Quote:
Originally Posted by Claeren
You sound exactly like bulls in Florida, Phoenix, Las Vegas and California did about 2 years ago.
Income is a huge factor in home prices BUT income and employment will be easing significantly for the next ~5 years. Home prices are also about 30% above what income suggests they should be.
As for the other factors you mention, they only matter when land is restricted (which it is not in Calgary) and/or where there is less CAPACITY to build than there is demand. Since capacity has grown to reach and then exceed demand prices (like they would with any consumer product) should no longer grow.
I see it already with new woodframe condos dropping and dropping their prices. Why would I buy a 2 year old condo in the suburbs for $320k (its price at peak) when I could buy a brand new one for $209k just as far from downtown? And those prices will keep dropping as well....
But keep on hoping, maybe hope will hold those prices up?
Interestingly, the industry lists price drops as one year declines but the market peaked more than one year ago. So when they say prices are down 5.6% they could really be down 12% since peak.
Claeren.
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I not bullish on the situation at all.. What I am saying is that media reporting on the "meteoric rise of nortel stock" causes just as much problems as the media does talking of "Mortgage Crisis to hit Canada"..
I'm saying that Country wide we are all in a tougher situation then we were 18 months ago. On an equal basis some regions are more desirable then others. I agree that in Calgary affordability is an issue, and that the market is correcting. What we need is a slow controlled correction, and that's what we would get if it weren't for the dramatic headline.
As for the capacity exceeding the demand, that's beyond obvious at the current prices. If the price falls enough the demand will go back up. we could sell every single house in the city in one day if the price were a dollar each!... The point I was making is flashey blanket statements by the media only fuels the problem.
Part of the condo problem is while affordable.... nobody with a family wants to live in a condo... The city requires the "burbs" to build in density that nobody wants. It was great when single family homes were 400k but as the price corrects condo's have to be given away.