Back To The Basics

This past weekend I was enjoying the nice weather when I received a call on my mobile phone. Not recognizing the phone number, I let it go to voicemail.

I checked my voicemail later on during the day and the last person I would ever think to contact me, did. It was the real estate “professional” that I had been talking to in the spring of 2007 when I was browsing some condo units in the city. It was during that time I was researching the market and planning to either purchase or wait on the market. We had not spoken since because of obvious differing market perceptions. As a consumer, I was trying to educate myself on the market while the “professional” was just interested in earning 6%. Our last communication revolved around the individual’s belief that prices would climb forever and I’d miss my chance in entering the market (“forever”). I knew better.

This “professional” left a message indicating that a property that just “came across their desk” and wondered if I was interested. It was a condo in the NW quadrant of the city and the price had been recently reduced by $20,000 as the seller was motivated. Further details revealed the condo was ~800 sq. ft., and now priced at $300,000. It was a “deal” in the opinion of the “professional” because neighboring similar units were $320,000 and $350,000 respectively. No thanks.

What a stark contrast the year 2008 is compared to the boom years of 2006 and 2007. During those years, houses sold themselves with little effort.

Now, sales are plummeting 30%-40% year-over-year.

April sales are plummeting as it looks like we’ll have another consecutive month of dismal sales.

SFH April 1-13 2008: 569, 1313 (projected)
SFH April 2007: 2086
SFH April 2006: 2040

Condo April 1- 13 2008: 258, 595 (projected)
Condo April 2007: 839
Condo April 2006: 922

There are approximately 5700+ real estate “professionals” in the Calgary area. With commissions being paid only on sales of properties, many of these “professionals” are not making any money.

To generate sales, some of them are forced to go back to the basics. This may include generating sales leads by implementing cold call tactics. In addition, it would be interesting to see the marketing budget for the DDS these days. On some Calgary radio stations, every second advertisement concerns real estate.

Afterall, these are all signs of a “normalizing” marketplace.

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