Metro-Calgary Sales & Prices at mid-December 2008

Metro-Calgary has recorded 277 Single Family Home and 118 condo sales month-to-date in December (1-16th)   This is down from last December where 515 SFH and 230 condo sales were recorded during the same time period.

(All figures below are for the same time period, Dec 1-16th)

SFH median is down $30k,  from $410,000 to its current $380,000.   The average price has also dropped approximately $26k, from $442,166 to $415,908.

Condo average prices have dropped from $312,166 to $280,356 with the median falling from $289,500 to $253,500.


15 responses to “Metro-Calgary Sales & Prices at mid-December 2008

  1. i’m amazed that prices are hanging in considering the oversupply and general economic conditions. I can’t help but think come january we dive off the cliff!!

  2. Rational Exhuberance

    If I was a seller, I would immediately looks at all my competition, find the lowest priced one, and list my property 10% below that.

    It would likely sell immediately and I would avoid “chasing the market down”. Given that prices of many types of homes in Calgary tripled since 2002, there is a lot more room to go down.

    Better to get out now, still with lots of equity intact (provided to didn’t HELOC to go on vacation, buy a car etc.), than chase the market down, by pricing your house at “comparable” levels with the competition, which also isn’t selling.

    Do these sellers really think that a 50s era bungalow in an ordinary middle class neighborhood is worth $450,000, when 6 or 7 years ago those were selling for $150,000?

    Get real people. The last few years were a bubble. The bubble is now over, and the faster you understand that and reduce your price accordingly, the faster you can move on with your lives.

  3. Rational Exhuberance: I believe that many sellers are aware of the situation, but they find themselves in a predicament.

    This memo was released by a Law Firm late in late November:

    “Recently, our office has become aware of many situations where the seller has entered into a contract with more owing on their mortgage security that the house sold for. As a result, the seller does not have sufficient funds to cover the mortgage payout…”

    In a similar vein, we received this memo from CREB, stating in part: “Now that market prices have moderated, many of you may be finding situations where mortgage amounts are higher than the suggested list value…Have the seller make prior arrangements with their lender for a monetary shortfall payout and release of the caveat, in the event of a sale.”

    There probably are many Sellers out there that want to price themselves competitively but don’t wish to be owing the bank after the home is sold. This could be why we have reached a temporary impasse between sellers, not wanting or unable to reduce their prices, and buyers who are holding out for a better price. In this situation, buyers have time on their side.

  4. i’m seeing some very aggressive pricing on builder spec homes, I can’t help but wonder if some of these guys arent in serious trouble.
    Someone told me that in some neighborhoods builders are offering rent to own!!

  5. Rational Exhuberance

    Mike. Good point on those that are “underwater”.

    However, my comment is more directed at those that purchased many years ago, lets say before 2003. Lots of those people still have significant equity in their homes if they sell at “current” prices. However, they are holding out for the fantasy prices that their neighbors and friends got in 2006 and 2007, and they listened to the CREB who tell them that the market will heat up again in the spring, if they can just wait it out a couple of months.

    It is those people who I am recommending to take a dose of reality, and sell now, before it is too late and they too are underwater.

  6. CJ, by chance did you hear who these rent-to-own Builders were?

    Rational, thanks for clarifying 🙂

    Interesting sidepoint: Of the 2279 condos currently listed and active on MLS, over 500 were built in 2006 or newer; SFH: almost 1000 out of the 4672.

    If we were to change that date to 2003, it gives us 1479 (32%) for SFH and 803 (35%) for Condos.

    Of the remaining 65% or so homes listed, how many were purchased in the past few years and are now reselling? And out of those sellers left, how many didn’t take out HELOC’s and still have a substantial amount of equity? (Just musing…)

  7. mike i didnt actually hear who the builder was but the person who told me said garrison green was the neighborhood.

    Mike says: Thanks, CJ! Some of the builders there are Artisan Homes, Aspire Condo Living (Jayman), Sandlewood Developments, as well as two Senior/Assisted Living projects under development.

  8. Rational Exhuberance

    Lots of good questions Mike. I have friends that actually think that their HELOC limit is like “cash in the bank” or “dry powder”, and spend it as such.

    Someone should let them know that it is simply debt, and the bank has the ability to reduce the limit and/or increase the interest rate whenever they want. Read the fine print.

    I will re-iterate my point. It is not the buyers responsibility to over-pay for a house, just because the seller has a HELOC which they used to buy a BMW or a vacation to Hawaii. The faster that the sellers understand this, the faster they will lower their prices, sell their houses, and move on with their lives (even if not a rich as they thought they were).

  9. All I can say is that the worrying is over and I am glad to have sold my house. We unfortunately commited to a new build before the uncertain conditions hit in October. We sold for 22000 under our list at 285K. Selling was a bigger worry than having a higher mortgage due to prices dropping. We can now move on ….

  10. We are going to wait it out , we want to buy but do believe time is on our side. I do think many sellers are still out to lunch on the price. My banker said they do think there will be a price slide of 25% in 2009 . With the oil prices low , I think once the layoffs start it will get scary for a lot of young ones that bought high. Just like oil has fallen over 60% houses can too. Lets face it 400,000 for a 2 bedroom condo with condo fees LOL thats just way out there . SFH is the place to buy not a condo.

  11. We decided to wait as well. I’m thinking about 6-8 months.

  12. Many buyers are opting to “wait it out” – there’s no point in jumping into a such a large financial commitment when the outlook is so uncertain.

    There were 846 SFH and 393 Condo total sales last December. So far this month: 409 and 189.

    The full December real estate review will be up later this week.

  13. First time poster, long time reader.

    As a buyer, I think waiting it out is prudent. Paying 10% more for a home in 6-8 months because the market recovers is low risk. Buying and taking a 25% beating can get you into trouble dependent on debt load and financial position.

    The interesting part of this point in time is if you own your house outright and are looking to upgrade.

    I am fortunate to have bought in 2001, and raced to pay it down. My house value has approximately doubled, but is still in that median single home range. Taking a 15% price hit to move it quickly, so I can secure a larger home with that same 15% price reduction makes sense. I may miss on an addtional 10% swing downwards, but long term it doesn’t really matter if your debt ratios are conservative.

    I think this is how the trouble will start. Those that can drop (impending retirement etc) will do so, and those that are stuck with those foolish HELOC s will find themselves in a heap of trouble.

    The important consideration in this market is timeline. The longer the planned timeline to keep the property should drastically reduce the risk.

  14. Thanks for all your insightful comments everyone. It’s great to read your opinions, keep them coming.

    Canada’s House Price Index has just released October’s report: (remember, they’re on a 2-month delay)

    Calgary home prices were down 7.5% from a year earlier. It was a fourth consecutive month of both 12-month declines and monthly declines. The Calgary index has been down from the previous month in 11 of the last 14 months, since it also declined in each of the seven months from September 2007 through March 2008.

  15. December’s month end review will be available on Monday. In the meantime you can view the month-end unofficial stats here.

    CREB: “Due to the holiday the statistics package for December 2008 will be released Monday, January 5, 2009. Thank you for your understanding. “

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