Quote:
Originally Posted by Mike Oxlong
There is not going to be a big real estate crash. Sure there will be small corrections here and there and prices will increase, decrease and increase again, it's all cyclical. The big correction happened when prices increased rapidly 4 years ago. Calgary was an undervalued market at that point. Now after such a sharp rise in prices we are seeing waves of increases and decreases as the market tries to stabilize.
It's hard for anyone to predict where the market will go. Regardless if you are and Econiomist with a PHD or a Realtor. How many of these so called economist's predicted what happened in the US? (A few but not many)
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I don't think all real estate agents are slime balls. Despite what their education is, they rely on sales for income. It is in the agents best interests to believe that it's always a good time to buy. You see it spun in the media constantly. If prices are high, it's a great time to buy because you'll be priced out forever. If prices are low it's a great time to buy because it's the bottom, if prices are neutral it's a great time to buy because prices are stagnant. But, one key that is always happening according to most real estate agents, that prices are always going up, or are about to go back up.
Does it make them a slime ball? Absolutely not. Of course not all real estate agents are like this, there are some great ones out there, you just need to do your research.
I have a couple degrees (one in economics), and am working towards a professional designation in an industry related to real estate (think more towards appraisal).
I look at the listings everyday as part of my job. I don't have a real bias one way or the other, I can buy right now, but have chosen to hold off the past couple years, I pulled out of an offer we made on a property in early 2008. Saved a lot of money so far.
If you think for one second that the correction was when prices doubled during the peak in 2007 you're crazy. The general rule, is that your mortgage should be no more than 3 times your gross salary. The median household income in Calgary in 2006 was approximately $85,000/yr (this is according to the 2006 census). This is NOT the average household salary (I prefer the median as it's not influenced by the higher and lower salaries).
http://www.cbc.ca/canada/calgary/sto...-earnings.html
If the 85,000 median salary is correct that would mean that the median house price should be approximately $250,000. As you all know housing prices are nowhere near this. Salaries may have increased since the 2006 census but not in a large enough increment to warrant a median house price of $400,000, which was the median price in July of 2010.
I find it surprising that there are this many people who are adamant that prices cannot decrease by a significant amount. It happened in the 80's, it's been happening for the past 5 years in the U.S., and it has happened in Japan. All these situations had people saying that prices would always go up..
It CAN happen. Is a big crash likely? No. Is a 10-20% correction over the next couple years possible? Absolutely.
Just keep your eye on the market, when you find a place you like, and can afford, even with rising interest rates, then purchase. It's time people stopped looking at houses strictly as investments, and looking at them as homes first, and investments second.