So, what do you call it when the average price of houses in a city plunges by $88,522, or a riveting 17.5%?
If youâ€™re Bonnie Wegerich, itâ€™s a â€œstable and balanced market.â€ In fact, she adds, â€œthere is no free fall here.â€
And so is born the nationâ€™s latest spokesmodel for real estate, another blinkered career realtor voted into a position of market influence and media stature, as president of one of our largest real estate boards. Like her counterparts in Toronto and Vancouver, Bonnie has interpreted her job as meaning she must try to restore consumer confidence in housing by fibbing about it.
At a forecast conference on Wednesday the 19-year housing veteran declared the average house price in Calgary this year will drop by 2% from its 2008 average, to just over $450,000. At the same time, she adds cheerily, sales will rise by 10%. â€œMy advice,â€ she told a breathless metropolis of pent-up buyers, â€œdonâ€™t wait too long.â€
But, there are a few problems. First, the average price now in Cowtown is $417,398, down from a peak of $505,920. So, for the average price to fall by 2% from the 2008 average, it will actually have to increase to $451,000, a jump of 8%. Thatâ€™s about as likely as oil going back to $100 a barrel this year.
And speaking of oil, at forty bucks or so, itâ€™s already low enough to have forced big cutbacks in new projects, to give Suncor its first loss in 17 years, to rob Alberta of $5 billion in royalties and cause the preem this week to say the collapse in oil sands expansion is â€œa No.1 issue for us in terms of jobs.â€ So where, exactly, is all this consumer confidence and money going to come from to jump housing prices in Calgary by four times the rate of inflation?
And what of market momentum? Fewer than 450 single family homes sold last month, a massive 47% decline from the same time a year earlier, and 33% lower than the previous month. Condo sales tanked by 48%. In fact, outgoing CREB spokesmodel Ed Jensen admitted how negative market sentiment is, saying â€œour third quarter really hurt us for unit sales.â€
So, given a US-style collapse in sales, a US-style dump in prices, crushed commodity prices, buyers on strike and a screeching halt to oil industry expansion, what does Bonnie Wegerich give as her reasons the housing market is a great thing to jump into right now? Well, here is it, as detailed in her speech at Stampede Park: â€œI think some buyers are trying to predict the bottom of the market. But record low mortgage rates, affordable prices and great selection will eventually get people buying again.â€
Then Bonnie closed her eyes tightly and clicked her heels three times.
Here are the latest housing sales numbers, for the period ending a week ago. Is this what prompted Ms. Wegerich to declare the market ‘stable’? I guess ‘deceased’ was too colourful a word.
Road trip update:
For those of you in the magic Kingdom of Vancouver who might want to attend my speech on Thursday, February 5th, here’s an update. I was informed yesterday the location has changed. But, happily, the admission price has not. It’s free, and worth every dime. If you want to attend, then call the guys who are brave enough to sponsor it, Dundee Wealth, at (604) 731-8900. Here’s the venue and time:
February 5, Vancouver BC
Plaza 500 Hotel, 500 W 12th St., (at Cambie)