Monthly Archives: April 2013

Market update Apr 1 – 25, 2013

Inventory remains very low for this time of year.

Inventory vs sales and price2

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Who should pay for infrastructure?

No doubt you’ve heard about the “Smoking Gun” video of a November meeting hosted by Cal Wenzel, founder of Shane Homes, where Wenzel presents a plan to defeat select members of city council who are perceived to be anti-development.

Some in the housing industry have been clashing with the city over growth and who should be responsible for infrastructure.

Mayor Nenshi, in an interview on CBC this morning, says he is against urban sprawl and corporate welfare, implying that developers, and ultimately new home owners, don’t pay the true costs of their infrastructure, and are getting a free ride on the backs of the taxpayers.

When the city pays for infrastructure, it distorts the playing field.  Rather than making inner-city more attractive because the infrastructure is already there, it basically subsidizes the developers(and their private jets and big profits, as Nenshi pointed out),  and contributes to urban sprawl. Should developers be paying for the true costs of the infrastructure in new areas?

Global News video of Cal Wenzel, founder of Shane Homes, presenting a plan to defeat select members of city council are perceived to be anti-development: http://globalnews.ca/news/502394/exclusive-video-obtained-by-global-news-reveals-calgary-developers-plan-to-control-city-council/

CBC’s Eyeopener this morning: Mayor Nenshi reacts

This story has produced a flurry of comments on Global’s website. For example:

“Things WILL change, they WILL HAVE to build sustainably and buck up with environmental initiatives as well as paying for asp’s that they push the City to develop just because they want to slap up a new development in the sprawling parts of Calgary. Shame shame shame. Well done global, we need more developers actions put under the microscope”

“Continued urban sprawl is a financial subsidy to housing developers in that their developments get the necessary physical infrastructure (water, road, sewer, transit, et cetera) on the cities dime and property taxes never fully recover these costs.   The city carries a large ongoing debt due to the expense of continued urban sprawl that these developers are trying to ensure continues unabated through the purchase of the necessary votes on city council.”

“The fact is that inner city development is far less costly when you look at the overall life cycle costs than development on the fringes (Transportation, water, sewer, etc.) so its time that the full cost of development is borne by the consumers of new homes in the suburbs.”

Garth Turner misleads his readers about Calgary

Do not read

Turner said on his GreaterFool.ca blog: It is different in Calgary. It’s worse. Year/year prices are up a startling 9%, but sales have just turned negative compared to last Spring. SFH sales are down 6%, and listings have crashed 22%…The nation’s most American city risks getting a wee taste of Vegas.

For someone who prides himself on accurate and up-to-date data, this is quite an astonishing deception which he’s trying to pull. How about using data from April? You know, current, updated, relevant numbers?  We know that Gartho has a bookmark to these latest numbers CREB statistics. Sales for the city of Calgary are actually up 14% compared to last year, and new listings have turned the corner this month and are up 13%. It’s no secret that sales have been low because inventory is down 30% compared to historical averages. There just hasn’t been anything to buy.

When you quote statistics that are outdated to prove your point, it makes one wonder if you have an agenda. As it is, GreaterFool.ca seems so intent on having Alberta join the ranks of falling markets in Toronto and Vancouver that he is willing to mislead his readers. Calgary’s stable market has been a source of severe irritation for Turner. Maybe he’s so blinded by his dislike of anything Calgary that he believes his own chicanery and deceptions.

Transparency? Let’s see how forthcoming he is about Calgary’s numbers at the end of the month when sales are up. I predict silence. The greater tragedy, however, is that most of his docile followers don’t even question him.

Market update Apr 1 – 19, 2013

Despite more new listings, inventory continues to drop because of the increased sales.

Inventory vs sales and price2

The demand for homes in Calgary is resulting in numerous bidding wars. Yesterday, 25% of all sales were for list price or higher. A home in Scenic Acres which was listed for $458,000 had an accepted offer after one day on the market and sold for $468,000. It was purchased in 2001 for $209,000.

A tear-down on a 50′ lot in Montgomery also sold in one day. It was listed for $419,000 and sold for $432,500.

2007 is history

Average and median prices in Calgary have been flirting with all-time highs this year. I had a look at the sales history from the past 3 days to see the ultimate fate of those homes sold in 2007 when prices were at their peak.

We’ve had 11 sales where the homes were previously sold in 2007. The average list price was $601,027. The average sale price was $610,136.

7 of the homes sold for more than the previous purchase price in 2007.

Market update Apr 1 – 14, 2013

Sellers are finally starting to list their homes, but inventory remains low because the buyers are snapping them up.

Inventory vs sales and price2

Bidding wars update:

Over the past 3 days, 17% of homes sold for list price or higher. A bi-level in Silver Springs was listed for $475,999 and sold in 5 days for $484,000. It was purchased in 2010 for $417,000.

A 2-story in Sundance was listed for $419,900 and had a firm offer in 2 days for $430,000. It was purchased in 2007 for $365,000.

From the Calgary Herald: Calgary home price growth best in Canada

Calgary #1 Destination in Canada

Calgary skyline3

After seeing how busy the real estate market has been in Calgary, this story shouldn’t surprise you:

U-Haul names Calgary as top 2012 Canadian destination city

According to moving data reflective of nationwide statistics for calendar year 2012, Calgary ranked No. 1 and took first place from Toronto, which ranked No. 1 for 10 years in a row and dropped down to No. 2.  Montreal ranked No. 3 and Edmonton took No. 4 for the fourth year in a row. Other cities in the top-25 included Regina, Saskatoon, Kelowna, Vancouver, Victoria and Red Deer. 

The ranking reflects destinations for movers renting a truck one-way and considers every city in the country, regardless of size. To make this even more significant for Calgary, the data is not stated as a percentage of population.

In the United States, Houston took top honours.

More accolades for Calgary: Bow Tower is world’s most spectacular corporate building

As predicted

Sales have been repressed this year because of low inventory. A few days ago I predicted we’d see more listings and consequently more sales this month. Unlike Garth Turner’s predictions, mine come true.

So far this month new listings are up 18% compared to last year, and sales are up 17%.

I have a lot of respect for someone who admits they screwed up. If you got it wrong, man up and admit it and move on. Denial and obfuscation is some people’s style, however. Yesterday Turner was taking credit for his predictions, but there are a few of his readers who can see through the spin, such as this  one:

#97Vik on 04.11.13 at 12:08 am

Garth,

Price went up 30-40% in the GTA. You call 15% correction? Nice try dude. More like a dent. I feel sorry for the people who listened to you for the past 5 years.

We all know what prices inflated. I’m telling you why this period is over. — Garth

It would be enlightening to know what excuse he would use for his incorrect prediction about Calgary’s prices dropping to 50% of 2006 levels.

“…the beginning of the end in Cowtown.”

Overheard on greaterfool.ca on April 1:  “It is not a bed of roses in Cowtown just wait and see over the next 2 mths.”

crocus2The 6% drop in sales in March is intoxicating to the doomers who can’t contain their excitement at seeing Calgary finally meeting the same fate as Toronto and Vancouver.  Even this insignificant blip created hysteria among the bubble bloggers, who are conveniently blinded to the realities of accurate data.

From a salivating Garth Turner this prediction: “… the beginning of the end in Cowtown.”

It’s been annoying and irritating to Turner to see the stability of the Calgary market, given his distaste of Alberta. In his frenzy to see Calgary crash, he’s conveniently forgetting that he once said, “one month means nothing.”

As for his credibility, Garth also predicted in 2008 Real estate prices in Calgary, Edmonton, Fort Mac at 50% of 2006 levels. ” That would put our average price at $200,000. Today it’s over $500,000.

Most fail to mention that new listings have been down, year-to-year, for 10 consecutive months, or that homes were at record high prices in March. How do you buy a house when there’s nothing coming on the market that appeals to you, or is in your price range?

April will be the first month where we see an increase in new listings,  Y to Y,  since May 2012. More selection will hopefully result in a moderation of the prices, also resulting in increasing sales.

To April 6, new listings are up 13% compared to the 3-year average, and up  5% compared to last year.

Spring will bring more listings, lower prices, more sales. It may not be a bed of roses, but crocuses are beautiful, too.

What happened in March

The median price hit an all-time high for Calgary at $450,000 which obliterates the previous high of $439,000 set back in Jun 2007.

Inventory vs sales and price

There’s an overwhelming demand for homes priced under $500,000 with only a 36-day supply of homes on the market. Last year in this price range, there was a 51-day supply.

Read more here Monthly stats update

Does the phenomenon of recency distort our views? How far back should you examine the numbers when considering housing data? From the Globe and Mail: Housing bears need to relax and take the long view.