Real estate in Calgary - another bubble?

[Sliver]

Originally Posted by flamesfever

I really don't like a lot of the relatively new developed areas in Calgary, where you have these huge houses, all pretty similar in design, spaced a few feet apart. When one catches on fire, the adjoining houses are automatically threatened. Also the tree growth seems to be quite sparse.

For me. I prefer the older areas with smaller houses on bigger lots, with sizeable backyards, and abundant tree growth. Also the variety of design and quality of materials and workmanship seems to be much greater.

Agreed, but it takes deeper pockets or a handy skill set and lots of time off to live in an older area. New homes are great because of the maintenance holiday. You won't need new windows, doors, appliances, furnace, roof, etc. for years and years. That helps keep expenses predictable and affordable.

[blankall]

Originally Posted by bizaro86

I live less than 100 m from that Google map point in a single family detached house. My kids are still in your first age range, and love things like the backyard ice rink/sprinkler and roads empty enough to ride their bike on.

I think its reasonably likely walking distance amenities will remain interesting as they get older (library, movie theater, YMCA, etc). What did you find yourself travelling to as an older kid that you couldn't access locally? Genuinely curious here - my kids love our location now but moving isn't off the table if it would be better for them.

I work from home (even pre-covid) and my wife works part time in the north so commuting time is a non-issue for us.

A major issue arose when I wanted to meet friends, get jobs, do extra-curricular activities, go to gym, etc.. Basically anything that was independent from the rest of the family. Part of too was that my parents put all the resources into things like education. That meant no money for a car. I attempted to get jobs to pay entirely for my own vehicle (which was my form of rebellion, as my parents thought all my time should be devoted to school). This was extremely difficult, as buses ran infrequently and often stopped running entirely at 9:00 PM. Waiting for a bus for an hour each way in -30 degree weather, to get to and from my $6/hr 4 hour restaurant shift, led to a poor cost/benefit analysis. Ct train stations at night in the 90s were also questionable areas to be in.

Although there has been improvement in the quality and security of transit in Calgary, it's a long way from being perfect. And unless you want to go to and from areas very close to an actual station, it's very difficult to manage.

There also was no Crowfoot Crossing when I lived there. There was a large empty lot that would blow huge amounts of dust into the neighbourhood. Perhaps yes, the YMCA and the theater being within walking distance might have changed my perspective.

Overall, my parents really had this same idea, that I would never want to leave the neighbourhood, as everything I would ever want was available to me in the neighbourhood. It was really a clash between the theoretical and reality.

[bizaro86]

Originally Posted by blankall

A major issue arose when I wanted to meet friends, get jobs, do extra-curricular activities, go to gym, etc.. Basically anything that was independent from the rest of the family. Part of too was that my parents put all the resources into things like education. That meant no money for a car. I attempted to get jobs to pay entirely for my own vehicle (which was my form of rebellion, as my parents thought all my time should be devoted to school). This was extremely difficult, as buses ran infrequently and often stopped running entirely at 9:00 PM. Waiting for a bus for an hour each way in -30 degree weather, to get to and from my $6/hr 4 hour restaurant shift, led to a poor cost/benefit analysis. Ct train stations at night in the 90s were also questionable areas to be in.

Although there has been improvement in the quality and security of transit in Calgary, it's a long way from being perfect. And unless you want to go to and from areas very close to an actual station, it's very difficult to manage.

There also was no Crowfoot Crossing when I lived there. There was a large empty lot that would blow huge amounts of dust into the neighbourhood. Perhaps yes, the YMCA and the theater being within walking distance might have changed my perspective.

Overall, my parents really had this same idea, that I would never want to leave the neighbourhood, as everything I would ever want was available to me in the neighbourhood. It was really a clash between the theoretical and reality.

Thanks for sharing! I appreciate it.

I do think Crowfoot has improved since then (gym and a part-time job would both easily be walkable options). The rest of that sounds like a set of problems I could solve pretty easily by buying my kids a car (and driving them places when <16), which is like hundreds of thousands of dollars cheaper than moving to an inner city neighbourhood. And realistically their friends/extra curricular probably still wouldn't be in that neighbourhood anyway.

I really appreciate your perspective though, because having my kids end up bitter about where they lived growing up is something I'd prefer to avoid.

[flamesfever]

Originally Posted by Sliver

Agreed, but it takes deeper pockets or a handy skill set and lots of time off to live in an older area. New homes are great because of the maintenance holiday. You won't need new windows, doors, appliances, furnace, roof, etc. for years and years. That helps keep expenses predictable and affordable.

Yes but even in new homes you may have things like fence building, landscaping, watching out for material and building deficiencies, etc. Also I don't think the newer areas tend to appreciate in value as much.

The first question I would be asking, if I was to purchase a house in an older area, would be how old is the roof, furnace, water heater, air conditioner, appliances, etc. Although, walking around these types of neighborhoods, i would say in general, that the people tend to take great pride in keeping their place fairly well maintained. This probably happens because of their awareness of the relatively faster rate at which their place is appreciating.

However, before buying any house, especially an older one, I think it would wise to pay for an inspection to know what you are potentially up against for extra expenses.

[bizaro86]

Originally Posted by Cowboy89

I fully agree with you about the current market. I recently almost pulled the trigger on a house that cost $575k because at that price for an equivalent house, my rent looks expensive.

That's why the thesis of my post was that the rent vs. buy argument is always a nuanced one because the math is constantly changing. There isn't a 'general rule of thumb' or 'more often than not' argument that applies because when one sits down and models the decision correctly (includes all costs of home ownership and rent costs (property taxes, condo fees, maintenance, insurance, moving a couple of times if you need to switch rentals etc) it's highly sensitive to a number of assumptions that, again if you're being honest with yourself you cannot accurately predict (market returns, price appreciation assumptions, rent inflation assumptions etc.)

With regards to the purpose of the thread, Calgary and Edmonton are not anywhere close to a housing bubble. They've been beat up so badly over the last 10 years while the rest of the country has bubbled that these are some of the only markets with high affordability relative to incomes. The issue in these markets is maybe the terminal value argument ie. Does it really make sense long term that an inner-city duplex should cost $850k- $1 million in a small prairie city whose major industry is in long term decline. If you're a 20 or 30 something couple are you going to get your money back with a decent return in 25 / 30 years that it makes sense compromising retirement savings to squeeze into the house you want to live in?

From a personal finance point of view, probably the key is to not end up house poor. Whether you buy or rent, if you move into something that's a struggle to afford it'll limit your ability to save for retirement and take care of other priorities. Living in something you can afford easily vs stretching for "perfect" is a big source of savings. Because whether you own or rent the cost of consumption for a place to live is really high.

[I_H8_Crawford]

Anecdotal, but my wife and I are looking inner city for a duplex or detached house. Stuff is moving, but moving below asking price. Anything priced under $700K moves fast.

The range we are looking in, ($750K-$1M) things hang around for the most part. They will sell, but not right away, and again, below asking. If things start heating up inner city we will likely just sit out and keep renting for the time being.

[Cappy]

Originally Posted by flamesfever

I really don't like a lot of the relatively new developed areas in Calgary, where you have these huge houses, all pretty similar in design, spaced a few feet apart. When one catches on fire, the adjoining houses are automatically threatened. Also the tree growth seems to be quite sparse.

For me. I prefer the older areas with smaller houses on bigger lots, with sizeable backyards, and abundant tree growth. Also the variety of design and quality of materials and workmanship seems to be much greater.

I mean this is a whole other issue in itself and one I somewhat agree with. New subdivisions with exclusivity agreements for one or two homebuilders offering a half-dozen similar floor plans and colour palettes all on a flat quarter section of dirt with no semblance of nature (heaven forbid there were trees on the property before!). All done with the singular goal to minimize costs to the builders to produce the cheapest (not most-affordable) box builders can build

[Cappy]

Originally Posted by calgarygeologist

I would love to see a lot of the older, 60s-70s, attached up and down duplexes replaced with newer row style homes. This is near my house and I think the location and lots sizes would be perfect for redevelopment.

https://maps.app.goo.gl/UyNmvr28qfNCbjZi6

Agreed. I think these are perfect areas for densification while offering people the opportunity to purchase property in a quiet inner-city neighborhood without needing to drop over a mil

Also a chance to slowly rid this city of the mile-and-a-half green waste space in the front of most properties :P

[blankall]

Originally Posted by bizaro86

Thanks for sharing! I appreciate it.

I do think Crowfoot has improved since then (gym and a part-time job would both easily be walkable options). The rest of that sounds like a set of problems I could solve pretty easily by buying my kids a car (and driving them places when <16), which is like hundreds of thousands of dollars cheaper than moving to an inner city neighbourhood. And realistically their friends/extra curricular probably still wouldn't be in that neighbourhood anyway.

I really appreciate your perspective though, because having my kids end up bitter about where they lived growing up is something I'd prefer to avoid.

Having a car in Calgary makes it a lot more manageable for sure. In the late 90s insurance costs for cars for young males were insane, $3-$4k/year, which would be about $8k/year now.

Once again, I see why people go for the yard in the burbs. However, there are definitely downsides to living in place where you need a car and everyone drives. It goes beyond your own restrictions. The city, the infrastructure, and the businesses also become orientated towards everyone driving.

If I did move back to Calgary, it would have to be to a central location. Once again, I would prioritize location over having a detached home and would prefer to live in a newer townhouse over a rotting old inner city house.

[RichieRich]

Originally Posted by bizaro86

I can't see your sheet to verify the assumptions/math, but 60% over 15 years is less than a 3.2% compound growth rate. I think its pretty likely Calgary single family homes do better than that over the next 15 years from their current starting point.

I also think the stock market might do less than 7% over the next quarter years. The current market levels are pretty high, especially in the US. Thats generally the best predictor of future returns.

Edited to add: I think your pricing assumptions are a bit off as well. My house (location discussed above) wouldn't be worth $600k I don't think, probably ~10% less than that. But based on a rentfaster search the only things close to comparable (but not as nice) rent for ~10% more than that. Even small differences (which will obviously vary based on location/personal circumstances) will make a big difference to your results.

Yeah I wish I could show you the spreadsheet... I've reduced the amount and so lets see if the following works... these are the default numbers (since my spreadsheet is about 20yrs old they made sense back then) I have in there so give me what you want me to use and I can share the output and then we see how that aligns with expectations and such:
Ownership Inputs Present Home Value $250,000
Down-payment Available $25,000 10.00% *Must be at least 5% Amortization (Years) 20 *Cannot exceed 35 years Mortgage Interest Rate 4.50%
Condo Fees (Monthly) $300 if applicable Property Taxes (Annual) $2,000
Maintenance/Other Expenses (Monthly) $500 Power, water, garbage, cable, parking, etc.. Rental Income (Monthly - After Tax) $0
Renting Inputs Rent (Monthly) $2,000 If YOU are renting Other Expenses (Monthly) $0
Other Inputs Opportunity Cost (After Tax) 7.00% ie Investment returns Comparison Period (Years) 10.0
Real Estate Appreciation Over Period 0.00% realistic for 2010-2015

[Torture]

Originally Posted by flamesfever

You're going to screw up some pretty nice neighborhoods doing that. Have you seen what the parking looks like where infills are built?

Next thing you'll want to start selling off green areas, golf courses, etc. and the whole inner core turns to sh**.

Hmm, do we build houses and neighbourhoods for people, or for cars?

I say this as someone that lives in an infill, in the inner city, near where the green line will someday maybe be built if the provincial government ever agrees to fund it. I have a garage and 90% of my neighbours do too. And yet any time somebody wants to develop something everyone's concerned about parking spaces for the cars.

[timun]

Originally Posted by Cappy

I could be in the minority, but if we could destroy a few of these:

https://www.google.com/maps/@51.1288...7i13312!8i6656

to create a few more of these:

https://www.google.com/maps/@52.0883...7i16384!8i8192


All the while, keeping housing affordable. I would be ok with that. Density doesn't have to be 20 story condo buildings offering sub 1000 sqft apartments.

This is Calgary's biggest problem. Density-wise we have a teeny tiny inventory of buildings between single family homes in the burbs and 20+ storey condo buildings. We need more of the sort of 3-4 storey buildings that mostly exist the Beltline (that are slowly but surely being torn down and replaced with apartment towers) to be built elsewhere.

Our suburban communities are planning disasters, but a lot of Calgary's density problems need to be fixed by redeveloping the pre-war and 1950s neighbourhoods that were originally low-density suburbs but are now in the inner city. I live in that 'ring' around the core, I have a much bigger lot than the average suburban house, and as much as I enjoy it I can see that it simply isn't sustainable. Unfortunately there are parts of that area that will be very difficult to redevelop due to very very deeply entrenched opposition with money behind it (e.g. Crescent Heights, Sunnyside, Upper Mount Royal, Elbow Park, Britannia, Elboya) and some special cases where legally it would be difficult (i.e. Scarboro, which has a robust 100+ year old restrictive covenant that limits the neighbourhood to single-family homes).

[CliffFletcher]

Originally Posted by Torture

Hmm, do we build houses and neighbourhoods for people, or for cars?

I say this as someone that lives in an infill, in the inner city, near where the green line will someday maybe be built if the provincial government ever agrees to fund it. I have a garage and 90% of my neighbours do too. And yet any time somebody wants to develop something everyone's concerned about parking spaces for the cars.

You don’t have guests? We have 4-6 people over to our house a couple times a month, and 10+ a half-dozen times a year. Not a problem at all for guests to find parking. That is not the case in denser neighbourhoods.

[burn_this_city]

Originally Posted by Cappy

You don't need 500 year old buildings to increase density and make a neighborhood more attractive to residents. The majority of the buildings in that photo were built within the last 70 years.

When Hawkwood is accidentally bombed by the allies at the end of WW3, we will probably use the opportunity to build upward. Entire neighborhoods surrounding the Hague were flattened in WW2, its easier to build up when you're starting with bare pavement in a post war reconstruction.

[DownhillGoat]

Originally Posted by Torture

I have a garage and 90% of my neighbours do too.

I'd venture a guess that 90% of my neighbours don't use their garage for their cars.

[calgarygeologist]

Originally Posted by Cappy

Agreed. I think these are perfect areas for densification while offering people the opportunity to purchase property in a quiet inner-city neighborhood without needing to drop over a mil

Also a chance to slowly rid this city of the mile-and-a-half green waste space in the front of most properties :P

The set back on those properties in particular is pretty ridiculous. If someone could ever redevelop across those lots and build with a 15 foot or so setback it would provide plenty of room for a good size backyard and double garage.

[Bunk]

Originally Posted by blankall

I disagree with this. The people are going to move to whatever city regardless. They can either live in a place with high density, that is close to transit and jobs. Or they can all commute in from the suburbs. The commuting is far more damaging.

Converting office buildings to residential is a good idea, but, once again, this requires a loosening of the zoning restrictions.

Zoning is not a barrier to conversion. City will accommodate easily from a regulatory standpoint. I can also expedite its approval through priority designation. The issue is primarily is the economics of it - probably need some incentives from various levels of government to see it happen at a larger scale. The other issue is suitability of a floor plate - anything over 12,000 sq ft floor plate becomes difficult for residential use.

[flamesfever]

Originally Posted by Torture

Hmm, do we build houses and neighbourhoods for people, or for cars?

I say this as someone that lives in an infill, in the inner city, near where the green line will someday maybe be built if the provincial government ever agrees to fund it. I have a garage and 90% of my neighbours do too. And yet any time somebody wants to develop something everyone's concerned about parking spaces for the cars.

We build neighborhoods for people. However, as you know, Calgary is a very car oriented place (we like to drive), and many families have a multiple number of cars. If you cut the living area in half you decrease the available parking area per car.

If you have ever experienced a neighborhood, where they started allowing infills, it's a given that the street will be, from thereon, lined with vehicles along the front of the infills.

I wish I had the photos to show you, but at the end of our street they allowed just two infills on a 50 ft lot, and the parking changed the moment they started building, and has continued long after the infills were completed. It has negatively changed the entrance to our street. You now have to be much more careful when passing other cars.

[peter12]

Originally Posted by Bunk

Zoning is not a barrier to conversion. City will accommodate easily from a regulatory standpoint. I can also expedite its approval through priority designation. The issue is primarily is the economics of it - probably need some incentives from various levels of government to see it happen at a larger scale. The other issue is suitability of a floor plate - anything over 12,000 sq ft floor plate becomes difficult for residential use.

Truly spoken like someone in city government.

[Bunk]

Originally Posted by flamesfever

We build neighborhoods for people. However, as you know, Calgary is a very car oriented place (we like to drive), and many families have a multiple number of cars. If you cut the living area in half you decrease the available parking area per car.

If you have ever experienced a neighborhood, where they started allowing infills, it's a given that the street will be, from thereon, lined with vehicles along the front of the infills.

I wish I had the photos to show you, but at the end of our street they allowed just two infills on a 50 ft lot, and the parking changed the moment they started building, and has continued long after the infills were completed. It has negatively changed the entrance to our street. You now have to be much more careful when passing other cars.

To me, this is a feature, not a bug of parked cars. People drive slower.