These aren't great reasons why this is a buble. Mostly the low interest rate is the reason for the spike in prices. I don't really see a huge correction coming. Maybe on the order of 10%.
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Originally Posted by cmyden
Yeah, it seems people are either in the bubble camp or the non-bubble camp.
Reasons why I think we're in a bubble....
1) The price to rent ratio for a SFH in Calgary is currently around 250-275X. The long term average is 200.
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Big reason why this is, is due to rental market being flooded. Doesn't necessarily mean that housing prices will go down. Will likely mean that rental prices go up in addition to housing prices going down.
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2) Historically, home prices increase at about 1.5% above inflation in Calgary. In 2010, we should be at about 300k for an average home. Right now we're at 2020 house prices.
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This is not good logic. If you're flipping coins and you get a run of 10 heads in a row, are you expecting the next bunch of flips to come up tails more often?
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3) Everyone and their dog has been talking non-stop about where real estate prices are headed for the past 5 years. This might be the most telling of all.
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I agree with this. It's toned down quite a bit, though since 08.