[Claeren]

^ Only problem with that is that i am not sure how much the day to day oil price had to do with speculative house pricing on the way up (despite the hype), so not sure how much effect day-to-day oil pricing has on the way down assuming it doesn't drop out completely.

- The entire homebuilding industry, driven by speculation, has increased its capacity to build significantly. 'Capacity to build' is a major influence on speculative home prices.
-Calgary has no fundamental shortage of land to build on.
- 'Material costs' were always cited by home builders as justification for higher and higher home pricing. This is somewhat true but was exhaggerated by home builders to their own benefit. And many of those infaltionary pressures are now gone thanks to the collapse in the American bubble. The Canadian dollar allows cheap construction imports of materials and equipment, lumber pricing has eased, etc.
- Current pricing has eliminated a huge pool of first time buyers.
- Seemingly half the cities CURRENT residents bought second homes with a 1-3 year delay before they came/come to market. Each of those thousands of new homes/condos represents surplus in the market today.
- Many many baby boomers are counting on price growth to support their retirement. Without this price growth many will be looking to downsize, potentially increasing the supply of surplus homes on the market over the next 30+ years.
- Interest rates are much higher than they were and many many peopel will be looking at renewing in the next 1-5 years at TWICE their current rate (often on twice the house, as they move into their just completed larger homes).

On the otherhand prices rarely drop in a healthy job market. They can stay stagnant (more or less matching or just trailing inflation) for 10 or 20 years though.


The high price of land has added a underlying cost to a lot of new developments that is hard for developers to get around in the near term, but beyond that i think most things would indicate that the market can now provide more homes than are needed in any given year for the foreseeable future. The sad thing about currently inflated land costs is that Calgary has no fundamental shortage of land or major physical barriers to traffic/living patterns that justify those costs like a Vancouver, Manhatten, San Fran, etc. We are a prairie city with a full 360o of growth options...

I think you will see prices fluctuate within a fairly tight band for the next 10 years. Some years will be slightly better than others of course though... I think we will see a small upwards movement in pricing again (denial-phase), and then a flat market for a good period after that (reality-phase).

The market can relatively easily now provide ~25,000 new homes a year on top of the current 5,000-10,000 empty and 10,000(?) near completed homes/condos on the market - and could further up that towardss 30,000+/year if speculation started to run rampant again). That is up from virtually 0 surplus homes and a capacity to build ~12,000 just a few short years ago. Ask many American cities how those numbers match the market....


That is my take on it.

Claeren.