Mario Toneguzzi, Calgary HeraldPublished: Thursday, September 25, 2008
The number of residential MLS listings in the Calgary area that have expired without a sale soared in the month of August to nearly double what it was a year ago.
According to the Calgary Real Estate Board, there were 2,550 MLS listings that expired in August comprising single-family homes and condominiums in Calgary metro, as well as residential properties in CREB's market area, which includes acreages as well as town and country.
In August 2007, there were 1,368 listings that expired.
There are more listings expiring each month, said Ron Esch, executive vice-president of the local real estate board.
For many sellers, the expectation of a sale is not being met probably due to pricing, he said.
In August, MLS sales were down compared with a year ago throughout CREB's market area in four categories -- single-family homes in Calgary metro (10.96 per cent), condominiums in Calgary metro (17.2 per cent), towns outside Calgary (30.3 per cent) and country residential or acreages (20.3 per cent).
People need to know that condos now average 58 days to sell, compared with 35 days last year, while single-family homes were averaging 52 days in August, compared with 39 days a year ago, said Lai Sing Louie, senior market analyst in Calgary for the Canada Mortgage and Housing Corp.
"So it is taking longer to sell right now and people have to be in touch with the current market conditions," said Louie. "If you price it above, there's likely another house that's selling maybe a little below and that will go first."
He said people selling a home these days have to price their property according to product that's very similar.
Active listings are coming down in the Calgary market, but remain high.
"In terms of August, over 11,000 units were for sale. It's the highest August on record that we have going back to 1981," said Louie. "Even though it's peaked, the peak appears to have happened in May this year at over 13,000, it is coming down and the trend line is also down, but historically comparing the number, it's still high. We expect it to come down."
In August, average sale prices in the Calgary market dropped in four different areas compared with last year -- single-family homes in Calgary metro (down 9.3 per cent), condominiums in Calgary metro (10.3 per cent), towns outside Calgary (six per cent) and country residential including acreages (0.8 per cent).
Esch said MLS listings expire in two ways -- a listing contract runs out after 60 or 90 days with the property not selling or sometimes listings are terminated in advance of the expiration date. He said the majority of expirations are because they've run the course of the listing period and did not sell.
Data supplied by realtor Mike Fotiou of First Place Realty show that expirations in single-family homes in Calgary metro hit a high of 1,332 in December 2007 and have been over 1,200 in each of the months of August, July and June. Over the past year, expirations in the Calgary metro condo market hit a high of 614 in July.
On his web blog, Fotiou writes that the days-on-the-market (DOM) tatistic is not accurate these days.
"In the past few years, when properties were actually selling in 60 days or less, the DOM stat was quite accurate," he said.
But now with close to five months of supply for the inventory, "homes are expiring and getting relisted frequently, skewing the DOM stat."
He said the days-on-market clock resets back to zero when a property expires and is relisted.
mtoneguzzi@theherald.canwest.com
Thursday, September 25, 2008
Housing market feels fall chill
Canada warned it may follow U.S. meltdown
Geoffrey Scotton, Calgary HeraldPublished: Thursday, September 25, 2008
Two prominent economists warned Wednesday Canada's housing market is at a tipping point and could trigger a financial meltdown that would mirror the unprecedented crisis gripping our neighbour to the south.
"We fear . . . it may simply be a matter of time (before) . . . housing and credit markets in Canada crack," said Merrill Lynch Canada Inc. analysts David Wolf and Carolyn Kwan in a note to clients. "Markets remain overly sanguine with respect to the prospects for the Canadian housing market, the financial sector and the overall economy."
Locally, some real estate players are carefully watching stretched household finances coinciding with falling real estate values, worried the squeeze could steepen the descent of a falling market -- or worse.
"There's definitely some concern -- prices in Calgary have been on a downward trend for well over a year and inventories are high," said realtor Gary MacLean of Re/Max Real Estate Central Calgary. "If there's a downswing, Albertans will get hurt the most. The fact that people are over-extended and leveraged to the max should be of concern to everyone."
Prime Minister Stephen Harper dismissed the Merrill Lynch report, saying both the housing and consumer markets and financial institutions in Canada are "much stronger" than in the U.S.
"I do not accept this conclusion, not at all," Harper said.
The two economists -- who ironically work for the Canadian arm of investment bank Merrill Lynch & Co. Inc., a casualty of the financial shakeout in the U.S. that is pounding global markets -- argue household finances here are as over-extended as those in the U.S. and the U.K. were before falling house prices caused the bubble to burst.
"These data imply the Canadian household sector is now overextending itself as much as the U.S. or U.K. ever did, challenging the consensus view that Canadian lenders and borrowers have been far more conservative through the cycle," said Wolf and Kwan.
"The absence of a Canadian credit crunch to date may be cause for concern, not comfort. How can it be that mortgage debt is growing at a double-digit pace against an asset class now seeing deflation?" said Wolf and Kwan.
Other economists believe worrisome parallels between the U.S. and U.K. housing markets, and Canada's, are limited.
"We don't see the same factors," RBC Financial Group assistant chief economist Dawn Desjardins told the Herald, citing modest Canadian mortgage delinquency and foreclosure rates, a smaller housing market inventory overhang than south of the border, and a lack of subprime mortgages. "From the fundamental structural backdrop, we just don't see the same situation that we saw in the U.S."
Calgary Economic Development chief economist Adam Legge was adamant Calgary's housing fundamentals remain strong. "Is the housing market in trouble? No. Will the bottom drop out? No," said Legge. "We should not fear a collapse."
Nonetheless, house price deflation was clear in Canadian Real Estate Association statistics showing the average Canadian house sales price in August was down 5.1 per cent from a year earlier. The association noted sales volume dropped almost 20 per cent.
Nowhere in Canada is the softness in real estate more pronounced than in Calgary, where association figures showed the average price for a house in August was eight per cent lower than a year earlier, while sales volume plunged nearly 17 per cent and new listings dropped 16.3 per cent.
"I think there's a credit problem," said MacLean. "I don't think it's going to cause us to crash, but I do agree that the world is too overextended and too leveraged and something has to happen. There are going to be people that lose a bundle."
Canada Mortgage and Housing Corp. declined to be interviewed on questions about Canada's housing market fundamentals and the Merrill Lynch report.
gscotton@theherald.canwest.com
Geoffrey Scotton, Calgary HeraldPublished: Thursday, September 25, 2008
Two prominent economists warned Wednesday Canada's housing market is at a tipping point and could trigger a financial meltdown that would mirror the unprecedented crisis gripping our neighbour to the south.
"We fear . . . it may simply be a matter of time (before) . . . housing and credit markets in Canada crack," said Merrill Lynch Canada Inc. analysts David Wolf and Carolyn Kwan in a note to clients. "Markets remain overly sanguine with respect to the prospects for the Canadian housing market, the financial sector and the overall economy."
Locally, some real estate players are carefully watching stretched household finances coinciding with falling real estate values, worried the squeeze could steepen the descent of a falling market -- or worse.
"There's definitely some concern -- prices in Calgary have been on a downward trend for well over a year and inventories are high," said realtor Gary MacLean of Re/Max Real Estate Central Calgary. "If there's a downswing, Albertans will get hurt the most. The fact that people are over-extended and leveraged to the max should be of concern to everyone."
Prime Minister Stephen Harper dismissed the Merrill Lynch report, saying both the housing and consumer markets and financial institutions in Canada are "much stronger" than in the U.S.
"I do not accept this conclusion, not at all," Harper said.
The two economists -- who ironically work for the Canadian arm of investment bank Merrill Lynch & Co. Inc., a casualty of the financial shakeout in the U.S. that is pounding global markets -- argue household finances here are as over-extended as those in the U.S. and the U.K. were before falling house prices caused the bubble to burst.
"These data imply the Canadian household sector is now overextending itself as much as the U.S. or U.K. ever did, challenging the consensus view that Canadian lenders and borrowers have been far more conservative through the cycle," said Wolf and Kwan.
"The absence of a Canadian credit crunch to date may be cause for concern, not comfort. How can it be that mortgage debt is growing at a double-digit pace against an asset class now seeing deflation?" said Wolf and Kwan.
Other economists believe worrisome parallels between the U.S. and U.K. housing markets, and Canada's, are limited.
"We don't see the same factors," RBC Financial Group assistant chief economist Dawn Desjardins told the Herald, citing modest Canadian mortgage delinquency and foreclosure rates, a smaller housing market inventory overhang than south of the border, and a lack of subprime mortgages. "From the fundamental structural backdrop, we just don't see the same situation that we saw in the U.S."
Calgary Economic Development chief economist Adam Legge was adamant Calgary's housing fundamentals remain strong. "Is the housing market in trouble? No. Will the bottom drop out? No," said Legge. "We should not fear a collapse."
Nonetheless, house price deflation was clear in Canadian Real Estate Association statistics showing the average Canadian house sales price in August was down 5.1 per cent from a year earlier. The association noted sales volume dropped almost 20 per cent.
Nowhere in Canada is the softness in real estate more pronounced than in Calgary, where association figures showed the average price for a house in August was eight per cent lower than a year earlier, while sales volume plunged nearly 17 per cent and new listings dropped 16.3 per cent.
"I think there's a credit problem," said MacLean. "I don't think it's going to cause us to crash, but I do agree that the world is too overextended and too leveraged and something has to happen. There are going to be people that lose a bundle."
Canada Mortgage and Housing Corp. declined to be interviewed on questions about Canada's housing market fundamentals and the Merrill Lynch report.
gscotton@theherald.canwest.com
Friday, September 19, 2008
Rising costs squeeze builders
Mario Toneguzzi, Calgary HeraldPublished: Friday, September 19, 2008
Rising labour and material costs as well as a continued cooling in the housing sector will rip into profits of Canadian home builders for a second consecutive year, according to a report released Thursday by the Conference Board of Canada.
As demand for new home construction weakens, profits this year are expected to dip by three per cent compared with a year ago to $3.6 billion. This follows a 16.4 per cent year-over-year plunge in 2007.
The Conference Board's Canadian Industrial Outlook: Canada's Residential Construction Industry -- Summer 2008 said profits will drop another 6.6 per cent to $3.3 billion in 2009 before swinging upwards in 2010-2012.
The Conference Board's forecast says year-over-year increases in 2010, 2011 and 2012 will be 6.7 per cent, 4.1 per cent and 2.3 per cent respectively and peak at $3.8 billion at the end of the forecast cycle. "Costs escalating at frenzied paces ripped a strip off profits last year," said the report.
"It was the first time in recent years that cost growth outpaced revenue growth. Despite a much slower pace of cost growth, industry profits will fall again this year and in 2009 as slowing construction activity and input price appreciation take their toll on the industry."
Profits for the home building industry peaked at $4.4 billion at the height of the housing boom in 2006.
The report said the heated housing markets in Western Canada have been doused with cold water this year. Housing prices have hit an affordability ceiling in both British Columbia and Alberta and there has been an oversaturation of supply in many local markets. Because of that, construction activity will moderate over the next few years in a correction.
In Alberta, housing starts will shrink by a whopping 23.7 per cent this year and another three per cent in 2009, predicted the Conference Board.
"High costs will continue to plague the industry," added the report. "Labour is scarce and expensive, and although lumber prices remain weak, other materials (such as steel and concrete) are expensive and costly to transport."
Rising labour and material costs as well as a continued cooling in the housing sector will rip into profits of Canadian home builders for a second consecutive year, according to a report released Thursday by the Conference Board of Canada.
As demand for new home construction weakens, profits this year are expected to dip by three per cent compared with a year ago to $3.6 billion. This follows a 16.4 per cent year-over-year plunge in 2007.
The Conference Board's Canadian Industrial Outlook: Canada's Residential Construction Industry -- Summer 2008 said profits will drop another 6.6 per cent to $3.3 billion in 2009 before swinging upwards in 2010-2012.
The Conference Board's forecast says year-over-year increases in 2010, 2011 and 2012 will be 6.7 per cent, 4.1 per cent and 2.3 per cent respectively and peak at $3.8 billion at the end of the forecast cycle. "Costs escalating at frenzied paces ripped a strip off profits last year," said the report.
"It was the first time in recent years that cost growth outpaced revenue growth. Despite a much slower pace of cost growth, industry profits will fall again this year and in 2009 as slowing construction activity and input price appreciation take their toll on the industry."
Profits for the home building industry peaked at $4.4 billion at the height of the housing boom in 2006.
The report said the heated housing markets in Western Canada have been doused with cold water this year. Housing prices have hit an affordability ceiling in both British Columbia and Alberta and there has been an oversaturation of supply in many local markets. Because of that, construction activity will moderate over the next few years in a correction.
In Alberta, housing starts will shrink by a whopping 23.7 per cent this year and another three per cent in 2009, predicted the Conference Board.
"High costs will continue to plague the industry," added the report. "Labour is scarce and expensive, and although lumber prices remain weak, other materials (such as steel and concrete) are expensive and costly to transport."
Get set for $200 oil, says CIBC economist
Geoffrey Scotton, Calgary HeraldPublished: Friday, September 19, 2008
The fundamentals for oil are enormously strong, outspoken analyst Jeff Rubin told international business leaders Thursday -- warning those fundamentals may in fact be too strong as high energy prices spark inflation globally and a reordering of the world economy.
Speaking to the Global Business Forum in Banff, Rubin also argued indicators show the underlying cause of the crisis gripping U.S. and world financial markets linked to the credit crunch -- weakening U.S. home prices -- is close to an end.
"The underlying problem is about to be remedied," said Rubin, chief economist and strategist of the Canadian Imperial Bank of Commerce. He warned that amid global financial uncertainty, investors and corporate leaders need to be careful not to make poor decisions based on what he believes are fleeting conditions. He forecasts U.S. house prices will bottom and begin to rebound by the beginning of 2009, while oil prices could hit $200 in four or five years.
"What's happening out there is a giant head fake . . . that could easily put you running in the wrong direction," Rubin told about 200 senior corporate and government leaders at an invitation-only gathering at the Fairmont Banff Springs.
Rubin's comments came as central bankers pumped or promised $180 billion US of injections Thursday into world financial markets to ensure liquidity amid continued fears about the solvency among major U.S. investment banks and the repercussions of a potential failure.
Nonetheless, while the financial market turmoil will work itself out over time as home prices begin to regain lost ground, there are other spectres on the horizon as the global economy begins to revive, said Rubin.
"By the first quarter of next year the word's really going to change, because instead of deflation and Wall Street we're going to be talking about inflation and energy," Rubin said.
He predicts the world oil price will hit $200 in four or five years, but that will just be a signpost marking a longer ascent.
Other analysts and experts at the Banff event warned the global economy is about to slip into as long as three years of recession.
"We're taking the froth off, but it's going to hurt," U.K.-based Institute of Directors chief economist Graeme Leach said, referring to a downturn in the wake of credit tightening worldwide.
"You ain't seen nothing yet. The economy is going to get significantly worse before it gets better. (We're going to have) much weaker economic growth, much weaker employment growth," he said.
"The bigger the party, the worse the hangover," noted James Bond, chief operating officer at World Bank Multilateral Investment Guarantee Agency. "I think we're in the hangover phase right now. This may be Wall Street, but Main Street is going to hurt."
Rubin argued oil supply has effectively not risen over the past three years and existing, low-cost conventional supply is being replaced with uncertain, high-cost non-conventional supply -- either deepwater or oilsands. Deepwater sources, such as the Gulf of Mexico, face dramatic and substantial rates of decline.
"Every year the marginal cost of the new barrel of oil goes higher and higher," Rubin said. "The U.S. is going to be facing an enormous oil crunch."
At the same time, Rubin explained that due to consumer and industry prices that are far below world market prices for oil in many countries in the Middle East and the Third World, demand there is soaring. He noted for the first time, demand and consumption from countries outside the Organization for Economic Co-operation and Development is about to overtake OECD demand and overall demand will inevitably ratchet higher.
In the wake of dramatically higher energy costs, sharply heightened transportation charges are set to remake the world economic order, Rubin said.
"We're going back to a world where distance costs money," said Rubin, noting the phenomenon has already been seen in the return to competitiveness of U.S.-produced steel, which for many years could not stand up to Chinese imports.
In turn, returned competitiveness is likely to spark wage inflation as workers demand some of the returning profit in industries where transportation costs have made them newly competitive.
In that type of environment, Rubin said, policy-makers will be forced to react.
"That's the world where interest rates are going up, not down -- and it doesn't matter what happens to Goldman Sachs in the next three months because there's nothing the Federal Reserve can do to change that world."
The fundamentals for oil are enormously strong, outspoken analyst Jeff Rubin told international business leaders Thursday -- warning those fundamentals may in fact be too strong as high energy prices spark inflation globally and a reordering of the world economy.
Speaking to the Global Business Forum in Banff, Rubin also argued indicators show the underlying cause of the crisis gripping U.S. and world financial markets linked to the credit crunch -- weakening U.S. home prices -- is close to an end.
"The underlying problem is about to be remedied," said Rubin, chief economist and strategist of the Canadian Imperial Bank of Commerce. He warned that amid global financial uncertainty, investors and corporate leaders need to be careful not to make poor decisions based on what he believes are fleeting conditions. He forecasts U.S. house prices will bottom and begin to rebound by the beginning of 2009, while oil prices could hit $200 in four or five years.
"What's happening out there is a giant head fake . . . that could easily put you running in the wrong direction," Rubin told about 200 senior corporate and government leaders at an invitation-only gathering at the Fairmont Banff Springs.
Rubin's comments came as central bankers pumped or promised $180 billion US of injections Thursday into world financial markets to ensure liquidity amid continued fears about the solvency among major U.S. investment banks and the repercussions of a potential failure.
Nonetheless, while the financial market turmoil will work itself out over time as home prices begin to regain lost ground, there are other spectres on the horizon as the global economy begins to revive, said Rubin.
"By the first quarter of next year the word's really going to change, because instead of deflation and Wall Street we're going to be talking about inflation and energy," Rubin said.
He predicts the world oil price will hit $200 in four or five years, but that will just be a signpost marking a longer ascent.
Other analysts and experts at the Banff event warned the global economy is about to slip into as long as three years of recession.
"We're taking the froth off, but it's going to hurt," U.K.-based Institute of Directors chief economist Graeme Leach said, referring to a downturn in the wake of credit tightening worldwide.
"You ain't seen nothing yet. The economy is going to get significantly worse before it gets better. (We're going to have) much weaker economic growth, much weaker employment growth," he said.
"The bigger the party, the worse the hangover," noted James Bond, chief operating officer at World Bank Multilateral Investment Guarantee Agency. "I think we're in the hangover phase right now. This may be Wall Street, but Main Street is going to hurt."
Rubin argued oil supply has effectively not risen over the past three years and existing, low-cost conventional supply is being replaced with uncertain, high-cost non-conventional supply -- either deepwater or oilsands. Deepwater sources, such as the Gulf of Mexico, face dramatic and substantial rates of decline.
"Every year the marginal cost of the new barrel of oil goes higher and higher," Rubin said. "The U.S. is going to be facing an enormous oil crunch."
At the same time, Rubin explained that due to consumer and industry prices that are far below world market prices for oil in many countries in the Middle East and the Third World, demand there is soaring. He noted for the first time, demand and consumption from countries outside the Organization for Economic Co-operation and Development is about to overtake OECD demand and overall demand will inevitably ratchet higher.
In the wake of dramatically higher energy costs, sharply heightened transportation charges are set to remake the world economic order, Rubin said.
"We're going back to a world where distance costs money," said Rubin, noting the phenomenon has already been seen in the return to competitiveness of U.S.-produced steel, which for many years could not stand up to Chinese imports.
In turn, returned competitiveness is likely to spark wage inflation as workers demand some of the returning profit in industries where transportation costs have made them newly competitive.
In that type of environment, Rubin said, policy-makers will be forced to react.
"That's the world where interest rates are going up, not down -- and it doesn't matter what happens to Goldman Sachs in the next three months because there's nothing the Federal Reserve can do to change that world."
Wednesday, September 17, 2008
Calgary house price drop largest in Canada
Sales activity plunges 28% from last year
Mario Toneguzzi, Calgary HeraldPublished: Tuesday, September 16, 2008
The average MLS sale price for a Calgary residential property in August was eight per cent less compared with a year ago -- the biggest decline in the country, according to statistics released Monday by the Canadian Real Estate Association.
The association's major market survey for August showed Calgary's average price for single-family homes and condominiums was $390,091 during the month. Sales for the month were also off 16.7 per cent, at 1,990, and new listings dropped by 16.3 per cent to 4,103.
Nationally, house sales plummeted by 19.3 per cent in August compared with August 2007 while the average sale price dropped by 5.1 per cent to $316,052.
"Price declines in the pricier major markets are pulling down the overall average price," said Gregory Klump, the association's chief economist. "Significantly lower sales activity in Greater Vancouver compared to a year ago means that the most expensive market in Canada now has less weight in the overall average price calculation.
"Sales activity is down in a number of resale housing markets in Western Canada that earlier posted hefty price increases. Prices continue rising in other markets where price gains have been more modest."
Sales in Vancouver were a whopping 53.9 per cent off from a year ago while Victoria saw a 37.5 per cent plunge.
The real estate association said new listings have eased in many major centres across the country, and now stand at their lowest level this year.
"This trend has been most evident in Calgary and Edmonton," said the association.
On a year-to-date basis, until the end of August, the average MLS residential sale price in Calgary is down 0.9 per cent to $411,510 compared with the same time period last year while the national average price is up 1.5 per cent to $336,225.
But sales activity in Calgary has plunged by 28.8 per cent while new listings have increased by 9.6 per cent. Across the country, sales have slipped by 13.7 per cent so far this year compared with a year ago for the first eight months while new listings have increased by seven per cent.
Calgary's residential real estate market is currently in buyers' conditions, said Lai Sing Louie, senior market analyst in Calgary for Canada Mortgage and Housing Corp.
"There's a lot of supply out there relative to demand and that's putting downward pressure on prices."
Nationally, existing home sales year-to-date have experienced the steepest decline since 1998 excluding March's 19.4 per cent year-over-year slide, said Robert Kavcic of BMO Capital Markets Economics in a commentary on the real estate association's numbers.
He said with sales activity "falling steadily" average prices remain under pressure and the annual decline is the steepest one since 1996.
"Canada's housing market continues to face strong headwinds from declining confidence, low affordability and an upward trend in new listings. While we highly doubt that the downturn in Canadian housing will reach U.S. proportions, slower sales activity and softer prices are still ahead," said Kavcic.
Real estate association president Calvin Lindberg said people have to remember that 2007 was a record year for real estate sales in Canada.
"In light of that fact, our current market can certainly be characterized as stable," he said.
"The Canadian market fundamentals are still solid and mortgage rates are still at near record low levels. The challenge is for sellers to price their home to meet the local market realities and for buyers to realize there is no real estate bubble that will burst and send prices to new lows."
Average Prices
Selected housing markets' average sale prices in August and percentage change from a year before
Calgary $390,091 -8
Edmonton $329,207 -4.8
Montreal $261,604 6.2
Ottawa $282,792 5.6
Regina $237,814 36.1
Saskatoon $279,366 10.3
Toronto $364,880 0.8
Vancouver $557,114 -5.2
Victoria $452,205 -1.2
Windsor, Ont. $164,503 -5
Winnipeg $190,979 12.6
National average $316,052 -5.1
Mario Toneguzzi, Calgary HeraldPublished: Tuesday, September 16, 2008
The average MLS sale price for a Calgary residential property in August was eight per cent less compared with a year ago -- the biggest decline in the country, according to statistics released Monday by the Canadian Real Estate Association.
The association's major market survey for August showed Calgary's average price for single-family homes and condominiums was $390,091 during the month. Sales for the month were also off 16.7 per cent, at 1,990, and new listings dropped by 16.3 per cent to 4,103.
Nationally, house sales plummeted by 19.3 per cent in August compared with August 2007 while the average sale price dropped by 5.1 per cent to $316,052.
"Price declines in the pricier major markets are pulling down the overall average price," said Gregory Klump, the association's chief economist. "Significantly lower sales activity in Greater Vancouver compared to a year ago means that the most expensive market in Canada now has less weight in the overall average price calculation.
"Sales activity is down in a number of resale housing markets in Western Canada that earlier posted hefty price increases. Prices continue rising in other markets where price gains have been more modest."
Sales in Vancouver were a whopping 53.9 per cent off from a year ago while Victoria saw a 37.5 per cent plunge.
The real estate association said new listings have eased in many major centres across the country, and now stand at their lowest level this year.
"This trend has been most evident in Calgary and Edmonton," said the association.
On a year-to-date basis, until the end of August, the average MLS residential sale price in Calgary is down 0.9 per cent to $411,510 compared with the same time period last year while the national average price is up 1.5 per cent to $336,225.
But sales activity in Calgary has plunged by 28.8 per cent while new listings have increased by 9.6 per cent. Across the country, sales have slipped by 13.7 per cent so far this year compared with a year ago for the first eight months while new listings have increased by seven per cent.
Calgary's residential real estate market is currently in buyers' conditions, said Lai Sing Louie, senior market analyst in Calgary for Canada Mortgage and Housing Corp.
"There's a lot of supply out there relative to demand and that's putting downward pressure on prices."
Nationally, existing home sales year-to-date have experienced the steepest decline since 1998 excluding March's 19.4 per cent year-over-year slide, said Robert Kavcic of BMO Capital Markets Economics in a commentary on the real estate association's numbers.
He said with sales activity "falling steadily" average prices remain under pressure and the annual decline is the steepest one since 1996.
"Canada's housing market continues to face strong headwinds from declining confidence, low affordability and an upward trend in new listings. While we highly doubt that the downturn in Canadian housing will reach U.S. proportions, slower sales activity and softer prices are still ahead," said Kavcic.
Real estate association president Calvin Lindberg said people have to remember that 2007 was a record year for real estate sales in Canada.
"In light of that fact, our current market can certainly be characterized as stable," he said.
"The Canadian market fundamentals are still solid and mortgage rates are still at near record low levels. The challenge is for sellers to price their home to meet the local market realities and for buyers to realize there is no real estate bubble that will burst and send prices to new lows."
Average Prices
Selected housing markets' average sale prices in August and percentage change from a year before
Calgary $390,091 -8
Edmonton $329,207 -4.8
Montreal $261,604 6.2
Ottawa $282,792 5.6
Regina $237,814 36.1
Saskatoon $279,366 10.3
Toronto $364,880 0.8
Vancouver $557,114 -5.2
Victoria $452,205 -1.2
Windsor, Ont. $164,503 -5
Winnipeg $190,979 12.6
National average $316,052 -5.1
Friday, September 12, 2008
New house prices post worst record in 12 years
Decline of 0.3% comes after years of stunning gains
Mario Toneguzzi, Calgary Herald; with a file from Canwest News ServicePublished: Friday, September 12, 2008
New house prices in the Calgary census metropolitan area decreased in July from the previous year, one of only three markets in the country to see a decline, according to Statistics Canada.
The federal agency, in releasing its New Housing Price Index on Thursday, said the Calgary area saw new house prices drop by 0.3 per cent in July 2008 from July 2007, the worst performance in 12 years.
In Edmonton, the year-over-year change was the worst in 23-years at a negative 5.3 per cent.
"Markets in these cities continue to adjust after experiencing record price increases in the last two and a half years," said Statistics Canada.
Nationally, the rate of increase in new housing prices continued to ease in July for the sixth consecutive month. The growth rate of the index has been on a downward trend since September 2006, mainly due to the softening of the market in Western Canada, said the federal agency.
And a report to be released today by Sal Guatieri, senior economist with BMO Capital Markets Economics, says Canada faces the prospect of lower house prices in the year ahead similar to many other countries -- the United States, Britain, Ireland, Spain, France and Australia.
"After six years of unsustainable growth, prices have run smack into the affordability wall," says the report. "Demand is sagging, listings are at record highs, and prospective first-time buyers are choosing to rent rather than own."
The average house price in major markets rose 78 per cent from early 2002 to late 2007. The report says Canadian prices increased more than twice as fast as income and since peaking in late 2007, the prices have trended moderately lower.
"Canadian house prices will likely decline moderately further to restore better value," says the report. "The brisk housing tailwind of recent years will likely reverse course, damping economic growth in the year ahead."
Across the country, contractors' selling prices for new homes rose 2.7 per cent between July 2007 and July 2008, a slower pace than the year-over-year increase of 3.5 per cent in June.
On a monthly basis, prices rose 0.1 per cent between June and July.
In Calgary and Edmonton, on a monthly basis, prices dropped by 0.2 per cent.
"Housing continues to cool markedly," said Douglas Porter, deputy chief economist with BMO Capital Markets Economics, in a research commentary.
Porter said the annual year-over-year increase in Canada was the slowest pace since 2001 and down from a peak of 12.1 per cent year-over-year just two years ago.
For the Calgary area, the year-over-year price change was 9.8 per cent from July 2006 to July 2007. The annual rate of new house price growth in the Calgary area peaked at 60.6 per cent in August 2006.
The Calgary CMA includes the city, Airdrie, the Municipal District of Rocky View, Chestermere, Cochrane, Irricana, Beiseker and Crossfield.
Regionally, prices rose at the fastest pace in Regina, which led the nation with a year-over-year price increase of 29.6 per cent, down from its record increase of 34 per cent in April of this year. St. John's was next at 24.3 per cent.
Only Calgary, Edmonton and Victoria (0.1 per cent) experienced year-over-year decreases.
Charmaine Buskas, senior economics strategist at TD Securities, said July's national figures are "yet further evidence that the housing market in Canada continues to cool.
"Looking ahead, there is scope for further correction, in line with a normal housing cycle."
Thursday's housing report followed three others so far this month that show how dramatically the Calgary real estate market has cooled. Total housing starts in August plunged by 60.3 per cent compared with a year ago in the Calgary area, according to Canada Mortgage and Housing Corp.
As well, residential building permit value in the City of Calgary is down 35 per cent to $1.2 billion compared with a year ago. And the Calgary Real Estate Board reported the average MLS sale price for a single-family home in Calgary fell by more than nine per cent in August compared with a year ago, while the average condo price dropped by just over 10 per cent.
New Housing Price Index
July 2007 to July 2008 % Change
Canada 2.7
Calgary - 0.3
Regina 29.6
St. John's 24.3
Saskatoon 13.1
Halifax 7.3
Winnipeg 7
Mario Toneguzzi, Calgary Herald; with a file from Canwest News ServicePublished: Friday, September 12, 2008
New house prices in the Calgary census metropolitan area decreased in July from the previous year, one of only three markets in the country to see a decline, according to Statistics Canada.
The federal agency, in releasing its New Housing Price Index on Thursday, said the Calgary area saw new house prices drop by 0.3 per cent in July 2008 from July 2007, the worst performance in 12 years.
In Edmonton, the year-over-year change was the worst in 23-years at a negative 5.3 per cent.
"Markets in these cities continue to adjust after experiencing record price increases in the last two and a half years," said Statistics Canada.
Nationally, the rate of increase in new housing prices continued to ease in July for the sixth consecutive month. The growth rate of the index has been on a downward trend since September 2006, mainly due to the softening of the market in Western Canada, said the federal agency.
And a report to be released today by Sal Guatieri, senior economist with BMO Capital Markets Economics, says Canada faces the prospect of lower house prices in the year ahead similar to many other countries -- the United States, Britain, Ireland, Spain, France and Australia.
"After six years of unsustainable growth, prices have run smack into the affordability wall," says the report. "Demand is sagging, listings are at record highs, and prospective first-time buyers are choosing to rent rather than own."
The average house price in major markets rose 78 per cent from early 2002 to late 2007. The report says Canadian prices increased more than twice as fast as income and since peaking in late 2007, the prices have trended moderately lower.
"Canadian house prices will likely decline moderately further to restore better value," says the report. "The brisk housing tailwind of recent years will likely reverse course, damping economic growth in the year ahead."
Across the country, contractors' selling prices for new homes rose 2.7 per cent between July 2007 and July 2008, a slower pace than the year-over-year increase of 3.5 per cent in June.
On a monthly basis, prices rose 0.1 per cent between June and July.
In Calgary and Edmonton, on a monthly basis, prices dropped by 0.2 per cent.
"Housing continues to cool markedly," said Douglas Porter, deputy chief economist with BMO Capital Markets Economics, in a research commentary.
Porter said the annual year-over-year increase in Canada was the slowest pace since 2001 and down from a peak of 12.1 per cent year-over-year just two years ago.
For the Calgary area, the year-over-year price change was 9.8 per cent from July 2006 to July 2007. The annual rate of new house price growth in the Calgary area peaked at 60.6 per cent in August 2006.
The Calgary CMA includes the city, Airdrie, the Municipal District of Rocky View, Chestermere, Cochrane, Irricana, Beiseker and Crossfield.
Regionally, prices rose at the fastest pace in Regina, which led the nation with a year-over-year price increase of 29.6 per cent, down from its record increase of 34 per cent in April of this year. St. John's was next at 24.3 per cent.
Only Calgary, Edmonton and Victoria (0.1 per cent) experienced year-over-year decreases.
Charmaine Buskas, senior economics strategist at TD Securities, said July's national figures are "yet further evidence that the housing market in Canada continues to cool.
"Looking ahead, there is scope for further correction, in line with a normal housing cycle."
Thursday's housing report followed three others so far this month that show how dramatically the Calgary real estate market has cooled. Total housing starts in August plunged by 60.3 per cent compared with a year ago in the Calgary area, according to Canada Mortgage and Housing Corp.
As well, residential building permit value in the City of Calgary is down 35 per cent to $1.2 billion compared with a year ago. And the Calgary Real Estate Board reported the average MLS sale price for a single-family home in Calgary fell by more than nine per cent in August compared with a year ago, while the average condo price dropped by just over 10 per cent.
New Housing Price Index
July 2007 to July 2008 % Change
Canada 2.7
Calgary - 0.3
Regina 29.6
St. John's 24.3
Saskatoon 13.1
Halifax 7.3
Winnipeg 7
Thursday, September 11, 2008
Canadians stampede into U.S. real estate
Eric Beauchesne, Canwest News ServicePublished: Thursday, September 11, 2008
Canadians have been flooding into the depressed U.S. housing market, purchasing a record number of homes south of the border, and twice as many as a year earlier.
Armed with what until recently was a strong currency, most were also paying cash, according to the 2008 National Association of Realtors annual profile of international home-buying activity in the U.S.
Canadians have replaced Mexicans as the top foreign buyers of U.S. properties, the survey revealed.
The surge in purchases of U.S. properties by Canadians is due to the combination of the stronger dollar, a drop in U.S. house prices, and last winter's record snowfall, John Clinkard, a consulting economist with Reed Construction Data, said in an analysis of the report Wednesday.
The annual report, based on a survey of U.S. realtors, found that in the 12 months ended last May, nearly a quarter of foreign buyers of U.S. properties were from Canada, double the proportion of a year earlier, reflecting both a surge in Canadian buyers to a record high and a drop in purchases by other foreigners.
"Condominiums were most popular among those foreign buyers from Canada," it said, noting that nearly half of all properties purchased by Canadian buyers were condominium apartments.
Florida and Arizona were the most popular states for Canadian buyers, accounting for more than 60 per cent of their purchases.
The amounts Canadians paid for their properties were relatively modest compared with other foreign purchasers. The median price -- with half higher and half lower -- of properties purchased by Canadians was $277,800 US, well below the $450,000 US by buyers from China, and less than the $297,000 US paid by all foreign buyers. Among the six top nationalities of foreign buyers of U.S. properties, only Mexicans paid a lower median price than Canadians.
Only 5.1 per cent of Canadian buyers paid more than $1 million US.
___________________________________________________
I thought this article might be interesting, I am sure I am no different than most other Canadians that think about owning US properties when the snow starts to fly. In the last year I know of or have heard of people that have purchased properties in Phoenix or vicinity. I have been to Phoenix in the last year to look at properties and get educated to the market. I have found it overwhelming.
Canadians have been flooding into the depressed U.S. housing market, purchasing a record number of homes south of the border, and twice as many as a year earlier.
Armed with what until recently was a strong currency, most were also paying cash, according to the 2008 National Association of Realtors annual profile of international home-buying activity in the U.S.
Canadians have replaced Mexicans as the top foreign buyers of U.S. properties, the survey revealed.
The surge in purchases of U.S. properties by Canadians is due to the combination of the stronger dollar, a drop in U.S. house prices, and last winter's record snowfall, John Clinkard, a consulting economist with Reed Construction Data, said in an analysis of the report Wednesday.
The annual report, based on a survey of U.S. realtors, found that in the 12 months ended last May, nearly a quarter of foreign buyers of U.S. properties were from Canada, double the proportion of a year earlier, reflecting both a surge in Canadian buyers to a record high and a drop in purchases by other foreigners.
"Condominiums were most popular among those foreign buyers from Canada," it said, noting that nearly half of all properties purchased by Canadian buyers were condominium apartments.
Florida and Arizona were the most popular states for Canadian buyers, accounting for more than 60 per cent of their purchases.
The amounts Canadians paid for their properties were relatively modest compared with other foreign purchasers. The median price -- with half higher and half lower -- of properties purchased by Canadians was $277,800 US, well below the $450,000 US by buyers from China, and less than the $297,000 US paid by all foreign buyers. Among the six top nationalities of foreign buyers of U.S. properties, only Mexicans paid a lower median price than Canadians.
Only 5.1 per cent of Canadian buyers paid more than $1 million US.
___________________________________________________
I thought this article might be interesting, I am sure I am no different than most other Canadians that think about owning US properties when the snow starts to fly. In the last year I know of or have heard of people that have purchased properties in Phoenix or vicinity. I have been to Phoenix in the last year to look at properties and get educated to the market. I have found it overwhelming.
Thursday, September 4, 2008
Home prices skid nearly 10 per cent
Average single-family home now $440,625 amid sales drop
Mario Toneguzzi, Calgary HeraldPublished: Wednesday, September 03, 2008
The average MLS sale price for a single-family home in Calgary fell by more than nine per cent in August compared with a year ago, while the average condo price dropped by just over 10 per cent, says the Calgary Real Estate Board.
Sales in both markets also declined -- by nearly 11 per cent for single-family homes and more than 17 per cent for condos.
Data released by the board Tuesday showed the average MLS sale price of a single-family home in the Calgary metro area in August was $440,625, down 9.32 per cent from August 2007 when it was $485,914. The average price of a condo in Calgary metro was $287,832, a drop of 10.27 per cent from August 2007 when it was $320,790.
Realtor Lana Wright, with Re/Max Professionals, said August is typically quiet for herself and husband, Steve, but this past month has been busy for her despite what the CREB numbers indicate.
"We're getting a lot more buyers coming in and, in our experience, they're not as pessimistic as other buyers have been," she said. "They're very well-educated. They know what's going on. I think that they're realizing that the market has stabilized and waiting any longer may not do them any justice. So most will take advantage of what's out there in the market."
Wright added typical buying patterns have been thrown out of whack.
"Historically, (the market) picks up in the fall but I would say the last two years we've not been able to count on anything historically because it's been so odd."
Wright said she's also seeing a little bit of a "surge" in her business because of mortgage changes coming this fall. The federal government announced changes taking effect Oct. 15 which include the requirement for buyers to put down at least five per cent for a down payment.
It is also implementing a reduction of government-backed mortgages from maximum amortization periods of 40 years to 35 years.
"People who are in that situation right now -- those are their options for qualifying -- are out there in the market right now looking," said Wright.
In August, according to the real estate board, single-family home sales were 1,170, a 10.96 per cent decrease from the 1,314 sales in August 2007. In July, it was 1,313 sales.
Condo sales in August were 495, a 17.22 per cent drop from August 2007 when they were 598. Condo sales in July were 535.
As for new listings, in the single-family market, there were 2,270 for August, down 19.99 per cent from a year ago (2,837). In July, there were 2,559 new listings.
Last month, the condo market saw 1,054 new listings, a drop of 11.13 per cent from a year ago (1,186) and down from July's 1,183.
Median sale prices also dropped in August. For single-family homes, it was $398,000, down 7.4 per cent from a year ago ($430,000) and down 2.6 per cent from July ($408,500). For condos, it was $268,500 -- off 10.8 per cent from $301,000 a year ago.
Real estate board president Ed Jensen, in a news release, said the median price for single-family homes is under $400,000 for the first time since January 2007, "which may indicate that properties are being reduced in price and that some sellers have waited too long."
Lai Sing Louie, senior market analyst in Calgary for the Canada Mortgage and Housing Corp., said declining sales in the Calgary market combined with still high listing levels (5,541 for single-family homes and 2,699 for condos at the end of August) are putting downward pressure on prices.
"Right now it's a matter of consumer confidence," he said. "Pricing uncertainty is impacting consumer confidence. People are taking a wait-and-see position. The actual levels of supply are starting to come down, but it's still going to take awhile."
In July, the average sale price for a single-family home was $456,380 while the median price was $408,500. For condos, the average price was $296,338 and the median price was $273,500.
The average price of a single-family home in Calgary peaked at $505,920 in July 2008 while the condo peak was $332,237 in May 2007.
Year-to-date until the end of August, single-family home sales are down 27.57 per cent and the average sale price ($466,677) is off by two per cent compared with the same period a year ago. Meanwhile, condo sales are off by 32 per cent and the average sale price ($307,640) is off by 2.6 per cent.
Mario Toneguzzi, Calgary HeraldPublished: Wednesday, September 03, 2008
The average MLS sale price for a single-family home in Calgary fell by more than nine per cent in August compared with a year ago, while the average condo price dropped by just over 10 per cent, says the Calgary Real Estate Board.
Sales in both markets also declined -- by nearly 11 per cent for single-family homes and more than 17 per cent for condos.
Data released by the board Tuesday showed the average MLS sale price of a single-family home in the Calgary metro area in August was $440,625, down 9.32 per cent from August 2007 when it was $485,914. The average price of a condo in Calgary metro was $287,832, a drop of 10.27 per cent from August 2007 when it was $320,790.
Realtor Lana Wright, with Re/Max Professionals, said August is typically quiet for herself and husband, Steve, but this past month has been busy for her despite what the CREB numbers indicate.
"We're getting a lot more buyers coming in and, in our experience, they're not as pessimistic as other buyers have been," she said. "They're very well-educated. They know what's going on. I think that they're realizing that the market has stabilized and waiting any longer may not do them any justice. So most will take advantage of what's out there in the market."
Wright added typical buying patterns have been thrown out of whack.
"Historically, (the market) picks up in the fall but I would say the last two years we've not been able to count on anything historically because it's been so odd."
Wright said she's also seeing a little bit of a "surge" in her business because of mortgage changes coming this fall. The federal government announced changes taking effect Oct. 15 which include the requirement for buyers to put down at least five per cent for a down payment.
It is also implementing a reduction of government-backed mortgages from maximum amortization periods of 40 years to 35 years.
"People who are in that situation right now -- those are their options for qualifying -- are out there in the market right now looking," said Wright.
In August, according to the real estate board, single-family home sales were 1,170, a 10.96 per cent decrease from the 1,314 sales in August 2007. In July, it was 1,313 sales.
Condo sales in August were 495, a 17.22 per cent drop from August 2007 when they were 598. Condo sales in July were 535.
As for new listings, in the single-family market, there were 2,270 for August, down 19.99 per cent from a year ago (2,837). In July, there were 2,559 new listings.
Last month, the condo market saw 1,054 new listings, a drop of 11.13 per cent from a year ago (1,186) and down from July's 1,183.
Median sale prices also dropped in August. For single-family homes, it was $398,000, down 7.4 per cent from a year ago ($430,000) and down 2.6 per cent from July ($408,500). For condos, it was $268,500 -- off 10.8 per cent from $301,000 a year ago.
Real estate board president Ed Jensen, in a news release, said the median price for single-family homes is under $400,000 for the first time since January 2007, "which may indicate that properties are being reduced in price and that some sellers have waited too long."
Lai Sing Louie, senior market analyst in Calgary for the Canada Mortgage and Housing Corp., said declining sales in the Calgary market combined with still high listing levels (5,541 for single-family homes and 2,699 for condos at the end of August) are putting downward pressure on prices.
"Right now it's a matter of consumer confidence," he said. "Pricing uncertainty is impacting consumer confidence. People are taking a wait-and-see position. The actual levels of supply are starting to come down, but it's still going to take awhile."
In July, the average sale price for a single-family home was $456,380 while the median price was $408,500. For condos, the average price was $296,338 and the median price was $273,500.
The average price of a single-family home in Calgary peaked at $505,920 in July 2008 while the condo peak was $332,237 in May 2007.
Year-to-date until the end of August, single-family home sales are down 27.57 per cent and the average sale price ($466,677) is off by two per cent compared with the same period a year ago. Meanwhile, condo sales are off by 32 per cent and the average sale price ($307,640) is off by 2.6 per cent.
MLS® STATISTICS FOR THE MONTH OF AUGUST 2008
MLS® STATISTICS FOR THE MONTH OF AUGUST 2008
Prepared for the members of the Central Alberta Realtors® Association
City Residential Sales
August 2008 --> 204
August 2007 --> 200
January 01, 2008 to August 31, 2008 $1,496
January 01, 2007 to August 31, 2007 $1,716
Value of City Residential Sales
August 2008 $62,642,250
August 2007 $62,427,893
January 01, 2008 to August 31, 2008 $463,949,967
January 01, 2007 to August 31, 2007 $527,447,333
Selling to Listing Ratio (CITY)
August 2008 74.45%
February 2008 55.16%
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It is my opinion that our market here in Red Deer mirrors the Calgary market in percentages. With CMHC changing its lending guide lines in October I believe that you will see a bump up in sales in September and October because of first time home buyers beating these changes. I think this will also affect sales in the spring of 2009.
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