Real Estate Freefall?

[OracleOfCalgary]

The Calgary Herald reported today that the average home price plunged by $20,000 in August.

http://www.canada.com/calgaryherald/...6b84d8&k=82195

On the CREB website today, they are showing the average has plunged another $5000 already this month.

It's not just the weather that's getting chilly.

[Slava]

I love the inflammatory thread title!

The prices have pulled back a bit, but its not a huge deal. On the average house its a drop of 4%....hardly time to panic. The article also states that the majority of the drop is due to the smaller number of $1million dollar properties....

[Dion]

More like house prices are leveling off.

[llama64]

I doubt it considering friends of mine just dropped 700k on an inner city infill. Lots of people out there who have no issue getting large mortgages.

[arsenal]

If you also look at the creb site, and look at the stats, the # of homes on the market is close to 10,000, with sales being around 2,500. Lots of supply, not enough demand, so the prices will go down a bit. Too many people are putting their places up for sale, trying to cash in on any equity built up. Right now, it's a buyers market. Give it about 6 months, and it will most likely be trending the other way again.

[Fobulous]

As was mentioned in another thread the price drop is expected. This is the time of the year when prices tend to fall.

Prices tend to go back up during the spring.

Nothing to panic about.

[Neeper]

Maybe now it's a good time to buy?

[ken0042]

Originally Posted by Neeper

Maybe now it's a good time to buy?

Now would be a good time to buy if you are willing to make some lowball offers. Get a realtor who is willing to sort out how long places have been on the market, find places that have been on 90 to 120 days, and make an offer. My neighbours just sold after about 140 days, and talking to him 2 weeks ago he was pretty much ready to take just about anything. (mind you his sale was a divorce.)

Otherwise I'd wait until December. I think prices will slide a bit more, and December is the worst month for sellers.

[FireFly]

I wish someone would give me a mortgage so I could buy a house.

[Dion]

http://www.cbc.ca/canada/calgary/sto...y-housing.html

Sharon Whitton, an agent with Royal Lepage Benchmark, said the overheated market is just catching its breath.

"I think this is just the regular summer breather, and I am looking forward to what happens in September."

[Sylvanfan]

Hard to say... right now there is a lot of selection. But I don't know how much of it is people trying to cash out on a huge investment return...needing to sell to move to their new house, or thinking they're going to sell and go back to Winnipeg or Saskatoon set for life. That 20k number looks huge...but in terms of % I imagine theres been other months that were just as bad. For example in May in Edmonton places were up 3% but because of the price that was 12 grand a house which was the highest total dollar figure ever. Simply a product of higher numbers than people are used to.

[Sylvanfan]

Originally Posted by FireFly

I wish someone would give me a mortgage so I could buy a house.

Is it getting the mortgage or is it the down payment? From what I hear thats now the biggest obstacle for the first time home buyer...at 5% you're needed like 15 grand to get your 5% down which is tough when you see what people are having to pay for rent. Certainly the last two and a half years were really tough for people saving because house prices pretty much went from like 175 to 400 for an average house. So folks who were trying to save like 5 grand over the course of 12 months for their downpayment were having the market outpacing what they could save along with the other pressures to try and keept saving. Certainly a year where prices hold steady will be welcome relief for those trying to save up.

[photon]

Look at the # of sales.. if the # of sales was dropping significantly I'd be a bit more concerned, but as it is it looks like a normal time of the year market pattern.

http://www.creb.com/media/stats_pdfs...7%20August.pdf

[FireFly]

Originally Posted by Sylvanfan

Is it getting the mortgage or is it the down payment? From what I hear thats now the biggest obstacle for the first time home buyer...at 5% you're needed like 15 grand to get your 5% down which is tough when you see what people are having to pay for rent. Certainly the last two and a half years were really tough for people saving because house prices pretty much went from like 175 to 400 for an average house. So folks who were trying to save like 5 grand over the course of 12 months for their downpayment were having the market outpacing what they could save along with the other pressures to try and keept saving. Certainly a year where prices hold steady will be welcome relief for those trying to save up.

yes, but rents have also gone up. So I can save less now than before, so it takes longer to save the $5000, let alone the $15,000. However, as a first time buyer, I do believe I can get the downpayment included in the mortgage, no? Regardless, being single and only making $40,000/year makes it impossible to get any mortgage at all. I'd need to get one with someone, and no one I know can afford one either.

[lifer]

Originally Posted by FireFly

yes, but rents have also gone up. So I can save less now than before, so it takes longer to save the $5000, let alone the $15,000. However, as a first time buyer, I do believe I can get the downpayment included in the mortgage, no? Regardless, being single and only making $40,000/year makes it impossible to get any mortgage at all. I'd need to get one with someone, and no one I know can afford one either.

I'm in a similar situation. It's a terrible feeling when it just seems that you can't get ahead. Like, if I was one year older, I would have been finished school in time to buy before the real estate boom, but that wasn't an option. Now I'm trying to put myself in a position to buy something here, but it just seems so intimidating. My girlfriend has 2 more years of school, so that's how long i have to wait to be able to have a 2 income household, which is what I would need to buy here.

[Thunderball]

Freefall implies that the housing price is dropping so low that not only are all gains wiped out, but prices have fallen below 5-10 year averages...

This is a correction, and as a 22 year old non-homeowner... a very welcomed one.

[I-Hate-Hulse]

Originally Posted by fotze

My neighborhood went from an average sale price of $880k in July to $570k in August.

Clearly, the neighborhood got warning that you moved in! Fotze discount?

If you read the article (coughOraclecough) it clearly talks about the high end stuff not moving as much, thereby driving the average transaction price down. It's not really a freefall till foreclosures get prevalent.

More condos and average houses in your area moved perhaps?

[Fozzie_DeBear]

I'd like to see the stats for the median house price (the price where 50% of the sales are above and 50% are below). I would expect that it would still be quite healthy...

Anyone know where to find this?

Also wondering if the sub-prime meltdown in the US is affecting the mortgage products available in Canada?

[photon]

Originally Posted by Fozzie_DeBear

I'd like to see the stats for the median house price (the price where 50% of the sales are above and 50% are below). I would expect that it would still be quite healthy...

Anyone know where to find this?

Also wondering if the sub-prime meltdown in the US is affecting the mortgage products available in Canada?

That CREB link I posted has median prices in it as well.

The sub-prime stuff is having a slight impact in Canada, though not that much as only 2 to 5% (depending on who you talk to) of mortgages here are considered sub-prime (as opposed to what, 25% in the US?), and less than half of a percent of mortgages are in default (3 missed payments).

However lenders are just like us and react to the big flashy news story, so many of them have tightened up their lending requirements. A few lenders have gotten rid of their sub-prime programs entirely, and a few lenders that were sub-prime only have closed their doors.

For the major lenders though the brokers I've spoken with expect them to be a bit more picky and want more info for a while, but will relax back to normal fairly soon (six months maybe they said).

[burn_this_city]

Personally I think the real estate board is doing alot of damage control by lowballing how much the drop has actually been. They were telling people 2 or 3 months ago that they were forecasting a average price gain of 30+% this year. If people get a hint that the bottom might fall out of the basket you will see the market flooded with people trying to cash in. My neighbours just sold their house next door for 50k less than the asking price after it sat on the market for 3 months. Being fairly young I'm praying for the crash so the price of these junky starter homes become reasonable. I'm sorry but $400K isnt a realistic price when I know how much these things cost to build. I think we will see a flux shortly, where people who having been buying up rental properties at peek prices will find no tenants and end up selling to save their skin. I see alot of postings on my companies buy and sell for rental properties at outrageous monthly rates. Example I saw today 3 br 2 bath $2700 a month plus utilities..?? Right...