Am I CRAZY to be building a new home in Calgary?

[smithtofuhr86]

Hello CP'ers....I'm kind of freaking out here we are looking to build a new home in the New Brighton area in 2009, we've actually got some of the paperwork started already and as of March 2009 we were looking to sell our home in the Northeast. The reason why we're moving down south is because it's closer to my work and my wife's family, plus my son starts pre-school next September and we found a highly recomended pre-school in the area we are moving into. Also we bought well before "the boom" in 2001 and we feel that we've peaked in our current home (in Monterey park) and want to take the equity while we can and put it into more of a bigger home and growing area as opposed to where we are now. Are we crazy? Any professional or friendly advice is appreciated so I can actually get some sleep tonight cause i'm getting a little worried!

[I_am_Beast]

whos the builder? style? approx cost?

I built 2 homes down there in newbrighton

[smithtofuhr86]

Obviously as you know there is a lot of "promos" so we're looking at Cedarglen (I know i've heard horror stories) but we have 5 family and friends that have built with them and say some good things. We're looking at a Murano Style, they gave us lots of upgrades, fully landscaped and fenced, 1900 square feet looking at about $425,000

[4X4]

I'm pretty confident that the market is going to pick right back up come spring. The over-correction of 2006 was over-corrected in reverse in late 2007 and in 2008. Most news outlets agree that calmer times are ahead and that things should plateau and slowly (very cautiously) start to creep back upwards the way they should.

Of course, if I were in your situation, I'd be just as apprehensive. There are alot of spec homes available right now. Heck, there are alot of everything available right now, and I personally doubt that the market is going to purge itself by March. In other words, you won't be getting 2006 dollars for your house. As long as you're ok with that, then I don't see any reason why you shouldn't make a move that would be beneficial to your family.
If your hang up is that you wont get "as much" as you could have a couple years ago, well, that's just reality. If it's any consolation, you'll probably be paying less for your new home as well.

Outta curiousity, are you set on building your dream home, or have you considered waiting until march or april to list your place and then snap up one of the new homes already there and maybe waiting another year or so to take the plunge and build?
It would get you into the community that you want to be in, but save you the anxiety of signing on the dotted line now and hoping that the market starts to recover when you *need* it to...

[smithtofuhr86]

Thanks 4X4....we thought of the same thing about selling, then buying in the area then selling after we builld but we are bighting the bullet a little and trying to prevent 2 moves in a few years and making just one into this home.

The other thing I forgot to mention to you guys is that the home was actually around $415,000 but they added this $2500 fees mandatory for homes (structural fees) we also paid an additional $10,000 to get a bigger lot it's 10m wide and 40m long and it's off of the main road in a cul de sac / crescent not right on New Brighton Drive across the street from smaller started homes as they were trying to sell us so we thought that 10,000 would be well worth spending so that pushed us closer to $425,000 - $430,000

[Fire]

House prices in Calgary are still too high. The prices were too high before all the economic turmoil and now with the economy going in the dumps and oil prices plunging, the correction should be even larger. I would expect prices to drop even further (10%) in my non-qualified personal opinion.

[AFireInside]

I kind of work in the industry.. Don't want to say exactly where.

IF, IF you can sell and make a lot of money (which if you bought before the boom you should make some nice cash), then I'd do that first as someone suggested above. Then you get a large chunk for equity and if you are planning on living there for a long time, and can afford it, fine. Don't stretch yourself.

Personally, I would not buy, but I'm in a different position, with no equity in a home that I've made money on. Someone said above that prices are going to go back up in the spring. Unless there are some changes I do not see that happening. Houses are still WAY overpriced.

There is more indication that this is just the beginning of the price declines in this city, province and even the country. Listings to sales at this point in time range anywhere from 2 : 1 to 4 : 1 (thats listings to sales), this has been happening for months now. Despite what anybody says, what we experienced was a price bubble and if you look at any information surrounding a bubble, when they pop, they don't instantly go back up.

What you will find is that those who have purchased in the past several years will always tell you that the prices will increase again. Those who can't afford to get in the market will say the prices are going to crash..

I reside in the middle..My gf and myself are both working professionals, no children, we make a pretty good living. We were approved for a mortgage, and we were looking at houses last february-march. I pulled back, and based on my research believed at that time that prices would go down down down, even though others told me they would not. Well so far so good. I'm going to stick with it, if prices happen to go back up then fine I don't want to purchase a house that I believe is WAY overpriced.

That said you have equity, you've probably made good money on your property so if you can afford it and are going to live there for 10 yrs or so, then you'll likely make money on that property as well.. Look at the house as a place to live and not an INVESTMENT and you'll be fine.

[automaton 3]

I wouldn't commit now. Try to sell your own home first.

If you are successful in selling your house in the spring, you can then go the custom route, or the builders will have a few spec homes on inventory in that area that you could buy and move into on a relatively short timeline. You might be able to choose finishing, colours, floor coverings ect. Not quite the same as custom building a home and getting to choose everything, but it will save the sleepless nights and the potential for having to figure out how to carry 2 mortgages if your existing home doesn't sell easily.

[RogerWilco]

A slower market always means more availability of qualified traids. You stand the chance of having a much better built product in a shorter period of time. The builders I work with have slowed down their production because they can't make as much money as they did before. When the builders can't make as much money that is good for you if you can afford it. If you can get money from your home this is the best time to build. You will get a cheaper product with better quality. If you hold on to it for 10 years.

Don't just take the price that the builder gives you, in a time like this you can drop the price. If it is within reason they will take it. Times like this are the best for a new property that you will hold on to. In time like these if you drop a property that is less in value, and build one more in value in 10 years you will make a huge return.

Think of it this way. If you sell a cheaper house that lost 10% and build a more expensive house that also dropped 10%, who will have more of an investment in 5-10 years when the property gains back that 10% or more? The person that held on to the cheaper property or the person that built a higher quality more expensive property. You do the math.

This is my opinion, nothing more.

[Nancy]

Some builders will guarantee you the resale value of your home. At the very least, I would insist on that. Failing that, find a buyer for your home before you buy a second. In this market, you absolutely do not want to get into a position where you are carrying two mortgages.

[I-Hate-Hulse]

I'm quite the bear lately so sorry if this is a little too negative....

Like others have said, real estate only has down to go from here. At that point you want less exposure to real estate not more. Simple math will tell you a 10% decline in real estate will bite you a lot more if you have a 500K house vs a 300K house. It doesn't make a lot of sense to basically sign up for increased losses right now.

If you weren't taking on more debt - maybe I can get there... but that brings me to my next point...

How safe are your jobs in a recession? Could you get by on 1 of 2 incomes? There's going to be some nasty layoffs in January IMHO, and I think it'll be 12-18 months MINIMUM before we see the bottom. It's going to period of "what can I afford" vs "what would be nice" coming up.

At a @#$#@ minimum, as others have said, sell first then buy. I know someone who made the same decision as you but can't sell their old place for what they need for the new place, despite having signed papers for the new place. They are completely hooped - I think they are going to have to walk away.

[Nancy]

Originally Posted by RogerWilco

A slower market always means more availability of qualified traids. You stand the chance of having a much better built product in a shorter period of time. The builders I work with have slowed down their production because they can't make as much money as they did before. When the builders can't make as much money that is good for you if you can afford it. If you can get money from your home this is the best time to build. You will get a cheaper product with better quality. If you hold on to it for 10 years.

The slower market does mean that all of the losers who managed to get work during the boom time are mostly gone. Unfortunately, most builders are also pinching pennies like crazy so they may need to cut corners on product or not be able to provide the same level of warranty coverage.

[ken0042]

Great post IHH. I would also echo what has been said, if you have to do it sell your current place before buying the new one. Might mean storage for your stuff and an apartment (or even a $2500 rental house) but better than losing it all by having 2 mortgages.

I will also throw in my standard reminder about the dump and it's proximity to New Brighton. I've been throwing stuff out a few hundred metres from new homes. And if the builder tells you "they are closing the dump within 18 months", they have been "about to close the dump" for about 5 or 6 years now.

[Incinerator]

Originally Posted by ken0042

Great post IHH. I would also echo what has been said, if you have to do it sell your current place before buying the new one. Might mean storage for your stuff and an apartment (or even a $2500 rental house) but better than losing it all by having 2 mortgages.

I will also throw in my standard reminder about the dump and it's proximity to New Brighton. I've been throwing stuff out a few hundred metres from new homes. And if the builder tells you "they are closing the dump within 18 months", they have been "about to close the dump" for about 5 or 6 years now.

Best advice so far in this thread, especially about the dump.

Like what is said above, make sure you have a firm sale on your current house with a good deposit before even thinking about buying. Always, always, always sell before you buy in a slow market, I cannot stress that enough to any of my clients.

Before you list, get an appraisal on your house by an accredited appraiser (CRA or AACI), this will cost you around $350 but it will be money well spent. List it a couple grand under and you should be in good shape.

If you don't want to do this, get at least 5 detailed CMAs (not those joke average one-page'rs printed off MLX by some lazy Realtors) from 5 different Realtors then take the median, that should be you list price. Take 5-6% off and that should be your sale price range. Clean up & stage it to the nines (a good Realtor will do this for you or hire someone to do it for you), live like you are in a showhome for the next 3 months, and expect to wait at least 45-50 days minimum before an offer comes in. Keep in mind only about 1 in 8 houses listed will sell right now.

Once you've sold, you can get started on shopping around again, from what you've said so far I would expect a better price than the one you've quoted for your dream home. You probably had to budge on your selling price, so get them to budge too, they will. This game works both ways (that $2500 fee is BS btw). If they won't budge, walk away and either lowball a smoking deal on a spec/resale or get your Realtor to take you to another builder, let him do all the low-balling. Get some comps on the recent solds and you will have a pretty good idea what to settle for. Again, this is your Realtor's job, it won't cost you any more to get him to do all the dirty work vs. just walking into a builder and signing whatever they tell you to.

Everyone has different needs when it comes to the roof over our families' heads, what you need to evaluate is whether you really have to build vs. buying whats available right now that's closest to what you want. Given the amount of stuff out there, I really think you will find one close enough if you bother to look for a bit. Renting and moving again in a year as some have suggested doesn't sound like a good fit for you given your situation IMO, but you probably already knew that.

Anyways that's my 2 cents, good luck!

[AFireInside]

Originally Posted by I-Hate-Hulse

I'm quite the bear lately so sorry if this is a little too negative....

Like others have said, real estate only has down to go from here. At that point you want less exposure to real estate not more. Simple math will tell you a 10% decline in real estate will bite you a lot more if you have a 500K house vs a 300K house. It doesn't make a lot of sense to basically sign up for increased losses right now.

If you weren't taking on more debt - maybe I can get there... but that brings me to my next point...

How safe are your jobs in a recession? Could you get by on 1 of 2 incomes? There's going to be some nasty layoffs in January IMHO, and I think it'll be 12-18 months MINIMUM before we see the bottom. It's going to period of "what can I afford" vs "what would be nice" coming up.

At a @#$#@ minimum, as others have said, sell first then buy. I know someone who made the same decision as you but can't sell their old place for what they need for the new place, despite having signed papers for the new place. They are completely hooped - I think they are going to have to walk away.

I did not want to state it this bluntly, but I agree 100% with this post. 12-18 months minimum until bottom. Personally I think Calgary is in for quite a ride. I think we are a couple years behind the U.S. and while I don't think we'll be hit quite as hard, as I said above I think this is just the beginning.

[Titan]

Just a comment on the dump. I live in Prestwick and have not noticed the dump, meaning smells or whatever, in the 4+ years I have lived here. Have others had a more negative experience? I could see if you are at the north edge of NB or in the condos facing 52nd but other that that ...

[ken0042]

Living in Prestwick you are given some protection due to the prevailing winds; which are normally north, or west. The odd exception is sometimes from the south. You would need an NE wind to notice it. Plus as I mentioned in another thread, there are wastewater ponds north of 126 ave which can bring up quite the funk too.

And comments like yours, and my own experiences are what the builders are counting on. You in Prestwick say "I don't notice it." Me in Copperfield I say "I don't notice it." And although I am in the potential path of the winds, I am also almost 5km away.

I'm not saying that New Brighton always stinks, or it is all bad. But OP- be sure you have a look at where you are building- in detail. Look it up on Google maps and compare it to other distances. If your street doesn't exist yet, ask one of your buddies who does backpack camping to borrow their GPS (not a car GPS), and you can plug in your co-ordinates into Google maps.

Also look at everything else in the neighbourhood. How far are you from where the LRT tracks are going to be? How about the station? I checked that closely- I am far enough from the station to not have to deal with some of the bad elements you get, but close enough that I can walk to it.

One other thing I would look at- see if builders will offer you some sort of price protection; in case the market takes another down turn.

The bottom line is you aren't crazy to buy right now- but you would be crazy to not take the time to make sure you make the right choice.

[Claeren]

There is a real estate thread already with tons of info.
http://forum.calgarypuck.com/showthr...=52710&page=25


Real Estate is going to continue to PLUNGE in Calgary and Canada and the world over the next 2 years and into the future beyond that. I would guess another 15% drop to start but could easily see scenarios where prices drop 30%. (Just read a report out of the USA that homes prices could easily drop ANOTHER 20% next year, taking them roughly 50% off of peak.)

Whatever you do I would be very careful and would be cautious as to whose advice I sought -- people with a vested interest like Real Estate Agents or Home Builders are the WORST people to listen too yet are at the top of a lot of peoples list when seeking advice, which is brutal. (And also explains the mindless logic behind the bubble we just saw in the world real estate market.)

The people waiting for the 'spring bump' are going to get even more thrashed this coming year than last.

The hilarious part is how rents are now finally starting to plunge. You can get fantastic brand new highend 2-bedroom condos downtown that were priced $600,000+ at the peak for $1595/month ALL inclusive right now! (I have seen people offering stereos, plasma TVs, free internet, etc on top of that!) The mortgage + carrying costs on that unit would be many times that, the condo fees alone are likely $400-$600/month.

Likewise, you can get fantastic never lived in homes for $1400/month in areas like you want to live. Why not rent and save $1000/month (or much more?) right into your savings and not lose equity all the way down as the market collapses?

Assuming you could sell your house for a fraction of the price you think you can....



Claeren.

[firebug]

If you are thinking of that part of the city, you should be looking in Prestwick.

By far the best designed suburb built in Calgary in nearly 30 years (excluding 'infill communities' like garrison woods) from a sustainability perspective. Nearly all amenities are available via a short walk, and once the BRT is finished next fall, transit access to the core will be much better.

If you have children, the elementary will be done in a year. As well, since there are no front garages (aside from being much more pleasant aesthetically), it is much safer and enjoyable for you kids to walk and ride their bikes.

My $0.02 anyways.

Best regards,

~firebug

[smithtofuhr86]

UN-FLIPPIN-BELIEVABLE...thanks for all the awesome feedback you guys (or girls) it just amazes me how many times people have asked simple questions on this forum and get such a great response, thanks again to all of you for your advice and expertise we've definitely put things on hold until the New Year and looking to get ideas on listing our current home soon.