Monthly Archives: July 2012

Summer break

Summer is here in all its glory, so I’m taking a break from blogging for a while. That is, unless something dramatic happens in the Calgary housing market, but I don’t see anything earth-shaking to be imminent. The raw data at SFH stats and Condo stats will continue to be updated as time permits.

Market update July 1-15

Although the mortgage rules changed on July 9, this past week(July 9- 15) would have been the period where a lot of the last-gasp deals were finalized and showed up on the books. The 30-day sales-to-new-listings ratio today is at 77%, the highest it’s been in July since 2005, but I wouldn’t read much into it.  I attribute it to the fact that a preoccupation with Stampede prevented people from listing their homes, while at the same time, a flurry of sales which were conceived 10-15 days ago were being finalized. I’d expect to see a lot of new listings in the coming weeks, with not so brisk a pace of sales. Compared to last year only, sales were up 37% this past week, while new listings were down 10%.

I’ve long maintained that average prices are a poor indicator of the housing market. Here’s a story that goes a little further  Average house prices don’t tell the whole story.

Sucking and blowing

Have you noticed something missing from the bubble blogs over the past few days? Conspicuous by its absence?

When sales are robust and prices are climbing, it’s a daily occurrence to hear that the real estate board’s stats are unreliable. An untrustworthy source of information. You know, cooking the books.

Now that sales and prices are declining( a normal occurrence in summer), we never hear mention of it. Suddenly, the real estate board’s numbers are infallible. Impeccable, trustworthy, and incapable of error.

Sucking and blowing, both at the same time.

******
It’s football season – again

Three times the mortgage rules have been tightened with little change in sales or prices in the Calgary market. Three times the blog dawgs were in a feeding frenzy for a few days. Three times they lined up to make the kick. Three times Lucy pulled the ball away.

For a fourth time, they’ve all lined up. What will be the result this time?

Go Stampeders!!(except when you play the ‘Riders :) )

******
Examples of the trustworthy stats

A zealot from TheGreaterFool.ca, ironically with the name Questioning Calgary Stats left an anecdotal comment today: “Some comments on this blog provide examples of people who bought in Calgary in 2008, 2009, etc. and can only sell for a loss today.”

Let’s look at the facts. Over the past three days, 25 homes have sold which were puchased originally in 2008 – 2009. A total of 16 sold for more than the purchase price, or 64%. Not surprisingly, it appears that only the losers go to TheGreaterFool.ca.

******
Bidding wars update

Over the past three days, 11% of homes sold for list price or higher. A tear-down in Rideau Park sold in one day for $30,100 over list. Selling price was $880,000.

Market update July 1-7

If previous years’ patterns hold true, July should be the month where sales and prices start to drop. It’s already evident from the statistics when compared to the last few months, as single family home sales for the first week of July were the slowest start to a month since March, but compared to the past three years, the market is still vibrant.

Rents will be going up

(aka “Be careful what you wish for”)

“We recently moved into a new rental. The search was brutal. We went to numerous open houses and met numerous landlords and they all had plenty of people to choose from and even though we’re desirable renters it’s largely a first come first serve situation and involves a lot of luck…wow it was shocking how many renters and how few properties are out there.”

Two stories were on the CBC’s Eyeopener this morning about the difficulty in finding rental accommodation in Calgary.

“…101 people viewed the one bedroom beltline apartment Gonzalez had his eye on. Fifty people filled out applications and, after two interviews and a stringent screening process, Gonzalez landed the suite — a gruelling process he’s never been through before.”

Darren Paddock, the co-owner of RentFaster.ca, advises renters to find ways to help them stand out from their competitors because properties are going fast. He says “These people are getting a number of applicants in two to three days time…It’s really hot, we’ve never seen it like this before.”

Paddock also says an influx of workers and tighter mortgage rules are to blame.

Once again, we see the law of unintended consequences rear its ugly head. With the new mortgage rules making it more difficult to buy a house, people turn to renting, with the result of higher rents and a shortage of accommodation.

What happens next? Investors start finding it more attractive to buy houses/apartments and rent them out. The increase in demand for investment property will in turn put upward pressure on prices.

The vacancy rate in Calgary is already at a very low 1.9% and is predicted to tighten even further to 1.5% by 2013.

Read more Calgary renters struggle to find vacancies

A Calgary Herald article back in February was warning of a coming rental crunch:

Research at the University of Calgary noted that from 2000 to 2008, an  average of less than two per cent of all new dwellings constructed in Calgary  were intended for rental accommodation.

It also pointed out that from 2001 to 2009, Calgary lost about 7,500  apartment units to condo conversions. The “lack of rental housing construction  meant that the condominium conversions contributed to a 19 per cent loss in the  absolute number of rental housing units between 2001 and 2009,” the report  said.

Read more: Falling vacancy rates raise fears of rental crunch