Back to School Sale-35 Per Cent off in Calgary

As you might have noted in the Daily stats. We have heard several stories of people getting more than 20 per cent off properties of interest to them. But 35 per cent means either the property was seriously over priced or the seller was pretty desperate. Or could it be an error like the ones you find in the Sears catalog?
But in any case, August 2007 was a slow month, yet this month is likely to be slower still, at least in Calgary with approximate monthly sales of 1175.
No spring rush, no summer rush, no bottom and the Sale has just started.
The markets will be good to those who wait for the right time to buy.

Is housing influenza infecting Calgary?

No, no and No, as per this Calgary Herald article. Of course, MSM is losing its relevance with every passing day and such senseless rehashing of REIC perspective will only hasten their demise.

“I don't see a lot of price decline on a year-over-year basis in Calgary. I think we're still a pretty healthy economy and still a pretty healthy housing market," says Legge.

By which metric, one has to wonder. Median prices. Down. Average Prices. Down. Median price for condos, down? Pick any metric and it is down YOY.
Can they actually find a property that has increased in value since last summer?
All I see is a glut of inventory and a lot of reductions in prices.

Someone has to tell them that it wasn't the healthy economy that drove prices to stratosphere. It was the worldwide credit bubble abetted by the local tales of 'we are different here' that drove prices this high.

The other perma bulls are still throwing their wild predictions:
“And in the long-term, real estate here looks great, says Campbell, adding year-over-year average house price gains in Calgary should be in the 11 per cent range this year.”

Obviously, in the days of easy credit, liar loans and speculation driven mania all such predictions hold true. But when it costs 2 to 4 times the rent to buy, the average income can’t afford the average house, there’s a gluttony of inventory and houses are still being built like it's 2005 and credit markets are tightening worldwide, it's an act of desperation to make such statements.

Why do all real estate stories have the happy ending of perpetual 5 to 10 per cent annual increases? Are such increases a divine revelation? Why is there such a belief in this? Such patterns have been repeated at numerous other places in a lot of different eras. Especially, when they all believed that their city or locale was different.

On a different note, It’s been quite a while since I wrote the last post. I’ve been busy with numerous usual things, but I’ve been impacted by a few serious illnesses in my close circle of friends and family. That distracted me quite a bit from the real estate stuff and made me prioritize a few things. Yes, real estate is important, money is important, too much debt is bad, 40 year mortgages are bad; but poor health is worse than all these. Warm weather will hopefully come sometime this year, so when it does arrive, do take the time to go out and enjoy some outdoor activities that you like. Quality time with family and good health are two things that should be at the top of our priorities, certainly way higher than blogging, for both bulls and bears.

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.