Weekly Market Update, Nov. 3/17

Prices for SFHs are up year over year. Where are the doomsday predictors now?

Wait until after January 1st, when Trudeau's mortgage destroying plan comes into effect.

@GM:

I don't think that's a big issue. The banks still want to do business and actually compete for it. If the banks see a decrease in business, they will simply drop the posted interest rate by which borrowers are required to qualify. For example, CIBC has a posted 5 year fixed at 4.89%. That's an inflated rate no one with good credit will actually accept. All they need to do is to drop that rate to be more in line with the actual rate people are getting, if they want to qualify more borrowers.

Agreed, it won'the have much effect. Sales will continue to rise.

Your interpretation..... show the last 10 years and see the difference... the prices are way lower than in 2009 on nominal terms.... forget about inflation.... Edmonton real estate has been one of the worst investment options since 2007-2008... Or you can say prices are 25-30k lower if we compare with June -July prices, right?

You couldn't be more wrong. In November 2008 we were at an average of $360k for SFH. Now we're at $425K, a nominal increase of 18%, Inflation, meanwhile, was far less than 18% according to the Bank of Canada inflation calculator. #fakenews!

I work for a large bank in Edmonton as an economist, so you'd better be able to back up your 'facts' with evidence.

count interest rate paid on the mortgage, taxes and maintenance... you, economist? hahaha....

The posted rate to be used is that of BOC which cannot be manipulated.
See you next year with lower prices which is not bad anyways specially for millennial and young home buyers.

I know there are quite a few problems in Alberta, but here in Toronto, we have something like this.

https://www.thestar.com/business/2017/11/02/north-york-remax-brokerage-has-accounts-frozen.html

So the shortage will be covered by RECO insurance. Deposit up to $100K per claim. Max amount is 3 million, if there is more than 3 million dollar claim, it is then prorated.

One would think your deposit is safe when it is in trust account.

Resale condos that once fetched $250,00 in 2007 are now listed at $125,00 ten years later the exact same townhouses. Even cocoa did better over the last ten years.

The new B20 OSFI rules will poleaxe Vancouver. Every piece of real estate sells at the high end no matter what it is. Vancouver will fall the most of any city in Canada (maybe Brampton). It'll be a toss up Brampton or Vancouver?

ReidBuilt Homes is one of Alberta's largest homebuilders and on Thursday it lost its court battle to restructure its debt and fell into receivership after the Royal Bank of Canada sought to collect more than $64.6 million.

https://ca.yahoo.com/news/half-finished-homes-lots-questions-155920526.html

You were talking about houses prices, not total cost of owning a house. Nice job changing your argument after you were proved wrong.

ReidBuilt was my builder for my very first home back in 80 when I was in Edmonton. It was a small builder back then, but kept expanding since.

So many negative stories.

Wow

Right with you there Wally. The only reason why we're seeing sideway sales is that people are chasing the deadline for the stress test due on Jan 1 exactly the same for the last quarter of 2016. Facts on the ground are that a lot of contractors are hurting, flat sales and too high prices for SFH. It's staring right on your face Tom and you still don't get it. Never trust analysts, the number are only good when it suits them.

Reid was a great company that built quality homes. Really string on the construction side of the biz with top notch integrity in their middle management.

But, ownership and senior management didn’t manage conservatively enough to withstand any shocks...then one hit on a land deal gone sideways in BC. Boom. Done. Less to do with the poor Edmonton market, more to do with too much leverage and a bad investment.

I don’t think he’s that wrong, Tom. Same-house values have been sideways for most of the last decade. You cant cherry pick your starting point from the ‘08 trough. Certain areas/types of housing have continued to appreciate...and some have declined. On the whole, most people who bought in the last decade are lucky to be even money after inflation. And it’s not wrong to throw in cost of ownership when calculating return...in fact if you don’t, it’s not a valid analysis.

There’s lots of people underwater who havev bought in last ten years. I’ve got an underwater condo, not afraid to admit it. Bought on a whim early 2016 thinking Oil never stayed low for more than a couple years...did my financing and document review homework ahead of time, urgent sale, quick close, unconditional offer... got it for 20% under list...cheaper than any comparable sales in the building in recent history...thought I was brilliant...bad bet. Good news is it cash flows after all expenses, so I’m hoping to ride out the dip. I’m hardly unique though. On the flip side, had I bought a SFH in Westmount, I’d be money ahead. I think most people’s houses are worth less now than three years ago.

Let's look at OFSI stress test effect:

1/ Previously, if you don't qualify for the insured mortgage. You just have to borrow money to pay the 20% and you are in
2/ This stress test doesn't apply to existing mortgage. Hence a rush of people trying to get in before Jan 1
3/ You need a bigger income to qualify for mortgage.
4/ Force more people to rent means higher rent
5/ Force people to downsize, condo will boom
6/ SFH is for rich people in Toronto and Vancouver, which is the norm elsewhere.

You may say that will cause the real estate market to collapse. Wrong.

It just means that the government now has more say. They can adjust the BOC posted rate.

It may also mean that there won't be a 20% increase in house price, this applies to Vancouver and Toronto, elsewhere it is a different story

There were quite a few Foreclosure sale in this building. Back in 2014, average price for a 1 bedroom suite is $300K

https://www.realtor.ca/Residential/Single-Family/18615537/208-1899-45-ST-NW-Montgomery-Calgary-Alberta-T3B4S3-Montgomery

Looks like this guy lost his tenant and "his" home went into foreclosure during his listing. The new normal list your house and get no offers at all then walk away while it's listed.

http://www.edmontonhomesweb.com/listing/e4079285-575-abbottsfield-road-edmonton-ab-t5w-4r3/

The doomsdayers and the right to left wing ideological pundits, like usual, are hiding when the argument nor evidence do not go their way.

The Ontario-Quebec federal liberals continue to mingle in our provincial markets, and when that happens, market failures occur for Alberta. Add to that, you have the new leader of the UCP who's never had a real "private market" job in his life dictating what's best for Alberta.

Interesting days to come.

yeah, sky is falling. I have read this over the last 9 years here. Sky is falling...

I happen to have a SFH in Brampton as an investment that I brought in April, 2016. It has appreciated 30% even in today's market.

I'm using sold price of a house that is sold about 2 weeks ago. Took a month to sell.

It will be interesting to see what the value will be in a year from now.

Sky is not falling ....

All it means it is a good time to buy in the next year or year after. Buy low sell high

Agreed. Oil is recovering, 2018 will be hot, 2019 more so.

Brampton is probably the one of the few cities that still has land available for SFH. GTA Population is growing.

FYI, got properties in Brampton and Pickering. People are now buying in Whitby. One can check out the price there too.

We will check this out a year from now.

Lots of people are talking about Vancouver would crash early this year (if you remember my posting last year).

At the end of the day, real estate is trending up; just like stock market.

Oil just hit a multi year high!!!

Even if oil goes up the housing recovery will take longer to materialize I'd say 1 to 2 years. In the meantime the house price will continue its downward correction slide for a while before it hits bottom.

It's a given Brampton will fall the most of any city in the GTA. The ratio of house prices to income is by far the highest in the entire GTA. The new B20 OSFI rules will take down Brampton.

What bottom? We're up from last year in terms of SFH prices. You have so many alternative facts haha.

Tom, That's exactly the reason why prices will go down I mean because they didn't go down in the last two or three years they are now due for a correction.
In the 80's recession prices went down about 20% over a three year period. In the current recession which is a bit less severe than in the 80's prices were artificially kept from falling due to a number of reasons but eventually the correction is unavoidable because it's part of the RE cycle.

The longer the prices stay high the less chance that the prices will crash. Also many people have maxed out Heloc. Making it impossible to sell there homes at lower values. I have thought due to so many negative factors in the last couple years that the market would crash. Yet that did not happen. I believe we are going to see better times in the next couple years.And I think the worst is behind us.
As far as the rule changes I believe credit unions and treasury branches do not have to follow the rules. Is this correct?