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View Poll Results: Where will housing prices finish at the end of 2015?
I work in O&G - At worst, down 5% 23 19.66%
I work in O&G - Down more than 5% 25 21.37%
I don't work in O&G - At worst, down 5% 24 20.51%
I don't work in O&G - Down more than 5% 31 26.50%
Only time will tell - I have no prediction 14 11.97%
Voters: 117. You may not vote on this poll

 
 
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Old 01-20-2015, 12:21 AM   #1
Travis Munroe
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Question Poll: Where are YYC housing prices at the end of the year?

With such a wide margin on predictions for Calgary housing prices, let's see where CP stands. I enjoy hearing about others opinions. Being in the industry, I am asked this question daily and always point out that their guess is as good as mine.

For the record, 2014 was up around 7%. I initially felt that REMAX's projection for 2015 was overly positive (around 3% growth). At the 2015 CREB forecast with Kevin O'Leary, CREB predicts a more modest growth of 1.5% (roughly). My first prediction was a 5% decline in prices as a worst case scenario which was later influenced to a 3% decline as a worst case scenario.

The logic behind the possible answers relates to a recent post of mine where I found most people I spoke to in the O&G industry seemed less concerned than those who were not involved.
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Old 01-20-2015, 08:08 AM   #2
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There are houses at the airport?
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Old 01-20-2015, 08:19 AM   #3
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Up 1.73%
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Old 01-20-2015, 09:05 AM   #4
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I expect prices to be pretty flat. +/-1.5% at the most.
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Old 01-20-2015, 09:17 AM   #5
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Originally Posted by Realtor 1 View Post
The logic behind the possible answers relates to a recent post of mine where I found most people I spoke to in the O&G industry seemed less concerned than those who were not involved.
sounds like you have a lot of, "let them eat cake" type of friends. You're probably upper middle class very well off with very well off friends. That's not a good representation of the "average" person. Those with secure jobs, friends of the owners etc are in a very good position to whether the storm. Go talk to people in O&G that have already lost their jobs and ask them how they feel and how concerned they are. When times get tough and in a 200 person company 100 people get laid off, the remaining 100 people are just fine. If anything they're better off because they have jobs and can take advantage of lower prices due to the slower economy. But those 100 that got laid off will create a huge downward pressure on the economy and real estate market. So asking people in the %1 how they feel about their satiation is probably not a good indicator of the overall trend out there. If I was rich I'd welcome a downturn so I could take advantage of it. Too bad that doesn't help the rest of those that are going to have trouble making ends meet.

Also remember, a huge driver of the market in the past few years has been investors. So even if people aren't rushed to dump their homes, they might rush to dump their extra properties and at the same time investment demand will drop off a cliff. There is also a case to be made as to what will get hit the hardest. I agree that some will get hit less than others. Commercial office space is going to be brutal once all this new space comes on tap from query park, brookfield, telus, the bow, etc. There's going to be tons of extra office space all across this city in the next few years.
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Old 01-20-2015, 09:30 AM   #6
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Quote:
Originally Posted by lorenavedon View Post
sounds like you have a lot of, "let them eat cake" type of friends. You're probably upper middle class very well off with very well off friends. That's not a good representation of the "average" person. Those with secure jobs, friends of the owners etc are in a very good position to whether the storm. Go talk to people in O&G that have already lost their jobs and ask them how they feel and how concerned they are. When times get tough and in a 200 person company 100 people get laid off, the remaining 100 people are just fine. If anything they're better off because they have jobs and can take advantage of lower prices due to the slower economy. But those 100 that got laid off will create a huge downward pressure on the economy and real estate market. So asking people in the %1 how they feel about their satiation is probably not a good indicator of the overall trend out there. If I was rich I'd welcome a downturn so I could take advantage of it. Too bad that doesn't help the rest of those that are going to have trouble making ends meet.

Also remember, a huge driver of the market in the past few years has been investors. So even if people aren't rushed to dump their homes, they might rush to dump their extra properties and at the same time investment demand will drop off a cliff. There is also a case to be made as to what will get hit the hardest. I agree that some will get hit less than others. Commercial office space is going to be brutal once all this new space comes on tap from query park, brookfield, telus, the bow, etc. There's going to be tons of extra office space all across this city in the next few years.

I already saw your post in the other thread and this one is no different - comes across as if you are attacking me or have something against me. It's purely a question with a opinionated answer - there is no right or wrong.

As for the rest of the post, why would investors be dumping their properties right now? The only reason I can think of is that they are in a position where they need whatever cash they can get out of the property asap. Rental vacancy rates are still below 1.5%, a correction in housing prices (be it moderate growth in the 1-2% range or losses in the 2-3% range) are not going to do much for vacancy rates. As long as investors are still covering their tails on their rental income, it makes no sense to sell now if they are in a position to hold on for a year or 2. Of course there will be the unique case of a investor needing the equity however that holds true in any market condition.

I can guarantee that someone who is unable to purchase a $399,999 property isn't all of a sudden going to have no problem getting in at $388,000 thus driving demand for rentals down.

Speaking of office rental space, it is already dropping. It may be the hardest hit throughout the whole downturn however those in charge of making the decisions to spend the money spent on these office spaces are much smarter than I and I don't think the woke up and decided to build on a hunch.
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Old 01-20-2015, 09:40 AM   #7
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sorry not attacking you, was making a point about generalizations based on a few friends which I have no doubt are well off. Obviously nothing wrong with that but the average joe on the street that just lost his/her job and has to take care of a kid or stay at home spouse is probably not as positive as your friends right now. Also, when I refer to investors, im not referring to Donald Trump. I'm referring to some average calgarian that had a good O&G job and over leveraged themselves thinking they can get rich in real estate. Many multiple home owners are just average people that will suffer once their jobs are gone and will be forced to at least sell their extra properties. Not everyone can afford to maintain two properties even if rented, and a lot of people that purchased at the top might not even be cash flow positive on their rentals after taking all expenses into account. Increasing property taxes is not helping either.

These are all factors that eventually add up. I'm not saying we're going into Detroit Mode, but when I was the CREB predict a price increase for this year I feel out of my chair laughing. I don't think we'll crash but our real estate market is heading for malaise no doubt.
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Old 01-20-2015, 12:50 PM   #8
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REMAX's, CREB's, most realtor's etc. projections have always been painfully and obviously self serving and full of s**t. It doesn't matter when you ask, NOW is the best time to buy buy buy! Recession ahead? Oh don't worry, prices will RISE only at a slower pace.

BS

Have you seen the latest Deutsche bank report on Canada? I think that would be a fairly objective source for some good info.

My prediction is the next year or two will be quite the reversal. 15 to 20% price decrease at least. Hopefully more, as current valuations make no sense.

It already has begun.
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Old 01-20-2015, 01:05 PM   #9
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Out of curiousity, has anyone ran the CREB's projections vs. reality in past years, dating back to say, 2005? Would make for an interesting read on their actual accuracy.
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Old 01-20-2015, 05:36 PM   #10
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those much more in tune with the situation, how do you argue this?

Quote:
Currently, the world burns over 90 million barrels of crude daily. The price is down by $50 a barrel. If current prices hold (which they won’t) this would save the world’s oil consumers $4.5 billion per day, or $1.6 trillion per year. Big money. For the world to consume an extra 500,000 barrels per day, demand must only rise by 6/10 of one per cent.
http://calgaryherald.com/opinion/col...by-this-summer
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Old 01-20-2015, 06:29 PM   #11
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Quote:
Originally Posted by Realtor 1 View Post
those much more in tune with the situation, how do you argue this?



http://calgaryherald.com/opinion/col...by-this-summer
Why argue that? It's just some guys opinion. A bit confusing when he says that everyone that makes predictions is always wrong. Then he predicts himself...go figure.

Anyway, back to RE. Sales down 30%, inventory up 66% (condos are almost double). I realize that these are compared to last year and overall these inventories are not huge (yet), but it's hard to argue that the appetite to sell has grown and appetite to buy is shrinking. Something has changed in a huge way.
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Old 01-20-2015, 06:52 PM   #12
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Quote:
Originally Posted by Realtor 1 View Post
those much more in tune with the situation, how do you argue this?

http://calgaryherald.com/opinion/col...by-this-summer


there's an ocean filled with these just sitting at sea storing oil due to lack of demand. It's going to take quite a bit for demand to catch up to every increasing supply. Demand is growing far less than expected and more and more supply is coming on the market. China is slowing down massively (even more so than official numbers lead on), so is Europe and the US. Not good for demand. 2015-2016 is going to be rough.
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Old 01-20-2015, 07:01 PM   #13
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At the peak in 2009 contango related vessels stored 100M barrels, roughly 26 hours worth of oil.
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Old 01-20-2015, 07:20 PM   #14
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Quote:
Originally Posted by Realtor 1 View Post
those much more in tune with the situation, how do you argue this?

http://calgaryherald.com/opinion/col...by-this-summer
This says nothing it, the entire article figuratively says nothing, other then the author "believes" and has "faith" in oil going up... What you quoted says less, it says we produce 90m BPD, that the consumers would save 1.6 Trillion and a claim that 500k extra BPD would offset the supply glut, with no baseline growth numbers. No actual numbers and an assertion that all that savings would be turned back into oil vs. spent on something else.

Last edited by Krovikan; 01-20-2015 at 07:32 PM.
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Old 01-20-2015, 07:41 PM   #15
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Quote:
Originally Posted by Realtor 1 View Post
those much more in tune with the situation, how do you argue this?



http://calgaryherald.com/opinion/col...by-this-summer
Complete pie in the sky thoughts. Think about this practically

- There are plenty of layoffs in Calgary. Those people aren't buying houses.

- Everyone's options or RSU's are under water. Many people use that money for large ticket purchases as they live off salary.

- Bonuses are pooched. See comment on options.

- Housing supply will increase as people net migrate out of Calgary this year. That and foreclosures will increase.

10-20% off of the 2014 highs would be my guess.
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Old 01-20-2015, 07:52 PM   #16
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I agree with those sentiments, but I think it will take longer than 12 months to drop that much.
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Old 01-20-2015, 08:20 PM   #17
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I'm no expert but the two numbers I'm curious to follow are foreclosures and migration, specifically in Calgary. Unless rental demand drops, people will still need places to live. That will in turn keep them rented out (for those who bought them strictly as investments but couldn't make them at least cash flow neutral in this market, they probably shouldn't be in the game in the first place). However, if people start moving out and rental demand drops, that could be when you see inventories going much higher than normal. People who are in good financial health can ride things out but those who can't could be in for a rough landing.

This is assuming that interest rates remain stable (which I think is a reasonable assumption).
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Old 01-20-2015, 08:22 PM   #18
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Why argue that? It's just some guys opinion. A bit confusing when he says that everyone that makes predictions is always wrong. Then he predicts himself...go figure.
That's not what I said. Not everyone.

If you notice I made a distinction as to the people/entities who are intrinsically biased when it comes to real estate forecasts, because it is their business to just sell sell and sell more houses.

And their opinion does hold some weight (to a point) and is widely disseminated in the media, so they will of course always say that everything is just dandy. This helps to reassure the public and keep the gravy train going. It is however tiring to hear the same point of view over and over again without any counter points, especially when they go against basic logic.

But yes prediction is just that, nobody knows for sure and mine COULD be just plain wrong. It's just nice to have more than one opinion/prediction in the media from time to time.
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Old 01-20-2015, 08:38 PM   #19
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That's not what I said. Not everyone.

If you notice I made a distinction as to the people/entities who are intrinsically biased when it comes to real estate forecasts, because it is their business to just sell sell and sell more houses.

And their opinion does hold some weight (to a point) and is widely disseminated in the media, so they will of course always say that everything is just dandy. This helps to reassure the public and keep the gravy train going. It is however tiring to hear the same point of view over and over again without any counter points, especially when they go against basic logic.

But yes prediction is just that, nobody knows for sure and mine COULD be just plain wrong. It's just nice to have more than one opinion/prediction in the media from time to time.
Thinking you quoted the wrong person.
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Old 01-20-2015, 08:46 PM   #20
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Originally Posted by burn_this_city View Post
I agree with those sentiments, but I think it will take longer than 12 months to drop that much.
I agree, prices will be sticky on the way down as people take time to re-adjust their valuation expectations. Also the newly laid off are likely to spend the entire duration that their severance packages looking for a new job before taking steps to put their home for sale or move away permanently.

There's a mentality that has grown since the Klein days that economic problems are something that other people in different parts of the country and world deal with and does not happen here for any length of time. It will take some time of ever decreasing prices and no upswing to dissuade a group of people who think the 2008-2009 time period in this province was the high water mark for economic misery in their lifetime(Hint: this was probably the least negatively impacted place in the entire world by the great recession).
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