should I be thinking of selling in Calgary right now? Evert, who asked the question, observed that I had said several months ago that there was going to be a buying opportunity happening in Calgary over the winter season leading into the spring, and that I was anticipating the buying opportunity to end in spring 2008. His question therefore was, “the flip side; being, based on the latest information when is the selling opportunity?” This is a great question, because a lot of people think that a market is either in a buyer’s market, or a seller’s market. The logic follows that if the buying opportunities go away, that must mean that you then want to become a seller — which isn’t the case. First of all, I made the comments about the buying opportunities ending in the spring on the basis that, as with every year, the real estate market in Calgary in transition from winter to spring almost inevitably goes up. Prices typical flatten out or decline in the winter period, and then start to rise again in the spring. As I always say, let’s look at the numbers for the facts. The median home price in Calgary for December 2007 was $406,788, compared to when the market peaked in 2007 in June at $439,000 – a decrease from June to December of approximately 7.3%. Yikes! It’s over .. better get out! At least that’s what the amateurs were saying .. and doing. But that happens virtually EVERY year .. prices go up in the first 1/2 of the year, and moderate in the second 1/2 of the year. That’s just the real estate cycle doing what it does. Of course, if you don’t know that’s normal, you might think it’s time to jump ship because prices are crashing. It doesn’t help when you’re being bombarded every day by the horrific financial and economic news coming out of the U.S. Ok, so what’s happened since December? The median home price in Calgary for Feburary 2008 was $428,000 .. that’s up 5.2% from December (and up 4.9% over the same month in 2007). And as I write this in late March, it appears the median price will move up slightly in March over February. So the point is, prices are back UP after stalling in late 2007 – which is exactly what I was suggesting would help. Now, back to the central question — is it time to sell? The simple answer, in my mind, is this (and this is precisely what I tell people that ask me this question in Alberta ..) Unless you need to sell, my advice is to hold onto any property you can right now — provided it’s a decent property in a decent area, in a decent town or city in Alberta. A year from now, prices WILL be higher than they are today. If you read between the lines, I’m not the only one saying this either. In today’s Calgary Herald, there was an article about Calgary’s condo market, and whether there is a bubble and prices are set to decline. One of the quotes in the article is from Richard Corriveau, the senior economist at CMHC (who I respect a lot):
“We don’t subscribe to the bubble notion. . . . You might see some short-term variations, but in the long run whatever you buy now will be worth more into the future”And I agree with him. So my whole point is, I was suggesting that there would be a period of soft prices, where you could likely negotiate a better deal, with better terms, while the prices were softening. But I also believed that in the spring, things would start to tighten up and you’d see prices moving slowly up again. That’s where we’re seeing the market now. This is not to say you shouldn’t buy anything right now! Just that these little windows of better opportunity open up and it’s great to take advantage of them. Should you sell? I would say absolutely NOT. With what’s happening in Alberta (and particularly in Calgary), the future is upward price movement. Remember that markets don’t move in a straight line .. so you’ll see ups and downs .. but I would confidently say that overall, Calgary’s market has a lot of room to grow in the next 3-5 years (and I back that opinion with my money .. since most of my portfolio IS based in Calgary, and with all humbleness I can muster, my prediction have been incredibly accurate over the last 5 years). And like one of my Golden Investing Rules says, “Only take advice from those who are doing and getting what it is you want to do and get.” So the point is, watch for buying opportunities, but don’t plan on being a seller for several years, if you’re in Calgary (and most places in Alberta). And by the way, here’s another great example of the media hiding good news on page 6!In this article, Genworth (one of the mortgage insurance companies who released an in-depth report on Canadian housing prices) had this to say ..
“The gains in Calgary over the next five years are expected to be the best of any major Canadian city.”No WONDER the average person out there has no idea what’s really going on with the real estate market! They hide all the good news, and put the bad (often irrelevant) news on the front page! So .. should you sell in Calgary? I’ll leave that decision to you! Just make sure you’re using fundamentals research to guide your decision.]]>