Monday, November 3, 2008

No Subprime in Canada yet Sales Plummet in Calgary

I've been very busy last week or so....this post from 'rjt' puts things into clear perspective:

If you read my posts over the past couple of months, I predicted that the end of 40 year mortgages and zero down mortgages would create a major gap in buyers. I figured that since 40% of mortgages originated in Calgary in 2007 were the 0-down, 40 year variety, when these went a way, sales would drop substantially.

Well, the numbers are out, and while there are other factors in play, it appears that sales volume did fall off a cliff in Oct 2008.

Sales Volume (old criteria of combined SFH and Condo, from BT’s site)

Oct 2001: 1821
Oct 2002: 1930
Oct 2003: 2021
Oct 2004: 2135
Oct 2005: 2584
Oct 2006: 2122
Oct 2007: 1944
Oct 2008: 1442

How about days inventory?
- This is calculated based on month end inventory from BTs site, divided by monthly sales, multiplied by 30

Oct 2001: 101
Oct 2002: 95
Oct 2003: 121
Oct 2004: 100
Oct 2005: 46
Oct 2006: 96
Oct 2007: 154
Oct 2008: 226

Look at Days Inventory over this year. Impressive October!

Oct-07: 154
Nov-07: 148
Dec-07: 148
Jan-08: 134
Feb-08: 131
Mar-08: 148
Apr-08: 162
May-08: 171
Jun-08: 159
Jul-08: 160
Aug-08: 167
Sep-08: 161
Oct-08: 226

A huge number in October 2008, way above anything we’ve seen in Calgary since at least Jan 1999, which is where my data set begins. The second closest month had days inventory of 171 (May 2008).

People, disregard the spin from the media about a “balanced market” and “normalization” and all those other bullsh-t sales pitches. If you are in the market for a house, make sure to low-ball big time, as you are likely the only potential buyer by a mile.
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