18% of sales have been for list price or higher in August.
Canada’s house price index reached an all-time high in July according to Teranet, an independent reporting concern. Calgary real estate review – Teranet
Anyone 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
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.
Garth 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)
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
Posted in Calgary Herald, Correction, Fearmongers, Greater Fool, Predictions
With inventory down 35% from the norm, and new listings hard to come by, it’s almost unfathomable that sales are up 39%. Don’t expect too much of a lull in activity which usually happens at this time of year, unless we completely run out of homes to sell.
Sales to first-time buyers were up 39% in July compared to the 3-year average, but I expect this group will be affected most by the CMHC mortage cap, and a drop in first-time buyers is most likely to eventually occur.
Posted in Calgary SFH, First-time buyers, Market update
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.”
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/
You entirely miss the point. The culprit is the media reporting. Your blog post attacking me is weird.
@garthturner Not you, your tactics. Always spinning, cherry-picking, massaging stats. Schtick is wearing thin & people seeing through you
@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.
@garthturner People want and deserve the truth. Your credibility outside your echo-chamber blog is waning. Was just some friendly advice.
@MikeFotiou You, sir, are no judge of my credibility.
@garthturner You’re absolutely right, my apologies. Your track record speaks for itself.
Posted in Fearmongers, Greater Fool, Predictions
Update Aug 1: The Financial Post Magazine contacted me today regarding a story they’re doing about the real estate market across Canada. The reporter was asking why Calgary was so different from other cities. I have my opinions which will eventually be published. What’s your take? (I had to chuckle when they asked about Garth Turner’s bad predictions for Calgary!)
How do you achieve record sales when there’s almost nothing to buy? Inventory is at its lowest point since 2006, so you know that attractive new listings are going fast. As we learned from the craziness of 2006 – 2007, a runaway market is no fun for anyone except a few sellers who are moving to cities where the prices are low or dropping. Many homes are sold by the time a buyer comes to view them. Sellers can realize a quick sale, but if they are moving up or across town, they have all the headaches of looking for a new home with all the difficulties and turmoil of an over-heated market. We require lots more inventory before things will settle down, and there is no sign of that happening.
First-time buyers were up 39% compared to the average of the past 3 years.
The sales-to-new-listings ratio at 80% is the highest it’s been since 2005. Homes under $500,000 are in huge demand, with an absorption rate of 1.1 in July. That is an entrenched seller’s market. Over the last four days of July, 15% of sales were for list price or higher. As Brad stated in his recent comment, Garth Turner looks very foolish for his dire predictions of a nosedive in Calgary’s sales. Be careful who you listen to.
Posted in Calgary SFH, City of Calgary, First-time buyers, Market update, Month-end
Mayor 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
Posted in Predictions, Renting
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
Posted in City of Calgary, Population
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:
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:
He doesn’t agree with his buddy Garth:
Posted in Fearmongers, Greater Fool, Inaccuracies
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.
Posted in Calgary SFH, Historical comparison
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Garth Turner @garthturner
Mike Fotiou @MikeFotiou
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