“Resale prices soar within Calgary” – Really?

As soon as I saw that chart in October’s stat package, I wondered how long it would take until those figures were taken out of context. It only took until the weekend.

It looks as though Calgary’s real estate market is on the upswing.

Several communities had substantial price increases and sales from January to the end of October compared to the same period last year, says the Calgary Real Estate Board.

More than 61 per cent saw increases in the average number of sales, with Collingwood leading the way with a whopping 220 per cent increase.

When it came to price increases, the southwest neighbourhood of Shaganappi took centre stage with average price increases of 140 per cent compared to 2010.

Can you imagine a 139.58% price increase in today’s market? Let’s take a look at what really happened in Shaganappi.

Through January 1-October 31 last year Shaganappi had 30 sales with an average price of $186,350. Why so low? 25 of the 30 sold were condos with 23 of them selling below $200,000, many of  them foreclosures. (Edit: the previous wording made it sound like all of them were foreclosures)

This year, until October 31 there were 23 sales of which only 7 were condos. This resulted in an average price of $446,461.

$186,350 to $446,461 = 139.82% increase.

Sorry Shaganappi homeowners – house prices didn’t double over the last year.

Sales, however, have shown a marked improvement. In Collingwood, sales did surge 220% from last year. From 10 sales to 32.  Even more than the 27 recorded in 2009 and the 25 in 2008 during the same time period.

Anytime you read reports, whether positive or negative, dig a little deeper to find the truth behind the numbers so you can put it in perspective.

5 responses to ““Resale prices soar within Calgary” – Really?

  1. Hi Mike, indeed this kind of pumping seems so desperate. Who is it pulled in? The market does look in better shape this year than last – for the moment – but no that great.

    You’re right, sales have definitely improved – compared to a slow 2010. Prices seem to be going sideways now (flat) with slight dips and blips along the way
    -Mike Fotiou

  2. CanuckDownUnder

    I’ve seen similar junk presented as news in Australia – it took about 5 minutes to discover that the “hottest” suburb in the country was lucky to register a single sale each month. Very statistically significant! 🙂

    I’m not sure why CREB would publish such meaningless numbers. Any chance you could get them to provide some balance and show us the bottom 10 communities? After all, if “nearly half of all Calgary communities” saw prices increases then more than half didn’t.

    As you alluded, publishing the “bottom 10 communities” would be as completely useless as the “top 10 communities” without the proper context. Since both condos and SFHs were lumped together, even a different sales mix between the 2 years would produce drastic price swings
    Mike Fotiou

  3. The overwhelming majority of people can’t appreciate statistics and when they are significant. A lot of otherwise intelligent folks I know think that anecdotes are more significant than statistics which is disappointing. It hardly surprises me that journalists who often have no training in math or science or easily confused by them. This “pumping” is less intentional than just incompetent.

    My sense is that the market is flat. Prices are barely keeping up with inflation and we are slowly picking up sales pace from historic lows. We will see things pick up as the employment picture continues to improve.

    Wages are also much higher Y-o-Y: 4.8% higher in Alberta – that suggests housing is actually much more affordable than last year for Albertans.

    Thanks for your thoughts! How much of an impact do you think there will be when interest rates finally rise, or do you think the effect will be negligible if they are increased slowly?
    -Mike Fotiou

  4. Mike,

    Thanks for taking time and analyzing this data..! I have no words to thank you for providing such a balanced view.

    My two cents…

    Yes, job market is improving and wages are rising. But remember we have more than 70% (can you share whats the exact number of Alberta?) of home ownership and 96% employment. Interest can’t go down any more.

    House prices may be flat or wiggling around historical average. To me renting is still cheaper than buying…I will wait until end of next year to see how this Europe thing unleashes…


    According to the 2006 StatsCan census, Alberta homeownership rate was at 73.1%
    – Mike Fotiou

  5. Hi Mike,

    Thanks for bringing balance and facts to the table!
    I have been watching Hidden Valley and the prices have been pretty stagnant for a long time.
    It seems to be a tale of two markets; funky inner city seems to sell for close to list – My observations show that Altadore seems to be very popular with attached infills going close to list in the $800k range.
    The burbs seem fairly flat.
    Anecdotaly country residential and high end homes >$1M seem to be going for a 10% discount or more over list and take a long time to sell.

    It might be stating the obvious but it seems like quality at the right price is selling right now but the rest just sits on the market.

    Thanks again for being a beacon of reason!

    I appreciate your comments, Marty!
    – Mike Fotiou

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