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Originally Posted by polak
Dude. There was a ten year recession in Alberta in the 80's. Not even that long ago.
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I mentioned the early 90s. No need to go back to the 80s. Plus the 80s lasted a few years before it stabilized. The high rates was what kept prices low, not the economy.
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That has to be the most ridiculous view I've ever heard in my life. If there's no work, people aren't going to come to Calgary. Why would they? It's not like the whole world is going to ####, it's just (Expensive) Oil based economies. FIRST thing someone looking to move countries or provinces will do is look at employment numbers. Would you go to the place that has more work or less work? Pretty simple logic right there.
There is no justification for Calgary's real estate bubble. None. We don't lack space, we don't build some sort of great quality housing, we're just lucky to have high population growth due to what used to be a very hot job market. Now there is a very real chance that stops long term. Tell me then, what will prop up these prices when our population stays flat or goes down and the people that do still have work here are now making significantly less without the high salaries? I don't care what sellers WANT to sell their house for. It's what people can afford.
Ask the people who aren't working in O&G, the people making 45 - 60 K a year how affordable housing is in this city. If that becomes the new reality, I'd love to see how your sellers are going to sell their 1000 sq ft starter home in Cranston for $400 K
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Ok so I'm trying to grasp your arguments and reply.
1) Unemployment doesn't not necessarily mean lower house prices because just because someone is unemployed doesn't mean they need to sell their homes. Even unemployed people need a place to live. Calgary is not a work camp, people live here and call it home, it's one of the biggest cities in Canada and consistently ranked one of the best places on earth to live. Not saying prices will go up, but unemployment alone is not enough to send prices crashing.
2) We don't lack space. You're right, but we lack affordable land in good locations. People have a limit and not everyone wants to live within a 5 hour commute to the center. The rich hoard land in Calgary and will not sell it unless they get the prices they want. If times get tough they just hold onto it. Building a house in Calgary still costs a lot of money, we don't have illegal Mexican day laborers building our homes like they do in Texas or California etc. Stuff here takes a long time to build and it's expensive.
3) People will move here even in a poor job market because they want to live in Calgary just like people move to any other city that has a far worse UE rate than Calgary has ever had. Look at how many people flood into Vancouver and it has a horrible economy.
4) Marginal wage people can't afford homes. That's right. So the rich buy the homes and rent them out to the poor and fleece them for %50-%80 of their take home because its the only game in town. I don't like it, but it's reality. It's what happened in the US after the financial crisis. Homes were foreclosed on and selling for cheap so hedge funds and the rich purchased them all and rented them back to the same people that were foreclosed on. The rich get richer. Sucks, but that's the world we live in and it's a similar situation in Calgary. There are tons of rich people here just waiting to jump on cheap real estate. I think you would be very surprised how many people in Calgary are saying, "wow I can't wait for prices to come down so I can BUY". Sorry, that's not a sign of low prices to come. All those bottom feeders will put a floor on this market.
5) Look at the MLS. If people don't get the price they want they're delisting. This isn't like in the US where people are foreclosing. It's just not happening here. Our low rates will keep this bubble going for a long time yet. Mark my words.