Category Archives: Predictions

Market update July 2014

Inventory vs sales and price2
As always in the summer, the price dropped slightly in July. Sales activity is still strong, and more homes are being listed compared to historical averages. Inventory is still low. 19% of homes sold for list price or higher.

If you bought an average home in Calgary in July 2013, the price has increased $29,000 in the past year.

Where will Calgarians be buying holiday homes?

The iconic Three Sisters near Canmore, AB

The iconic Three Sisters near Canmore, AB

An article in the Invermere, BC newspaper touches on the subject of real estate values in resort communities such as Canmore and Invermere. The reporter sought input from me and the reknowned expert Garth Turner of GreaterFool.ca fame. Columbia Valley Pioneer “Real estate market in valley may not be stable expert warns.”

The market in Canmore has turned around remarkably in the past six months. Inventory is low, attractive homes are selling quickly, and Calgarians are buying them up. Prices are on the increase.

Ontarians to move to Calgary in droves

The election of the Liberal majority in Ontario has just ensured a continued shortage of housing in Calgary along with increasing prices.

The Twittersphere is choc-a-block full of disillusioned entrepreneurs, trades people and others who will be immigrating to Alberta, the land of opportunity.

“If the Liberals win a majority, I will emigrate from Onterrible.”

“Ontario will be the next Detroit. Bankruptcy on the horizon.”

“Trades will come as there will no longer be a need for them in Ontario.”

Hudak: “I’m moving to Alberta. Good luck.”

“Would the last business in Ontario please turn out the lights (if you haven’t already been cut off for not paying your exorbitant bill).”

“A corrupt government under police investigation is rewarded with a majority. The province is corrupt at this point.”

“To all the hardworking refugees, welcome to Saskatchewan. Move to a place where hard work and initiative still count for something”

“How bout Saskatchewan? Us and Alberta are the two economic powers now. We will take Ontario’s trades and businesses.”

“here is a business case for distribution centres going west, who should I talk to?”

“What other companies will move to Calgary? Debt, taxes, electricity costs, regulations, unemployment, housing costs, HST. Plus the Rockies.”

“The move to Alberta is looking more and more appealing.”

“To the thousands of Ontarians who aren’t content with decline, you’re welcome in Alberta.”

“My prediction: before Wynne is done, a national bank will move its head office to Calgary. Ontario’s have-not status is the new normal.”

“Breaking: Ontario to be renamed Detroit”

Welcome to Calgary. I hope you can find suitable housing. Our inventory of resales is low, new build inventory is low, and the rental vacancy rate is nearly the lowest in the country. Competition for the few homes available is going to be fierce.

Calgary prices post-flood

It’s enlightening to look back and see what the experts were predicting about Calgary real estate immediately after last June’s flooding. One got it right, one got it wrong. Mike has the details on his blog http://calgaryrealestatereview.com/2014/06/08/june-1-7-2014-calgary-real-estate-statistics-trends/

The most serious threat to Calgary real estate

Trudeau

Justin Trudeau will follow in the footsteps of his father and demonize Alberta in order to get elected

“Screw the west, we’ll take the rest”

I have no doubt that previous strategies of the Liberal party will be resurrected come election time. It was Liberal Senator and campaign chairman Keith Davey who, in the 1980 election, summed up his party’s strategy as “Screw the West, we’ll take the rest.” Liberal prime minister Jean Chretien used Alberta as a foil for everything he claimed would go wrong if his Liberals were not re-elected in 2000, and it was Mr. Chretien who said he preferred to do politics with anyone but Albertans.

“It’s all Alberta’s fault.”

Trudeau6As we get closer to an election, and reality sets in, and Trudeau sees his support plummeting, he will do the same thing that his old man did to get elected. Demonize Alberta. Alberta has become the economic engine of the country, however, so there are serious consequences for the rest of the country as well.

Pretentious, vacuous, and bumbling, Justin Trudeau has the support of many Canadians based simply on his looks and his name. His platform consists of smoke and mirrors(legalizing marijuana). Trudeau and the Liberals stand for nothing except the goal of attaining power at any cost. Scarier still, Trudeau has most of the media eating out of his hand and asking him no difficult questions.

“Justin Trudeau and Justin Bieber have more in common than just a first name. Both guys are also adored by legions of love struck fans. Except in the case of Bieber the fans are teenage girls, whereas for Trudeau they are the Canadian media.”

In November 2010, Trudeau told a Quebec television show that he was tired of Albertans running the country and that, whether it was Jean Chretien or Brian Mulroney, Canada is better off when Quebecers are running the country.

“Canada isn’t doing well right now because it’s Albertans who control our community and socio-democratic agenda. It doesn’t work.”

Trudeau was then asked if he thought Canada was better served when there are more Quebecers in charge than Albertans.

Trudeau replied: “I’m a Liberal, so of course I think so, yes. Certainly when we look at the great prime ministers of the 20th century, those that really stood the test of time, they were MPs from Quebec… This country – Canada – it belongs to us.”

Trudeau3“This anti-Alberta attitude is deeply held in the Liberal party.” 

He’s also on the record for saying “…it would be a bad idea to abolish the Senate, because we have 24 senators from Quebec and there are just six from Alberta and six from British Columbia. That’s to our advantage.”  He is defending the status quo Senate because it gives Quebec disproportionate power at the expense of the West. 

Alberta has been a tried-and-true whipping boy of Liberal politicians. They have nothing to lose because there are no seats to be won by Liberals in Alberta, but they have tons to gain in central and eastern Canada. I expect he’s learned this lesson well from his daddy.

Baby Trudeau has accomplished nothing in his life except to charge schools and charities with speaking fees while he’s supposed to be in parliament, all the while collecting his MP pay from the taxpayer. Charities with lobbyists who later approach him for favours.

Will Trudeau Jr. follow in the steps of Trudeau Sr. and plunder Alberta?

Will Trudeau Jr. follow in the steps of Trudeau Sr. and plunder Alberta?

“Alberta will suffer if Trudeau becomes prime minister”

If he  becomes prime minister, Alberta will be plundered as occurred during the national energy program when real estate tanked and thousands of people lost their homes.

Two years ago, on the night that Stephen Harper was elected, I predicted on this blog that Justin Trudeau would become leader of the Liberals, and that our real estate values would be in jeopardy if Trudeau became prime minister. I have no doubt that as the pressure mounts for him to get elected, he will revert to the divisive style of regional politics that Liberals are known for.

“Justin Trudeau is a dabbler – he dabbled in teaching, dabbled in the arts, dabbled in acting, dabbled in activism. Now he’s dabbling in politics.” 

Trudeau has absolutely no idea what it’s like to work for a living. He is a silver-spoon millionaire who pretends to understand the middle class average guy. I hope there are enough intelligent Canadians who can see through the thin veneer of this airhead. He is an opportunist with little intelligence and no abilities. His most important decisions to date revolve around managing the $1.2 million trust fund which was bequeathed to him.

I hope I am wrong in thinking that Canadians would give this lightweight the reins of power on Oct 19, 2015. My greatest fear is that they will buy into the name, the looks, the hair, the smile, the youth, and completely disregard his agenda that will decimate Alberta, and consequently Canada.

“The best argument against democracy is a five minute conversation with the average voter” -Winston Churchill

Why 3 years?

‘The real estate executive says July sales statistics from a historical standard were “tepid” and adds the numbers gets “the big headline” because the comparison is to a period when housing sales were slumping badly.’

http://business.financialpost.com/2013/08/15/canadas-housing-market-the-one-that-no-one-can-predict/

If you’ve followed my blog, you’ll be aware that I’ve been comparing the present year to the average of the past 3 years when I compile the market updates. The story in the Financial Post illustrates the reason why. A single year can be an outlier, an anomaly. It can severely distort the overall picture when comparing to a single year.

In the same article, David Madani of Capital Economics gets thrown under the bus for his history of incorrect predictions. He’s been predicting a 25% correction consistently for 30 months. If the Canadian market declines 25% from today’s prices, it will be pretty much back where it was when he started his forecasts. Now that Harold Camping has met his maker, perhaps Madani can take his place at the table.

It would appear that CREA is the voice of calm and reasonableness: “Canadian home sales have staged a bit of a recovery in recent months after having declined in the wake of tightened mortgage rules and lending guidelines last year,” said Gregory Klump, chief economist with CREA, who expects August results will also look strong as they are compared to a weak 2012.”

Accolades to First Foundation

When Madani first made his prediction in Feb 2011, it was rebutted by a mortgage broker who wrote, “people are not over-leveraged, that our incomes are sufficient to pay our obligations, and that the fundamentals are solid for a good, old fashioned, boring real estate market where reality overcomes emotion and conjecture.” It wasn’t sensationalist enough to attract any headlines, but it was accurate. Why David Madani is wrong

I’m not sure how a guy like Madani is able to keep his job in the light of such incorrect forecasts. On Capital Economics home page it states, “we have gained an enviable reputation for original and insightful research.” Good thing they don’t claim that it’s accurate.

“Good news like strong home sales is potentially bad”

Skeletons2Anyone who’s followed the forecasts of the well-educated economists,  the pundits like Garth Turner, crazed attention-seeking bubble bloggers, or lowly realtors, the housing market predictions have been a comedy of errors(except for the realtors). Most would excel at being contortionists. Reversing direction so many times has produced dizziness and clouded analysis(see quote on blog header from Calgary Rip-off).

Porter: Strong sales means we’re drunk

The graveyard of bubble blogs

The graveyard of bubble blogs

All the bases are now covered. After reading for eons from guys like Garth Turner that the precursor to a crash is lower sales combined with higher prices, we now have Bank of Montreal chief economist Douglas Porter taking the opposite view, saying strong sales are bad news. “Canadians are already drunk on housing, so imbibing more means the inevitable hangover will be all that much worse.”

Madani: Persistent, consistent, and always wrong

“It’s astonishing to me that people are not picking up on this. If you see volumes crash and prices still rising, you shouldn’t be thinking everything is fine, you should see that as a warning sign.” David Madani from Capital Economics has been predicting a 25% drop in prices every year for as long as I can remember, and true to form, he’s back with the same prediction. I won’t be too hard on him, however, since he’s a Bugs Bunny fan. “Homebuilders are having a Wile E. Coyote moment” as when the perpetually ill-starred cartoon character realizes he has overshot the cliff and looks down to see nothing but air under his feet.

lucy-footballGarth Turner: I didn’t say crash

If Garth were a cartoon character, it would have to be Charlie Brown. He’s been ready to kick the football many times, only to have it pulled away at the last second, time and time again. Every year, some new development is the harbinger of the long-awaited crash: Higher interest rates. 35-year amortizations. Mandatory 5% down payments. 30-year amortizations. Unemployment. 25-year amortizations. Lack of first-time buyers. Now, this year, the silver bullet is the recent capping of CMHC guarantees. For six years he’s been lining up in anticipation of a big score, but rather than kicking the ball through the goal posts, he’s tripped at the line of scrimmage.

Most predictions could have been made by a monkey(Photo from the GreaterFool.ca)

Most predictions could have been made by a monkey(Photo from the GreaterFool.ca)

His futility has resulted in him saying that he never wanted to kick the ball in the first place. When confronted with the truth, he blames the victims for listening to him: “it was your decision.” Never one to be encumbered by facts, he has managed to keep a loyal following with his fantastic writing ability, sexual connotations, and lewd pictures. If nothing else, he knows that sex sells, understands herd mentality, and that people easily forget. In other words, he’s another Smoking Man but with good grammar and spelling, but not as intelligent. Cult followers have a difficult time thinking for themselves, but they should pay attention to these 10 warning signs. For example, #4  “Unreasonable fear about the outside world, such as impending catastrophe, evil conspiracies.” Yikes.

From the Calgary Herald: Canadians appear to be drunk on housing and approaching a hangover

Garth Turner’s track record speaks for itself

Does Garth really drive a Harley? Can we believe anything he says?

Does Garth really drive a Harley? Can we believe anything he says?

The tone of the  comments on Garth Turner’s GreaterFool.ca has taken a pronounced turn. Many readers(and many more whose comments were deleted by Garth) of his blog have finally realized the emperor has no clothes. His long-awaited, much-anticipated housing crash didn’t occur. Garth now denies that he ever predicted a crash, despite writing a book entitled “After the Crash.” The peasants are becoming restless with the never-ending promises of ultra-low house prices. Promises which never become Garth’s fabled houseageddon. Some recent comments which would have been anathema a few years ago…

If your financial advice was half as good as your writing, I’d be buying a nice place in calgary for 360k, not 500k.

I want prices to fall, but its not falling at this point. It’s not as bad as Garth makes it seems. 

Spin it any way you like, over 8,000 sales in July for the GTA is a strong month and hardly an indicator of a collapsing housing market. 

The truth is that individuals who have been waiting on the sidelines for this event to occur have unfortunately lost an opportunity this time out.

Why is it when anyone posts an opposing view here that they get attacked, called names and chant delete him, delete him? 5 years and waiting for the big collapse maybe a tad frustrating? 

If anything, guys like Garth and Peter Schiff that keep calling for crashes just cause others to lose money by waiting for ever.

I’ve been waiting since 2006 for this mythical crash. Maybe in 2053?

Garth there are no signs that real estate is going down at this time in toronto…..after all these mortgage changes it still has held up…..if it is harder to buy now then why after one year has there not been serious cracks in the market…

And the wait continues and the predictions continue to be incorrect. 

When will prices be at the same point of when this blog started?

The resiliency of the market has stunned many experts over the past few years – I believe the best advice is to just to get on with your life, and view “Nostradamus type predictions” as “for entertainment purposes only”.

Remember when Garth was selling survival gear and squirrel recipes? Now pretending it never happened: http://shop.xurbia.ca/

Garth’s realtorhate is running at a fever pitch. He now has a knee-jerk reaction to any commenter who disagrees with him. In adition to accusing them of being a realtor, he also calls them liars. Lashing out, making assumptions that are insulting and judgemental, could be a sign that he’s losing his grip.

Turner is a harsh critic of the media, but he forgets that at one time, he was quite happy to take money for advertising which today would be classified as “advertorials.”

  • Paying for time:
  • Wendy Mesley of CBC: I just wanted to ask you one question about how many financial links there can be to people on your show before it starts to get sticky.       Garth Turner: I’ll only answer that by way of saying that, ah, because we’re not the CBC and we don’t get money given to us, that we have to run a business for which revenues are generated and the bulk of the revenues are generated by selling sponsorships and advertising and what we call billboards.

His yearly predictions have been notoriously incorrect, with real estate boards across the country coming through year after year with more accurate forecasts. A pattern of making incorrect predictions.

Okay, so no crash. How about a correction and slow melt? Well, maybe lowering the amortization from 40 to 25 years should do it. Requiring a 5% down payment will most certainly bring it on. Sorry. Finally, a new silver bullet comes to the rescue. Monday’s announcement of a cap on CMHC guarantees will prove to be the catalyst. Garth hopes.

Turner is obviously feeling the heat. He had the misfortune of getting into a twitter battle with Calgary’s(maybe even Canada’s) top real estate stats guy, one person who Garth should never tangle with, because he will always come out looking second-best:  http://calgaryrealestatereview.com/2013/08/05/garth-turner-attacks-media-reporting-real-estate/

  1. You entirely miss the point. The culprit is the media reporting. Your blog post attacking me is weird.

  2. @garthturner Not you, your tactics. Always spinning, cherry-picking, massaging stats. Schtick is wearing thin & people seeing through you

  3. @MikeFotiou Mike: No smart person builds business by tearing down others. Your blog post will make no difference to me, quite a bit to you.

  4. @garthturner People want and deserve the truth. Your credibility outside your echo-chamber blog is waning. Was just some friendly advice.

  5. @MikeFotiou You, sir, are no judge of my credibility.

  6. @garthturner You’re absolutely right, my apologies. Your track record speaks for itself.

Bad news for renters

NenshiMayor Nenshi predicts the rental vacancy rate could come close to zero

This is not just bad for renters, but I also believe it’s bad news for Calgary in general. If people can’t find suitable, affordable accommodation, we’ll soon see a lot of negative fallout such as higher prices for home buyers, an exodus of people for more affordable locations, lower in-migration, students without accommodation, and a flood of pets at the animal shelters.

From the Calgary Herald: Calgary and Edmonton had the lowest vacancy rate of any major Canadian city in April, at 1.2 per cent, according to the Canada Mortgage and Housing Corp. Calgary rents jumped by more than seven per cent over a 12-month period, the biggest annual rise in Canada, as the average rent for a two-bedroom apartment reached a record $1,202, CMHC reported.

Tammy Panchuk, who owns 40 rental units with her husband, said they don’t have any vacancies now, and when there are openings they advertise on only one website because the inquiries become “overwhelming.”

Calgary is now among the fastest-growing cities in North America, according to new civic census data released this week, and Panchuk expects the narrowing rental market will force many would-be renters to buy instead.

“I deal with a handful of investors,” the Calgary real estate agent said, “and none of them have any vacancies whatsoever, and if they do they are snatched up just like that.”

If we had the lowest vacancy rate in April, I shudder to think what it will be now, after the flood. Read more Rental market worries rise in Calgary

Image

Market update Jul 1 – 15, 2013

Inventory vs sales and price2

Bloodbath postponed for five years

“House-aggeddon” was supposed to have happened every year between 2008 – 2011.  No luck.

After the mortgage rule changes, a devastating crash was predicted for 2012. No luck.

A crash of biblical proportions was forecast for 2013. That one’s gone by the wayside.

Now its been delayed for another five years according to this gem from GreaterFool.ca: . “If so many people are rushing to lock-in pre-approved mortgage rates while home prices are still high, how bad is it going to be in 2018 when the rates are closer to 10%??? Its going to be a bloodbath!”