The bubble finally deflating. not bursting.............

[GGG]

Originally Posted by DiNaMo

I'm really puzzled as year-over-year prices as posted by CREB have been positive every month from October-January and sales are off to a strong pace this new year at 20% more then 2016 so far. Ironically this time period corresponds to the stricter mortgage rules and mortgage rate increases.

What gives? Is $50/bbl all it took to stabilize the Calgary real estate market? Is now the time to buy (always is right)?

Calgary's prices are sustainable relative to incomes and rents. So market confidence is all it takes to get it moving.

[newts]

Originally Posted by DiNaMo

I'm really puzzled as year-over-year prices as posted by CREB have been positive every month from October-January and sales are off to a strong pace this new year at 20% more then 2016 so far. Ironically this time period corresponds to the stricter mortgage rules and mortgage rate increases.

What gives? Is $50/bbl all it took to stabilize the Calgary real estate market? Is now the time to buy (always is right)?

Average price is not a reliable measure in last years market. Average price was inflated last year because of the increase of luxury properties (1MM+) sold in relation to the 2015 market. Due to the correction in pricing in this category, this attracted more buyers to the category, hence driving the average of the entire market up.

A better measure is the benchmark price, which basically measures the range where most homes are sold. Through 2016, this measure was down consistently -3% to -4% every month, vs. same period prior year.

As for unit increases, it's not surprising as 2016 was historically a very bad year. As the economic sentiment seems better today than it did a year ago, it's not surprising to see unit sales increasing in the last couple of months.

I would say that based on low numbers and seasonality, these aren't great months to gauge what the market is going to do moving forward, but a good sign nonetheless (if you're wanting to sell).

[Kavvy]

Originally Posted by newts

Average price is not a reliable measure in last years market. Average price was inflated last year because of the increase of luxury properties (1MM+) sold in relation to the 2015 market. Due to the correction in pricing in this category, this attracted more buyers to the category, hence driving the average of the entire market up.

A better measure is the benchmark price, which basically measures the range where most homes are sold. Through 2016, this measure was down consistently -3% to -4% every month, vs. same period prior year.

As for unit increases, it's not surprising as 2016 was historically a very bad year. As the economic sentiment seems better today than it did a year ago, it's not surprising to see unit sales increasing in the last couple of months.

I would say that based on low numbers and seasonality, these aren't great months to gauge what the market is going to do moving forward, but a good sign nonetheless (if you're wanting to sell).

I hear this a lot, but see very few stats to back it up.

Do you have by any chance:

- # of +1MM homes sold in 2016 vs 2015?
- % of total homes sold are +1MM in 2016 vs 2015?

[CliffFletcher]

It's remarkable how high real estate prices are staying. Where's the money coming from? Has anyone linked this to the enormous wealth accumulated by baby boomers, and the expected billions in inter-generational transfer of wealth to their children? Is it the bank of mom and dad keeping the market humming?

[newts]

Originally Posted by Kavvy

I hear this a lot, but see very few stats to back it up.

Do you have by any chance:

- # of +1MM homes sold in 2016 vs 2015?
- % of total homes sold are +1MM in 2016 vs 2015?

617 vs. 514; +20%

In 2015, the average home that sold for over 1MM sold for 1415k. In 2016 it was 1477k (+4.3%)

Both would be a small percentage of total homes sold, not really worth calculating.

Of interest, properties selling over 2MM were 72 vs. 47; +53%

Properties selling over 3MM - 16 vs. 11

[flylock shox]

It's largely low interest rates I think. People can't afford to buy a home to any greater degree than they used to. However, they can afford to buy debt to a greater degree, which they use to finance the home purchase.

So people aren't really able to afford houses, just debt they then use to buy houses.

That's fine if property values go up or stay the same, but if interest rates rise new buyers (or mortgage renewers) can't afford as much debt, can't pay the current market prices, and the market prices therefore fall.

Any dramatic increase in the interest rate would result in a bubble pop IMO. It's the low price of debt that's keeping the market humming.

And now that I think about it, the stage may be setting for a crash. If Trump's presidency ushers in an Era of crazy private sector spending in the US, the result could be a dramatic rise in interest rates to cool spending and encourage saving. Of course, that's the US, but still...

Mind you, I'm no economist, and have no idea what I'm talking about.

[snootchiebootchies]

Color me skeptical about rebounding housing prices.

- Albertans still have persistently high debt loads
- increasing interest rate environment
- lower for longer oil prices
- more stringent mortgage rules
- oversupply in the condo and rental markets
- dismal (but improving) jobs market

There was such a build-up during the boom that I just don't see a rebound anytime soon. Moreover, I'm not confident that we've seen the last of government intervention in the real estate market. It's possible the bottom is behind us but I really don't see much appreciation until there is real evidence that jobs and job security are coming back.

[Kavvy]

Originally Posted by newts

617 vs. 514; +20%

In 2015, the average home that sold for over 1MM sold for 1415k. In 2016 it was 1477k (+4.3%)

Both would be a small percentage of total homes sold, not really worth calculating.

Of interest, properties selling over 2MM were 72 vs. 47; +53%

Properties selling over 3MM - 16 vs. 11

Thanks for that.

To confirm, those plus% are 2016 vs 2015, i.e. 2016 has more?

Where did you get the info from?

[Slava]

Originally Posted by snootchiebootchies

Color me skeptical about rebounding housing prices.

- Albertans still have persistently high debt loads
- increasing interest rate environment
- lower for longer oil prices
- more stringent mortgage rules
- oversupply in the condo and rental markets
- dismal (but improving) jobs market

There was such a build-up during the boom that I just don't see a rebound anytime soon. Moreover, I'm not confident that we've seen the last of government intervention in the real estate market. It's possible the bottom is behind us but I really don't see much appreciation until there is real evidence that jobs and job security are coming back.

I think that there are signs of recovery though. Oil is basically double where it was at this point last year. People I talk to in the industry are much more confident than they were even 3-4 months ago. So if you didn't lose your job (which yes, a lot of people have), you were worried about it. That fear is dissipating though and when it does, people are more willing to take risks.

I have also heard of companies starting to hire more. If you kept your job, don't think that you'll lose it now, and were debating buying a house you are buying while rates are low and prices are at least lower than they were. Real estate changes pretty quick. Think back to 2008-09 when you could buy a condo and get extras like a free trip to Hawaii or whatever thrown in. It was like that for a while...until it wasn't. And once the deals were gone, that was it.

[Jason14h]

And now that I think about it, the stage may be setting for a crash. If Trump's presidency ushers in an Era of crazy private sector spending in the US, the result could be a dramatic rise in interest rates to cool spending and encourage saving. Of course, that's the US, but still...

Yesterday they said they would lower interest rates in response to Trump.

Interest rates are never significantly going up again. This is just the new world!

[rubecube]

Originally Posted by CliffFletcher

It's remarkable how high real estate prices are staying. Where's the money coming from? Has anyone linked this to the enormous wealth accumulated by baby boomers, and the expected billions in inter-generational transfer of wealth to their children? Is it the bank of mom and dad keeping the market humming?

I want to know where this bank of mom and dad is. I'll get to split like $100 with my sister when my parents go.

[newts]

Originally Posted by Kavvy

Thanks for that.

To confirm, those plus% are 2016 vs 2015, i.e. 2016 has more?

Where did you get the info from?

Yes, growth is '16 vs '15

as a realtor, I can pull this info from our database

[CliffFletcher]

‘Bequest boom’: Canadian parents will pass on $750 billion to kids over next decade

A new study out Monday suggests Canadians can expect a $750 billion windfall from their aging relatives over the next decade, an inheritance inflated 50 per cent compared to what was passed on in the previous decade.

Canadian Imperial Bank of Commerce deputy chief economist Benjamin Tal says this is the largest intergenerational wealth transfer in Canadian history for the time considered and the amount will grow even larger in subsequent decades.

Tal says the wealth transfer will have important economic consequences that will impact wealth distribution, start-up activity, labour participation, savings and the real estate market.

[Slava]

Originally Posted by CliffFletcher

‘Bequest boom’: Canadian parents will pass on $750 billion to kids over next decade

I think that this is true, and we've been hearing about it and planning for this for many years in the finance industry. I just think that the vast majority of that money is going to debt, and then the piece that is left over will fund peoples retirements. I have no real stats to back that up, it's just my feeling in general.

[GP_Matt]

It is hard to picture the wealth transfer affecting startups very much. It strikes me that right tired people in their 90's will transfer their wealth to retired people in their 70's.

[troutman]

I heard on CBC this morning that Alberta still leads the country in per capita spending, and highest average salaries. We also have a relatively young population.

[DiNaMo]

I'm surprised at the lack of media coverage into the GTA's housing market. Average detached prices in Toronto itself have hit $1.5 million after a 35% year over year gain. Where's the finish line? Give it another year and will we be at $2+ million this time of year?

https://www.thestar.com/business/201...-year-ago.html


Frankly I'm sick of foreigners using Canada's housing market as a bank, and whether or not they're the driving force (only part of the problem in my opinion) it's time to impose a tax like Vancouver's country wide for the privilege of owning Canadian real estate.

Lastly I don't mean to promote a different forum but I read the following forums once in a while for some more GTA based perspective.

http://forums.redflagdeals.com/real-estate-f169/

[squiggs96]

Originally Posted by DiNaMo

Frankly I'm sick of foreigners using Canada's housing market as a bank, and whether or not they're the driving force (only part of the problem in my opinion) it's time to impose a tax like Vancouver's country wide for the privilege of owning Canadian real estate.

These foreigners are ruining Canada. It's very bad. Very bad. We need to bring back houses to Canadians, unlike Harper who gave them away. Sad.

[d00little]

Originally Posted by DiNaMo

I'm surprised at the lack of media coverage into the GTA's housing market. Average detached prices in Toronto itself have hit $1.5 million after a 35% year over year gain. Where's the finish line? Give it another year and will we be at $2+ million this time of year?

https://www.thestar.com/business/201...-year-ago.html


Frankly I'm sick of foreigners using Canada's housing market as a bank, and whether or not they're the driving force (only part of the problem in my opinion) it's time to impose a tax like Vancouver's country wide for the privilege of owning Canadian real estate.

Lastly I don't mean to promote a different forum but I read the following forums once in a while for some more GTA based perspective.

http://forums.redflagdeals.com/real-estate-f169/

Actually I see a new news article every day talking about GTA's real estate prices and affordability issues. I think there have been like 4 major bank CEO's that have warned of the bubble in the past month. It's crazy, the demand is sky-high, but listing are very low, leading to bidding wars on almost every detached house.

[automaton 3]

Even with the low interest rates I don't understand how the Toronto market has gotten so frothy.

The average family income doesn't support those prices. Where is the money coming from?

Vancouver I understood a bit more, as it is fairly unique place to live and in my mind very desirable. From what I've seen of Toronto, it is pretty much the same as living anywhere in Southern Ontario.