Tuesday, August 28, 2007

Reality sinking in.....

Somewhat, if not entirely....
First, today's Edmonton Sun mentioning on their cover page what we have been saying here for a few months. Edmonton is toast. The official MLS inventory is now over 9000 and although no sales numbers are available, they can't be great. Or we would have heard from someone....and anecdotal evidence strongly suggests otherwise. I've seen nothing sold in downtown Edmonton even though now listings continue to pile up, although the rate of increase has definitely slowed.
My take on the prices is simple- they are too high for this city. Tar sands, upgraders, cultural mecca, plethora of recreational activities and 'the most beautiful city on the face of earth' notwithstanding. If Edmonton Sun is openly talking about $40k reduction in home prices, how do you expect someone who bought in May this year-about the very peak-to react? Almost half of the down payment gone?
Or what's it going to do the balance sheet of ATB?
They believe that everything is going to be okay for them, as they have very limited sub-prime exposure. Where did we hear it the last time? Somewhere around 600 kms south of Edmonton.
They say "ATB mortgages do not exceed 90 per cent of appraised value." This has to be a really funny statement. First, what is the appraised value? Appraised by who? Greedy flippers? Or avaricious mortgage brokers interested in boosting their commission?
And secondly appraised at what time? May 2007? Or some other date.
But they are still a provincial crown corporation and they'll get bailed out of all the mess. No matter how bad they screw up.
And 'We are very different' Calgary has shown a very significant drop in the prices. The average price is down by $17k. May be Calgary isn't so different after all. The median, which has been falling for three consecutive months, fell by another $5k this month. But none of this will matter to anyone in Calgary as Calgary is just 800 kms south of the 'biggest resource discovery' ever made by humans. And only 300 kms south of the biggest refining/upgrading projects to be ever built. So what if Edmonton is toast. Calgary has mountains and it even had the Olympic games once. It's more like Vancouver, no a lot better than Vancouver because it has a stronger economy. So prices can't really fall here, just as they can't in Vancouver.

Thanks all for a wonderful week of discussion and useful links and tips (the links in this post are all fixed now).
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