Quote:
Originally Posted by pepper24
I still think that housing prices are going to continue to drop. The party driven by low interest rates is coming to an end. The bubble is bursting and will continue to do so.
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My thoughts:
House prices will continue to drop due to a glut of inventory, lack of quality inventory in the mid range price bracket, over development in the suburbs within the last few years, and an average to sub average economic climate in the city.
The media has made such a big deal out of interest rate increases, and have really distorted people views. 4 years ago today, right in the middle of Calgary's biggest real estate boom in recent history, prime rate was at 6%. More than double what it is today. Yes, rates will rise, but right now you can get yourself into a 5 year fixed term at a shade over 4%. What's scary about that? You should be scared of interest rates if you extend yourself to the max in variable scenario...but in the end your lender has to approve you to get into this volatile situation anyway. Lenders have tightened...most won't let you leverage yourself to the max and get yourself and themselves into a bad situation.
Economic factors will play the biggest role in where pricing goes in this city. Renewed confidence in energy capital markets and increasing natural gas prices are keys to a strong market in Calgary. Those are the keys to positive migration to the city. This is the key to solving some of the issues I identified in the first part of my post.
Interest rate increases are a function of the economy improving as a whole. Hopefully as rates start to rise, the BOC is making those adjustments to coincide with an improving economy, and hopefully coincide with an improving US economy as well.