Calgary Real Estate Today...
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The Daily Realist
a blog written for the smart and the savvy
in Calgary, Alberta Canada
What we do on a rainy weekend in Stampede week...we interview each other!
Wendy: What would you say about the market today Bryan?
Bryan; I don't know, its confusing, but what I do know is that there is NOTHING for sale.
Wendy: So when there is nothing for sale and we are in the summer doldrums and oil patch downturn, what happens?
Bryan: Normally prices would go up, now however, it could well be that there is a cap on prices due to uncertainties in the job market.
Wendy; So what we are seeing then is that interest rates are so compellingly low that unless need becomes dire, people have no incentive to sell?
Bryan; Exactly and on the other side of the coin, some people think that 2.5% interest rate is compelling, but buyers are also cautious, they can fix a rate and wait. They are prepared to stay where they are unless they think they have seen the bottom.
Wendy; We are seeing multiple offers on the low end listings and little or no activity in the mid to higher end properties, other than low ball offers. Do you think the investor bargain seekers are driving the REAL ESTATE bus now.
Bryan; Certainly there is a preponderance of handyman investor class buyers. Not necessarily from China or India, most of them are local residents.
However the high end is getting thinned out too.
Wendy; Yes, I guess we have to remember that not everyone is in the oil patch but its misery is affecting other sectors like retail and restaurants, builders and anyone who was going to spend money but now isn't.
Bryan; What I do know is that Real Estate is cyclical and nothing remains inert.
Wendy; Yes, and now we have all those Millenials who are ready to buy, with their PHD's tucked under their arms, they want a piece of the pie now.
Bryan: Do you think they will let their parents live in their basements Facebooking and playing Pong?
Busy Busy busy in the bottom end
Lots of folks buying almost any single family home under $400,000.
The upper ranges remain difficult to move but if a house is in the right location and at the right price, buyers are willing to jump in...why who wouldn't with interest rates as low as they are today.
We have a number of handy man specials right now.
One in Dover on a nice street but the house has been horribly abused. This one is a gem so roll up your sleeves and prepare to make yourself some sweat equity.
The other one is in Marlborough and it will come on tomorrow at a compelling price.
These properties are either owned by the bank or are judicial sales. This means that everyone perceives them to be a great value and last night we had a listing sell with 13 offers in competition with each other.
Another one went to court and after coming back with sealed bids the townhouse sold for way more than its list price.
Please call your REALTOR(r) to have a look, but if you don't have one we have some very talented and smart, sharp negotiator Buyer's Agents that we can refer to you.
Everyone asks me, are the numbers up? I bet there are a lot of empty houses. There must a a whole lot of foreclosures in Calgary now eh?
Answer; Well, no. Sure the numbers are up today, the count of foreclosures either directly from the lenders or from the Court of Queen's bench is 107. Yes, that is double from last year but no where near what people expect to hear.
Foreclosures with a direct link to the energy sector have not materialized. Some marked differences between previous housing price crashes...the great depression of 1982 and the self made mortgage crash of 2007 to today's situation is the information and the speed of it and the interest rates. In the early eighties the interest rates were in the stratosphere, rates as high as 17% were common. We didn't have computers to gather and sort information. In the 2000's we were all blindsided by a mortgage derivative scheme that no one saw coming.
This situation, the sinking of the energy sector has been long awaited and feared, we are not stupid, we know that the world has been convinced that the petrochemical industry is the worst of all evils. Brighter minds than mine see the bigger picture involving manipulation of world money markets and flagrant persuasive use of the true American heart of patriotism to sway loyalties and march into war...oh dear I am way off track here.
Back to this blog....I also believe that some large lenders with savvy asset managers are clearing the decks of the usual clog of foreclosures to make way for foreclosed product coming into the market when
severance packages run out and when the possibility of new employment dissipates.
Colouring outside of the lines
In these uncertain times in Alberta selling one's Real Estate demands a strategic plan and, a creative approach to marketing. Sometimes the creative approach is simply the ability to price your property at a compelling level. I say simply but simple does not equate with easy.
A lot of research will go into pegging a price on a moving target and that is what the Real Estate market in Calgary and area is right now, a moving target.
Each day new global events affect our backbone industry and it is definitely our weakness to be a one trick pony. However smart minds are seeking diversifiction to replace, enhance and begin an evolution to different employment.
I hope it isn't a hideous wind farm idea...here's a thought, someone should come up with a wind powered energy creating device that everyone will want in their back yard and that won't kill wildlife. I have seen the huge horrific looking wind farms that turn north of Palm Springs. I do not want that in my backyard. We have solar options I am sure but to be real, these options need to be unseen.
Unemployment is getting worse by the day as layoffs occur in the oil industry and its service satellite employers. We have no back up plan.
So things aren't looking up for Real Estate.
There are a few ways this could all work in your favor.
How? You say, as you take your head out of the oven.
1) Firstly Real Estate dollars aren't real unless you are cashing out and moving away to another market,
If you are staying here but changing lifestyles wouldn't it make sense to analyze your current value, reduce that by 10% say, know how low you can sell, then buy first; flaying open the seller until they bleed and get your best possible price, oh and add a condition or two.
Then put your house on the market at a compelling price. Don't worry about what your neighbours are asking for theirs. Remember there is often a huge difference between asking and getting. Someone will come along and try to beat you up for price but you have already beaten yourself up and a line up of buyers is beginning to form.
2) If you are disposing of an estate and it is to be split 4 ways... do the math, your equity loss is lessened by the others and your loss is only 25% of the total 'loss' and that is not as painful as taking the hit alone.
3) You are retiring to Victoria to begin growing palm trees. That sucks, your timing is off but you do have the luxury of time...wait a few years, or suffer the loss now. Remember though the loss from value at the top of the market was only a loss of expectation.
4) You are just buying into the house market, wow, you won the lottery of choice, no hurry, work the sellers to your price. Houses aren't going anywhere and never chase a deal.
Calgary is getting a NEW Greenline. YES a train from north to south.
check it out on you tube click the link below.
by Wendy Morrow
May 12th. 2015
Well its been quite a shock, not just losing the hockey playoffs but electing the NDP in Alberta.
But the world didn't end. The Real Estate market is waiting for the new government to make some gaffs I think, but the planet is still revolving and after all people have to live somewhere. Housing is still affordable in Calgary. Mostly due to interest rates of course not because CMHC makes lending more difficult.
Somehow we always find a way around it.
Here is an idea. Governments don't make the people, people make the governments. Right after the election of a very left government, we got all kinds of sympathy cards from our exNDP neighbouring provinces, where their left leaning governments raped and pillaged the coffers with handouts to union interests and taxed the corporate weath until it bled and left town. But wait a minute, we already had our coffers pillaged by our right leaning previous government so what the new government would be wise to do is just lie in the weeds for 4 years and keep the status quo, get the people to like them before they let the guillotine fall.
However, we are Albertans, we are a different kind of population, we are generally independent thinkers and don't take guff from anyone. This will be a new world experiment or it could be if everyone plays along.
I am putting my money on the people, the people won't let the government kill the goose, we still need our golden egg.
April 24th, 2015
This update is long overdue but because of our busy practice and my involvement with the Calgary Real Estate Board as Director and Treasurer, I haven't had any down time to write this blog. Contrary to the doom and gloom stories told by many REALTORs(r) our business has been swift. Our listings don't languish on the market but are sold in a timely fashion for top prices. Why? Its all about pricing, presentation and pinpoint marketing. We monitor the market activity and graph the critical information like months supply, reductions versus new listings, and this information helps us evaluate property and get it on the market at the right price. You as a seller may be inclined to throw a dart, guess or take a stab at a list price if you haven't been shown what the real activity is and how it will affect your property's saleability.
I am having trouble with my screen shot software today to show you how many reductions are impacting the market but the data is this; in the past 7 days 651 price reductions compared to 955 listings,and exactly 651 sold properties, of all descriptions. The story is, price it right and it will sell.
High end Real Estate has taken a harder hit than the bottom or starter end, Why? possibly because the higher valued properties, those $750,000+ that are for sale are less likely to be occupied by teriary oil industry employees. There is a broader employment base of homeowners in the lower end of the market. People in the service sector, labour, health care workers etc are less likely to be transferred or immediately impacted by an oil blackswan. They are vulnerable however when the market gets bad as it did in 1981.
Today oil is $55 a barrel and may wander around $15+ or - that price. We will survive and accommodate a new norm. There are some good deals out there...like our foreclosures that come and go so quickly that if you haven't made time to come in for an interview with us and are on our preferrred buyer list, you may miss.
A beautiful, well kept home priced right no matter what the market niche it is in will always sell for top dollar, and no matter what the prognosticators say there is always a buyer for such a property.
March 27, 2015
Land Transfer Tax? We just got a 'lite' one in the provincial budget, I think the door is open to introduce the BIG ONE next time. This of course has to get approved and then ratified. But...who else are we going to vote into power at our next election. Can we do better? You bet we can but no one is willing to step up. I would like to see some of the 'fat' and entitled appointees get trimmed first.
Fees Prior to July 1,
($50 + $1 per $5,000
Fees After July 1,
($75 + $6 per $5,000
Land Title Registration
If you are planning to sell, do it now. Land transfer taxes, no matter what costume they dress up in always paralyze a market for a little while.
Check out the CD Howe report when the Ontario government brought one in and then the City of Toronto took their turn.
February 09, 2015
Do you ever long for the old days? You know...yeah, that's right, the days when tomorrow was probably going to be mostly like today and next year would most likely "feel" like this one and when it cost 5 bucks to fill'er up, the bank manager knew your name and hey, when you could actually put a dollar in the bank and that bank would pay you interest for the privilege of being able to use it? Now, of course, you have to pay them in many countries and in this one it's almost that bad as well so we ask...do you ever long for the old days?
We sure do! And...speaking of interest rates, there are 5 yr. mortgages out there now for 2.79% and, in some cases even lower if you can act fast or jump through a hoop or two but we do know - 2.79 is out there everywhere.
Will rates go lower? Sadly, we think they may; perhaps even a point lower by year's end for it seems the world is broke with limited prospects for the future. On top of that too, we have governments who think it's wise to trash their currencies and, who also think it wise to print money ad infinitum so that they can give it to banks to buy government bonds with. It's crazy we know but guess what...we have knaves and fools running the world now...haven't you heard? So with that in mind, let me say, this too shall end. Trouble is, when it does...it will not be pretty but that day is likely some years away so in the meantime...party on dudes!
For those who like visuals, we've posted some rate charts on the Charts & Graphs page so have a look. In the meantime, and in the words of the great Art Cashin, stay alert, stay wary and very very nimble!
Thank you Art and yes...thank you all for taking the time as well.
December 13, 2014
I must admit,
I got real “twitchy” the past few weeks watching oil literally crash by $50 or
so per barrel, with more probably to come before it’s over. Naturally, my
knee-jerk reaction was, “Oil has crashed, jobs will be lost and house prices
To prove our
hypothesis, I went back to our charts and, to my great surprise, “It Ain’t
Necessarily So” (see graphs page). When we looked at the housing crash circa
1982 – 1985, it is true; oil prices did decline somewhat during the period
but…did not crash until March of 1986. By that time, real estate was in
recovery mode and, while the ’86 market was somewhat slow, it was back to
normal come 1987.
And again, in 1998 when oil swooned and we all thought The End was
coming, house prices kept right on marching sideways to higher. When oil
crashed in 2008, it is true…real estate prices declined briefly by 18% but
quickly recovered, as did oil.
Therefore, and try as we might to find a correlation between weak oil
and weak real estate, we cannot; and even though there may have been some
correlation the last time oil headed south, and we doubt there was in reality,
one out of three is not good enough for us to predict a major decline in the
Calgary housing market. However, it is likely we will see an uptick in layoffs
and, for sure, more For Sale signs and yes, fewer sales, at least for the first
6 months or so. In other words we’re likely to be in for a slower market than
what we’ve enjoyed for the last number of years but…it does not mean we’re
headed for a crash or even a good decline. For that to happen, job losses would
have to be catastrophic. We don’t think they will be. And, if the past is any
guide to the future, we would expect oil prices to rebound within a year into
say, the $75 or $80 range. As they say, “The best cure for low prices is…low
November 29, 2014
First of all, my congratulations to my dear wife Wendy on her re-election to The Board of Directors of The Calgary Real Estate Board. Wendy works hard at that task and, I must say, she handles herself very well at the table in amongst all those guys!
On to other matters, it didn't take long for me to change my opinion to "bearish" on the outlook for oil prices and, by extension, housing prices in our fair city. It seems OPEC are in no hurry to cut production so that spells glut in our books and yes lower prices for the foreseeable. This will mean job cuts for sure come Spring and a soft housing market in spades.
The end of the world? Not at all. But sure, we could see a rather healthy correction before this is over.
November 16, 2014
Albert Einstein once said, “I know not with what weapons World War III
will be fought, but World War IV will be fought with sticks and stones.” Of
course, we hope and pray neither event occurs but frankly, we are becoming less
optimistic about the prospects for peace breaking out as each day passes with,
it seems, one aggressive act after another being committed by all concerned. So
we prepare for the worst and hope for the best and trust that at some point
saner heads will prevail.
On a lighter but no less important note, the price of oil is down,
which for many of us is, or may soon be, a cause for consternation. We think it
might, as it seems clear to us that our “friends” to the south are intent on
making life difficult for The Russians by deliberately flooding the market with
crude in order to depress the price. Call me paranoid if you wish but that’s
how we see it as of now. Further out though, we expect this gamesmanship in the
oil market to be rather short lived as the fracking side of the business in
North America will shut down if prices remain depressed and, with no Keystone
on the horizon, the U.S. would once again become vulnerable if that were to
happen so…look for higher prices and lower production by The Saudis by Summer ’15.
On top of that, it looks as though we are now in the middle of a full
blown currency war, with Japan doing its best to commit financial suicide by
printing the U.S. equivalent of 3 trillion dollars per year! The yen, of course
is tanking and the other countries in the region are reeling because their
currencies are now uncompetitive. Can counter moves by China, Korea and the
rest be far behind? We think not.
Next up will be Western Europe and again, our ‘friends” to the south,
who we expect will be back at the printing presses again before next summer.
And then, and then, we take note of the fact that Russia & China are buying
about 100% of the world’s gold mining production every year – which is to say,
about 2,000 metric tonnes per year, with India and the rest of the world lining
up for the scraps… except for us smart folks in Canada. We sold all our gold
years ago because it was a “financial relic”. And oh yeah…the price keeps
dropping even though bullion is now in short supply. Go figure!
And finally, and back home in Calgary, we take note of the fact that
apartment rents are now about $2.00 per sq. ft. or more per month! That
translates to at least $1,200 a month for a small 1 bed unit. By way of
comparison, that $1,200 will now pay for a $428,000 mortgage so it remains a
mystery; why would one rent when, for the same monthly payment they can buy and
perhaps make 5 or 10 percent or more in tax free appreciation because with
everyone doing their best to trash their currencies, the smart money has
figured it out: the only true stores of value are those assets which one can
touch & feel; and residential real estate is at the top of that heap
because you can also live in it and…if & when you sell, the tax man will
not be there on moving day with his hand out waiting to steal your money!
October 27th, 2014
"Its a privilege"
Not just anyone can call themselves a REALTOR®. This s a trademarked name and used only by those licensed real estate professionals who are members of CREA.
You may find 'real estate' websites that claim to have information about your neighbourhood but if they are not getting their information from CREB
then it is not reliable information.
This time the Media got it wrong....
August 17th 2014
Media types are usually reactive to gossip and this time they read the stats published by CREB® to mean something that just wasn't happening. RED HOT Market screamed the headlines. Oh you guys in Real Estate must be making money hand over fist, is the cry at cocktail parties. (Wait, I don't go to too many cocktail parties, but that is what they tell me.)
So here is the truth. yes the market was good this spring, in almost all sectors but it was sensitive to price and that was reflected in the number of days to sell in most cases. What was a hot market was the very very high end. That is because there is a demand for those properties and a limited supply. In the average price range $500,000 to $600,000 the number of listings is increasing and we are watching the signs on the lawns swing in the summer breeze for weeks now.
In Calgary, the market is fairly predictable. Usually a good start to the year with buyers picking off the bargains in January, a surge of selling in February, new listings driving up the prices in March through to May, Then the market slows somewhat towards the end of June and becomes very sluggish through-out the summer. Fall sees a gain in listings and the buyers are active till November. The market slows down, both in the number of listings and the number of sales until the end of the year and the cycle begins again.