I am by no means an expert but this got me scratching my head:
Quote:
Originally Posted by Claeren
I think the biggest mistake a lot of you are making is the assumption that energy prices in Calgary were the prime driver of real estate pricing. (They were not.)
There were housing price bubbles around the WORLD people. Miami, LA, Vancouver, Spain, Ireland, London, etc etc etc etc etc.
It was due to cheap money (a credit bubble) and not a fundamental need for housing.
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Wasn't one of the major driving forces the massive influx of people into Calgary, many of whom had above-average incomes? This drove demand through the roof, and took prices with it (as supply went to record lows).
These days, even though the economy has slowed drastically in the past few years, net migration in Calgary is still positive, no? Plus the fact that many of these people who moved into Calgary and recently bought homes may have little equity (or negative equity), I would guess that they don't have any incentive to sell at the moment, and will be looking to hunker down and ride this out. This would contribute to the lower real estate sales numbers (people looking to stand pat rather than buy and sell in this market). I also wouldn't expect a massive exodus of people out of Calgary (even with the layoffs) -- correct me if I'm wrong but I'm guessing things in BC, Sask, or out east aren't any better than Alberta these days.
Also, I think the whole "0 down, 40 year mortgage" thing is overstated -- isn't the percentage of people with these mortgages quite low? With mortgage rates at record lows, it's not like the subprime stuff in the US or Alberta in the 80's where people's mortgage payments go through the roof... I suppose if people start declaring backruptcy left and right, that's another issue, but I haven't heard of any big spikes in foreclosures (in Alberta or Canada for that matter)...