The week before Last week I had three different clients from different out of town locations, relocating to the Edmonton area for work reasons. Between these buyers I showed about 75 properties. Except for one of these clients, none of them had any real knowledge about the Edmonton real estate market. One buyer lived here before but it was so long ago that her information was entirely out of date.
The end result was that all three ended up buying homes for their families to live in.
It makes me wonder though, just how many other relocating families or individuals are using their REALTORS to help them buy homes for their families in the Edmonton area? The most recent migration stats I can find, show that plenty of people are relocating to Alberta:
It’s undeniable that the vast majority of relocations use a REALTOR.
Relocating buyers are quite often the best buyers from a seller’s perspective, because they have a short period of time to buy, and are usually well qualified and motivated. In 2006 and 2007 we had to show and help our relocating buyers buy a number of properties that were being sold by sellers on their own, because of the shortage of inventory in Edmonton. A couple of these were friggen nightmares to deal with – I’ve posted on some of these experiences previously.
Today, with the amount of properties for sale on the MLS, most of our buyers (relocating or not) are focusing their time exclusively looking at properties on the MLS. How many properties could a buyer set up appointments to view on their own through private sales? I don’t know how many relocating buyers could set up 30 private sale appointments in a 3 day time span – especially since most of these buyers look during the day on weekdays. How would a relocating buyer then obtain all the necessary information to make an informed decision? Clearly many sellers who aren’t on MLS are missing the "relocating" boat.
Recently the Canadian Real Estate Association did a member survey that found the following. In the past year:
- At least 64% of its members listed a property after the seller failed to sell on their own.
- 6% of their members listed 10 or more properties where the sellers previously tried on their own.
- Over 92% of those properties that were For Sale By Owner properties and then listed by a REALTOR sold after being listed on MLS
- In the previous run up market over 30% of REALTOR’s introduced their buyers to FSBO properties. (This is surely shrinking)
- 54% of those introductions resulted in a sale where a fee was paid to the REALTOR. (Hence my position that Comfree’s stats on commissions saved are misleading if they use their standard commission for every property sold, even if a REALTOR was involved.
My point is simply most relocating buyers still use the services of a REALTOR to assist in their relocation to the Edmonton area, and many sellers who try to sell privately simply miss the boat on this excellent market.
Missing the Boat is the sane thing one can do in the current situation.
Don’t get into troubled waters.
Thank you for sharing this info. However, just like most of my friends, we are gonna wait. The price is still too high.
Sarah,
So what you are saying that you have led three of your less informed clients into buying a property…Was it not your duty as their realtor to tell them that there is a big risk for the prices to decrease in next 6 months…
***John,
Anytime you buy a property there is a risk of losing value. People buy properties for a variety of reasons. People buy many things knowing they will lose value. In any case neither of these buyers are looking at a short term horizon. I guess the uniformed person would be you then
P.s. its Sara with out an H and they were my clients.
Sheldon
Exactly, people make decisions on their own accord.
With any property, there is a chance that the price may decrease. This has and always will be a reality.
John,
With people migrating to Alberta, buying property doesn’t really matter if they’re already property owners back home. Prices are dropping all over Canada so as long as they stay in the market it probably doesn’t matter too much where they buy.
Also, 99% of families are probably moving here for work, so buying a home here over being un-employed isn’t necessarily the wrong choice.
May be when two or three people are saying that it was good/ok decision…then yes it will be a right one. May be I am seeing things from a wrong angle….it happens..
My point was that ..that if you knwo that the property is going to fall another 40,000 in 6 months then it is better not to buy…
And you know when I am saying that price will fall by another 40K in a house of 350K..it almost appears certain to me…a lot of EPC companies have start laying off people and seeing the current condition of the oil companies, the year 2009 will bring no work..and a lot of layoffs….just my 2 cents.
***No one can say for certain what will happen. Certainly not I but if that’s your opinion then you guide your decisions by that. I can respect that but it is foolish to think that you or anyone else out there knows the circumstance and motivations of everybuyer out there.
Hardly a day goes by with out some bad news for our province/city. I can’t see migration into Alberta continuing for much longer, there will be no need for new workers pretty quick if things continue the way they are going.
Todays Headline.
Oilpatch loses another upgrader
High labour costs, low oil prices cited
Dan Healing, Calgary Herald
Published: Friday, December 05, 2008
An oilsands upgrader set to be built east of Edmonton at a cost of more than $4 billion has been withdrawn from regulatory consideration by Norwegian energy giant StatoilHydro ASA, joining billions of dollars worth of delayed or cancelled Alberta oilsands megaprojects.
The company, citing low commodity prices, high labour and other costs and the unknown impact of Canadian emissions regulations, confirmed Thursday it had withdrawn the paperwork
I was inquiring into the prospect of investment properties about 4 – 5 Months ago and requested a meeting with Sheldon to discuss opportunities. These were inner city (new) condo units.
In all fairness Sheldon predicted a further decline in condo prices and advised me not to buy and to wait.
So there yah go, not all REALTORS are slimy.
Julian…
This means that he is pretty realistic…but why….why on blog he is never saying that..
***Advice on the blog is pretty generic. When people come to see me and we get into details then we deal in specifics. Everyone’s situation is different.
Sheldon
Its actually kinda nice to see some balanced opinions and intelligent discussion on the blog for a change, a nice break from the “infinity and beyond” bulls and “the world is going to end” bears.
From following this blog intermittently from time to time, I do think that Sheldon and Sara are a few of the good eggs out there.
Realtors do provide a valuable service to many people that don’t have the time to wade through MLS or FSBO listings by themselves, or for sellers, basically increase their exposure thought MLS. I’ve always maintained that’s he bulk of what they do, and some of them are very good at what they do.
Their job is not to advise you on your personal finances, help you invest or speculate on the future price of real estate, the best they can do is guess like you or me. In the end its your own decision to pull the trigger or not, only you know your own personal financial situation, its really none of your realtor’s business. Like Sheldon said, a lot of people buy things that they know are going to depreciate. “Should I buy a new car or continue to drive my 10 year old car, which works fine, but I’d like something that can haul stuff?” Its not for your realtor to decide for you.
My only problem with realtors is what they charge, especially back in the boom times of 2 years ago. My father used to be a realtor and before the day of the internet, used to do 3 times the work to show houses and list houses. Property values are gone up 5-10 fold (and accordingly commisions), but the work has gotten much easier. Even he thinks realtors were way overpaid back in the boom days, when all they had to do was throw a property on MLS and within 48 hours you would have people tripping over themselves to write an offer over list, and the realtors would pocket then a tidy 3.5/1.5% of the sale.
In all fairness, there are good times and there are bad times, I suspect times are leaner now for most everyone involved in real estate. I don’t believe all realtors are slimy, some do provide a good service, provided you’re willing to pay the hefty premium for them. Remember at the end of the day they are there as a sales facilitator primarily (no matter what they would have you believe), but as such don’t blame them for selling you a house when prices are still going down, you have to be smart enough to inform yourself of market trends and decide when is the right time to buy for yourself. If you’re willing to jump into the biggest purchase you’ll ever make based solely on someone else’s advice, you deserve what’s coming to you, good or bad.
Balanced:
The only balance in our global economic arena is the fulcrum point of the “teeter totter” with greedy bulls on one end and fearful bears on the other.
Up and down and up and down, ad nauseum. Ever notice that even children get sick of the mundane nature of a seesaw after about five minutes?
Without government intervention into loose lending practices and rampant unbridled speculation bordering on insider trading, this will never end.
Booming and busting is not balance. It’s insanity. And it results in much hardship for many working people that would otherwise just be inclined to work hard for an honest living, raise families and save and invest a little bit for retirement. But these people are loathed by the uber-capitalists who don’t generate anything or produce anything besides ‘doomed to pop’ inflationary bubbles of paper wealth everywhere they go.
Those who cheer capitalism, ironically, are often on the OTHER side of the thin red line that first divides the middle class then expands to erode it away completely. 10% go up to the upper echelons, while 90% go lower and lower. But if you ask around, 90% will secretly hope that they are on the up and up. 70% of Albertans polled said they were not benefitting financially from the boom. 7/10 people. Yet they all run to the polls and vote for a government that is in bed with big oil. A government that focusses on appeasing the oil giants to keep unemployment numbers and oil revenues looking good while letting education, healthcare and civil infrastrature erode and the environment to get raped and pillaged. You see, the Alberta working class are like the “new kids” that just got into a pyramid scheme that promises everyone untold wealth. They just keep dreaming about the promises and never do the math or look where the money really ends up.
That’s why I still get folks asking me to come to “a presentation that could change my life” and when I ask “Is it AmWay?” they pause, red faced, and say “Uh, no…”. Sure it’s not AmWay. Everyone is looking for that HGTV good life on three hours of work per week. Everyone wants to be the flipper. The landlord. The winner in the ponzi scheme. The top of the pyramid scheme – the top of the economic food chain, eating the smaller members for lunch as they climb to the top.
Albertans are a sturdy lot. They have to really focus hard on their profits to ignore the literally criminal behaviour that we as a society permit just so they can sleep at night.
I don’t hope for hyperinlfation. I don’t hope for major crashes. What I hope for I will never have – a society that indeed has balance with responsible governments that put controls on the “uber capitalsts” that wreak utter havoc on economic systems with “teeter totter” speculation games while creating fragile paper wealth by shorting stocks and hedging bets. Someone needs to generate tangible goods and services for a country’s economy to be strong. The uber-capitalists call these people dumb dumbs. You don’t BUILD anything to build wealth, you build it on the backs of others who do, right? Use OTHER PEOPLE’S MONEY to invest right?
Well, our governments should leave the uber-capitalists out in the cold for the wolves to feed on instead of bailing them out, and perhaps instead reward entrepenerial business people trying to grow companies that promote economic and workforce diversification and real, not imagined, wealth.
Ah, but dare to dream.
Cheers,
E-town
Amen to that E-town. I’m not hoping for a global economic meltdown, but boo-hiss to bailouts. That’s simply rewarding those who over-exposed themselves with unneccessary risk and punishing those who tried to live conservatively withing their means. But that’s another topic for another day…
Those speculators who weren’t smart enough to get out will get what’s coming to them, done in by their own greed.
@Etown, although there are some points in your response that I would debate, I admit that your perspective is very well thought out.
Thanks Sheldon for maintaining this Blog as it gives us good highlight of what is happening in the Edmonton market.
Looking at the migration situation(if it is still going to increase with the slowdown in projects) I still believe the jobs that are now left are mostly $15/hr or less. Also being part of the bank industry I now believe increasing amortization was a grave mistake by CMHC .
IF prices were going up in 2006 and if there had been no possibilty of 30,35 and 40 yr amorts the common man would not have had the ability to be stuck in the situation they are in now. The rise in prices would have been controlled. By allowing increase in amortization they allowed a person to extend themselves a little more in debt.
CMHC curbed the amort to 35 yr after seeing the consequences of the market turmoil. I feel 25yr amort was the right thing. I will not give my opinion on the current market situation as I don’t have a very good one (and no I have not lost money as I bought in 2005 if some bloggers think I am bitter. Banks are now begining to see cust come back for skipping their payments on new mortgages and it is only going to get worse. If people are thinking of moving doe to better opportunities they will either have to loose out on the house or sacrifice on their prospects. It hurts to see people going to private mtg corporations with lesse regualtion and higher rates which just speedens the process of them going under. It is amazing how careless the credit market is ever heard the ads on radio for some car dealerships which inform people they can get credit easily for buying cars from them ?? I know that there are many vacant homes which will spring up in the market again in the Spring but I dobt if ther going to be new comers buying anymore into this market especially if they are aware of what has occurred in Edmonton.
If you do not plan to move in 5 years from Edmonton, I think you are better off paying rent(saving on property taxes, maintenance, condo fees etc) because if you do have to move imagine the prepaymnet penalty + realty fees + market changes that could actually put you in the negative.
I feel strongly the high amort should not have been allowed and now if CHMC reduces the amort periods back to 25 years. I can assure you market will take a major hit as people will not be able to afford the current market on 25 yrs(Sorry I keep repeating myself).
Thanks aging for maintaing this website I review it on a monthly basis.
As E town mention –” 70% of Albertans polled said they were not benefitting financially from the boom. 7/10 people. Yet they all run to the polls and vote for a government that is in bed with big oil” –
It makes perfect sense as the prices have more than doubled in the last 3 years howvwer the average income ( if you exclude oil related jobs) have not double in fact some of us hardly managing to beat inflation caused by the BIG OIL. Why should common Albertans pay for this when outsiders come in make more money and cause inflation for all of us and leave us with the mess for other opportunites outside Alberta. Albertans have suffered more by paying way more for property taxes, groceries and higher mortgages to support the OIL industry( some additions to these are increase in drugs and crime, big trucks zooming past you, incrased co2 emissions etc.).
E-town once again you hit the nail on the head. Thanks.
Humbly yours
“Why should common Albertans pay for this when outsiders come in make more money and cause inflation for all of us and leave us with the mess for other opportunites outside Alberta. ”
Because they live in a province that has one use. Pump Oil or work at the Tims … if you are here to do anything else then you should be in another Province (a nicer Province). I am exaggerating of course and I %100 agree, but honestly look around … Alberta was built on a “fast buck” mentality. Cheap homes, cheap infrastructure, a laughable service industry, etc …
Step 1 – get in
Step 2 – get out
Step 3 – count money back home
No one gave a crap in the last few booms and no one gave a crap this time around.
Alberta could be so much better … too bad.
Hmmmmmm….if only 30% of people benefited of the boom in Alberta, than only 30% will suffer, if bust comes or oil prices will go deep down.
That’s not much. Will not effect RE prices that much.
That means if I want to rent until RE prices will go down to my comfortable zone, it might take a decade or more.
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Edmonton recorded a 12 month drop of 7.7 per cent, which was the largest annual decline since May 1985, Prices declined by 1.7 per cent in Edmonton from September to October 2008.
Calgary new home prices record biggest drop in almost 17 years
And there’s no indication that the downward pressure on Alberta R/E prices will abate any time soon, quite the opposite.
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