The Sky is (Not) Falling
After reading the business section in this morning’s Calgary Herald I felt compelled to make an addition to my previous post about the September 2008 market statistics. It’s amazing how one story can be represented in many different ways.
My take on the results was quite positive, sales are up compared to last year, inventory is down and the imbalance between the number of sellers and buyers (at least in the Calgary metro area) is shrinking. So I was surprised this morning to read the headlines to Mario Toneguzzi’s article “Home-Price Slide in double digits”, “CALGARY CONDO VALUES DOWN 15 PER CENT”. I feel compelled to inject some of my individual perspective and clarification.
These are not year-over-year numbers, this is compared with the peak values in individual city quadrants which occurred between April and July 2007. The reason for the inconsistency is to make the per cent decline as large as possible. This would only matter to you if you were unfortunate enough to have traveled around the city in 2007 buying up homes in individual neighborhoods at the absolute peak of the market and today decided to sell them all. You have to read quite far to learn that the median price is down about 6% from last year while average price is down 5.7% (again this is only Single Family Calgary Metro).
All of these numbers are accurate but the spin is completely different. Looking at the rest of the cover page to the business section, another comment to be made is that Calgary Real Estate seems to be the best investment on the entire page. Single family home prices are down 5.7% compared with last year. Meanwhile the Toronto Stock Exchange is down 15% year to date, the S&P 500 has lost 20.7% and the Dow Jones is down 18.2%.
Admittedly I have a horse in this race. I own Real Estate in Calgary and make a living selling it, so you shouldn’t take my word alone. Evaluate the numbers for yourself and decide if it’s really as bad as it sounds. While we’re making comparisons, have a look at the chart below comparing 2005 2006, 2007 and 2008 prices. Short term buying and flipping of homes is a very risky practice, but over time Real Estate has proven to be a great investment.
Real Estate is a long term investment. My advice is don’t get too caught up in comparing your home’s value to what it might have been worth 18 months ago. Consider what it was worth 5, 10 or 15 years ago and you’ll feel much better. As of September 2008, the average value of a single family home in Calgary is up 56.7% since September 2005. The average value of a condo over the same time frame is up 61.6%.
These numbers were compiled from monthly stats reports released by the Calgary Real Estate Board from 2005-2008.
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