Ok, I will buck the trend.  Despite the overall malaise felt by many consumers in the past two weeks due to the over stimuli of “crisis” this and “recession” that the underlying fundamentals of the Canadian Real Estate Market and more specifically the Calgary real estate market are pointing to a balanced market historically speaking.The problem we faced earlier this year was that there was  sharp and sudden drop in sales, BUT new listings kept coming into the market, the proverbial “Johnny come lately’s”  who were trying to “Cash in” on the boom.  That trend has continued to drop for the past three to four months.In the past four months the overall inventory has dropped over 20%…this is good.  New listings added is dropping every month in the past three…this is good.  We are headed for a statistically slower time for new listings added…this is good.  This all points to overall inventory levels reaching a more historically balanced level.Put another way, at the end of September 2008 we had YTD sales to listing inventory at around .43.  Historically we know that when that ratio is between .4 and .6 we are in a statistically balanced market.Here is a great article on it as well which looks more at Canada as a whole, I have captured a few quotes from the article as well in case you don’t want to read the whole thing. Fewer Canadian homes were sold in the third quarter and the number put on the market also dropped — signalling a slide in housing prices is beginning to slow, says the Canadian Real Estate Association.“We had a sellers’ market for several years and now we have a much more balanced market,” Alexander said in an interview.A drop in new listings helped to moderate the decline in prices, said BMO Capital Markets economist Doug Porter.“With fewer sales and fewer listings, it’s a built-in stabilizer as far as the extent to which you can expect to see prices to decline,” Klump said in an interviewAs the oil boom eases, Edmonton and Calgary led the decline in the number of new listings, posting year-over-year drops of 19.8 per cent and 11.7 per cent respectively.But Canadian homeowners shouldn’t expect to see the kind of price crash that their neighbours south of the border have experienced, Alexander added.“In the Canadian context, this is very much a cyclical event. The housing market is cooling down after a very hot run but the tide will turn when economic conditions improve and that will probably be late 2009 into 2010.” 

CMHC announced today that they have purchased $5 billion of a promised $25 billion of mortgages.  This is wonderful news.  Couple this with the government guaranteeing interbank lending and we will see considerable declines in rates for mortgage consumers.  Couple this with drops in real estate values in Calgary, makes now a great time to buy a home. One thing to be sure, CMHC DID NOT buy bad assets.  These were good assets, to be sure the Canadian mortgage market really does not have “bad” assets.  Are current defaults and foreclosures are still well below historical averages.Keep in mind the sub-prime mortgage market in Canada was around 5% of the total market, compared to 20% dow south.  

Sherry Cooper is a well respected economist that is certain, and when she talks people do listen.  In a recent article she says the federal government must intervene in the Canadian financial markets even if…GASP we have to engage in deficit financing to do it.  On the surface she is probably right.  The easiest thing they could be doing that i am told they likely will is guarantee interbank lending.  Most other central banks have done this at a minimum and we should to.  She points out that if that was to happen then the banks would match the cuts to the prime interest rates that the bank of Canada has been doing and is expected to cut again on Tuesday by a further .50%.  If this cut happens and the government comes through with the guarantee then you will see prime rate drop likely 1% next week.   This will of course be welcome news for consumers, particularly mortgage consumersStay tuned