Edmonton home prices see biggest drop in 23 years

http://www.canada.com/edmontonjournal/news/story.html?id=8a1b04db-2391-4bd3-a10a-f12e8243a128

....................Prices for new homes in Edmonton fell 5.3 per cent in July compared to the same month last year, marking the biggest year-over-year drop in 23 years, said Statistics Canada today.
Edmonton's cooling market showed the biggest year-over-year drop of any Canadian city.
Compared to June, Edmonton new home prices nudged downward 0.2 per cent.................................

Let's talk about my own experience with Surrey, BC - A suburb 25 kms from Vancouver. Although, everybody's talking about the price cuts and high inventory, I hardly see any difference in house prices here. On the weekend, I sometimes go to any open house to get an idea of where the prices are heading. Yes, inventory is going up - unboubtedly. However, the prices more or less remains the same. Townhouses in my own complex with 3 bedroom, 2 car garage and 1500 sq. ft. are in the market for $400,000 (No Basement).Just two blocks away, a 4000 sq. ft. 3 level house priced at $6,60,000. That's too in Surrey, which is a suburb, faraway from Downtown Vancouver. Don't even talk about Vancouver, Burnaby, Richmond, North Vancouver etc. They are even higher.

2 detached houses that I saw two months ago in my neighborhood for 6,50,000 sold for 6,40,000 and 6,45,000 each. I don't consider the price cut of a mere 5,000 - 10,000 a real downturn or a crash.

One of my colleague has been in the market for the last 4-5 months looking to buy a detached house in the nearby suburb (North Delta), but mentioned that prices are still high, and although reduced by 15000/20000 - still unaffordable. He's an IT Project Manager and earning pretty good.

Yes, you could still find a detached house for $450,000 but who is interested in a crap-house, which is 20-25 years old?

Just my experience, and not an analyst's report.

15 reason not to buy (Feel free to add more reason):

1. 11 banks got closed in US
2. Bear Stearns bailed out
3. Finnie Mac and Freddie Mac bailed out
4. Merrill Lynch sold to BOA
5. Lehman brothers filed chapter 11
6. CIBC, RBC, UBS, Citibank already wrote down billion of $
7. $0/40 yrs mortgage window is near to close
8. Finding greater fools are getting difficult every day
9. Inventory is all time in all the cites in Canada
10. Price are already down (15-20%) in western Canadian cities which have the lowest unemployment rate
11. Half brain people are reading "Finance for dummy" than depends upon their expert friend/banker/investor/Real Estate Board
12. Oil is below $100 as TSX is mainly commodity base index
13. There is tons of layoff in manufacturing sector
14. New house Construction is lowest in decade
15. We are not different than US or World

I am surprise and don't know how to answer these people who ask this question repetitively:

"How are all these going to affect me as we are different and my neighborhood prices are not going down?"

http://www.greaterfool.ca/

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The stock market will be hammered, eroding the value of every investor’s portfolio, RRSP and pension. This brings household wealth down, drops confidence and is nothing but negative news for real estate as liquidity is drained away in financial losses.

Credit is going to be a lot harder to find. Banks on both sides of the border have already pulled their horns in a little, and that can only accelerate. Look for far tighter restrictions on loans and mortgages to new borrowers, to builders, for renovation and lines of credit.

An inevitable result is a sharp acceleration in the decline of the Canadian market. Without a steady flow of new investors and buckets of borrowed money, there is no alternative, especially in real estate markets where prices are unsustainable – Vancouver and Victoria, for example.
Further restrictions on mortgage lending mandated by government. In this environment of declining equity, allowing buyers to finance 95% of the purchase prices, is like shooting carp in a tub.

The descent of prices will quicken. With about 90,000 resale listings currently on the market – the highest ever – and this financial crisis spilling over from the south, along with a very costly winter setting in, many sellers will be motivated to bail for a far lower asking price.
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http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=43507229-d64c-4161-895a-9b7cc1d47e67

Get set for $200 oil, says CIBC economist.

He forecasts U.S. house prices will bottom and begin to rebound by the beginning of 2009, while oil prices could hit $200 in four or five years.

Does this guy present any data about last 3-4 year oil consumption along with production which is validated by some independent organization? Does he present any data of Chinese and Indian oil consumption from last 3-4 yrs?

Oil speculation is over and smart people already made money from oil like smart people are staying away from RE after making big $$$ from RE.

CIBC (or him) might invest in oil stocks at peak price and they are struck with advice of their economist and JP Morgan economist. It sounds like same to me that big banks invested in fake mortgage bonds.
Common.. Economists please use more common sense than complex computer data reporting.

Can Washington stop home price declines?

Home prices. That's what the Bush administration's historic Wall Street bailout is really about.

Falling home prices nationwide have acted like dominoes, knocking homeowners into foreclosure and taking down lender after lender, until the entire global financial system was in jeopardy.

Experts say that the government's enormous plan to relieve Wall Street banks of their bad investments has a decent chance of stabilizing home prices, at least in theory. If that happens, it will stop Wall Street's bleeding, but could still keep many families locked out of the housing market.

By buying troubled mortgage debt from major banks, the government can help make more money available to borrowers -- and maybe at lower interest rates. The government also will have more power to modify delinquent loans and keep homeowners out of foreclosure.

"If the government -- as the mega-investor -- can speak with one voice ... there can be big changes in the rate of foreclosures," said Alan White, a law professor at Valparaiso University and a longtime consumer attorney.

The downside, however, is that in many areas like California and Florida, where prices soared and are now falling precipitously, homes in many cities remain unaffordable -- even for well-paid professionals.

For example, Paul Castor, a corporate attorney, is reluctant to buy a home for his family in San Diego at current prices.

He has a down payment of more than 20 percent and has made two offers in recent weeks, but the sellers' asking prices "were unrealistic and I wasn't going to budge."

If nobody accepts his offer, Castor is more than willing to keep renting and hope home prices fall further.

"The root cause of the problem is that we don't have any homebuyers," said Edward Leamer, an economist at the University of California, Los Angeles. "They're going to sit on the sidelines -- by and large -- until they get a better deal."

Rather than reward Wall Street investors for making bad decisions and exposing taxpayers to hundreds of billions in losses, Leamer said the government should be providing incentives for first-time homebuyers to get into the real estate market.

Even if the government's plans succeed, experts don't foresee a dramatic recovery in home prices anytime soon.

"When housing rebounds, it will not do so with the kind of speed and activity that we have seen in the last couple of years when the housing market was strong," said Bernard Baumohl, chief economist at the Economic Outlook Group in Princeton, N.J.

After having been burned by skyrocketing loan defaults, banks are "going to be to be very reluctant to issue any kind of risky mortgage," he said.

Treasury Secretary Henry Paulson gave few details of the government's plan in a news conference Friday morning, but said he would work through the weekend with leaders of Congress from both parties to flesh out the program, the biggest proposed government intervention in financial markets since the Great Depression.

Paulson said that the bailout would cost "hundreds of billions," but said it would be "far less than the alternative -- a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion."

The Treasury secretary also said mortgage giants Fannie Mae and Freddie Mac -- taken over by the government earlier this month -- will step up their purchases of mortgage-backed securities to help provide support to the crippled housing market.

http://www.businessweek.com/ap/financialnews/D93A2BIO2.htm

Quote:

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Originally posted by rahul_singh23

15 reason not to buy (Feel free to add more reason):

1. 11 banks got closed in US
2. Bear Stearns bailed out
3. Finnie Mac and Freddie Mac bailed out
4. Merrill Lynch sold to BOA
5. Lehman brothers filed chapter 11
6. CIBC, RBC, UBS, Citibank already wrote down billion of $
7. $0/40 yrs mortgage window is near to close
8. Finding greater fools are getting difficult every day
9. Inventory is all time in all the cites in Canada
10. Price are already down (15-20%) in western Canadian cities which have the lowest unemployment rate
11. Half brain people are reading "Finance for dummy" than depends upon their expert friend/banker/investor/Real Estate Board
12. Oil is below $100 as TSX is mainly commodity base index
13. There is tons of layoff in manufacturing sector
14. New house Construction is lowest in decade
15. We are not different than US or World

I am surprise and don't know how to answer these people who ask this question repetitively:

---

Why does Real Estate Board not mention how much Re listing expired and what is the lowest price in a particular neighborhood?


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Calgary condo, home prices drop

The average MLS sale price of a single-family home in Calgary metro dropped by nearly six per cent in September compared with a year ago while condo prices fell by more than 10 per cent, according to data released this afternoon by the Calgary Real Estate Board.

In the single-family home market, the average sale price was $444,048 while in September 2007 it was $470,888 - a decrease of 5.7 per cent.

The median sale price also dropped by 6.06 per cent to $395,000 from the $420,500 a year ago................

.......................Year-to-date, up until the end of September, single-family home sales are down 25.1 per cent compared with a year ago for the first nine months of 2008 while the average sale price is down 2.4 per cent and the median price is down 2.89 per cent.

In the condo market, sales for the year have plunged 30.23 per cent while the average sale price is down 3.33 per cent and the median sale price is off by 4.24 per cent.