When the reporter in Edmonton called, it sounded like a big story. “They sure are bullish,” she said, “and we want your comments.” I listened to her for a while then offered that if Edmonton was a serious city, this wouldn’t even be a story. But it isn’t. And it is.
So on Thursday, in advance of snow and -23 overnight temps, 700 realtors crowded into the Northlands Expo Centre to hear the head of their cult, Dear Leader Darrell Cook, give the real estate board’s 2013 forecast. “You realize,” I asked, “that this is a sales-oriented trade organization pumping its own product in the middle of a slump? What’s the news?” The CBCer responded, “That’s why we’re talking to you.”
And I suddenly realized there is life after Global.
For the record, the cartel’s trying to make Edmontonians horny again by telling them that both sales and prices will be higher this year. DL Cook said average prices will climb by 2% and sales by a greater amount. “We are positioned in the best economy in Canada and perhaps the world,” he boasted. “It is hard to make a restrained forecast when we have job growth, in-migration, low vacancy rates and continuing low interest rates.” So he didn’t.
Detached homes will go up this year, he said. So will condos. And semis. Even sales of vacation houses will take off, “as the prices of properties in sun belt destinations recover and local recreational properties become more comparable in price.” Of course. Why buy in southern California when you can veg in Vegreville?
The only problem is none of this is likely to happen. The Edmonton market has been losing momentum by the week. Sales in December were 31% lower than in November, and 17% behind the same month a year earlier. The city’s experiencing the same buyer drought that’s hit Vancouver and is assaulting Toronto and Montreal. Listings have shrunk 19% and the average house price, at $333,140, is 4% less than it was seven months ago.
Despite the oil sands, cheapo sales taxes and hot times for engineers, Edmonton is not immune to the forces which have real estate on its heels everywhere. There’s a reason condo prices have cratered and agents are looking for second jobs. And why the realtors cartel is seeking to divert attention from what is to what they hope will be. But if I lived there, I’d pretend a lot, too.
Now, let’s savage Winnipeg for a few moments. Poor Peg, where hockey is high culture and people are trapped underground beneath a frozen downtown.
But at least something’s smoking: “Homes market still hot in city” said the Free Press this week. Another city. More out-of-work realtors. More pumping and misleading media reports. As the local board did its year-end thing this week it managed to scale new heights of hyperbole on the white prairie.
“To finish as well as we did, given tighter mortgage regulations and regular national media calls for softer real estate markets, it is testimony to the resiliency of the greater Winnipeg real estate market and our Manitoba economy in general,” said Shirley Przybyl, outgoing president of Winnipeg Realtors. “Winnipeg just kind of goes to its own beat,” added Peter Squire, the association’s residential-market analyst. “It just delivered another really solid year. Sort of like a blue-chip stock.”
Hmm. Some stock, with prices and sales on the decline. The number of deals done in December tumbled 12% from the same month a year earlier, which is definitely not encouraging. In fact, sales for the entire fourth quarter of the year slumped 7%. So when the board trumpets that 2012 saw almost as many houses changing hands as in 2011, you know the activity was front-end loaded in the Spring market. It’s the same pattern as in Edmonton, Vancouver, Toronto and Montreal – a daffodil frenzy followed by a long season of second thoughts and buyer remorse.
Winnipeg isn’t different. Just dangerous. House prices have essentially doubled in the last decade, far outstripping incomes. Meanwhile the city’s growth rate has fallen behind the national average, while the household income of $74,500 is 18% lower than that of Edmonton. It’s regional markets like this, where real estate board fluff pieces turn into front-page news, that people make seriously dumb decisions.
Last year 24 houses sold in The Peg for more than $1 million. Two changed hands for over $2 million.
“To me that speaks of confidence in the city as a whole when you see people spending those kinds of dollars in the local housing market,” the realtor boss says.
To me it speaks of delusion. Did I ever mention this will not end well?