Edmonton sellers slashing prices.
Looks like the boom has gone bust in Edmonton:
“There’s no sense reducing any product by 5% because it just doesn’t work. We’re seeing reductions of 10% and more,†he said.
Jon Hall, with the Edmonton Real Estate Board, said 85% of single family homes that sold over the past 30 days went for less than the asking price. On average, the final figure was nearly $12,000 less than the seller was seeking.
Condos didn’t fair much better, with 79% going for less than the asking price.
This is interesting because much like major US markets two years ago the market is dropping despite a very healthy economy.
Pratt said she’s also heard some homeowners cashing out and moving back to their home provinces, like Saskatchewan, where homes are cheaper.
Keith Mackie, fleet director for Budget Rent-a-Car, sees it every day. He said demand for moving trucks going to Saskatchewan from Alberta and B.C. has recently increased three-fold.
“It seems like a lot of people are going home,†said Mackie, who’s based in Edmonton. “There’s no doubt about it, it’s a significant number.â€
September 2nd, 2007 at 8:21 am
sheepless in vancouver said:I agree with most of your points, but can't figure out the math. Wouldn't that depend on how much equity you have in the place? If it's 100% of market price and the market goes down 10%, wouldn't you lose 10%?Let's assume a $500,000 condo (the norm here in Vancouver). An investor puts in $100,000 cash towards the purchase and borrows $400,000 from the bank. In effect, he has about 20% equity in the home. When the market drops 10%, the condo is now worth $450,000. But you see, he DOES NOT OWN that $400,000 — the creditor does!The investor owns only the $100,000 of the $500,000 purchase. When he eventually sells it for $450,000, he would only get back $50,000 as opposed to his original $100,000, hence a 50% loss. People always talk about magnified gains by borrowing money to invest. The same is true in reverse!!:I think a lot of people are buying second homes with the intention of selling their current one and moving into the second one. They're buying now and having renters pay the mortgage.A lot of the boomers I know (and I'm one myself) are planning to move into much cheaper accomodations when they retire so they can stretch their savings further.I agree with the viewpoint, except that the majority of the boomers had already done so before this boom had ever begun. Those who hadn't done so earlier were now convinced by external factors that persuade them to invest. This is much like the stock market of the late 1990s. I mean, many of the technology stocks were available for extremely cheap in the early 1990s. I bought Northern Telecomm (before it was called Nortel) for like $8.50 Canadian. I sold them at the high of $100. Anybody would have equally opportunity to buy Northern Telecomm for $8.50, but very few boomers did then. When they realized Nortel was going bonkers, suddenly all these boomers that weren't investors become investors. This is the same scenario we are seeing now. Except that, there are MORE people into it than the last dot.bomb crash.:I think we're going to see a huge drop in consumer spending from this group. Many of us lived frugally through the '70s and '80s and still remember how to do it.Time to brush up those skills again?!?
August 31st, 2007 at 10:36 pm
thevanman said"I said it in the earlier posts that it only takes 10% reduction in RE price to wipe out 50% of your equity!"I agree with most of your points, but can't figure out the math. Wouldn't that depend on how much equity you have in the place? If it's 100% of market price and the market goes down 10%, wouldn't you lose 10%?I think a lot of people are buying second homes with the intention of selling their current one and moving into the second one. They're buying now and having renters pay the mortgage.A lot of the boomers I know (and I'm one myself) are planning to move into much cheaper accomodations when they retire so they can stretch their savings further. I think we're going to see a huge drop in consumer spending from this group. Many of us lived frugally through the '70s and '80s and still remember how to do it.
August 31st, 2007 at 8:14 pm
People were also more frugal back then than the Baby Boomers of today.Ok..I think it's fair to say that Baby Boomers were once savers. In fact, when people buy shelter, they enter into a forced savings program sponsored by a financial institution. That is their 1st instinct. By paying into the mortgage, you are inherently building up equity in the house. When you sell the house, you convert that equity back into cash. In an up market like right now, you sell.But you see, it's not that simple.In real estate terms, men always call shelter a "house". Whereas women call it a "home". Why the difference? Simply put, women have nesting instincts and treat a shelter area as a means to raise a family.When it comes to selling the "home", the best the men could hope for is the right to veto, convince or persuade the other sex to sell.Unfortunately, the majority of them try to have the cake and eat it too!! Keep the home, but use it to raise cash by collateralizing it against a 2nd, 3rd of 4th mortgage in an up market by means of borrowing cheap money. That's what happening in Vancouver right now. That's why the boomers are called non-savers. They are house-rich (note the manly term), but cash poor!They all have a distorted view of the whole housing market situation.They think that it's completely safe to buy these homes using their paid home as an insurance policy. What they don't realize is that, they only paid a "portion" of the debt they owned as equity. It's spread equally among collateralized debt obligations (trophy homes or condos). It's good when the market is up. It's bad when the market's down. I said it in the earlier posts that it only takes 10% reduction in RE price to wipe out 50% of your equity! Imagine these folks have more than one!The banker definitely has something to worry about! Because, unlike stocks, more common folks are playing this risky game as we speak.The problem I see is when to sell.Selling a house is easy in an upmarket if you are the captain of the ship. Even in a slight down market too. Selling a home, however, is tougher in any market.Women call the shots and sometimes, it takes some dire serious events to persuade the two to sell. And when they do, it's usually too late. Capitulation begins. It's already happening in the States and with their President going on TV to reassure the public that everything is fine is a testament of the fact.Remember.. Selling a house is easy. Selling a home is another matter.
August 30th, 2007 at 7:11 pm
The boomers are a selfish bunch, most will live 10 or 20 years beyond their financial means and will rely on their children to support them.Yes and what a shock when they find out that their children are even more selfish than them.The very large immigrant cohort which is coming to dominate voting in the big metros is also not sympathetic to Mr. and Ms. I Want it Now.No, they are not going to end up living in cardboard boxes, but they are going to find out what kind of lifestyle one can lead on CPP/OAS alone. That's all they're going to get from the rest of society, regardless of how much noise they make.
August 30th, 2007 at 3:57 pm
"The demand side is more flexible than that. "True. I guess all I am saying is that areas with more population growth have more building activity if permits are available. Densification is part of what happens as well. Mohican has some interesting stats if you're interested.
August 30th, 2007 at 2:02 pm
mk-kids, look at voter turnout by age group.I'm GenX, and all my life most people I've known in my age group have been practically proud to declare their apathy.And it seems like every generation under 60 is "spending like there's no tomorrow and not saving for retirement".
August 30th, 2007 at 1:14 pm
"We can't just blame the boomers though. GenX is horribly apathetic and self-involved." We not even the best at that.http://www.cbsnews.com/stories/2007/02/27/health/main2519593.shtml
August 30th, 2007 at 12:59 pm
"We can't just blame the boomers though. GenX is horribly apathetic and self-involved." Can you explain your comment about GenX patiently waiting? I'm curious how one comes to this conclusion… I realize we are sterotyping whole generations of people here and thats never a good idea but with respect to the babyboomers there's loads of evidence to support that they are spending like there's no tomorrow and not saving for retirement, etc… (actually just linked to a msn article on the friday-free-for-all thread). How do you measure apathy and self-involvement? What sort of info is there to support such a claim? Most of the GenX's I know don't fit that description at all so I'm curious…
August 30th, 2007 at 12:44 pm
We can't just blame the boomers though. GenX is horribly apathetic and self-involved. We are soon going to be baring more of the burden of maintaining our society and economy, so we need to start demanding proper compensation. Don't be afraid to ask for a raise (or seek a better employer) because there are lots of jobs out there.
August 30th, 2007 at 11:46 am
I agree with mk-kids. They also represent a huge voting block, so they are likely to get what they want. Sad times for me.
August 30th, 2007 at 10:10 am
"People think very one over 55 is filthy rich and that is just not true. They were the first generation of none savers and one day the chickens will come home to roost."Unfortunately it is the generation after the boomers that will pay, not the boomers themselves. The boomers are a selfish bunch, most will live 10 or 20 years beyond their financial means and will rely on their children to support them. They will also tax our public health care system & pension plan to extinction. I hope I'm wrong but the evidence seems to point that way…
August 30th, 2007 at 9:51 am
"Unprecedented residential real estate sales across B.C. represents just the "the tip" of a retirement demand curve that will continue for years, according to the BCREA. " I would have to agree with Freako on this. However its a myth that retirees want to move elsewhere from their children.People here in Victoria think that retirees will keep real estate propped up even though most average famlies can't afford to buy anything. It is almost as if people suddenly decided to retire and retiring is something new. My parents retired 20 years ago and bought a condo in Arizona. Friends parents bough in Florida.Not everyone wants to buy in Victoria or wants to go to BC for that matter. Sure, some will, some will go elsewhere and many if not most will stay put and travel. People actually want to be close to their families. People have been retiring here since the 60s – it is not something new. People were also more frugal back then than the Baby Boomers of today.Our banker in Toronto could not believe how many Baby Boomers close to retirement are taking out mortgages to pay for 2nd properties and trophy houses. She was wondering what is going to happen in the future with all this Baby Boomer debt. She had never seen people in their 50s and 60s with so much RE debt before and thinks it is going to be bigger than the sub prime problem.People think very one over 55 is filthy rich and that is just not true. They were the first generation of none savers and one day the chickens will come home to roost.
August 30th, 2007 at 9:46 am
there must be more dwellings than there are families to fill them or there would be homelessnessOh come now. The demand side is more flexible than that. Average household size grows with declining affordability. Grandma/Grandpa or kids move in with Mom and Dad, singles get roommates, etc.Extreme case is places like Ft. McMurray and Whistler. People go where the jobs are, not where the vacant housing is.
August 30th, 2007 at 9:36 am
Vancouver has a huge labour shortage for entry level jobs. We should be attracting more people from around the country, and around the world. BUT they can't afford to live here on $12/hr.
August 30th, 2007 at 9:26 am
Please note that this 1.3% population growth is at a time of roaring economy. Think about all the construction workers, and people who serve these construction workers, that come from rest of Canada, including Ontario, Quebec, Atlantic Canada. Basically provinces that haven't had a bubble yet.
August 30th, 2007 at 9:21 am
Seems like this bubble is a Western Canada thing, now spreading to Saskatchewan. I'm in Montreal now, and it takes a while to get used to the lack of cranes. The only crane I found is for the expansion of Concordia University. Apparently if something burns down, it doesn't get rebuilt– the RE price in Montreal can't compete for material and labor, I guess. Shall I "snap up" some RE here in anticipation of the spread of bubble? The economy is mediocre, and apartment vacancy rate is high here. But maybe Uncle Bob would take a vacation here? "Be bold or move to Newfoundland"?Jokes aside, I think this bubble won't have much to go, if only for the completion of new construction. Hopefully I will return in 2009 to a better and saner Vancouver. After living in Montreal just for a few days, I can see the merit of rapid transit and high density housing. That doesn't justify the wish rents asked on Craigslist, though.
August 30th, 2007 at 8:59 am
"SATV. Well said."Now that is what i'd call a contradiction in terms…
August 30th, 2007 at 8:36 am
SATV. Well said. Remember only serious bear posters will be stroked.
August 30th, 2007 at 8:25 am
JIM,do you have microscope at home,your place is THA BOMB I have melt my heart there so many times.how do you manage things here you might be a millionire,not less than 10.can't stop my self saying all this.if you like to share your biography……
August 30th, 2007 at 8:09 am
"Unprecedented residential real estate sales across B.C. represents just the "the tip" of a retirement demand curve that will continue for years, according to the BCREA."I would have to agree with Freako on this. However its a myth that retirees want to move elsewhere from their children.
August 30th, 2007 at 7:54 am
Make that "live in either place". Its early.