[Claeren]

I also read this thread without posting much, a few general thoughts about the current market:

1) Pricing may have been flat but you are comparing apples to oranges. You can buy a LOT more house for $500k today than you could 3 years ago, or 2 years ago.

Most suburban condos I know that peaked around $320k are now closer to $220k IF they have a good condo board, etc. And most homes that peaked around $450k I see now closer to $380k, IF they are desirable in some sense of that word and can sell at all.

2) With fewer houses selling, you can only sell if your house has some desirable characteristic. Anything less prime takes a huge hit and likely cannot be sold at all. Far too many people have not panicked into selling because they mistakenly believe that $500k home that sells today is just like their home they paid $500k for a few years ago. It is not.

3) As mentioned, low interest rates cannot last forever. If we are simply going to lend for free forever then your home is not actually worth anything at all - and neither is the money in your pocket. To restore rates to long term norms is to restore value to the other assets in your life.

4) There is a massive demographics shift taking place that WILL have an impact on the market. The most alarming aspect being the number of people counting on the 1-5 homes they own to be their retirement savings.

5) Even if you can buy the same house today for $500k as you could a few years ago, you can still still rent that home for a fraction of that amount of carrying cost. Even more so with condos. By renting today instead of buying you are likely ahead at least $1000/month relative the total carrying cost of mortgage/interest (especially when factoring in a future rise in rates), insurance, property tax, condo fees, and maintenance. The same house needs to be worth $12,000+/year for it to have been better to buy it. Without factoring in interest or value of liquidity in those saved dollars. (With my employer matching my savings 1:1, it would actually need to be $24,000/year in price growth and I am not the only one with a set-up like that.)


The list goes on, but that is how I see it....



I suppose the one chance for those that own currently is if they do keep things going on and on like this (as I think they intend on doing). Your house will not rise in any meaningful way relative to the value of money but it wont drop a lot either. With so few people properly adding up their costs associated with the asset, and preferring the intangible 'joy of ownership' over renting, homes could well just stagnate and sit for years and years as they have at other times in history. Often for decades at a time.

And yes, I agree, oil and gas prices will always have a chaotic affect on home pricing in this city, but long term trends do not change. If anything, I would be worried (not excited) about what will happen with the world energy economy over the next 30 years... short term gain (by a spike in pricing) may be balanced heavily against a long term loss (by a chance in energy sources/usage).



Claeren.