Monthly Archives: July 2013

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

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Calgary +29,327

Calgary’s population has reached 1,149,552; this is an increase of 29,327 residents from the previous year when the Civic Census showed the city’s population was 1,120,225. This is an increase of 2.62%, similar to the level of population growth reported in 2012.

The number of housing units, both existing and under construction continued to rise, increasing by 9,019 to 468,358; an increase of 1.96%.

There are currently 442,558 occupied dwellings. Of those, 303,166 or 68.5% are owner-occupied.

There’s no rocket science involved in understanding why we have a shortage of listings, and will continue to do so.

Read more  City releases 2013 census

Five years later, what are they saying?

Garth Turner, the GreaterFool

In 2008, when he wasn’t mercilessly insulting realtors, he was touring the country, pounding the table and adamantly advising everyone to refrain from buying a house. He even published a book entitled “After the Crash.” Now he blames the victims of his advice:

  • Here’s what he said Oct 28, 2008: “I forecast a minimum valuation drop of 15% in Toronto and 40% in the West.”A 40% drop would mean a median price of $234,000. Today’s median is $440,000. Epic fail.
  • “You will be basically unable to sell your home.” In Calgary, there’s such low inventory, you are “basically” unable to buy a home. 

Calgary Rip-Off

The following came from a notorious Calgary-hater who posted on my blog many times saying how he detested Calgarians and that he would never buy a house here. Five years, ago he said:

  • “My wife seems to think there wont be a bad crash in Calgary, and that the median wont correct to $250K. We had a big argument about this. I think it will crash hard by what I am seeing.”

    Somewhere he reversed direction:
  • “Dont wait in hopes that prices will come down because in Calgary you will wait forever.” – Calgary Rip-Off, proud Calgary home-owner http://www.greaterfool.ca/2013/07/23/aliens/

He doesn’t agree with his buddy Garth:

  • “The only thing ridiculous(about Calgary) is housing. And the argument that you can force house prices down by not buying is nonsense. “
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Market update Jul 1 – 21, 2013

Inventory vs sales and price2

Is demand outstripping supply?

Lester asks “How does this compare in terms of statistics to the frenzied days of 2006? It seems demand is rapidly outstripping supply. Are the number of proprties, dom, absorption similar?”

Comparing July 2006 to today, the scariest number is SNL(sales-to-new-listings ratio). It’s at 80% right now, whereas in 2006 it was 52%. Also of concern this year: sales are slightly higher, and new listings are a lot lower. The trend is definitely more demand, less supply. The early months of 2006 were the craziest and it cooled down starting in July. This year, it seems to be getting hotter(and not just the weather!).

Luckily, we have 50% higher inventory, but at 3100 listings, that’s still considered very low. DOM is a lot higher than in 2006. It took, on average, 18 days to sell a house in 2006, today it’s 35 days.

The absorption rate today is 2.0 but was lower in 2006 at 1.5. That means we had a 45-day supply of homes for sale in 2006, and today we have 60. Both those numbers are very low and of concern.

All things considered, the situation does not bode well for buyers.

Sellers have the upper hand in Calgary

Over the past four days, 14% of sales have been for list price or higher. For a healthy market, that’s still higher than I’d like to see it.

A 1990 sq ft 2-storey home in Citadel which was listed for $434,900 was sold for $445,000. It was only on the market for two days.

More indicative of the market is the sales-to-new-listings(SNL) ratio at 80%. The average SNL in July since 2006 has been 59%.

The absorption rate of 2.0 is also in seller’s market territory. This means we have a 60-days supply of listings. We normally have a 102-day supply in July.

I don’t normally pay much attention on this blog to the condo market, but the SNL ratio for condos in July is a phenomenal 95%. It’s usually at 59% in July.

Garth Turner – milking the gullible

Do not readI was alerted by Jeff to a number of recent comments on Garth Turner’s blog  trashing me.  Gratuitous untruths from anonymous cretins, as usual. As I’ve said before to Garth, “if he quits telling lies about me, I’ll quit telling the truth about him.” Garth gets upset when anyone holds him accountable for his misleading statements, and his way of fighting back is with more misleading statements. He likes to dish it out, but he can’t take it. Did you know that he once threatened to sue me? For someone who regularly insults and demeans people, he’s got a pretty thin skin.

Garth TurnerJimmy posted this comment a while back about Garth Turner and his blog. It will serve adequately as my rejoinder: “This pathetic blog truly is pathetic. I’m no realtor, and in fact I myself am hoping that real estate moderates. However, your repeated reminders of how you told us this or that would happen indicate a level of narcissism. The fact is, the housing decline you’ve been leading your impoverished followers to believe would happen for years has not materialized.

Garth gets his day off to a good start by reading my blog

Garth gets his day off to a good start by reading my blog

The mortgage rules changes will not induce correction — only a rise in rates will do that, and there’s not indication its going to happen any time soon. Face it — you have a legion of bitter, low-income wannabe home owners who would delight in the economy being trashed if it would mean that they could obtain a mansion in Bridal Path for $100,000. I don’t know who’s worse: the realtors or the bitter wannabes. Or maybe you are the biggest villain here for milking the gullible masses to suit your own ends, and for letting your ego and your need to be right get in the way of your message.

It was three months ago when Gartho predicted “…the beginning of the end in Cowtown.”  Since then we’ve had stable prices and increased sales.

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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!”

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Market update July 1 -7, 2013

Inventory vs sales and price2

The flood: for the record

Garth Turner has been notoriously wrong with his predictions about Calgary real estate. You’d think he’d know better…

CREB says…“While it might stave off a bit of activity on the sales from what we originally were thinking we were going to have for the rest of the year, I don’t think it’s going to be significant,” says real estate board economist Ann-Marie Lurie. “If there are less listings on the market because some of these properties are coming off, it actually could improve pricing activity in some of the other areas. You could actually see prices really continue to grow at the rates we’ve seen. So I wouldn’t expect much change there.”

Garth Turner(GreaterFool.ca) says…Then Calgary would be unique. Flood experience in other urban centres (like Brisbane in 2011) shows house values dropped by about 20% in affected areas, and as much as 60% for periods ranging between months and years. In fact in Brisbane (twice the population of Calgary) the average house price for the entire city – flooded or not – dipped between 10% and 30% for months after.

Other studies show that over a long period of time, there’s a flood discount, with properties that were underwater appreciating at a slower rate than those which stayed dry. http://www.greaterfool.ca/2013/06/24/the-deluge/

After his epic failings in the past, Garth has become quite reluctant to come out and make a definite prediction for Calgary, but it would seem in his contorted way that he’s predicting Calgary will follow in Brisbane’s footsteps with a 60% drop. No, a 20% drop. Sorry, I meant a 10% – 30% drop.

Update Aug 31, 2013: Stay renting. This is not the time to buy in Cowtown. -Garth Turner http://www.greaterfool.ca/2013/08/30/divine-guidance/