Cowtown blues

Calgary condo, home sales plunge 30%

CALGARY – Calgary’s resale housing market again showed dramatic cooling signs in May with monthly sales and average prices dropping for both single-family homes and condominiums compared with a year ago, according to Calgary Real Estate Board data released on Monday.

MLS sales during the month fell by more than 31 per cent for single-family homes and by almost 35 per cent for condos compared with May 2007.

In the single-family market, the average sale price in May was $479,564, a slight decline of nearly two per cent from a year ago while the median sale price dropped by nearly four per cent to $419,000.

In the condo market, the average sale price last month was $311,816, off just over six per cent from a year ago while the median sale price dropped by over seven per cent to $285,000.

The month-end inventory of residential properties in both markets have skyrocketed compared with a year ago – single-family homes up by 390 per cent to 7,099 listings and condos up by 182 per cent to 3,308 listings.

In the towns just outside Calgary, total MLS residential sales (single-family and condo combined) dropped by almost 32 per cent last month compared with May 2007 and the average sale price fell by almost five per cent to $375,831. The month-end inventory was up by 132 per cent on a yearly basis to 2,971 listings.

The country residential (acreages) market saw sales drop by almost 22 per cent compared with May 2007 but the average sale price increasing by almost 12 per cent to $941,086. The month-end inventory was also up by 74 per cent to 954 listings.

Year-to-date for the first five months of 2008, sales compared with a year ago are down in all residential property categories in the Calgary area MLS market – 33.83 per cent, single-family homes Calgary metro; 37.59 per cent, condos Calgary metro; 30.64 per cent, towns outside Calgary; 20.32 per cent, country residential (acreages); and 41.76 per cent, rural land. [email protected]


#1 Rob M on 06.03.08 at 5:09 pm

And so the tip of the price cooling iceberg starts on it’s inexorable path into Canada … how deep does it go, place ya bets.

#2 Rob M on 06.03.08 at 5:11 pm

apologies for the drama – thought I’d continue the apocalyptic tone and get the party started.

#3 poorguy on 06.03.08 at 5:14 pm

Looks like shit has hit the fan!

#4 womp on 06.03.08 at 5:36 pm

Victoria stats released by VREB show a 25% increase in inventory YOY and a 20% drop in sales YOY. Median prices for SFH and Townhouses declined month to month (condos were flat). May was the single biggest month for listings in the past 18 years. Properties over $1M have skyrocketed to over 11 months worth of inventory and are suffering the worst sales decline (37%).

Vancouver Island was even worse – 30% increase in listings and a 35% drop in sales YOY. If the trend continues, the west coast will likely start seeing real YOY price declines like Calgary and Edmonton by the end of the summer.

#5 Mike on 06.03.08 at 5:47 pm

Too bad I don’t live in Calgary… or maybe it is a good thing. hard to say. Still here in Toronto , prices are still hovering.. My experience over the past 7 months though has been that houses are selling… most in longer time frames and BELOW asking price. Nice to see .. Big problem is these pesky RE agents. Consider the fact that 300 people see a property and come offer night 2 people put bids in… maybe 3… no one can even determine if these offers are legit.. Must be thoroughly fixed and addressed as a problem. Consider that ONE out of those 300 people decides to offer even close to asking… REALTORS call this Market Value. So less than 1% of buyers on a given house/property are willing to pay the price and we’ve established a market price. And so the next door neighbour think “I can do that too” Mr/Mrs RE agent says “Yup you can and we will”. How could any rational person even want to buy a house when so much of it is …well…. BS….
Saw a house a week ago and supposedly the house was sold conditional… turns out the REA did a double ender and was shooing away potential buyers. Now that’s
truly PERFESSIONEL ( please pronounce like Gomer Pyle).
Can’t see buying a house unless we revamp the whole system and have some competent / honest/ ethical sales people involved. Otherwise… the little guy stands no chance.
To boot… any good deal comes out… The REs see it before the common man and snap it up.
Imagine what it would be like in a SUPER hot market…whatever that is.
Oh well… gotta pack and move to Calgary… maybe by the time I am there I can buy a house for less than 300K.

#6 Internal Exile on 06.03.08 at 6:45 pm

I thought FOR SURE this would happen in Vancouver FIRST (considering Alberta has made attempts to put together something at least resembling an economy – corporate headquarters and so on – something BC has never shown the slightest desire to do.

But we DO have those awesome license plates that inform everyone with a straight face that we are, in point of irrefutable fact, “The Greatest Place on Earth” – sort of like those Pizza places that advertise “Vancouver’s Greatest Pizza” or “World’s Great Grandpa” T-shirts?

The other thing is there’s the great myth of “The Alberta Buyer”: he (or she) is evidently some kind of mythical beast so laden with cash from the tar sands that they are forced to walk the earth searching for crappy particle-board condos on the West Coast to unburden themselves of their immense riches. Does this mean they are going to vanish suddenly, like Sasquatch did at the end of the 70’s?

This is suddenly getting a little too real.

#7 Gabby on 06.03.08 at 7:06 pm

i guess that there is little or no sympathy for the families (not the speculators) who are going to suffer and maybe even lose their homes if drop too much. Many of the respondants here are like crash site rubber neckers and blame the accident victim and not those who are really at fault for this debacle (ie., the speculators, the banks, the mortgage brokers.)

#8 wolfey on 06.03.08 at 7:52 pm

Judge for yourself what they are impplying:

Dear Registrant,

With the construction of Keenleyside, our most recent co-development project now complete, we are hoping to proceed with future co-development projects.

We are currently assessing the feasibility of a new project at this time, in light of the increasing construction costs and high real estate values we are experiencing in the market today. I am sure you can appreciate the challenge we face in bringing forward an opportunity that will meet the needs of __blank____ within an affordable cost range.

We wish to confirm that you are registered with us to receive this update on future co-developments. More information about taking part in market research for the next project, as well as other information pertaining to the next co-development will be made available to you shortly.

As a separate issue, there are 9 units at Keenleyside that were not taken on by co-developers at the end of the marketing and the sign-up process in early 2007. Without 100% participation in the program, the development of Keenleyside would not have been able to proceed; so in order for the development to continue, UBC Properties agreed to become a ‘Co-Developer’ for the 9 remaining units. Now that the development is complete, UBC Properties wishes to sell a couple of the units.

We have appointed two realtors to handle the marketing and sale of the particular units that we wish to sell.

don’t care

#9 Terry on 06.03.08 at 8:02 pm

What happens in a one horse town when the horse dies.
MacKenzie BC may soon become a ghost town as two sawmills and two pulp and paper plants close or go bankrupt.
Nice 2140sqft house for only $112,500.00 is way overpriced.

Sad reality of many small BC towns the result of a building collapse in the US as the only major employers are in forestry industry. I suspect there will be more towns like MACKENZIE, B.C. as the fallout will only grow as more mills close down. When you look at housing in most Canadian cities like Calgary although the market will correct there are places like MacKenzie that may never recover.

#10 shoutoutoutout! on 06.03.08 at 9:15 pm

This article is a little unbalanced. 30-35% lower sales than last year…ok, sure. You have to remember last year and a few years before were record breaking years. If sales in ’07 were 15% higher than a still hot year like 2005, then in the big picture the sales are bad…but not THAT bad. You cant have record breaking years every year in terms of price appreciation and sales records. I read Garths book, I think if you bought last year with less then 20% down in Calgary, you are in trouble…but only if you cannot (or dont want to) make your payments. If you can, hang on and soon wages will increase enough and prices will slowly decline -my guess MAX 20% over several years- or remain basically flat (yeah yeah but maintenance costs inflation blah blah- Im generalizing ok) to the point that you could get out of your home if you wanted to and at least “break even”.
ps please dont attack me with charts and graphs and stuff showing the end of the world- I ve seen them all on the alberta bubble blog.

Now, for doom and gloomers- Put on your tinfoil wrapped hockey helmet, get your wooden spoon,
look in the mirror and scream at the top of your lungs

#11 Ray on 06.03.08 at 9:21 pm

Any one got the GTA May numbers? Andrew mentioned the 19% drop YOY however the TREB official number has not come out yet.

#12 Jas on 06.03.08 at 9:23 pm

Hi Garth (and other investors):
Residential rental properties in winnipeg still giving good yield (anywhere from 6% to 8%) is it good investment? if not, what yield in w’peg would make rental a good investment?

#13 Michael on 06.03.08 at 9:49 pm

If these people had half a brain they would sell now for what they can get and re-invest in properties in such as Saskatchewan or Manitoba. These two markets so far seem to be weathering the housing slow down quite well, and most experts agree that they are likely to see further sizeable gains in the coming years. One person I talked to said that some automakers were even considering open up manufacturing plants within Saskatchewan, making a very attractive destination for the laid off masses fleeing from here in Ontario.

Just imagine what bringing in several thousand workers making $75 bucks an hour would do to the provinces economy. Housing prices would skyrocket, and it open all sorts of new opportunities for the thriving province.


#14 Future Expatriate on 06.03.08 at 10:18 pm

Gabby, how can there be ANY sympathy? ALL of Canada had the lesson of the debacle to the south for a FULL TWO YEARS to get the heck out. MOST smart folks that wanted to sell did just that. The only ones left holding the bag when any bubble bursts are the greedy and the clueless, and I’d argue they deserve sympathy the least.

MOST people when a bubble bursts have NO INDICATION WHATSOEVER that it is coming. We’ve had the debacle in the US AND Garth. What more did we need, John Lennon back from the dead on a flaming pie screaming “Sell, sell, sell, and rattle your jewelery?”

There’s no excuse. And no sympathy either.

#15 arugula on 06.03.08 at 10:23 pm

gabby, gimme a break with that “think of the children” cr#p.

What about the families that cannot afford a home because they were so reckless as to get an education, have a parent stay home with kids, or were so old school as to try to save a modest downpayment before they bought, only to watch the market spiral away from them. Couldja shed a tear for them too? Lose a home? Hell, we never had one in the first place because reckless buyers and speculators pushed the market out of our reach.

If they are buyers who extended too far, they ARE the problem. It’s the BUYERS what pushed up the price, and it’s the BUYERS that pushed the market to unsustainable extremes, forcing normal folks out. Sorry, life’s tough, you made a bad decision. Nouveau riche Seneca grads have been waving paper property gains in my PHD face for 5 years now, essentially saying that to me — you snooze you lose, now you’re priced out forever, sucker!

I don’t have any doubt what side of the fence I’m on in this. I don’t blame anyone for a little schadenfreude here.

#16 Toronto Bear on 06.03.08 at 10:44 pm


Why should fiscally responsible people who think for themselves feel sympathy for people that “lose their homes”? As a renter, I don’t “have a home” so do you feel sympathy for me? Despite what the media says, people that lose their homes do not become HOMELESS, they become renters, just like me. Do you know why they become renters? It’s b/c the prices of homes are WAY too high, and they cannot afford it, plain and simple. Creative financing and lax lending standards are the only reason these people were given the keys to these new homes in the first place.

While I agree with you that the RE agents, lenders, etc should also shoulder some of the blame for putting people into mortgages they can’t really afford, in the end, we are talking about adults making probably the biggest financial decision of their lives. If they can’t think it through for themselves and figure out some possible outcomes (ie, price declines, etc) then they had no business partaking in the transaction in the first place, and in doing so, put their family needlessly at risk (of becoming a renter, and maybe, GASP, losing their credit rating if they had to file for bankruptcy).

You choose the analogy of calling the readers here rubberneckers. Instead I would say that most of the readers here wishing for prices to return to normal are actually the safe drivers who actually drive within the speed limits. Meanwhile the sheep who bought houses they couldn’t afford (because real estate only goes up don’t you know) are like the traffic that just “goes with the flow” at say 20-30 km above the posted limit and then complain when they actually get a ticket for speeding. Their excuse is that “well, everybody is doing it”. I thought we taught our kids not to use that excuse…the whole “if so-and-so jumped off a bridge would you do that too?”. I think not.

Anyway, I don’t doubt there are some (very few) cases where people were actually victims of “predatory lending”, and these few people may deserve a small amount of sympathy, even if they did bring it on themselves by being financially reckless. However I would wager that most of the people who end up in this situation will have at one point justified their over-zealous and unaffordable purchase by thinking they will always just sell their home for a profit if they were to lose a job or something like that, since 99% of people truly believe that real estate only goes up.

As for the speculators, I hope they have their a$$es handed to them.

#17 Paul on 06.03.08 at 11:19 pm

Don’t forget Vancity. 30% drop in sales ( source). 55% drop in new condo sales (Ozzie Jurock source). Ouch!

#18 vultur on 06.03.08 at 11:24 pm

Calgary is just a dynamic place. Prices can only go up from here.

#19 Rick on 06.03.08 at 11:29 pm

Internal Exile, well put.

No one seems to explain Vancouvers disproportionate insanity with the cost of real estate, especially in a place where there are “no corporate headquarters’ or even jobs paying more than 12 bucks an hour.

May I? Drug money, pure and simple. BC’s biggest economy and the reason for Vancouvers prices. Currently we have VPD officers suspected of laundering guns to gangs and city councillors charged with murder.

Lotusland, ha ha!!!!!!!!!

#20 Mike on 06.04.08 at 1:19 am

Hello Garth,. Do you think the Toronto real estate market could be decreased soon? Because statitistic shows decreased resales but still increased prices.
Especialy Mississauga,Brampton,Georgetown,Milton and Oakville, thouse comunites increased prices in the last 4 years over 120k.

#21 Islander on 06.04.08 at 1:40 am

Mike, I don’t mind your criticism of the realtor who may be discouraging potential buyers when she’s got a double-ender in the bag, but economically ignorant anti-realtor diatribes don’t help anybody.

Market value is the price at which a transaction clears. All it takes is one seller and one buyer per unit. The other 299 lookeeloos are not relevant.

That price then becomes a comparable for other listings, for municipal tax assessments and for bank appraisals.

If you are unhappy with the way the market economy works, you are not forced to buy anything, much less a house.

#22 Terry on 06.04.08 at 1:47 am

New oil leases in BC this year will double that of Alberta. Alberta Tar Sands is booming mainly because of new projects being built in and around the tar sands. A lot of the major US oil companies have left Alberta, Alberta is running out of oil that is inexpensive to extract. What is left is oil that is expensive to find and expensive to refine.

BC will always have higher real estate values than Alberta because of climate and huge inflows of foreign cash into real estate. What may hurt BC over the next few years will be a rising cost of living higher than the rest of Canada forcing many to leave as wages will not keep pace with the cost of living.

#23 Al on 06.04.08 at 8:33 am

Hi Gabby,

I agree that there are alot of people out there that are going to get hurt that weren’t trying to get rich quick or anything. They just wanted to buy a house and didn’t realize the weirdness that was going on.

Having said that, people become victims all the time and people losing a house are hardly in the worst of circumstances. They could afford to get into the game in the first place, so obviously they’re not destitute. As Toronto Bear put it, they’ll start renting which is hardly a bad fate. There are plenty of people in far worse circumstances, here in Canada and around the world, that deserve our sympathy more.

#24 Fake Name on 06.04.08 at 9:52 am



forgive me…..

That message was either denial or fear. Either one you are in some deep dog dung!

#25 Mike on 06.04.08 at 9:59 am

Thanks for massive insights ISLANDER. I actually have two degrees in economics. My point about realtors is that they have modest insights into economics and are basically six week course know it alls who bully buyers into buying because they are no more than sales people on commission. Most could care less about whether the buyer can keep a house or not. Plus… they goose the market prices by lying that they have other buyers who will pay more. Classic greater fool scenario
None of their antics would be allowed in the stock market or any other asset purchase scenario. As others have said.. it is the wild west out there. Few rules.. self governed … unbridled salesmanship … Stock brokers or financial planners who practiced the realtors tactics would be fined or fired. These RE run amuck .. no one reigning them in for sure. IT must be addressed.
The price of a stock is based upon what the market would pay…not a single purchaser… The value is based upon intrinsic concepts like profit , expenses, debt . If only 1% of investors would pay $600 for Google would the stock stay at that price ….unless the books indicated it was worth that.
Real estate when managed by brokers is governed by falsehoods and propaganda. If a thousand people saw a house and 10 people put bids on it then the highest would win… you would think.. In the scenario I pointed out that was not the case. So much for market value when it is skewed by the wants and desires of an agent who is supposed to be working for the seller. So much for market economy ISLANDER. Maybe you should take a course in economics.

#26 Rob Madrid on 06.04.08 at 9:59 am

arugula makes a very good point. Prices aren’t been driven as much by speculators as the middle class trying to get in before they get priced out of the market.

It’s also simple math. If prices double and then drop by 30% you still above what you were before.

My own opinion a softening of the market and long term prices increases below the rate of inflation.

Long term will depend on how bad things get (economically not the housing market) in the US. In that regard the US is in for the mother of all recessions as US consumers run out steam and are forced to cut back. Recent articles show that the average American is using credit to an unforeseen degree for pay for day to day expenses, so what happens when the credit is maxed out.

#27 Robert B. on 06.04.08 at 10:02 am

Why do Bob Truman’s numbers look so much better?

The numbers on his weekly stats page show only slight increases over last month but if you compare to last years numbers then things are worse.

Looks like things cooled down over winter like always but then never recovered this year.


#28 My_View on 06.04.08 at 10:46 am

Heres some more daily fluff.

#29 Chinstrap on 06.04.08 at 10:54 am


Why would an average family suffer from a decline in prices? If they plan on just living there as it is their principal residence then it shouldn’t matter what “prices” are.

That said, if they bought something for more than they can afford and took on too much debt then too bad for them. Not everyone can have a nice house, 3 cars, wear brand name clothes, lakehouse , and vacation in Maui. Some people are better off buying small townhomes, shopping at Walmart, clipping coupons, and keeping hand-me-downs for their kids.

#30 Chinstrap on 06.04.08 at 10:59 am

What yield do you want for your investment? I think you have to ask yourself.

I bought my first Triplex in 1999 and got it up to a cap rate of 13%, which when levered worked out to like 30%+ returns…

I wouldn’t take a 6-8% return on real estate – never. It’s too much work for that and if things go wrong and you end up with 5% then you might as well have been in corp. bonds.. Go out and buy some beaten up REIT if you want 6-8% yields and then leverage with a credit line to simultate a mortgage. same thing with no work

#31 Al on 06.04.08 at 11:15 am


You’re taking a bit to much of a purist approach to valuations. There are intrinsic values to houses and stocks that can be estimated, and market values should resemble them. But that’s not how it works. Market value is based upon the last purchase, even if it’s only one purchase. Islander is right about how things work, you’re right about how things should work.

For instance, a good economic fundamental to estimate the value of housing is income. Say 2.5-3.5 times income should equal house prices. However, RE chicanery, lax lending, etc can push market prices higher. Since the market value is the most recent purchase price, it doesn’t take many greater fools to keep the housing market going up.

#32 Keith in Calgary on 06.04.08 at 11:31 am

There are 20,000 condos getting built in Calgary and 3,000 for sale…..we sell 500 a month.

When Miami burst it had 25,000 condos under construction……

Where’s the beach ? Oh yeah…….we don’t have one.

I just rented a place for 1/3 the cost of buying…….HAHAHA !!! Good luck RE bulls…’re going to ned it.

#33 Dave in Calgary on 06.04.08 at 11:32 am


I can’t see where you are coming from with that claim. There are 3 places that have been for sale on my block for over 2 months… one has been up for 4.

I know several people who are trying to upgrade and flip here in Calgary, and they listed their condo and are getting about one showing a month. This time last year, there would be a sale within 24hrs.

Calgary is dynamic. Boom and bust. How you can say that prices can only go up during a bust… well, again, not sure where you are coming from.

#34 moxie on 06.04.08 at 11:32 am

real estate agents = phantom offers
if an agent is telling you there is 5 other offers on house, walk away cuz he/she is only trying to punpup his/her commission. this is gonna hurt YOUR pocketbook.
’nuff said

#35 moxie on 06.04.08 at 11:36 am

i can’t spell!

Cdn mortgage debt up:

#36 Jim on 06.04.08 at 11:37 am


People don’t lose their homes when prices go down. They are only in danger if they lose their jobs and are overleveraged to the point of not being able to make payments while they find other employment.

The employment situation out west is excellent so I don’t see massive foreclosures coming down the pipe.

Of course some people on this site, who have never written an offer in their lives, think that as soon as a house is worth less than what the owner paid for it, he will imediately stop making payments, get foreclosed on, and start renting.

In reality, the owner keeps making the regular payments and lives in the house as usual, with no pain whatsover. If prices go down too much, owners do not want to sell anymore, more buyers want to buy, inventory dries up and things fall into balance.

#37 PBrasseur on 06.04.08 at 11:54 am

I all, it’s a pleasure to read your comments.

I just almost finished reading A Greater Fool and would like to share a few comments.

I have to say the book makes for the most part a lot of sense and brings many valid and important points.

(I didn’t care much for the passages on climate change, for example I don’t think attributing Katrina to human driven climate change is a valid point…)

RE goes up and down like any other market and thanks to the herd mentality regular folks tend to buy high and sell low… It is pathetic of course but it happens all the time.

I think the most important point of the book (a reflection I also had before) is this: Too many people (mostly the boomers) see their house as their sole ticket to retirement and neglect saving and other form of investments. Of course given our demographics this is sure to backfire in a big way later, I think we all understand why.

Because of this we must hope this bubble pops as soon and as loudly as possible, just as it is happening in the USA. Too bad for those caught in the storm but it would help give people a well needed warning that they must do something about their retirement other than pouring their money into this mess. The longer the bubble lasts the more time and money wasted.

Seen from this point of view the US meltdown is a good thing (for them) because it brings reality back in the picture for investors, not to mention it will improve housing affordability.

The US have for the future more favorable demographics and a very flexible, productive and more adaptable economy. I woud think they will get through this.

Canada’s productivity however is weaker although our demography is more favorable right now because the proportion of baby boomers is bigger and they are still active, for the moment this favors current activity rates and productivity (boomers are experienced therefore more productive than younger generations). This may partially explain why the bubble has not popped here yet. But of course in the near future all that will change and the Canadian demographic advantage will become a disadvantage.

Another problem with this debt driven boom is that (in conjunction with other bubbles in the resources) it hides the true weakness and vulnerability of our economy which is not nearly as adaptable as the US economy.

In short, even if it is painful for many, lets hope this bubble ends soon. This country need a reality check, badly.

#38 Ray on 06.04.08 at 12:21 pm

GTA May numbers just came out with omit of the inventory. Sales in Toronto indeed was down 19%. They are still blaming the land tranfer tax.

#39 Sam on 06.04.08 at 12:54 pm

I am dying to see the same news for GTA. Come baby come….

Vultur: I would not wasted my precious 30 seconds commenting on your posts anymore. Though I would still like to read when I see a lack of humor in my life.

#40 Keith in Calgary on 06.04.08 at 1:11 pm

Jim said…..”Of course some people on this site, who have never written an offer in their lives, think that as soon as a house is worth less than what the owner paid for it, he will imediately stop making payments, get foreclosed on, and start renting”

Uhhh huh……that is exactly what happened back in Calgary in 1982.

#41 HouseHuntVictoria on 06.04.08 at 2:25 pm


You understand very little about BC’s oil and gas business, obviously. What BC has is natural gas on shore and un-explored off-shore oil. We have very little in the way of on-shore oil. What you see in BC is land lease sales that cost much less than the equivalent in AB. Natural gas drilling is expensive, especially in BC, and rigs on both sides of the border are sitting idle as natural gas prices over the past year or two have been depressed.

You are right about BC people not making enough to afford their homes though. That’s what undid the US market too.

#42 Internal Exile on 06.04.08 at 2:28 pm

I agree with Rick.

There just doesn’t seem to be any other possible explanation! I heard the figure of 8 billion a year in drug profits. The Americans called BC a narco-state a few years back, and everybody here seemed to think it was a funny joke. Sort of like Quebec thought the Hell’s Angels were kind of racy and fun before they started doing things like blowing up kids as they played in the street.

Real Estate is the one place (in Vancouver at least) where nobody is watching. I heard the Federal Government is bringing in new regulations regarding making realtors check out where the money is coming from (maybe Garth could comment on that one) but it doesn’t seem to have any real teeth. And if the market goes south, how many realtors are going to say “no” to a briefcase full of cash.

I honestly cannot see anything resembling an economy here. Nobody DOES anything.

A day in the life of the Vancouver economy:

One idiot sells a condo to another idiot and they both go whale watching? And now that tourism is going in the toilet as the world gradually goes broke, I guess it’s just idiots flipping condos to other idiots (then hitting the Yaletown Cactus Club?).

I’m open to other ideas…

#43 Dave in Calgary on 06.04.08 at 2:30 pm


I think the people threatened in Calgary are:

1. Flippers who continued to buy in late 2007 and into 2008. No one to flip to. Many of these flippers aren’t high paid oil people, but just people with average jobs who borrowed against their “equity” and tried to make more money. They don’t have the income to support the money they are about to lose.

2. Upgraders. They bought a bigger place assuming their current place would raise in value to pay off the new place. No one is going to buy their existing place. Now they have their current mortgage, and a massive new one. Again, these aren’t all super rich oil people. Just average income earners whose salarys cannot abosrb the finacial hit (no savings)

3. People who have mortgages that are well paid in the Construction and Real Estate Industry. There’s been a boom here for over 15 years… but it wasn’t until real estate went bonkers that we saw this hyper-boom. With the martket flooded with listings, I doubt there will be much construction over the next few years. How are these people going to pay their mortgage? How are the labourers going to pay their rent?

4. Fools. Yes, the people who paid too much, live hand to mouth, and won’t be able to make their mortgage payments for some, or all of the following factors:

Cost of food rising
Cost of fuel rising
Cost of home energy rising
Inflation rising
Interest rates rising.

Now, people who bought smartly, and can afford their mortgage, and who don’t work in a construction related industry, will be fine. This doesn’t make up every Calgarian unfortunately.

And the talk of “all the jobs”. Wait until the building stops. There won’t be so many.

#44 Jim on 06.04.08 at 3:23 pm

Uhhh huh……that is exactly what happened back in Calgary in 1982.

Yes, when oil prices crashed and everyone lost their jobs.

Oil has yet to crash. Will it? Will it go back to 9$/barrell, will it settle in the 70$ range? Will it go up to 300$?

What does 300$ oil mean for Alberta? Do you know? Can you have real estate crashing 80% when oil sits at 300? How about 200? How about 100?

Who know, just something to think about.

#45 Future Expatriate on 06.04.08 at 3:50 pm

Jim, you’re not thinking far enough ahead.

Oil goes to $200-300 a barrel, and Alberta crashes as the US does to the foothills of the rockies what we did to Alberta. They won’t NEED our shale oil anymore; they have PLENTY of their own, and all ecological restraint will be lifted by President McCain. (Obama? As IF.)

What would a SIMULTANEOUS oil crash AND real estate crash do to our economy?

Think about THAT.

#46 Terry on 06.04.08 at 3:51 pm


Fuelled by a series of discoveries in its unconventional gas plays, the Canadian province of British Columbia attracted a single-sale record of C$441 million ($448 million) at its May auction of oil and gas leases, leaving Alberta, the traditional pacesetter, far in its wake.

Oil leases also refer to natural gas. Natural gas reserves in Alberta are running out as gas hungry Alberta Tar Sands consumes vast amounts of natural gas. Natural gas prices have only one way of going and that’s up. If the McKenzie Delta pipeline is not built within the next decade the Tar Sands are in trouble. Natural gas (methane) is still the cleanest burning fuel we have in large volumes and prices will rise as demand increases. That 440 million is money that goes straight into BC coffers. Maybe instead of looking at Vancouver and Victoria real estate maybe people should look at places like Fort St John. I rather doubt that oil and gas companies would outlay 440 million with no intention of drilling.

#47 Keith in Calgary on 06.04.08 at 4:19 pm

Not true…..back then when people with good jobs realised they were upside down, they walked away in droves.

I was a manager at National Trust Company (later bought out by the BNS) here in Calgary and oversaw the 2nd mortgage portfolio in our DT main branch go down from $75MM to $30MM in 18 months due to walk aways. Today they call it jingle mail in the US…….but back then people here just dropped the keys off on your desk and signed a quit claim, or made you take possession thru the courts.

It will occur again this time when the % drop in value is severe enough. IMHO the threshold of that point is a drop of 30% in value.

#48 Keith in Calgary on 06.04.08 at 4:23 pm

Forgot to mention oil can be $1,000 a barrel……and it is isn’t going to matter to you or me. Starbucks barristas won’t make $150K per annum.

Where can I go to pick up my cheque from one of the oil companies for my share of all of their profits…..or can I get a huge tax break from the government to offset their rvenue increases? I can’t…..nor can you.

#49 nonplused on 06.04.08 at 6:28 pm


My guess is that less than 20% of Albertans income is directly affected by oil prices. Maybe if you have stock options from your company, but otherwise even most oil company employees salary is more affected by the general wage levels in Alberta than oil prices. So at $300 oil, a lot of oil company shareholders are going to be rich but the average accountant working for say a major oil company will only have higher costs to drive to work.

Also, even with higher oil prices, many rigs are still sitting idle in the province. Farmer Ed’s new royalty program comined with low gas prices (we produce mostly gas, not oil) had an affect.

What will be more interesting is what happens to all the construction jobs in Calgary if the pace of construction slows. That’s where the real job growth was.

#50 nonplused on 06.04.08 at 6:34 pm


I totally agree, Calgary real estate can only apriciate, and probably at 20% per year! My house is currently appraised at $500,000 (city). So at 20% per year, I figure in 10 years it will be worth $3 million! Whoo hoo! Retirement here I come!!!! I know Garth doesn’t like RV’s but I figure I can get one of those really big ones with a washer a dryer and slideouts and all that for $250,000 and still have $2.75 million for gas and food. I’ll just follow the sun.

#51 Dom-GTA on 06.04.08 at 7:00 pm

You guys should look at some of the comments based on this article.

I wish Garth would go and set some of these people straight.

The garbage coming out of peoples computers is unbelievable and makes me realise that we are in this mess exactly because we deserve to be. End of story.

Greed is the problem and self delusion isn’t going to change anything. When people with good credit but nothing else become professional RE speculators and investors expecting to make hundreds of thousands of dollars in matter of weeks.

I sold my property when I moved for almost double that I paid, but once you subtract all the renovations, fees etc…about half the gain was gone…not that I am complaining at least I got out.

good luck to all as this will be a bloodbath

#52 moxie on 06.04.08 at 9:02 pm

the trickel effect of oil increasing in price to $150+:
higher transportation costs passed on to consumers;
higher food production costs passed on to consumers;
higher wage and price demands;
higher interest rates;
higher unemployment;
less money in my pocket to pay make mortgage payments, debts, and ordinary living expenses;
ergo..bankruptcy is an option.

#53 vultur on 06.04.08 at 10:28 pm

Calgary is booming. Read for yourself.

“”Calgary is blowing everyone away with its economy,” says Mario Lefebvre, director of the Conference Board’s Centre for Municipal Studies.”

#54 Peter on 06.04.08 at 10:53 pm

and our nice BOC are saying we still have rooms for cuts in interest rates…are we creating a BIGGER and NICER Housing bubble here in Canada ??

#55 wealthy renter on 06.04.08 at 11:59 pm

Dom, I am not sure if read the same comments, but virtually all of the comments on the article you cite are overwhelmingly bearish. There is a little intergenerational bickering, but I was actually a bit stunned about the overall tone & sentiment.

#56 Dave in Calgary on 06.05.08 at 2:29 am


That article was written in February, and claimed the real estate market would heat up with the weather:

“Oh well, like the weather, the housing markets will take time to warm up. Spring, after all, is just down the road, around the corner and over the hill.”

Well, it was 20C this afternoon in Calgary and I took a 3km walk past about 40 places with for sale signs that aren’t selling. And I could see the cranes downtown building condos owned by investors and flippers.

The article also said that Calgary has “passed its peak” in economic growth.

#57 Dave in Calgary on 06.05.08 at 2:40 am

And just to add, I work in oil and gas. I work in an office of close to 1000 people who are in oil and gas.

Real Estate is such a hot topic that I’ve began asking almost everyone I know (O and G engineers, techs, and project managers) if they could afford to buy their own homes at the current appraised values, and the most common answer, after head shaking is “not a chance”

What does that tell you?

#58 David on 06.05.08 at 3:53 am

Keith in Calgary made some excellent points about the quit claim culture of mid 80’s Calgary. Naturally enough the financial institutions kept a very tight lid on the information and legitimate journalists writing about the collapse of the housing market did not get much cooperation.
One thing that really did happen during the housing bust in Calgary in the 1980’s was that two Federally Chartered banks and who knows how many independent trust companies simply vanished due to insolvency caused by bum real estate loans. Cleaning up the mess cost the Alberta government untold billions. Journalists, lawyers and accountants got their chances to evaluate how bad loans were rebooked as income generating assets with all the lawsuits and public disclosure that flows from that. Remember the old saying that history is often about the dead speaking to the deaf or the bumper stickers in Calgary of the bust era, “Please God give me another oil boom and I promise not to piss it all away next time”.
This is next time for Calgary and the impending financial storm looks like a Category 5 hurricane.

#59 curious on 06.05.08 at 9:42 am

to Keith in Calgary:

re:National trust mortgage portfolio back then.

Would you tell me if the people who walk away from their mortgages were forced by the courts to refund the banks over time for the losses incurred.

#60 Calgary rip off on 06.05.08 at 11:44 am

Its interesting that the Calgary Herald currently portrays the market as still good. What a state of denial. The reality is most people wont buy for what they are getting for a house at those ridiculous prices. I cant wait to see what happens to all those suckers who bought in 2006. I hope the whole economy goes belly up. As for now, Im just going to sit and wait while all those suckers lose their money and the greedy realtors lose as well. They’ll all be screwed soon. And then the bulls will be dead. And I’ll probably buy then. Sit and wait…high mortgage bulls are sitting ducks to get blasted.

#61 Dave in Calgary on 06.05.08 at 1:12 pm

Almost everyone here is in a state of denial. Even those who bought 6 years ago, and have seen 150% gains in their home, who claim that they couldn’t afford to buy their own home, who say people are crazy for buying now, insist that the market will not go down, but will just flatten for a little while. It makes no sense. They are so in love with the market value increase of their home (even though they can’t actually spend it) that it would break their heart to tell them that their $200,000 ‘ivestment’ is only worth $350,000 and not $500,000.

The economy doesn’t have to go belly up for real estate to decline. As well as the economy was doing here, the real estate growth pulled way ahead of the economic growth, and actually started an absolute building boom frenzy that will soon dry up. While the economy was driven the worlds demand for oil, the real esate market was driven by madness.

While the economy in Calgary is healthy, the real estate market is not. Anyone who bought responsibly in 2004 or earlier, will still be so far ahead of the game that they shouldn’t care (so long as they don’t work in construction, or real estate). Anyone who bought from mid 2006 to now is going to take a hit. Not everyone who gets hit is going to be able to absorb it.

#62 TrueGritCalgary on 06.05.08 at 3:44 pm

I am just wondering, in my observations, it seems that it has been about a month since I last saw a new “sold” sign out here in Chestermere. What about the rest of you guys in and around the Calgary area, has this been your experience too?

#63 nonplused on 06.05.08 at 6:40 pm

There isn’t much of a foreclosure problem in Canada yet, and I say yet because there will be. If we look south for a model, the foreclosures didn’t start rising until prices flatlined. This is because in a rising market you can sell rather than get foreclosed. However once the market stops rising the foreclosures give it the bump over the ledge.

Where I believe the push will come from in Calgary is people upgrading to new homes. Now get this: In Calgary for the last 4 years it was a huge risk to sell your old house based on the promised delivery date of your new house by the builder. Builders were 3, 6, and 9 months behind schedule and offered no appologies. Plus anyway prices were rising. So rather than be outdoors, the motto was “don’t list until you have possession of the new house”. It was safer and you stood to make money anyway.

Well, the builders are starting to catch up. I have 2 friends myself that have possession of thier new house now, 2 shinny mortgages, and they can’t unload the old house. Of course the thought of cutting the ask price is still far from thier minds and it will stay that way because the ask price was somewhat baked in to what they paid for the new house. But eventually the burden of paying 2 mortgages is going to catch up with a few of these new home buyers.

I was looking at a house I was interested in. The owners have built a new McMansion and want to sell the old one. They paid $350,000 in 2000. They listed it for $820,000 and recently relisted for $800,000. I wish them luck because if I put the same money in bonds I can rent a similar property indefinately just on the interest.

But what I guess few are considering is that once the first seller throws in the towel, the drop will be rapid. This is because even a 30% correction (read “drop”) in house prices will still leave most people in Calgary with a well above inflation rate gains on thier house. They won’t loose money, just make less. For example the $800,000 house would sell for $560,000 and the sellers will still have a $210,000 profit in 8 years. That’s about a 6% annual return tax free, which is better than most investments. And that’s after a 30% drop!

Look out below I say. And most people will still be well in the money.

#64 peng on 06.05.08 at 6:57 pm

It’s A Terrible Time To Buy:

Who disagrees that house prices will continue to fall?:

What are their arguments?:

What should you pay for a house?:

“So what should I do?”
Don’t take financial advice from realtors, lenders, mortgage brokers, or anyone else who gets paid only if they convince you to buy. Put in your own numbers and calculate what it would really cost you to own rather than to rent.

#65 David on 06.05.08 at 11:06 pm

The real potential problem is that that anyone contemplating buying a home in Calgary will be paying to high a price for a house that will see strong deflationary house pressure. The risk of having an upside down mortgage with little prospect of unrealised inflationary gains to give them comfort. This is not the classic scenario of a simple buyers market.

#66 Dave in Calgary on 06.06.08 at 12:40 am


I am an avid walker, runner, biker, and I commute to work via foot, and I can tell you that in:

In Killarney, Glengarry, Sunalta, Canaught, Bankview, Knob Hill, and Scarburo

There are an average of about 3 for sale signs per 1 block length of street, and “price reduced” signs outnumber “sold” ones.

And for anyone who doesn’t know, these are saught after areas in the SW, close to downtown with easy access to everything.

#67 Keith in Calgary on 06.06.08 at 1:34 pm


At the time IIRC CMHC could only pursue for a deficiency balance on a mortgage if it went thru foreclosure and was insured by them.

Quit claims and uninsured mortgages did not have the personal covenant you could pursue. That has not changed AFAIK.

#68 Dave in Calgary on 06.06.08 at 1:40 pm

CALGARY, June 2 /CNW/ -:

* Single family Calgary metro new listings added for the month of May totaled 3,432…. Single family Calgary metro sales for the month of May came in at 1,368…


* Calgary metro condominium new listings added in May 2008 were 1,538… Condominium sales for the month of May were 577


CREB(R) President, Ed Jensen:

“Now is not the time to wait until the sale is over and then decide to buy”

(the sale hasn’t started yet Ed, but thanks for publishing the stats so we know the clearance sale is coming)

“The conditions today are perfect for buyers. We have a surplus of homes on the market”

(perfect to wait… not only is there a 5 figure surplus, but your own stats show its getting worse. Oh, conditions are perfect for buyers… perfect to wait for a year for the wheels to come off this mess. Or do what Ed want… buy into a surplus market before the price drops… good one)

“A professional REALTOR(R) understands what is going
on in the market and can help the buyer make an informed buying decision”

(that’s right… buy now, buy tomorrow, buy yesterday, buy again, buy, buy, buy, buy… great professional help)

“The Calgary Real Estate Board is a professional body of 5,752 licensed brokers and registered associates”

(Over 5000? Wow… I guess we have to continue buying at any price, at any stage of the cycle, or these folks won’t have a pot to piss in).

#69 David on 06.06.08 at 11:33 pm

I think Vultur is too optimistic about Calgary. Nothing is forever, including high oil prices.The high oil prices are fueling a great deal of cost push inflation and wages are for sure not keeping pace. It seems pure simplistic fantasy to believe that Calgary will be a go-go oil boomtown in 40 years when families have finally paid off their McMansions and McCondos.

#70 Calgary rip-off on 06.07.08 at 5:16 pm

Renters have all the cards in their hands. As a renter I can just sit and wait…I’ll be laughing when the market crashes. Not if, when…I dont have any committment to staying in Calgary other than my job, which in healthcare is a necessity. Oil is increasingly unstable…watch out!!!

#71 redcurlygirl on 06.07.08 at 7:45 pm

Wow! reading this are we ever glad that we RENTED in Calgary for Garth’s book after we sold in Toronto and husband got transferred here..we realized that Calgary is vastly overrated when it comes to housing prices..there can’t be that many people in a city of one million that can afford $400+ mortgages for something basic! We sold off one car and downsized as Garth suggested and moved inner city, renting a great townhouse and taking public transit..saving tons for now! And our “equity” from the sale ( 240000 ) sitting nicely in the bank making interest. Our rental costs are great and we ready to enjoy the good life out here being debt and mortgage free! As Garth said , you should NEVER have 90% of all your money in one investment and a home is just long as we’re making money ( equity) one way or the other we’ll be fine for retirement time,now to bank the difference. Wow renting is stress free , no stress with rising interest rates, no interest! except for out money making money, no high maintenance costs and no loss when we leave in a couple of years! plus no extra fees except utilities and rent! Loving it..thanks Garth for turning around our perspective of what home ownership ( major debt!) is!