Calgary Real Estate predictions?

[Flamenspiel]

Originally Posted by Winsor_Pilates

I read this earlier, and it's nice to see some numbers on this.
Especially here in Vancouver, it's really tiring to hear the same argument over and over about half of downtown condos being foreign owned and other exagerations like that.
Wealthy immigration on the other hand is a huge factor.

This is CMHC only, I would think that most condos purchases from overseas owners would not be using CMHC financing. I am surprised the article did not indicate that.

[JamMan23]

Originally Posted by Flamenspiel

This is CMHC only, I would think that most condos purchases from overseas owners would not be using CMHC financing. I am surprised the article did not indicate that.

CMHC did a survey of rental condos that had a Canadian mailing address attached to it. It has nothing to do with CMHC financing. It also doesn't count foreigners that have setup a corporation in Canada to handle the condo (I'm assuming many do this).

[Winsor_Pilates]

Originally Posted by Flamenspiel

This is CMHC only, I would think that most condos purchases from overseas owners would not be using CMHC financing. I am surprised the article did not indicate that.

The report was done by CMHC, but was not a survey of CHMC insured properties.
It was a survey of rental managed properties, which would mostly not be CMHC insured.

By no means a perfect study, but better than just anecdotal complaining we usually get and a start to actually putting data behind this debate.

One thing the study left out which would push the numbers higher (in Van + TO) was empty properties not being rented out.
Although I still argue the impact of "foreign" buyers is greatly exaggerated, wealthy buyers in general often leave their investment properties vacant as they don't need the rental income or headache.

[bizaro86]

Originally Posted by Righteous1

So i've got a pile of cash (literally) and a bunch on my account that i've just saved for no reason at all. Was thinking about buying a house..buy now or after all these out of provincers leave when their are no jobs left?

Not on the real estate topic, but just out of curiousity...

Assuming you correctly used the word literally, why keep cash? Is it a "not trusting the banks thing" or a "I have cash income and put an approximation on my taxes" thing? Those are the only two possibilities I can think of (other than criminal proceeds). You hear every so often of people being robbed (or a good samaritan returning) large sums of cash, and I always wonder why they have such large amounts of cash in the first place.

Back on the real estate topic, I'd probably wait and see how things shake out before buying. If you want to buy now, I have a pretty decent two bedroom investment property in sunnyside I'd consider selling...

[Flamenspiel]

Originally Posted by Winsor_Pilates

The report was done by CMHC, but was not a survey of CHMC insured properties.
It was a survey of rental managed properties, which would mostly not be CMHC insured.

By no means a perfect study, but better than just anecdotal complaining we usually get and a start to actually putting data behind this debate.

One thing the study left out which would push the numbers higher (in Van + TO) was empty properties not being rented out.
Although I still argue the impact of "foreign" buyers is greatly exaggerated, wealthy buyers in general often leave their investment properties vacant as they don't need the rental income or headache.

Ok i get that but other then CMHC properties(which would be registered), how would they even know who is a landlord and who is not? Other then tax returns, which they would not have access to. In addition what exactly is foreign owned, there are 300K Canadian residents living in Hong Kong, would they be listed as foreign owned?

Generally foreign ownership is understated, is it a big thing? maybe, maybe not but as an investor it would be foolish not to consider the impact of an economic downturn in China and Hong Kong on the VA market. This goes both ways, there are a lot of properties in Maui that have significant levels of Canadian ownership, i can see this market impacted if people from BC, Alberta, and Saskatchewan suddenly drop out of the market.

[Winsor_Pilates]

Originally Posted by Flamenspiel

Ok i get that but other then CMHC properties(which would be registered), how would they even know who is a landlord and who is not? Other then tax returns, which they would not have access to.

Good question; from what I can tell they studied units under rental management so obtained information through those agencies. The articles don't make it very clear though and I haven't personally read through the actual report.

In addition what exactly is foreign owned, there are 300K Canadian residents living in Hong Kong, would they be listed as foreign owned?

Generally foreign ownership is understated, is it a big thing? maybe, maybe not but as an investor it would be foolish not to consider the impact of an economic downturn in China and Hong Kong on the VA market.

I think this is really the heart of the issue and the question I ask those complaining about foreign ownership.
A lot of people use foreign owned and immigrant owned interchangeably which really bothers me.

From 2005-2012, 37000 Chinese millionaires were given permanent residency in BC under the Immigrant Investor Program. A large wave of Hong Kong immigration came 10 years before this when HK went back under Chinese rule.

This obviously has a huge impact on the financial makeup of Vancouver and real estate values, but I don't consider these foreign buyers as they are Canadian residents and immigrants; and many would now be citizens.

It really comes down to an immigration argument, not a foreign buyer argument (as in actual foreign residents).

Does a Canadian citizen who moved here from HK in 1996 still count as foreign?
My parents immigrated to Canada over 30 years ago; do they still count as foreign?
At what point does an immigrant no longer count as foreign?

I think for most people who are loudest about the huge foreign ownership issue, there is no difference between a 20 year immigrant and actual foreigner and maybe that's why they think half the city is owned by foreigners.

[ExiledFlamesFan]

http://calgaryherald.com/business/re...ls-in-december
Not surprising that the housing market is cooling significantly. Down almost 5% since the peak of June.

[Kavvy]

Originally Posted by ExiledFlamesFan

http://calgaryherald.com/business/re...ls-in-december
Not surprising that the housing market is cooling significantly. Down almost 5% since the peak of June.

Careful throwing out random stats. No where in that link does it say it is down 5% from the peak of June. Also, 'down' can have more then one definition. My interpretation of your post would be that housing prices are down, which is in fact your link doesn't state.

What the link does say is:

• Average price is up 4.3%
• Medium Price is up 2.%
• Total Quantity of Sales are down 7.4% from last December.
• Active listings and new listings are up by ~42% from last December
• Total Quantity of sales year to date are up 9%

Now, applying simply supply and demand rules - a jump in 42% new listings from the same month last year, with a decline in total sales, implies to me that we may have an overbought market and January will show a decline in prices. However, I am way out of my league on this.

To those who know housing... is a 42% increase in new listings from the previous year a normal trend? I understand the city grew so we should expect a increase in listings, but this seems fairly concerning

[ExiledFlamesFan]

Originally Posted by Kavvy

Careful throwing out random stats. No where in that link does it say it is down 5% from the peak of June. Also, 'down' can have more then one definition. My interpretation of your post would be that housing prices are down, which is in fact your link doesn't state.

What the link does say is:

• Average price is up 4.3%
• Medium Price is up 2.%
• Total Quantity of Sales are down 7.4% from last December.
• Active listings and new listings are up by ~42% from last December
• Total Quantity of sales year to date are up 9%

Now, applying simply supply and demand rules - a jump in 42% new listings from the same month last year, with a decline in total sales, implies to me that we may have an overbought market and January will show a decline in prices.

To those who know housing... is a 42% increase in new listings from the previous year a normal trend? I understand the city grew so we should expect a increase in listings, but this seems fairly concerning

http://www.creb.com/Seller_Resources...using_Summary/
Kavvy, you can check the CREB numbers for yourself if you don't believe me. Compare the June and Dec prices.

We've got a serious oversupply and lack of demand problem. Expect to see housing prices continue to fall into the new year.

And the scary thing is oil still hasn't bottomed out. Is sub $50/barrell next?

In the first half of 2014 the housing market was on fire. That is what is what's skewing these yearly average prices.

For a better current market trend check the monthly housing numbers since June. It's not pretty.

[Kavvy]

Originally Posted by ExiledFlamesFan

http://www.creb.com/Seller_Resources...using_Summary/
Kavvy, you can check the CREB numbers for yourself if you don't believe me. Compare the June and Dec prices.

But..... why post a one line fact.... and post a link along with that fact..... but not have the link align with that fact?

So confused.....


As for 'over supply and lack of demand' - yes I agree - read my post.

[ExiledFlamesFan]

Originally Posted by Kavvy

But..... why post a one line fact.... and post a link along with that fact..... but not have the link align with that fact?

So confused.....


As for 'over supply and lack of demand' - yes I agree - read my post.

Unfortunately CREB only posts averages and not medians in terms of numbers. Calgary average housing prices are down 3.5%, and median looks to be down about 4.5% from the graph posted from June to Dec.

[Kavvy]

If anyone is bored and feels like wasting sometime to answer my query below, thank you!

Also, please do not use any of this post for your personal economic choices. This is not my field of study. I am merely taking numbers and trying to find patterns. The world is full of people like me who try to correlate parameters which have no business being correlated.

I did a comparison of the 2008 oil crash vs the 2008 housing bubble crash. I was hoping to find similarities but instead found the following:

• Crude Peaked in June 2008
• Crude hit its low in Jan 2009
  
• Housing peaked in Calgary in July 2007
• Housing hits its low in Calgary in March 2009
• Aggregate housing prices didn't hit their high until April 2008. I assume this to be a Canada wide average, but I am unsure and not going to read up on it now.

If my memory serves me correct for the 2008 crash, the credit crisis hit first, partly due to the high oil prices, and then oil collapsed afterwards.

So

• The housing prices in Calgary were declining a full year before oil hit its high - despite the fact oil prices were increasing at a record pace and the rest of the nation prices were still going up. What brought down the local Calgary housing prices prior to the rest of Canada by 3/4 of a year?
• Housing prices in Calgary hit the final low price 2-3 months after oil hit its low. I am unsure if this is or isn't relevant when compared to today's potential situation. 2008 had a credit crisis that impacted the world markets, which to my knowledge doesn't exist right now. I think an interesting graph to overlay with this comparison would be the unemployment rate within Calgary, and see if it correlates with the 2008 housing prices crash at all.

My sources for this 2 min study:

Housing prices (click the 'Performance over Time' tab):

http://homepriceindex.ca/hpi_tool_en.html

This indicator is a percentage indicator from the baseline year (2005 I think) with a baseline value of 100. For example, if the price of a house in 2005 was sold for $100,000 and in 2007 a similar house was sold for $150,000, the indicator would show 150. That is at least how I read the explanation.

Price of WTI Crude (Brent was similar):
http://www.indexmundi.com/commoditie...ate&months=120

[Hi-Psi]

I don't know if any of you have tried to buy a house recently but I have and the market is still quite hot, even being that it's the winter months right now. My GF is a mortgage broker and we have a few friends that are realtors and there really hasn't been a major dip in prices or demand. I know it's not a huge sample size and it's not hard numbers but IMO if people in the industry aren't worried then I'm not and I just bought a house last month...

[Kybosh]

Originally Posted by Hi-Psi

I don't know if any of you have tried to buy a house recently but I have and the market is still quite hot, even being that it's the winter months right now. My GF is a mortgage broker and we have a few friends that are realtors and there really hasn't been a major dip in prices or demand. I know it's not a huge sample size and it's not hard numbers but IMO if people in the industry aren't worried then I'm not and I just bought a house last month...

Ditto for me too. I sold a house and bought a new one about a 3 weeks ago. Both properties were on the market for only a couple days and saw a lot of traffic. The market usually slows a bit over the winter, but my realtor was talking about how he hasn't really noticed that yet.

[old-fart]

This is just my own situation and has nothing to do with anything really but...

We are in the process of building a new house, tentative possession date of early March. When we were first considering the move last May, we had a Realtor in to look at our existing home and she gave us some anticipated numbers, and suggested that since our possession date was set for early March (even at that time), that we should probably list just after Christmas, around New Years. Now this was May, well before the oil dipped.

We talked to her again in early December, possession date of the new house is on track for early March, so we planned to list on the 29th of December (made Christmas season really fun at old-fart's house - "open the presents, great now pack up the tree and anything remotely christmas-y and go clean your rooms/garage/basement"). We listed for roughly the same as what she was suggesting in May, but in May she was guessing we would get about $10K less than list. Listing didn't hit MLS until the 30th I think, but we had 4 showings by New Years Day and accepted an offer that was 99% of our original list price (about $5K less than list), with a possession date one week after our theoretical possession date of the new house.

Now there are still two conditions on the sale (financing for the buyer and home inspection), but overall I'm pretty happy with the result as we were a bit worried that the market might take a bit of a kicking.

Now to get those conditions waived...

[Krovikan]

I don't think we will see a huge effect on Real Estate until things get scary (big layoffs) Albertans always seem bullish on their outlook no matter what.

[Kavvy]

Originally Posted by old-fart

Now to get those conditions waived...

Anyone who was in the market prior to the slump, isn`t worried about loosing there job to pay for the mortgage, and recently just sold and bought a new house will be minimally impacted.

Pretend the potential housing slump occurs and housing prices drop 10% across both communities you bought and sold in by June 2015. If you paid $1,000,000 for your new place, and sold your old place for $900,000. Waiting till June 2015 would of only saved you $10,000, not $100,000.

$10,000 isn`t pocket change, but I guess my point is in a 10% slump, you are not down 10% of the value of your place, you are down 10% of the difference, which in my example was only 1%.

Unsure how blatantly obvious this was...I might of just wasted everyone time.

[old-fart]

It's all good - I get the math and agree with you on the impact assuming you are both buying and selling.

You quoted the "just need to get those conditions waived" comment of my post which was meant to express my desire to have the conditions on the sale of my own house concluded - I'm not particularly worried about them per se but it isn't fully sold until it's sold...

I'm sure any of our resident Realtors can confirm that sometimes conditions like financing and home inspection are actually used to give the buyers time to change their mind and have an "out".

[mrkajz44]

Originally Posted by old-fart

It's all good - I get the math and agree with you on the impact assuming you are both buying and selling.

You quoted the "just need to get those conditions waived" comment of my post which was meant to express my desire to have the conditions on the sale of my own house concluded - I'm not particularly worried about them per se but it isn't fully sold until it's sold...

I'm sure any of our resident Realtors can confirm that sometimes conditions like financing and home inspection are actually used to give the buyers time to change their mind and have an "out".

Not a realtor here, but this is exactly what our realtor recommended to us. We were unsure if we should offer and he said that as long as we put on some conditions, we can always back out for virtually no reason (oh, the financing fell through...)

Best of luck!

[darklord700]

Originally Posted by mrkajz44

Not a realtor here, but this is exactly what our realtor recommended to us. We were unsure if we should offer and he said that as long as we put on some conditions, we can always back out for virtually no reason (oh, the financing fell through...)

I have buyers backed out on their conditional offer for no reasons. All I could do was to return their deposit and I thus questioned the need to take a deposit in the first place all when the buyers could just back out on a whimp.