Quote:
Originally Posted by Slava
Where do you base this though? If housing prices were down by about 15% last year (an estimate/recollection of mine, not a solid fact I've researched) than why do you think that another 15% cut is in the works?
That would make the total drop about 30%...not unheard of, but rather drastic for an economy that is still projected to grow in the later part of '09 and into 2010.
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First of all, let's really discount this 'projected' number nonsense. I've personally sat through presentations by some of the senoir economists of the major Canadian banks in the past month (some of them highly esteemed and decorated) and collectively they are all over the map. They range from Q3 2009 a return to positive GDP growth to the end of 2010 as a recovery time table. Bottom line is that even the best and brightest really don't know and there's a lot of indications that this is much worse than '80-82. Americans collectively are in a $1 Trillion home equity deficit. Thats trillion with a T.
I find it really hard to believe that Calgary house prices will stay stable all the while defaults and bankrupcies occur all over the map in the USA. I'm thinking that a 15% drop would still leave Calgary as one of the best performing real estate markets in North America through 2009. That being said I think once people are sure of their employment, there should be plenty of buying action towards the beginning of the recovery when that should happen. My call is -10% this year and plus 5% for 2010.
As for that 15% drop in '08, I'd be inclined to think that a lot of that was a drop from the "don't let house prices leave you behind, lever up and buy now" madness that occured here and here alone in 06-07 combined with a bit of overbuild. Right now we're in a credit crunch (banks can be much more selective on who they loan to), people are getting laid off, and there's still a bunch of newly built inventory being added. Calgary's not a large enough market to absorb that with only single digit price drops.