Thankfully 2020 is nearly over and it is time to do the annual prediction review scorecard post, an opportunity to review my Nostradamus-unlike predictions made each December with some time-machine-like hindsight. So here we go, just four predictions were made during the last few days of 2019;
the spring 2020 calgary inner city housing market would be better than the spring 2019 market - outcome - WRONG - in spring we were in the midst of a previously unthinkable nationwide pandemic lockdown. A home builder couldn’t even show vacant houses for some lengthy segment of the year and open houses were effectively cancelled all spring. The spring market was a horrible dud, the worst I have ever seen, bar none. I don’t blame myself for this forecast, the first couple months of the year were looking very promising, at least until we ran face first into an enormous black swan called covid.
my transition into building large single detached homes would be a wise move given overall market forces - CORRECT - this was a really spot on prediction, but I was right for the wrong reasons. It seems that a massive shift took place in home buyer preference due to the shockwave of lockdown induced cabin fever, and the work from home via zoom meeting scenario led to desire for a better web cam backdrop. Unquestionably we saw a reversal of demand for walkability and urbanism in the market in exchange for more space for a home office and gym and privacy, and elevators - ooh icky, condo builders got murdered. My prediction originated because I detested building in an oversupplied segment, the semi-detached infill, given how ruthless the competition was and how margins had compressed to nullify any need to build more product. I wanted to compete on design and quality vs just price, which is a total race to the bottom as the semi-d business is totally commodified. I will have more to say on the villains and consequence behind the ugly semi-d business model in the inner city in another post. I may even be a semi-d hypocrite because, unable to resist my innate building urges, I bought another really nice lot early in the year (Parkdale, 35st NW), and what am I going to be building on it? A semi-d! And I wanted to build four detached homes in 2020, but the result was finishing just one and starting two (really late in the year which was so frustrating and costly due to planning department ineptitude), while deferring two for later in 2021. So my transition wasn’t particularly spectacular and I’ve already had a major relapse into semi-d building.
Inner city real estate (land and homes) prices would increase slightly - CORRECT AND WRONG - can I be both right and wrong or does this violate the rules of the game? Well, in May, I saw a deal go down at literally 2011 or earlier prices in one of my key neighbourhoods. That was just a horrendous sentiment driven low point of market ugliness, when it appeared that the year would be a total calamity. Yet by the time I published my raspberry market update 1.0 and 2.0, the outlook was pretty good on pricing. Government meddling had imposed a level of pricing support based on cheap lending, and land values did rebound, and, lately, as this post is being written, some high dollar sales have been observed for nearly finished product. Other reports of many builders successfully preselling product has been recorded. It appear that at year end pricing is flat vs 2019, and way higher than what we saw in the first half of the year during the lockout lows. Also, I published a post called ‘same city, multiple markets’ describing unbelievably strong segments within the City. Perhaps government meddling in the financial markets is actually working in favour of the Calgary home builder for once?
The clueless federal government would fall and be replaced by some ‘better’ entity. WRONG - but how close it seemed we would be to dumping the head virtue signaller. Instead he was able to hide out in his cottage and deliver ridiculously ineffectual drivel to his paid off press gallery. A man so fearful of being labeled ‘racist’ he’d welcome flights departing plague central to all of our major cities still leads us into 2021. We did do away with the out of touch finance minister, but he was replaced with an individual far less qualified and apparently we will suffer months more Pollievre led question period cringeworthy non-answers.
So there you have it, my 2020 prediction score is two wrong, one right, and one sort of even. My record of real estate fortune telling remains a dismal affair. 2021 is a tricky year to make predictions for, however, fear not, as fearlessly I will do so (in a future post). Happy Holidays to everyone!
Quote of the Year - Chrystia Freeland on Canada’s efforts to reduce carbon emissions in perspective, “even if all Canadians ceased producing Carbon it wouldn’t even move the dial” - if we shut down all of Canada’s CO2 emission (1.6% of global total) it would have zero impact on global climate change, yet taking action on climate change is view with a religious fervour and any policy to reduct emissions is viewed as positive, without regard to the consequences or any cost benefit analysis.