It’s a time consuming and sometimes frustrating position to be in. As neither a pumper or doomer, I disprove anecdotes and spin from both camps and end up getting double the criticism for my troubles 😉
Let’s start with the cratering condo market Anecdote Allan speaks of over a Greaterfool today:
Allan called me from Calgary this afternoon, as I hurtled past the hookers and the homeless in downtown Toronto, with woman troubles. And condo worries. “I’ve had my place on the market for two months now,” he says, “and just one lousy showing. I priced it aggressively, too, twenty thou below the latest recent sale.”
Below what he paid three years ago, too. If he sells at his asking price, he’ll be down at least fifty thousand, but in reality the loss will be far steeper. “People in this city are smoking it, telling each other the market’s going up,” he says. “They think oil makes it different, but that’s simply a lie. I know.”
Anyone will tell you that if you’ve only have had 1 showing in over two months there is no way it’s priced “aggressively”, especially with the number of condo sales Calgary is racking up (more on this later)
Interestingly, I only found 1 “Allan” with a condo listing on MLS that has been listed for over 2 months that had a previous sale in 2009. The difference with this particular Allan is that his unit is listed for $68,800 more than it previously sold for in 2009.
So which “Anecdote Allan” is the right one to extrapolate the entire condo market off of? The answer is neither. Anecdotes, while amusing and make for interesting conversation fodder, are utterly useless.
The following chart on condo sales will serve a two-fold purpose. First to show that the condo market is actually performing better this year, and second, how the mortgage rule changes have yet to dampen sales.
Since the latest mortgage rule changes that came into effect on July 9th (Chart start date begins on the 10th just incase some stragglers were approved) sales have increased 20% year-over-year. And up 42.5% from the same time period in 2010. The numbers are clear and divulged for you. But that isn’t as fun as hyperbole and anecdotes, is it doomers?
Then we have the pumpers where real estate is always sunshine, rainbows and kittens. This group is equally as frustrating to deal with.
One agent disagreed with CREB’s recent forecast of a slowing market because his office had been seeing sales levels similar to the run up to our boom. Goodie, another anecdote. Some might point to the condo chart I posted above and say, see? Condo sales are going up, up, up!
But when you compare sales levels to what they were during the run-up to peak prices in 2007…
…it’s easy to see how far away from a boom we still are. Sales are off 27.7% from the same time frame in 2005 and prices still haven’t recovered to where they were during the peak.
Browsing through the sales so far this month reveals that the vast majority of units are still selling well below their 2006-2007 prices. Those that previously sold in 2009-2011 are a mixed bag with some selling for more and others less. It isn’t cratering, it isn’t booming. It’s “meh”. But a “meh” market doesn’t make for compelling news, does it? That’s why you have experts speaking of frenzies or apocalypses – it gets the headlines.
In case you were wondering, here’s how the single family home market has been performing since the mortgage rule changes this summer:
Sales are up 10.5% year-over-year and 27% from 2010. Clearly, the mortgage rule changes have done little to negatively affect buyer’s spirits. But to call it a boom? Hardly. Sales are down 26% from 2005 and 14% from 2006.
Price-wise, SFH’s have performed better than condos with many homes near or above their selling prices in 2007. Keep in mind that it was a 5.5 year white-knuckle journey of reclaiming equity and the following years might be just as harrowing.