Prime Example of Media Affecting Outlook on Real Estate Market

TD predicts the average price of a Calgary home will fall from $459,500 to $439,500 in 2015 (-4.4%) and then to $424,500 in 2016 (-3.4%).    Sales are expected to plummet by -47% this year and -1.9% next year.

The report goes on to say: “Calgary and Edmonton have already experienced a sudden and abrupt turn, and by January, existing home sales had already slumped by 45% and 30% from peak levels reached last year, respectively. Meanwhile, annual average existing home price growth slid into negative territory.”

It’s too bad TD is focusing entirely on the average price which is a volatile and misleading measure in the context of the following facts:

  • Median price was up 1.08% y/y in January
  • Benchmark price was up 7.69% y/y in January
  • Teranet HPI which tracks repeat home sales was up 7.1% y/y in January
  • Luxury sales ($1M+) in January were down -42% y/y

If the Calgary real estate market continues on this path, price declines are obviously expected.  However, I think TD is jumping the gun by stating that prices have already slid into negative annual growth by referencing only the average price.

 

The above is an excerpt frohttp://calgaryrealestatereview.com/2015/02/12/td-calgary-edmonton-housing-markets-likely-to-correct/

 

This type of media attention is exactly the kind that can cause panic in the market place.  There have been layoffs in the oil sectors over the last few months with others expected to continue over the next 6 months, this will certainly have an effect of the average sale price in Calgary and area but what that impact will truly be is yet to be seen.  There are still many people moving to Calgary for work – not just on the oil rigs but in construction and other sectors as well which are still doing well and are not as impacted as the oil patch and related industries.  I think that this correction was on the horizon for a number of months now and was going to happen no matter what the oil prices did, the oversaturation of high priced homes was incongruent with the buying power of your average Albertan.  I am speaking of the true buying power of the average Albertan and not the influx of buyers that are only buying due to the historically low interest rates and are going to be in trouble in 5-8 years when the rates start to increase.  The media plays a large role in public perception of how a province is doing fiscally and they of course sensationalize the little things to sell advertising – the true fundamentals have not yet to greatly decline in Alberta from what I have seen so far, based on that I say again that it is too soon to tell on whether or not this current market blip will end up resulting in a downward trend.

 

To your success

 

Tim R

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About Tim Reid

About Tim Reid

Tim is a sophisticated real estate Investor and Telecommunications Engineer. He has completed projects in Calgary and the US, and has partnered with experts in all areas of real estate.

Tim is also a real estate educator/Mentor who is always willing to help new investors accelerate their business to the next level. Through holistic and custom courses Tim helps investors of all backgrounds reach their business goals faster.