now dipped below 5,000, after hitting a record this year of over 6,000. Compared to the level of 1,700 earlier this year, we’re still a long way from the frenzy we saw in the spring. But things are moving exactly where I expected they would. Average prices are going to sag a little bit and continue the trend of a flat market in Calgary, while the market takes a breather from the craziness of earlier this year. As a result, the newspapers are screaming about the “cooling” of the market and there was an article in a local real estate this week with the headline, “Is It Time To Panic?” Of course, you should know by now the answer is NO! What’s happening right now is that a lot of the unrealistic sellers that had their properties listed are now realizing the “fool” market in the spring is over. (I call it a “fool” market because there were a lot of fools out there buying properties without knowing what they were doing! For many of them, they’re lucky that the market’s made them heroes, but it could have easily been the opposite.) In fact, last night I spoke Bob, the neighbour of one of our properties that we just bought. He had contacted the previous owner, asking if he might be interested in buying Bob’s house next door. Since we are the new owners, the guy I bought the house from passed on Bob’s name and I called him. Had a very interesting conversation. One of the nicest guys I’ve spoken to in a long time. Bob and his wife scrimped and saved, and bought this house 4 years ago. He’s a high school teacher, and she wanted to stay at home to be a full-time mom. They took the leap, and have been managing this house themselves since they bought it. His rents are about 40% below market right now since he doesn’t know what the market “is”, but he’s most interested in the equity increases that real estate provides. They’ve seen an increase in this one house of over $200,000. Speaking to him, it was clear Bob doesn’t know a lot about real estate investing, but he had the courage to take action . . . . and the results have been overwhelming for him. At this stage, he’s not sure where the market is going and is starting to feel somewhat uneasy. He told me he’s reading the newspapers and a bit worried that the market might be turning. We talked a little about what he felt his house was worth, and I made him a simple verbal offer. We talked about whether he’d be interested in carrying, which he said he might, because it would be great to have an added income coming in each month since his wife doesn’t work, and in his words, “teachers don’t get rich from their paycheques”. Just another fascinating view into the “accidential investor” who didn’t know a lot about what they were doing, but decided to take action . . . and their life is LITERALLY going to be different now. They decided to buy a second house last year, and he’s thinking about selling that one as well. Both in great areas, and I’d love to buy them from him. Especially if he’s willing to carry financing! There are a couple of points here. The first one is, nothing happens until you take action. Sometimes it’s stressful or makes you feel uncomfortable to do it, but it’s critical to moving forward. Second, a lot of investors that DON’T know how to read the real estate market are easily swayed by emotion, newspaper headlines, and opinions of people they know (that don’t know more about real estate than they do). He told me he’s taking advice from a guidance counsellor in his school, who owns 2 properties himself. Be careful who you take advice from. As I always say, only take advice from those who are doing and getting what it is you want to do and get! I think my phone call last night is going to lead to us picking up another property or two in great areas, and might possibly even lead into more opportunities with Bob since he said he’d probably take the proceeds from his house and put it into something bigger, and that didn’t have management headaches. Sounds like a great potential joint venture partner to me! I realy enjoyed speaking with him, and I’m looking forward to meeting him in person. I think that we can both help each other, and it just goes to show, you never know what’s going to happen when you pick the phone up to talk to a seller. So back to the headline of this post, and my point: I think we’re going to see a soft market here for a couple of more months. Christmas time is always a slower time with lower sales, lower listings, and lower price increases/averages. However, given the robust economy in Calgary, the market will NOT continue to be flat into 2007. Calgary has increased the number of jobs available by over 9% in 2006 alone — that means there are A LOT of people still moving to Calgary, needing somewhere to live. And yet, there’s still a massive labour shortage. Folks, what you are seeing is NOT the end of a boom or bubble.. you are seeing the results of what happens in a market when all of the economic fundamentals line up. It doesn’t happen like this very often, and I strongly recommend you get into the market and take action! 2007 will not be a repeat of 2006 — we won’t see 40%+ increases next year. However, I do project we will see at least double-digit increases, and I’m expecting somewhere in the range of 16-20% next year, depending on how a few economic items shake out. I don’t think we’ll see listings spike like we did this summer, because a lot of those unrealistic sellers have realized it’s a waste of time to try and ask crazy amounts, and they’re taking their houses off the market in droves. I think this, coupled with a strong pool of buyers in the spring, will lead to inventory levels in the 3,000-4,000 range – perfect for a healthy market with enough demand to place pressure on prices.. moving them up. The rental market will stay extremely tight (right now it’s officially pegged at 0.6% vacancy), and that will drive rents up, and make investing in real estate even more attractive, notwithstanding the higher prices for property. Plus, new construction costs will continue to go up, which inevitably leads to increases in new home prices .. which then leads to breathing room for the resale market to increase as well. Interest rates are on their way down a bit in 2007, and that will further fuel the market. We are a LONG way from the end of this cycle, and I just hope Santa remembers to fill all 3 stockings that I’m putting out this year! Give me all the real estate I can get .. please, Santa!]]>