Here is our update on the Edmonton real estate market. (Previous week’s numbers are in brackets). For the past 7 days:
New listings: 567 (479, 434, 486)
# Sales: 237 (255, 274, 243)
Ratio: 42% (53%, 63%, 50%)
# Price changes: 429 (457, 441, 434)
# Expired Listings: 211 (699, 209, 298)
# Canceled/withdrawn/terminated listings: 36 (68, 49, 52)
Net loss/gain in listings this week: 36 (-543, -98, -107)
Active listings for single family homes: 3433 (3382, 3651, 3683)
Active listings for condos: 2275 (2200, 2428, 2454)
"Steady Eddy" continues solid sales pace even as financial markets world wide tumble. If you remember recessions past, Edmonton real estate was always steady if not an under performer hence the name. The fact that sales continue to hold such a solid pace is a positive indicator for our market. However, the market is not with out risk so you have to look beyond the surface to see what’s really happening – every situation is unqiue. You can focus all you want on the down side – the media and plenty of blogs will even help you stay focused on the negative.
In the meantime consider this: Stats Can (Statistics Canada) Reported over 100,000 jobs were created in September. In addition positive moves by the Bank of Canada and the Federal Government will help to ensure continued liquidity and credit:
http://www.globeinvestor.com/servlet/story/RTGAM.20081010.wflaherty1010/GIStory/
What we are seeing on the street is that the financial landscape has changed somewhat in terms of financing requirements and programs, but on the whole the mortgage brokers I’ve talked to are still getting their of approvals and well priced properties are still selling.
Still, if you are in the market to buy or sell a home in Edmonton you should get expert advice on your situation.
With peoples occupations and investments riding so heavily on recent developments i can understand why topics discussed on this site get so heated. It is unfortunate that there has been alot of shady people involved in the inflation of the market especially when the market was on the rise. I have been looking at buying for quite sometime and have tried to research the real estate market so i dont make a lifelong regrettable decision. During this time i have met some GREAT realtors who have been very honest and not tried manipulate stats in order to make a buck and then I have met some from the other side that might as well be working a booth at the carnival grifting kids at a ring toss game. I think the current situation in alberta will eventually balance itself out but unfortunately there are going to be victims along the way. This current talk of a rise in provincial migration should be taken with caution. A lot of people who are coming to this province wont be selling a home in a depreciated market and all of of a sudden buy in an inflated market. A lot of these individuals will be chasin a buck with eyes on returning back home. Now I know real estate investors may say different so they dont lose there shirts but it is not all doom and gloom because i think there will be an increase of renters in this case so that will help some speculaters meet there monthly nut. However if people out there want to start singing inventory is falling and you need to act quick or get priced out they should be ashamed of themselves. You have entire neighborhoods completely stalled in terms of construction, builders were forced to back fill there predug foundations and entire condo projects have completley stopped and when they have been completed half of the units have gone up for sale indicating a high number of speculators in the market and not new albertans. So even when numbers start to decline there are a lot of units on the verge of being completed that will be going on the market right away. I think these issues need to be evaluated by any buyer so they make a smart decision that affects there finacial future. Thanks for creating this site i think it is an excellent tool for people to use.
I reposted this blog statement so that i could get others perspectives on these issues
Markets globally are crashing.
All banks are tightening their lendings.
Oil is down at $77 a barrel.
Ottawa is injected $25 billion into mortgages today so banks can loosen some lending practices.
Mortgages defaults are at near highest rates in a generation.
Home prices are down in Edmonton by 10% since the peak.
Everywhere, credible economists, analysts, etc are in agreement that things will be very bad for a long while.
Home prices are scheduled to be down as much as 10% nationally by next year. Some areas more, some other areas less.
How about all the 1000′s of folks who listened to EREB and its members since May 2007 and now will lose their homes when they renegociate their term and find themselves in NEGATIVE EQUITY?
How many times have EREB and its members have said: “Now’s the time to buy”?
How do EREB now explain to home owners that $80000 in lost equity is OK?
@ gloria white
When you make money flipping real estate because your agent told you to buy, it’s all you.
When you lose money, it’s the agents fault.
Whatever happened to personal responsibility?
When you spend more time picking out the color of nail polish to use, rather than study up on market trends, whose fault is it?
maybe you should look in the mirror.
Oct. 10 (Bloomberg) — Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world’s financial markets while they “rewrite the rules of international finance.”
“The idea of suspending the markets for the time it takes to rewrite the rules is being discussed,”
WOW!!!
Where is Brent, that Prophet of Doom and Gloom to point the way for us into the depths of despair?
I’m here Josh, I’m here!
Well not really, I’m in Central America on a Nortel contract making U.S. dollars (gotta love the loonie getting nuked) but I’m only an internet away.
A look into the past…
http://edmontonrealestateblog.com/2006/09/long_term_housi.html
We lead the nation on both ends of the stick.
We have the opportunity to see exactly where we are going (just look to the US housing market) and yet people ignore all the warning signs and pile in.
I don’t believe in decoupling or that all real estate is local. That’s all BS. We live in a global economy. It’s all linked.
Edmonton is doomed. Sell now. It’s not going to get better for at least three to four years.
I think Edmonton is headed for a repeat of the 1980′s.
Crashing in Kelowna
Mr. Garth Turner,
I know your time is very precious in this election year, but I though I’d drop you a line about the city I live in; Kelowna, British Columbia.
According to OMREB (Okanagan Mainline Real Estate Board) data, our housing market peaked out in March of 2008, with the average home price sitting at around $542K. In the six months following the peak of our market, the average home price has fallen about $67K; by far the highest raw dollar and percentage rate in all of Canada, and perhaps in all of North America for the six months following a market peak.
This is greater than Vancouver ($45K over 5 months), greater than Calgary ($62K over 16 months) and greater than Edmonton ($64K over 14 months). In effect, the owner of an “average” home purchased at the height of the Kelowna housing bubble has been losing $11,000 per month, or about $370 per day of their home equity.
http://www.greaterfool.ca/
I think you are wrong.
The U.S is all alone in this mess
and they are the only one who will suffer in the long term.
Nowhere else they sold mortgages you pay $600 in the first year, $850 in the second year and $2200 thereafter for 27 or more years.
Let me know ,if you can come up with another country.
In other countries, they do not spend such carelessly ( over and beyond their means )Heh, the whole world thought Americans are so rich, now we know how. They do not really own anything!
American “homeowners” easily walk away from their houses and stop payments, as they do not have any equity ( interest only mortgages )so the only thing thay can lose is their credit.
No money loss whatsoever, banks will lose only!
That is why here in Canada we are so different from the US.
And that’s why European and Asian countries will not suffer as much.
They just operate so differently, period.
To Brent and Garth Turner,
About 90% or more Kelowna residents had bought their houses for less than $ 100,000.
So, even as prices softening, they are still about $ 400.000
ahead.
brent, your in south america! Nice down there? It’s frosty here in Edmonton! I knew you didn’t live here…drink a mohito for me.
But what is with this market now, seriously…
This is something that just occured to me today. Like any margin account, a meltdown in any asset class will trigger sell-offs of any and all stocks to bring the account back in balance. Estimates for the total losses on bad loans in the US real estate market seem to be around 1 trillion dollars. That seems like a lot doesn’t it. Except that in the last 5 days, the TSX has given back the entire gains of the last 4 years with losses since ONLY August amounting to 440 billion dollars or, .44 trillion dollars (http://www.financialpost.com/news/story.html?id=873340). The Dow though is even more insane, from http://ap.google.com/article/ALeqM5gHs5OM3gFG_DytQQZFbWfgPT08MAD93NTHUG0
Investors suffered a paper loss for the day of about $100 billion, as measured by the Dow Jones Wilshire 5000 index. For the week, investors lost $2.4 trillion, and over the past year, the losses have piled up to $8.4 trillion.
and from the wall street journal:
http://online.wsj.com/article/SB122363315976122397.html
Mr. Baer, who was a Treasury-futures trader on the floor of the Chicago Board of Trade in 1987, said, “I’ve never seen a credit market like this one. The fear has gotten way ahead of the fundamentals,” including an unprecedented round of coordinated central-bank rate cuts this week that would normally prompt banks to increase their lending to one another.
Mr. Market has clearly lost his head in this spate of depression following mania. The bubble was bad, buoyed up by a clear surge of mania, but just like we all overreact when we wake up Sunday morning to realize we took our credit card to the bar the night before and can’t remember anything after 7PM…this is a gross over-reaction at this point.
The estimated world GDP is:
World — GDP: GWP (gross world product): $65.95 trillion (2006 est.) (purchasing power parity)
According to https://www.cia.gov/library/publications/the-world-factbook/print/xx.html
For Canada and the United States paper losses amount to over 11 trillion dollars! Or one sixth of the entire world GDP! Does this even seem logical.
Is there someone out there who can explain this to me, because it seems farcical!
It may sound idiotic but I’m seriously thinking of picking up stocks in a lot of these companies such as Agrium that close 10 Oct 08 with a p/e ratio of less than 6! Or Canadian Pacific Rail with a P/E of 9!
This is craziness. The blood is in the streets and people are running from these buys.
Quick someone talk some sense into me! The herd can’t possibly wrong can they? I seem to smell opportunity but maybe that is my feet…and to tie it all into real estate. If you did your homework and your real rents cover your costs…not the one on the embellished lease you gave your mortgage broker, you should be okay. I really don`t think anyone should sell into a market that is this screwy unless your really know something, you will get burned, but if you know something short the heck out of it!
SERIOUSLY ONE SIXTH OF THE WORLD GDP BETWEEN ONLY 2 OF THE G8 NATIONS IN THE WORLD!
Iceland might be the first country to go bankrupt. They have closed banks, customers are livid.
You have entire neighborhoods completely stalled in terms of construction, builders were forced to back fill there predug foundations and entire condo projects have completley stopped and when they have been completed half of the units have gone up for sale indicating a high number of speculators in the market and not new albertans.
Ian,
GDP is a measurement of goods and services produced in a year, not the “worth” of all property. So we should not make a direct comparison. Never the less there is some panic selling going on in the financial markets. I am a very long term investor. I began buying conservatively yesterday. A lot of very strong companies a providing dividend yields of close to 5%. That is just too compelling to ignore. It id interesting to note that in all of this turmoil, our local real estate market seems to be less volatile.
The confirmation that Edmonton is kaput as far as home resales in general will be after 15 October when prospective buyers will have to come up with 5% down payment. That could be $15000 on average.
Who has $15000 aside when the common family is swamped with consumer debt?
Unless they borrow from family, a safe assessment is that EREB members will be eating Ramen noodles over the holidays…
New home construction have crashed and now resales will crash as well.
Doom and Gloom? We shall see when EREB posts its November stats (first full month of 5% down and 35 years max.)
Within a year or two, those who bought at the peak and their value went down 20-25% (they’re home value is already down by as much as 12% since May 07) and try to refinance their mortgage when the house is worth less than its financing…the banks will refuse and foreclosure will follow…US style!!!
Gloria,
I can’t agree with your assesment. Are you just being funny or do you actually believe that if a person has been faithfully paying their mortgage for 5 years(the average renegotiation time) and then go into their bank to renew it. The bank is going to say “Oh, you are willing to repay us this full amount and seem to be able to do it. We will make allot of money with that option. However, since we are an evil entity that is out to destroy lives. We will instead sieze your house and dump it on the market for a loss just to spite you. After all, we are evil and to prove it we enjoy losing money instead of making it.”
You have to realize that banks are businesses and they want to make money. As long as a person keeps making their payments, they will be able to renew their mortgage. Period.
Gloria,
let me comment on two points you made:
There is a difference between RENEWING a mortgage, and refinancing.
Whenever I renewed mortgages, in the past, I only had to provide proof of income, but not a new appraisal of the home.
I am sure that the townhouse we had in Toronto, in the 90s, went down in value for a few years, and we renewed our mortgage every 6 months without a problem.
Therefore, I would not expect that people who bought in 2007 would be unable to renew their mortgage and possibly find themselves in foreclosure, unless they are generally overextended and unable to meet their financial obligations.
(However, we always had a 25% down payment, and no mortgage insurance. Not sure how that would change the picture.)
It’s different when you want to increase the limit on a home equity line of credit. In that case, you need proof of income, as well as a recent appraisal, and the outcome may not be what you hoped for.
Although housing starts in Edmonton are still down significantly, compared to September 2007, there is actually an increase of about 25% in the starts of single-family homes, compared to August 2008.
The price decline in 2007 was preceded by several months of declining housing starts. We might be witnessing a reversal, if September’s trend continues for the rest of the year.
Gee Gloria, I guess the end of the world is nigh! Think of all those people that bought between 1975 and end of 2006 that are up huge. I realize that all you bubble bloggers can only see the down side of any argument, but calling for an entire markets demise by looking only at the peak of the market is naive. Sure there is a small percentage of total homes owned that are in a negative equity position. A significant percentage of those are owned by investors who got caught by the glut of houses on the market by over specing and people taking their equity and moving elsewhere…..both those phenomena are over. What percentage of those investors have multiple houses? What percentage of those investors have multiple houses but don’t care because they’re rented or maybe they’ve sold 8 or 10 other ones for 6 figure gains between 2004 and 2007? What percentage of people are in negative equity but have a 5 year fixed mortgage and don’t have to renegotiate for years? What percentage will take on renters to help with the increased cost of a renegotiated mortgage? What percentage don’t have to do that because they have the room in their budget to cover the increase? Gloria, you don’t have any idea and neither do I, so a little less waving your hands and the air and running screaming from the room is probably called for.
Your comment about the 0/40 crowd is a little more interesting as I think it is at least partially, and maybe significantly responsible for the July/Aug/Sept big increase in sales. There is also the fact that 2nd quarter interprovincial migration and international immigration brought 20,000 people to Alberta…that’s a number that has only been bested in one quarter since 2004. In short I believe it’s a combination of both these factors that drove the sales up. If you could also try and understand that saying the only reason sales were up was because of the 0/40 crowd, then you must also accept that the recent price drop of prices by 7% over the same time frame is due to exactly the same thing. The 0/40 crowd is not buying at the high end.
Of far more danger to the local market is the goings on in the world wide credit markets. If things get straightened out in fairly short order, the impact will be smaller. If this goes on for years, the local economy will be greatly affected and prices will come down plenty. No doubt there is going to be some interesting turn of events over the next while.
How does one get a hold of Gloria White? Gloria, if you see this, please send me your email address. I have a couple of things I’d like to run by you…
lancecj at gmail dot com
How does one get a hold of Gloria White? Gloria, if you see this, please send me your email address. I have a couple of things I’d like to run by you…
lancecj at gmail dot com
Ian, your explanation of the farcical.
Trillions in stock market value — gone. Trillions in retirement savings — gone. A huge chunk of the money you paid for your house, the money you’re saving for college, the money your boss needs to make payroll — gone, gone, gone.
But if you no longer have that money, who does? The fat cats on Wall Street? Some oil baron in Saudi Arabia? The government of China?
Or is it just — gone?
If you’re looking to track down your missing money — figure out who has it now, maybe ask to have it back — you might be disappointed to learn that is was never really money in the first place.
You run into trouble when you think of that potential money as being the same thing as the cash in your purse or your checking account.
“That’s a big mistake,” says Dale Jorgenson, an economics professor at Harvard.
The key distinction here: While the money in your pocket won’t just vanish into thin air, the money you could have had, if only you’d sold your house a year ago, most certainly can, it is only ‘potential money’, is was never really money in the first place.
Robert Shiller, an economist at Yale, puts it bluntly: The notion that you lose a pile of money is a “fallacy.” It was never the same thing as money — it’s simply the “best guess” of what the stock is worth.
“It’s in people’s minds,” Shiller explains. “We’re just recording a measure of what people think the stock market is worth. What the people who are willing to trade today — who are very, very few people — are actually trading at. So we’re just extrapolating that and thinking, well, maybe that’s what everyone thinks it’s worth.”
Shiller uses the example of an appraiser who values a house at $350,000, a week after saying it was worth $400,000.
“In a sense, $50,000 just disappeared when he said that,” he said. “But it’s all in the mind.”
See Ian, it just in your head that you may have lost tens of thousands of dollars, so just get your head straight and ‘DON’T WORRY BE HAPPY!!!!’
.
It seems everyone in here is an economy expert.
I have sold 3 houses in 3 years all of them sold less than 45 days. My advice is to be the most attractive listing in your area, or your vacant home will continue to collect dust. Inflation will always make real estate a good investment, as long as you are living in your home and not trying to make a quick buck.
I am just glad my real estate adventure is over. But if you toke major losses keep your head up. It is only a matter of time before things will be on their way up. Sorry for the bad grammar and spelling but not all of us are anal financial experts with nothing better to do then spread negativity.
Hmmmm, I hope that oil stock I bought on Friday stays up long enough for me to dump it Monday morning without taking a hit.
http://biz.yahoo.com/cnnm/081010/101008_oil_prices.html
I am 27 yrs old, clueless about real estate markets, I work for DND make about 50k a year, my wife is a RN ( 70k ) plus. Right now it seems impossible that we will ever be able to afford anything other than a run down shack or tiny condo. I monitor these sites to try and get a vague idea about what is going on about the market, but I can’t seem to get a clear impression . We don’t want to leave our families in Edmonton but it seems like that is our only chance of ever owning a home. Is there any chance of the younger generation ( not slaving away in Ft Mac ) ever buying a home here?. Market crash PLEASE !!!! Please reply
Market woes hit oil sands projects
Tuesday, October 07, 2008
CALGARY — The global financial crisis is threatening new Alberta oil sands processing projects, as tighter credit lines and lower oil prices cause companies to look for cheaper alternatives.
Most at risk are upgraders, the sprawling facilities where heavy crude, or bitumen, is processed into a lighter synthetic product that can be handled by more refineries.
Upgraders can cost up to $12-billion. Financing woes aren’t the only roadblock: The price difference between bitumen and synthetic crude has narrowed, leaving less value for upgraders to capture.
“It’s pretty tough to justify building an upgrader in Alberta today … when the bitumen price and the capital costs are so high,” said Justin Bouchard, a Calgary-based analyst with Raymond James.
The returns are better if companies find a U.S. refining partner to take their bitumen production, he added.
THE SKY IS FALLING!!
THE SKY IS FALLING!!!
THE SKY IS FALLING!!!!
Lando,
regardless of where you will eventually buy a home, make sure you get your finances in order, before you take the plunge.
While you are waiting for the market to come down further(and it may), get rid of consumer debt, so that you qualify for a decent mortgage rate.
You have a good amount of money coming in, compared to many other people in Edmonton. Make sure you have a budget worked out and track where your money currently goes. Also factor in the potential arrival of a baby, and any loss of income this could cause.
Save up for a decent downpayment to lower monthly mortgage payments. See whether your family is willing to chip in, so that you don’t have to move away…..
Not all properties at the lower end of the current market are necessarily run down or tiny. However, don’t count on the market “crashing” to the point where you can get into much more than a decent starter home.
Hey Lando,
I’m in the same boat. Even while earning within the top 90th percentile of wages in AB I cannot afford more than a 100 year old slanty shanty in my home town.
Sellers aren’t going to willingly take a loss on a sale unless they cannot get renters to front the mortgage or are in complete financial disarray. But if financial markets continue to dive, this could be on the way in just a matter of time.
But I can tell you many major developers are struggling for financing to complete jobs and local builders have few friends willing to lend money to pay the bills these days. This is a fact.
The matter of oil sands projected margins falling to unreasonable investment/risk levels would be a pleasant sign of a housing market slide (provided you are on the winning end without a pink slip.)
Even with an average house price of $300,000 w/ 5% dp is $15,000 and then hefty monthly payments for 25 years. This is a big sum of money for most people right now… especially if jobs start dropping.
I’m prepared to wait another 6 to 8 months and save my pennies just in case.
Lando,
I am in the same situation as well. However my perspective is real estate is driven by the middle class. If the middle class can no longer buy as a whole then its a sign of whats to come.
MDM also has some excellent advice as always. The only thing I don’t recomend you do is “See whether your family is willing to chip in.” This in my opinion is another sign that prices have simply gotten out of control and your setting yourself up for loss. If you have to borrow extra to buy then it is likely in the next x years you will have to borrow to maintain the costs.
The last point is if the place is your home to treat it as such and think of it less as an investment.
Best of luck.
***Comment deleted. Impersonation. See code of conduct.***
Over the past two years our economy has become increasingly reliant on petro dollars. In the oil boom I don’t think the closure of firms like Dell, Convergys, the TD bank office, ect. ect. were noticed but cost 10,000+ jobs. Now my friends in contruction are getting lay-off notices. With oil headed south of $50.00 (which makes some oil sands operations non profitable or break even) I’d speculate that we are headed for tougher times as our economy is running on one pony. Remember the prov. goverment has based the fiscal years budget on an assumption of $117/bbl which will serve to cut at infrastructure projects (ie jobss) as that cost is not fixed (like the cost of heathcare or education). Those who have been in AB for a few decades know the drill…and I’d say real estate has barely started to decline. The good news is it’s not the end of the world, it’ll come back…but for my part I’ll hold off purchasing for probably 18 months-I expect to see some relative bargains then.
Edmonton home owners are very nervous. Sellers will panic and lose their shirts because of this:
http://thechronicleherald.ca/Business/1083989.html
It’s all over for the greedy in Alberta.
Pay off your HELOC or lose everything.
Just wondering how this “crisis” or non”crisis” (whatever side of the argument you may fall on.) will affect rental rates, will prices stay the same or will they come down. If they remain the same, there will be some good opporunites to pick up some good long term rental investments in the next year or two….opinions anyone??
Jo, the city is emptying out, draw your own conclusions.
http://cuer.sauder.ubc.ca/cma/data/Demographic/Population/population-pctgrowth-edmonton.pdf
http://cuer.sauder.ubc.ca/cma/data/Demographic/Migration-Immigration/MigrationAB.pdf
it is not getting better
http://cuer.sauder.ubc.ca/cma/data/ResidentialRealEstate/HousingPrices/housing-pri-pctgrowth-edmonton.pdf
All the upgrader projects that have not started a substancial portion of their construction are pretty well dead in the water.
This is devastating for the spectards who bought property around Fort Saskatchewan and Redwater. I personaly know a few who bought, at what turned to be, the peak and are now blaming the US housing market for the problem.
It is very serious for them and they stand to lose even their own homes as they borowed against them.
“Jo, the city is emptying out, draw your own conclusions.”
Mike, the Edmonton and Alberta charts both show positive growth….not as much as the last couple of years but still more people are coming to Alberta than leaving. We are not emptying out.
Nice try Mike,
Your chart only shows up to 1st quarter of 2008, 2nd quarter numbers are out and show iterprovincial migration of over 6000 and net international plus interprovincial of over 20,000….a number bested only by the 3rd quarter of 2006. Alberta appears to be filling up again.
JO,
If you subscribe to the idea that people won’t be buying as many houses because of economic uncertainty or availability of credit, and the population keeps growing….then rents will certainly not be going down. After all, these people have to live somewhere right!
I’ve also heard that population is increasing again, I don’t agree with you Mike, what are the best types of properties to buy as rentals, 5 years old 10years old, 20+, condos?? Any ideas?
Please check out the Alberta governments predictions here on page 133.
http://www.finance.alberta.ca/publications/budget/budget2008/eco.pdf
As you can see they are predicting below average growth through 2012.
“Edmonton’s detached house prices fell another 1.9% M/M in September and down 9.4% since last year (chart). Alberta prices are sinking and Edmonton holds the current Canadian distinction of providing their unwitting buyers who bought at the peak, the biggest loss (17.7%) in real estate equity among the Canadian cities herein tabulated.”
http://www.canadian-housing-price-charts.235.ca/
From the Edmonton Sun:
http://www.edmontonsun.com/News/Edmonton/2008/10/13/7067091-sun.html
If there weren’t enough gangs, murders in drugs in Deadmonton, the real estate crash created by greedy speculators will now bring more mayhem…
Now those new, expensive subdivisions will have grow-ups and prostitutes. It’s like Alberta Avenue all over the city.
Posted by: gloria white | October 13, 2008 at 07:38 AM
Oh come on! Edmonton will not turn upside down within a couple of weeks. This is the Edmonton Sun and the are pretty good at writing stupid stuff with no real evidence. This is what I call “Propaghanda for people with no critical thinking”.
Yes this is likely to happen anywhere there is a long economic crisis, but it will not happen that quick here in Edmonton.
I can tell you the boom has had a greater impact on criminality in Edmonton that will the economic crisis.
This is funny to see people on both sides (the optimictics and pessimistics) going nuts on stupid stuff with no real evidence…
Gloria,
you are a real ray of sunshine. Do you really believe that Edmonton will turn into The Bronx, overnight?
If we feel that hard economic times will take their toll on our community and will turn more people towards crime, why would we simply sit back and watch it happen?
There are many ways to get involved – at all levels – to make Edmonton a place that is supportive of those who are down on their luck.
You can change things, one person at a time, if you REALLY want to.
As a landlord, don’t squeeze the blood out of your tenants. Their entire purpose in life is NOT to make you rich, but to provide for their families.
As a neighbor, extend a hand to parents who are struggling. Be a positive role model to their children.
As a mentor, foster a relationship with a teenager who is struggling or depressed.
As a donor, support local charities that focus on alleviating social issues.
As a volunteer, coach Little League in your community.
As an activist, lobby for affordable housing, daycare, and programs that keep children and teenagers engaged and out of trouble.
GET INVOLVED. Don’t sit there and complain that it’s all going down the drain.
Today, I am thankful for my good fortune. Especially my home that we built 18 years ago. I would hate to have been priced out of the booming housing market of the past few years. It is obvious that some unfortunate souls who have not been as fortunate as many of us have subsequently descended to a dark place where the only solace they can find is in wishing ill of others.
Big day for me in the markets today, actually my best day ever. $20,000 U.S. profit on two trades. Ya baby!!!!!!
Lando,
You are forbidden from buying ANYTHING at this time, for at least two years.
If you buy a house now, you will lose money. You can rationalize it all you want, but you will lose money. Ask you wife if she minds blowing $100,000? She won’t like it one bit.
Housing downturns are long and deep and typically last longer than people think.
So, no house for you. Two years later you can buy… you will have your pick and will be able to name your price.
Gus,
Housing markets go up and go down. It has nothing to do with wishing ill will.
And the housing market is going down… possibly for a prolong period of time. The bears are simply trying to warn people.
Of course, nobody listens. I realized that I shouldn’t try to help anybody because all they want to do is shoot the messenger.
PS. I bought in 03 and sold May 08. I didn’t miss the boat and am sitting in a pile of cash.
Yup, real estate is yesterday’s game. Those days of big profits are past tense. The best you could hope for now is staying even. Which I believe is a long shot at best.
I don’t understand all this discussion. According to those stats, we have inventory up last week 20% ish and # of sales down 10% ish. That is a 30% difference !!!!
Last month when sales spiked it was all the rage on this website. Now when the reverse happens its called steady. I don’t get it.
So you don’t think that this is an overreaction then josh? You think everything has further to fall? Maybe you are right. I don’t see the financial sector recovering anytime soon. Next real estate pop, maybe 20 years from now. But right now a lot of really good stocks have been hammered by an overall fall in the stock market. Many stocks that perform very well in recessionary periods are down. Bond performance is down. Everything is down. My entire asset portfolio though is intact, I’m not missing anything. All the real estate I own is still standing, it didn’t vanish, at the end of the month there is always plenty more money than bills. All the stocks I bought, not one has “vanished”, in fact with prices low and earning up I find myself in an enviable position of being able to buy into this sell-off. But then, I never traded hard durable assets for non-durables, vacations, more car than I needed or anything like that. I’ve never been concerned about what a realtor or “appraiser” had to say about the value of my portfolio was, same as my stocks…I’m not retiring anytime soon so a bust now really doesn’t bother me. So thank you for the advice, I certainly do live it, “Don’t worry be happy!” Anxiety is fear of the future, and if the past is any indicator, the sun will rise in the east, there will be food to eat and the market will eventually become more balanced. All anxiety about tomorrow does is rob us of the joy we have in today. As Jesus said In Lukes Gospel Who of you by worrying can add a single hour to his life. No point in doing that. Better to plan what you will do next.
But that really wasn’t what you were getting at. I do know that. You were basically saying that I’m an idiot. And I’m okay with that (see above). Now you are saying I’m an idiot because the money which was lost on defaulted loans primarily in the financial industry didn’t really exist, it was only in peoples heads. Except that it wasn’t, it was borrowed from people who had it to finance the purchase of real homes and real products. Someone had some money and gave it to a bank, who then gave it to a person who wanted a loan. The person put up collateral in the form of a house, the value of which was grossly exaggerated. The person spent the money on something fleeting, a trip, new car, cosmetic surgery. For a while payments were made everyone was happy, then fewer payments were made and the bank stopped making payments to it’s shareholders and then they went to get some of those houses many of those houses were put on the resale market all at once prices fell. The banks, unable to pay their debts fell. The shareholders and depositers lost some or all of their money. Where did that money go? Mazda, Jet-set vacations, and Doctor Lou’s Body Mods. So what I am saying is for sure you are right, many of those values were not correct, some people got money based on that. Others did not, they didn’t pay attention. In 2004 they had a mortgage of 80K and today it is 66K maybe, the house went up the house went down but it never affected them. But for those who used the phantom money you speak about. Phantom money conjured by cheap credit, unscrupulous appraisers and exuberant markets willing to pay inflated prices at the time to pay for things they couldn’t otherwise afford. Those people are the ones having a fire sale. And their good stuff is going dirt cheap these days to pay for the other stuff they financed.
Happy Thanksgiving!
josh, one other thing. The loss of the American consumer will be significant. That will lead to slow downs in “not-so-emerging” markets, and a contraction in the global economy that will last a while–no one knows how long. That will come to an end and economic growth will follow at a much slower pace than the retarded growth of the last few years. And real estate investors will have to count on historically “normal” appreciation and long term paydown of debt to capture the value of their investments. And good stocks will continue to provide value to those who don’t spend their money on anything.
“The speculators are dead! Long live the speculators!”
Actually they’ve all gone into hiding! We’re all wired into a survival trip now! No more of the cheap money that fueled the bubble! Buy the ticket and take the ride!
Good news! Gas was 99.9 in Mundare Alberta today! The line-ups were huge! Lower fuel costs should provide some stimulus to world economies. Alberta jobs may take a nosedive as oil prices drop off but since there are too many jobs and not enough people already, will this have a noticable effect? And as oil prices fall and economies restart will oil consumption rise and stocks and reserves fall prompting a new rise in prices?
Guess we’ll see now won’t we!
http://www.generationaldynamics.com/cgi-bin/D.PL?xct=gd.e081014#e081014
We have the opportunity to see exactly where we are going (just look to the US housing market) and yet people ignore all the warning signs and pile in.
I don’t believe in decoupling or that all real estate is local. That’s all BS. We live in a global economy. It’s all linked.
Edmonton is doomed. Sell now. It’s not going to get better for at least three to four years.
I think Edmonton is headed for a repeat of the 1980′s.
***Comment deleted. Impersonation. See code of conduct.***
Why exactly would the ‘loss’ of 0%/40 year have that much of an effect?
5% of 362K (shown above as the average) is only $18.1K which is less than many people I know put on their houses, granted some years ago (ie: before the dollar was higher, they were saving more money, there were people making $12/hour at McDonald’s). People were able to do it then, but suddenly now they can’t?
The difference on the 362K mortgage at 0% for 40 years is at 5.6% (posted on my brokers site) is $1875.91 vs. 5% down for 35 years at $1854.86. So how exactly is this going to break any budgets?
I’ll give you that if houses go down, people’s equity gets wiped out. But at least you can live in a house, electronic stocks you can’t even blow your nose in.
I laugh when I see people like the guy on the first page of comments, where he and his wife make $10K a month, but worry they’ll never get more than a shack. Seriously. 0% down isn’t affecting them, and the only thing that 35-40 year mortgages are affecting there, is how long they choose to pay it and what their DSR should be in the meantime.
I don’t understand how people can’t find/save/come up with the 5% down, or how the 35/40 year thing supposedly really makes any difference at all.
Gloria,
You must really be worried that the Edmonton market has been showing renewed life and people coming to Alberta is way up again. Usually you stick with your own Calgary bubble blog. That being said…are you so blinded by your one-sided view, that you don’t reason out what you’re writing? You are saying prices will go down because 0/40 mortgages are dead, when in fact I would say the stats will show a miraculous price rise after a 25,000-30,000 haircut since the announcement of the end of 0/40 on July 9th. The fact is, prices were down so much during that time because of the large amount of 0/40 people getting into the market. Where do they buy? At the lower end of course. Cause and effect Gloria….you need to ask why stats show what they show!
Inventory has been decreasing every month since May and new listing have been consistently running 500-600 a month less than last year, since June. New home starts are low and have been for a year, and both inter-provincial and international have picked way up again. All of this will combine to either: A) Bring sales up or B) decrease the rental vacancy rate. These people will have to live somewhere.
Either way, the inventory of available houses will decrease….not a very bearish outcome.
While I’m neither a bear nor a bull in general, I’m certainly a lot more bullish this October than I was last October…as I realized the spring of 08 would see a still large pool of builder and investor spec homes that were started spring of 07 come onto the market. No such pool next spring Gloria.
I’m a realist. I realize that there are reasons to be bearish….world economy being number 1. But there are also reasons to be bullish, see above.
Those who can only see one side of the coin are always cheating themselves of opportunity, when it presents itself. If you’re going to live in a house for 10 years, enjoy. If you’re looking for a quick flip, or you’re transient and likely to leave in a couple of years….rent, there are markets for both.
To all, beware of hysterics, they are almost always based on self interest and an overriding need to be right.
“Edmonton’s detached house prices fell another 1.9% M/M in September and down 9.4% since last year (chart). Alberta prices are sinking and Edmonton holds the current Canadian distinction of providing their unwitting buyers who bought at the peak, the biggest loss (17.7%) in real estate equity among the Canadian cities herein tabulated.”
http://www.canadian-housing-price-charts.235.ca/
Mike:
Do those averages only show that less high end homes have sold and more lower end ones?
I wonder if there’s a way to find something more specific as a baseline of comparison, rather than the average, which just reflects ALL houses sold.
For example, what is the average selling price of (say) a 1500 sqft two story in SE edmonton with double attached garage over the last 2-3-4-5 years. That way it’s more of an apples to apples comparison – excepting, of course for differences in the area, age of house, etc. But at least then everyone is comparing the same sort of thing….
“I wonder if there’s a way to find something more specific as a baseline of comparison, rather than the average, which just reflects ALL houses sold.”
Are you saying that the average price that the Realtor boards have used as there best promotional tool is now unreliable and perhaps redundant.
What would you like to use this month as a meaningfull comparison tool.
I do not post to create an argument and i post no opinions.
Netwise,
there are stats available that show that sales in the higher price ranges have not been doing quite as well, this year, compared to last year, while sales at the lower end are stronger.
If my spreadsheet is right, here is what the numbers show:
Sales year-to-date as of 9/30/2007: 13,282
Sales year-to-date as of 9/30/2008: 9,567
On average, in 2008, we sold 72% of last year’s volume. Broken down by price range, the percentages are:
0-200K: 78%
200-300K: 131.17%
300-400K: 115.42%
400-500K: 80.84%
500-600K: 68.35%
600-700K: 66.10%
700-800K: 64.11%
800-900K: 60.50%
900-1 Mio: 66.67%
1 Mio +: 81.97%
As you can see, homes between 200K and 400K exceeded last year’s sales, while everything else underperformed.
Homes from 500K to 1 Million were the weekest performers, which does impact the average price.
Homes below 200K are not doing nearly as well as those between 200K and 300K. That means speculators are out and first-time buyers are looking for entry-level homes in decent condition and safer neighborhoods.
My prediction is that prices above 500K will continue to compress, for some time. Below that, not so much.
If I were a first-time home buyer looking for a place to hold for some time, I would start looking now for the cheapest house that can satisfy my needs, provided:
I had a strong down payment, no consumer debt, and a budget that balanced, with room for emergencies and continued savings.
(I realize I start to sound like Gail from “Til Debt do us Part”, or like Suzy Orman, but they do have sound advice for the average person who is not looking at a house as a short-term investment)
Mike:
I don’t take any argument from your question. I don’t think I’ve ever said that the average price is a really great number. It’s an interesting number, it does give a general indication of the market, but it’s not terribly specific.
MDM:
I wholy expected the stats you presented. But still they don’t really show apples to apples. For example, one can track the price of an “06 Mustang fully loaded” over the years and see it go down, how fast, etc. But when comparing houses, if it drops from 300-400K range to 250-300K range, it’s hard to tell that. All you really get is the “average”, but no real indication on what a particular type of house (ie: similar in size/age/location), so it’s hard to tell how *those* types of houses are doing.
That said, *that* is what I generally try to keep an eye on. I see the listings for houses I like, but of course you never know what they actually sold for or if they just expired.
Oh well.
mdm, I have been looking for those numbers thanks. So this is also a factor of the average price drop?
mdm,
Follow the big money, they aren’t buying. Big money knows more about what lies ahead then shoebox money.
Netwise,
for homes above 600K my personal stats are pretty good. I track each listing from start to finish, and know how often its price was reduced, and by how much.
You are right, I don’t know exactly at what price it sold, or whether it sold at all or just expired.
However, since I have been tracking those homes for 2 years now, I can tell when an expired listing comes back on the market, sometimes many months later.
Yes, it seems like a lot of work, but I sold my McMansion at the peak, and would like to get back into something similar, when things flatten out. So, I just call it homework.
The sky is still there.
If the world needs oil at a slower rate that would be good.
A slow-down would mean a return to a saner pace around here.
I predict, though, that within two years there will be a push to change laws wrt mortgages so that they become a personal debt that folks cannot just walk away from. Europe will push the US on this as speculators who can just walk were a big part of that bubble – and ours to a lesser extent.
Curtailing speculation in this way would really slow down bubbles as speculators would have a bigger downside. Just my 2c – we’ll see if it works out that way.
I am making popcorn now, in advance of the Spring inventory explosion.
I will keep renting while saving, so I can buy your house from the bank of directly from the government for $0.45 on the dollar. Don’t leave any of your junk laying around my new house when I steal it!!!
“Don’t leave any of your junk laying around my new house when I steal it!!!”
lol
when is that popcorn going to be ready? maybe never.
MDM, do you have the stats for the growth of 1MM+ houses in Edmonton? I’m looking for the raw number of sales. Before the boom, having a $1,000,000 house on the market was an oddity. I think it still is.
How about the growth in the “high-end” (500k-999k)?
It’s too bad MLS likes to keep the stats a secret.