A tale of two cowgirls.
On Thursday the premier of Alberta froze politicians’ pay. “We’re in some difficult times,” she said. No kidding.
In precisely a month Alison Redford will deliver a budget that would have been hard to believe a few years ago. Provincial revenues are taking a $6 billion hit as the gulf widens between what oil sands oil costs and what America’s willing to pay for it.
Cue the perfect storm. Tons of new oil development in the US Midwest, not enough pipelines, mounting supply and just one customer for all that black stuff that has to be cooked, sucked, squeezed, strained and refined. A third of Alberta’s budget comes from skimming off resource royalties, and they’re plunging.
So what? So Calgary should be more than interesting since it’s turned into Vancouver, circa 2010. Ignoring the looming Cowboy fiscal cliff, the growing economic tide against ‘dirty’ oil, our slowing economy and all the stuff F did to real estate, Calgarians have truly convinced themselves that it’s different there.
As this pathetic blog has been chronicling of late, sales have been fading in various degrees from Vancouver and Victoria to Regina, Halifax, Montreal and even the GTA. But in Cowtown there’s a prairie suspension of disbelief. This week the local cartel’s numbers were reminiscent of the good old hockey riot days in Mouldy City, when Olympic jingoism fueled the mother of all Canadian housing dirigibles.
Last month Calgary saw a 19% jump in sales at the same time Van shed an equal amount. The average price has gained 11% in the past year (but has definitely lost momentum in the last six months), while the time it takes to sell a house has shrunk 14% (while it swells in Toronto). That sharp drop in days-on-market, combined with a whopping 34% jump in total dollar sales volume tells us one thing: buyers are on drugs.
The average detached house price is now $496,592, an annual advance of 12.73%. This week, based on current sales, that jumped to $519,714. Cartel boss Becky Walters looked for all the world as if she was trying to dampen things down. “Overall indicators put the market in balanced conditions.” And while less inventory is forcing buyers into unstudied decisions, “this is by no means a signal that the seller has the advantage.”
Of course, shorter sales times and higher prices make a lie of that statement. There’s definitely a sense in Calgary that the next oil boom is just up Highway 2, and the laws of economics no longer apply. That is precisely why Alison Redford had to take over eight minutes of TV airtime a few days ago to look pouty and worried and tell people to get ready for changes ‘acoming.
The bottom line: same advice I gave the delusional citizens of Vancouver three years ago. Get out at the top. Of course, almost everyone will ignore me – which is hardly a surprise. So I’ll just stand back and watch the swelling, throbbing, self-gratifying spectacle.
Which brings me to Diana, the roadside seductress who this week came to personify all the class and sophistication this Paris of the flatlands stands for.
Diana Arvatescu is a Re/Max agent even that company is embarrassed of. She achieved her dreams of social fame and significant mindshare among 14-year-old boys with a billboard that had her colleagues clucking. “Let me take you home,” it screamed, as Diana flashed a come-hither look worthy of a Cialis documentary, “it’s gorgeous inside.”
Now this is a double-entendre even this tawdry, testo-drenched, bikes-babes-and-and-balanced-portfolios blog would never touch. (Do you know how many brittle, humourless regulators read this thing?) Not only does it demean Diana (which is fine), but it uses the patina of sex to sell houses. Imagine! What is this woman trying to do to all the horny house virgins out there?
As you’d expect, the cartel isn’t happy. Re/Max is pissed. Those who worry about female agents alone at open houses are appalled. But so far, silence from the premier.
This much is clear: today more people in Alberta know about Diana A’s insides (vicariously) than Alison’s deficit. This economics lesson is so over.