Edmonton is toast, Calgary is almost there....

...but the season of denial still continues. Despite record low sales, record high inventories, noticeable fall in prices, a lot of people still want to believe that this is a healthy, normal market. Wow!
And the seasonal trends witnessed during the last several years will return, despite the clear global liquidity crunch, an enervated oil and gas sector, clear signs of job cuts in the US and an overall change in the mood in the financial markets.
Why? Because we are in the very late phase of a bubble in which tales of stupidity woven by the 'vested interests' (media, banks, real estate agents, brokers etc) were taken to heart by thousands of speculators and 'investors' who could not see any problems with 50 to 100 percent YOY appreciations.
It's a theoretical possibility that someone will wave her magical wand and clear the still burgeoning inventory from Edmonton and Calgary in the next few months and give the much needed spring rally. I don't suspect it's going to happen though.
The fundamentals are totally aligned against this market yet both sellers and newbie landlords have totally unrealistic expectations from towns in the middle of vast prairie land.
But one cannot blame these real estate 'investors'. The real estate market bubbles take years to build and years to unwind. Unlike the stock market or commodity market bubbles which can wind and unwind more rapidly. Even more fundamentally, the 'mark to market' process for real estate is much slower and arbitrary.
After all, nobody can force someone to say that their property has fallen by 20%. People can continue to have delusions about their real estate wealth for long times after the paper wealth has disappeared. And this unfortunately prolongs a market turn around. Not that we are anywhere near that situation in my opinion.
Price declines will continue as lending standards tighten and the realization of a changed marked drives 'investors' and first time buyers away. There will still be plenty of knife catchers around though who will find that a detached 1200 shoe box in Edmonton has fallen by 25% and costs a mere $330k.
The shroud of secrecy around the monthly numbers will be lifted today and we'll get some more data to play around with. And I do like the idea of someone becoming a real estate agent for the sake of numbers. It's funny that in year 2007, a lot of organizations in our country still take pride in exercising authority by withholding information. I'm willing to chip in $100 to anyone who volunteers to become a realtor for the sake of giving us the daily/monthly numbers.