Quote:
Originally Posted by kevman
Speaking of economy… Someone else mentioned earlier in this thread that Calgary has something that Phoenix or Vegas do not and that’s jobs.
The following is a chart of home prices in Houston over the last 5 years. Prices have been pretty flat when the rest of the US has plunged…
Houston, like Calgary, has a strong economy driven by oil where as Phoenix had an economy driven by house sales…
However Houston probably avoided a bust because it also looks like they never boomed…
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I've been a consistant bear on housing for quite some time in the Calgary market. The price history since 2007 would suggest I was correct, but I'm in agreement with other posters in this thread that would suggest that Calgary's floor for prices is probably much higher than in other places in the country because we do have a functioning economy that isn't real estate driven. Places like Phoenix saw declines of 80%, I can see us being flat as Vancouver and Toronto crater, where prices have skyrocketed over the past two years while incomes and unemployment have remained static.
That all said, I would be quick to criticize those that would point to the pricing malaise of the past few years here and start up the 'buy now or get priced out in the next boom' mantra. Real Estate can only go up sustainably with incomes, and if you make an income that fluctuates with Calgary's aggregate incomes then there's no reason to overleverage and buy now. Draft up a spreadsheet and see how much principle you retire over 5 years on a 5% down 30 year amort. It's piddly, meaning that for you to be ahead vs. renting over 5 years you would be requiring the price of the property to increase subtantially to build equity in excess of what you could save and generate investing with the savings. When looking at the small principal retired over 5 years the concept of 'you're just paying someone else's mortgage' goes out the window. You're just debating on which vehicle to pay interest to the bank, either directly or indirectly through a landlord. Overall it's just safer and more responsible to wait until you have 20% or over for a down payment and not have to pay CMHC insurance, and not be dependent on real estate increasing in value to be ahead, because let's face it, the past 4 years have proven it doesn't
always go up.