Quote:
Originally Posted by fotze
I think everyone needs to put their own situation in this thread because almost everyone's prognostications seem pretty darn motivated by their hopes and not reality.
People with Real Estate holdings feel its going to go up up up.
People who can't afford to get into the market foresee double digit losses.
People from other major centers who have a rivalry with Calgary see dark days ahead.
People hoping for the petroleum industry to collapse predict grim days.
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In the spirit of full disclosure, I work as a petroleum engineer, so it is not that I want the petroleum industry to collapse. Nor is affordability a problem as my better half is a senior manager at an oil and gas service company. We can afford a house, but we see it as an extremely poor investment decision.
It is moreso that the mortgage carrying costs (taxes, interest to the bank, maintenance, utilities) is significantly more expensive than renting. Therefore the benefit of building equity is relatively gone. In fact, if you invest the difference between renting and buying, you'd be significantly ahead over 30 years by renting.
This does not bode well for the Calgary real estate market. There should be an economic payoff after 10 years by owning instead of renting, because there are greater risks involved.
Sales are down by 30-40% year over year, and we have record amounts of housing construction. Supply/demand should dictate that the correction isn't over. I would not be suprised to see house prices fall 10-15% (another $50,000) by this time next year.
Prices will continue falling until they are supported by rental yields.