfinished “improvement projects” and definitely overpriced.
The sellers were happily sitting on the deck, in the shade, with a drink and told us to show ourselves around the place.
Then they proudly proclaimed that this would all be in the past for them, the following week, when they would be taking possession of their brand new home.
Wishful thinking!!!
I guess reading the Comfree instruction booklet does not turn you into a real estate marketing guru…. Although these laid-back folks might present a challenge even for the most talented realtor.
I too have noticed a lot of delusional sellers on comfree and craigslist, kijiji, etc. lately.
Especially in the south end. We were looking at showhomes in Summerside, Ellerslie Crossing/Ponds, Rutherford and while looking at the showhomes, we were writing down codes from comfree signs around the neighbourhood. Every single comfree home we checked out online were listed with higher prices than what the new home builders were selling for. Brand new bi-levels and SFH’s in the 1200-1500 square foot range would at least 30k cheaper through the home builders.
Saddest part is that most of the comfree’s for sale are sitting empty as well. So somebody is paying an extra mortgage while still trying to flip.
Probably the same story for Realtor homes though, but most Realtor’s don’t have easy access websites for their listings, or even list their website on their for sale signs.
The drop in new home starts is a very bullish factor for Edmonton Real Estate, Dr Karl Case of Case Schiller index had mentioned that in US if the housing starts drop dramatically the market recovers with in a fiscal quarter. In case of SFH, with the new construction at a stand still the inventory will get worked out and we will be in a sellers market next year, a sample of that could be seen in St Albert where July sales were even higher than 2006 sales. Lots of potential buyers are waiting on the side lines and will jump in on the slightest sign of a turn around. I have lost hundreds of thousands following Merills research, if they are such good predictors of the markets how come they incurred tens of billions in losses and are having to settle their auction rate securities because the Govt claims that they defrauded the customers.
An increase in infra structure spending will compensate for the slow down in the housing construction, recession in Ontario will generate positive in migration and the doom and gloom economists will be wrong, the only time I made money is when I stopped listening to these professional spitters like David Wolf of ML, They ask you to buy when the market has peaked and ask you to sell at the bottom.
Shawn:
Nicely put. I just don’t understand what you mean in your first sentence, “drop in new home starts is a very bullish factor.” Seems you argue the opposite after that, no?
Holy did I misread that…
Disregard previous comment.
From the bubble blog.
people are leaving alberta I am glad that we
have so many blogs here.
from http://albertarealestatewatch.blogspot.com
affordable housing
Sorry my links didnt work, i will try this.
http://albertarealestatewatch.blogspot.com/2008/08/11-down-74-to-go.html
http://oilsandstruth.org/workers-are-suddenly-leaving-alberta-heading-atlantic-canada-will-it-last
Shawn,
Didn’t builders in Edmonton massively scale back housing starts a year ago?
I don’t think that you’ll see inventory eaten up in a single fiscal quarter. We would have to see 2000-3000 sales a month to eat up current inventory that quickly.
Also, the US has had record low housing starts for much longer than a fiscal quarter but they haven’t seen the price drops or inventory slow down.
It’s a shame that you’ve lost “hundreds of thousands” due to Merril Lynch predictions. But putting blind faith into Alberta real estate now doesn’t speak well for your due dilligence.
oh yeah..
-Canada Employment numbers from last week showed Alberta LOST 4000 jobs.
-Personal bankruptcies in Alberta as of June were up 16% month to month. 21% over last year.
-Business bankruptcies in Alberta were up 90% year over year. Despite oil DOUBLING IN PRICE over the same time period.
(see for yourself, http://strategis.ic.gc.ca/epic/site/bsf-osb.nsf/en/br01913e.html)
-GDP for the energy sector in Alberta recently DECLINED.
Merril may be wrong, but at least they’re considering most of the information that is available.
Nate:
Put the 4000 jobs lost in context. Alberta has gained over 57,000 so far this year.
Nate
No builders didn’t until now. Here is a graph from our friend “BAD” on bubble blog.
http://spreadsheets.google.com/pub?key=pqoAQ_B0GEgUvvcBvC2JTJA&oid=19&output=image.
The link in your post to bankruptcy stats is bad, so here are the June 2008 stats for bankruptcies in Canada, Alberta included.
http://www.ic.gc.ca/epic/site/bsf-osb.nsf/en/br01913e.html#tbl1
And here is the yearly Bankruptcy stats to put things into perspective.
http://www.ic.gc.ca/epic/site/bsf-osb.nsf/en/br01881e.html#one
Even with the increase they are way below the norm.
Alberta is just returning to normal. Which is good, isn’t it?
Don’t quite know what you mean by energy GDP in Alberta declining, but if you refering to petroleum exports, yes they were down in May, but the latest numbers for June were just released today and there back up again.
http://www.statscan.ca/Daily/English/080812/d080812a.htm
When numbers increase from all time lows it may look like the world is falling apart, but it’s not, they’re only returning to normal. Alberta is still doing very very well considering what is happening in the eastern Canada, the US and Europe.
Nate
No builders didn’t until now. Here is a graph from our friend “BAD” on bubble blog.
http://spreadsheets.google.com/pub?key=pqoAQ_B0GEgUvvcBvC2JTJA&oid=19&output=image.
The link in your post to bankruptcy stats is bad, so here are the June 2008 stats for bankruptcies in Canada, Alberta included.
http://www.ic.gc.ca/epic/site/bsf-osb.nsf/en/br01913e.html#tbl1
And here is the yearly Bankruptcy stats to put things into perspective.
http://www.ic.gc.ca/epic/site/bsf-osb.nsf/en/br01881e.html#one
Even with the increase they are way below the norm.
Alberta is just returning to normal. Which is good, isn’t it?
Don’t quite know what you mean by energy GDP in Alberta declining, but if you refering to petroleum exports, yes they were down in May, but the latest numbers for June were just released today and there back up again.
http://www.statscan.ca/Daily/English/080812/d080812a.htm
When numbers increase from all time lows it may look like the world is falling apart, but it’s not, the number are just returning to normal. Alberta is still doing very very well considering what is happening in the eastern Canada, the US and Europe.
Sorry… for the double post, damn back button on the mouse, and sorry about the first link, I stuck a period on the end. Here is a good one.
http://spreadsheets.google.com/pub?key=pqoAQ_B0GEgUvvcBvC2JTJA&oid=19&output=image
If Ontario is falling apart how come thier house prices aren’t falling off a cliff like Alberta’s are. The SFH starts have fallen off a cliff there, but they have here too. Listings are way up now in the GTA area as they are in GVA as well and yes their prices will fall but were ahead of them by a mile already.
Brent,
without having looked at any stats for the Greater Toronto Area, here is my personal observation:
I visited Open Houses in the GTA in Jan and Aug 2006, and again in Jan and May 2007. Compared to 2002, when we moved from Toronto to Edmonton, the price increases where nowhere near what we experienced in Edmonton in that same timeframe.
That leads me to believe that there is not the same “cliff” to fall off, in the GTA.
Alberta is projected to take 1st or 2nd place in GDP for this year and next. Still have very low unemployment as well. There are good jobs everywhere! 2009 will see Real Estate Rising in Alberta. 2009 will also see higher migration to Alberta as well. I suspect these trends will continue for many many more years after that.
Reporters have to write about something and drama sells. Don’t believe the hype. That applies as well when the market was going up!
There is only one thing that could really kill Alberta (which will seriously damage all of Canada) and that is the Green Shift of the Liberals. If the Federal Liberals get a majority then dump any Real Estate you have at whatever you can get cause it might be the worst nightmare since the NEP! I believe this will hurt Real Estate prices and the economy right across Canada.
Short of that happening give me a break folks. There is no place in North America with a brighter future than Alberta. Infrastructure in Alberta is progressing nicely and will further strengthen the postion of this great Province. Tack on strong economies in both provinces to either side and there is a massive shift in economic power to the West.
It is too bad that so many got burned but hey you could have bought Merril Lynch stock a year ago and only lost 70% of your investment instead of 10 or 20 on Alberta Real Estate.
I’m not saying things are very good in North America right now. But in general living just about anywhere else could have been and could be far more painful in the future than Alberta.
Take a pill!
Relax!
Everything is gonna be OK!
Anon,
Renters like Brent don’t want to hear bullish comments like that!
Anon and DREM,
Neither does Nate for whatever situation he may be in and for whatever reason he may have.
There are those who missed the boat the last time and are hoping for the prices to fall back low enough for them to catch up, but making dire predictions against the strong economic fundamentals here just ain’t gonna do it for them. Sellers are wiser and more rational than to buckle under such baseless fear mongering.
Anon,
The smart money doesn’t ride the boom all the way to its inevitable collapse. This is just the last boom all over again – oil has reached inflation adjusted highs we saw at end of the last bubble.
Everyone always says the boom is “different” this time.
Merrill isn’t the only one calling for a steep correction. Anyone dumb enough to hold Merrill stock all the way down 70%.. may god bloody well help them.
Pullback in Alberta drags housing market under across the country
Garry Marr, Financial Post Canwest News Service
Published: 1:34 am
TORONTO – The Canadian housing market got another dose of bad news with new statistics showing home prices are falling fast, led by a pullback in Alberta.
The Canada Real Estate Association says the average price of a home sold in Canada’s top 25 markets last month was $327,020, a 3.6-per-cent decline from a year ago. It’s the second year-over year drop after the June numbers fell 0.4 per cent.
The news comes after Canada Mortgage and Housing Corp. said Tuesday that new home construction was down 13.6 per cent in July from a month earlier, reaching its lowest level in almost a year. Statistics Canada also said new home prices grew by only 3.5 per cent in June from a year earlier. It was the slowest rate of the growth since March, 2002.
The malaise in housing is now clearly being felt across most of the country, but nowhere more keenly than Calgary and Edmonton.
In Calgary, the average home sold in July dipped to $413,371, a 10.1-per-cent decline from a year earlier. Sales in Alberta’s largest city also fell 13.1 per cent from a year ago.
In Edmonton, the average price dropped eight per cent from a year ago to $344,636
Brent,
You might want to check your numbers. According to the article at CBC.ca Calgary is down 7.8 YOY, while Edmonton is down 5%.
http://www.cbc.ca/money/story/2008/08/14/housesales.html
Not that significant of a drop if you think about it….
Maybe you should check your numbers. lol
Who knows, there both sources of respect.
One thing we can all agree on is that prices are down and there going down further.
I can’t say I would agree with you whole heartily….
YOY – yes, the next few months will show declines, after Dec. I believe YOY will be slightly positive as the market has been relatively stable since Dec. 2007.
Relatively stable since 2007
Your joking right?
Yeah – since December of 2007 – like I said.
Try telling that to any one trying to sell their house over the last 6 months and have dropped their price 10% and still can’t move it.
What about investment in the USA now? Can you give me a link to real estate industry news in the USA, pls?
Matt – you’re right. Sellers can hold out as long as they want, especially those hanging on to 2nd homes or flips that were over-inflated in the last price run up – right until they bleed money all over the front lawn. Point is, some homes are selling in a very short time. Why do some sellers have to wait so long? Possible answers?
- for $30K more the buyer can save 60K worth of repairs by getting a home that represents a better value despite the higher mortgage payment. (What’s a few hun more on the mortgage? You can’t do mass renos for a couple hun a month – but you CAN get a slightly better home!)
- in some cases you can get a new home for the same money the flipper is asking for his overpriced box with half-done renos and curly shingles.
- In general, some homes in E-town were not as “undervalued” as others, yet all of the homes ‘enjoyed’ an almost double in sticker price in the price run-up frenzy. Some of the “value” in these homes is not real value but just an effect of speculation – and there is downward force on the price of these specific homes.
Hang in there sellers with overpriced lemons! Hang in there right into the red if you want to! I am sure there are shrewd E-town RE investors that would rather burn the house down than lower their price any further.
Then again, some of the ‘starter’ properties I’ve seen should be burned down…
Cheers,
E-town
Oh, by the way. I saw Sara’s little You-Tube report about the media and how they effect housing prices in a downturn:
http://www.youtube.com/watch?v=OL6OYzfQgPY
Sara – did you protest when the very same media was involved with spreading the “buy now or get locked out forever” hype during the buying frenzy back in 06? I think not. I just found your report to be somewhat… transparent, that’s all.
Anyways, I thought of this while I was reading this report by TD:
http://www.td.com/economics/special/pg0608_housing.pdf
It’s title is “Canada’s Housing Boom Comes to and End” and it says that where the party was the loudest, (E-town and Cow-town), the hangover will be the biggest.
I know sellers are responding with “Alberta’s economy is still rock solid, this is all media hype!”
Then again, the trends in the last 12 months are speaking for themselves I guess.
If it’s true that the market is affected by the media and consumer psychology, the “greedy speculators & fearful buyers” condition has shifted more towards a “fearful sellers & stubborn buyers” situation.
Word on the street is “wait”. Maybe word on the street is not right or wrong – maybe it is what ultimately affects markets where the item being sold is nothing more than a commodity to begin with.
Time will tell, as they say.
Cheers,
E-town