Calgary Real Estate predictions?

[megatron]

Originally Posted by Nancy

Calgary plotted on the Case-Shiller Graph:

http://i44.tinypic.com/w6s3ur.jpg

Very interesting graph.

So we're currently at 85% of the peak prices which was 18 months ago (July 2007) and correct me if I'm wrong, but the peak prices for a SFH was ~485K? Meaning 0.85 * 485 = ~412K (average) for a SFH now.

[Nancy]

I think it's based on the median for Calgary.

[Nancy]

Well, looks like February will be an OK month RE wise for Calgary. Not a heck of a lot of sales (about 900) but also the number of listings is also moderate, placing us at a reasonable 5 months of inventory level. Prices remain relatively the same. If there have been a lot of layoffs, it isn't showing up in the RE market.

[gildo]

Originally Posted by Nancy

Well, looks like February will be an OK month RE wise for Calgary. Not a heck of a lot of sales (about 900) but also the number of listings is also moderate, placing us at a reasonable 5 months of inventory level. Prices remain relatively the same. If there have been a lot of layoffs, it isn't showing up in the RE market.

I know anything can happen between now and summer and everyday is unpredictable but in your opinion (or anyones) if we were wanting to sell our home in Monterey Park approx. 1400 sq. feet 4 bed / 3 1/2 bath for September 2009 when should we list it? 2,3,4 months in advance? Thanks for any help.

[Claeren]

^I would sell it ASAP.

Prices should stay flat through spring (or even go up slightly) and then drop quickly again come late summer. IMO that is the best case scenario, therefore my 'ASAP' comment.

I would sell it now, price it competitively, and if you sell it (which you might not), then you can just rent someplace for a few extra months (<which is less cost than you may take if you wait til fall to list).


Claeren.

[metal_geek]

I agree with claeren when it comes to selling your place. The sooner the better, you may have to move twice but if things go bad, and there is a very good chance they will you could save yourself 6 months or more of your salary on lost value alone.

The layoffs haven't show up in the real estate market yet. They won't untill people have have run out of credit or saving, which will vary but 4 -5 months without or with lower income will put a significant dent in most peoples savings/credit, especially if they were already stretched.

The layoffs will start of affect the market in calgary some time in April, and by May people will see the scope of the problem we have. If you list a house in april, as "Traditionally" was the most profitable time, this time around you will be selling your house, with a glut of normal listings, people who are forced to sell because of affordability, and the first "foreclosures" from the November-January job losses. Keep in mind this glut of homes will be pushed on a market where the number of people looking to and able to buy is significantly reduced. I see this upcomming "House season" as a perfect storm of events leading to significant downward price pressure and really bad consumer confidence.

Figure out what you think your house is worth, then take as much off it as you need to make your house, the best value off all the houses in your area. Make your house on the expensive end of affordable, to the people who are looking at the next tier of houses below yours, and "cheap" for the people looking at your level.

[Walks44]

I just sold my place after it being on the market for 28 days. I can honestly tell you that if its priced correctly in your area, people will come and see it. We had on average 4 showings a week, which I thought was extremely good. We had 3 open house on saturdays, which brought in good traffic as well. The only offer we got and the one we took, was a very quick possesion, and because of that, we only took $7000 less then our asking price. Trying to find a place to move in a month was more difficult, considering we wanted to get into a spec home. But we found what we wanted and needed, and for probbably $75000 less then it was a year ago at this time. It's not all doom and gloom, and it is a buyers market.

[Nancy]

If you are planning to stay in the market, then the timing of your sale probably isn't as critical, though the spring market is when there is the most activity , making it the easiest time to sell and buy a new place.

On the other hand, if you want to get out of the market, e.g. dumping an investment property, this may be the time to do it. I can't really read the market over the short term, I'm thinking the various stimulus programs and low interest rates will keep the market stable for a while, but one and two years from now, I believe the market will be down from where we are today. We aren't going to regain the 15% we've lost so far, not for at least a decade or more.

[Ducay]

This market is a total paradox to a first time buyer waiting to get in.

[Winsor_Pilates]

I would sell and not re-buy for a bit. We've had huge success here in Vancouver "liquidatind" real estate at huge discounts.
I can say with some certainty that Calgary will have to follow suit, as their situation is much worse then Van.
Developers will have to find a way to get rid of excess standing inventory and that will mean big price cuts in the near future. This is more so for condos, then detached housing, but if you're looking to get into a condo expect bigger price drops and good opportunity to buy soon.

[SeeGeeWhy]

With all of the supply coming on the market in the last 8 months in both re-sale, new builds, etc, we really wanted to get back on the market to see if we could get something that was even more in line with what we wanted when we first bought back in 2007. The place we're in now was 90% in line with what we wanted at the time from both a house and a financial perspective - which we thought was exceptional given the market we bought in. Since then, our taste in what we want in a home hasn't changed much, but our financing goals have changed drastically as we now want to move into a place that we could carry on one salary - both as a hedge for potential job loss as well as giving one of us the option to stay at home once our baby arrives.

We first listed our place a few months before Christmas to see if we'd get any interest. We had a lot of showings and traffic on open houses, but no feedback or offers. There were 11,000 - 12,000 listings on the market at the time, so there was a true abundance of options, so despite our place being very unique and in a desirable location there was little chance of us standing out.

The house was difficult to price because it is tough to feel out what kind of return investors would be looking for in such a wacky market (so an intrinsic value calculation based on regional rental rates beared little fruit), and there were very few comparable solds in the area (which is how most realtors will price your house). Adding those factors up, it was hard to compete, and it was very hard to know what type of person to target.

We took the house off the market for Christmas because traffic is low during that time, and the attitude in the market was very poor. We went back to the drawing board and took the chance to make our house as appealing as possible to move in right away, and not to think about the investor (given that most people probably aren't looking to invest unless it is at a deep discount). We painted, decorated a bit, and dropped the listing price about 5% from what we bought it at. We got a similar amount of traffic as before, but this time, there were only 5,000 - 6,000 listings on the market, and we started getting feedback.

The good news is that we received an offer in less than two weeks, just under our list price. We didn't need to have a single open house.

If the deal goes through, the sale price on our place will have dropped 7.7% from the time we bought at the peak in 2007 to today... not bad considering the average loss in the market being 20% or so...

Expenses related to improvements and sales were a significant amount, about 7.3% of our original purchase price, but that expense should pay itself back within 4 years considering the reduction in monthly mortgage costs - which seems reasonable to me given that we expect to live in our new house for at least 5 years.

Our realtor mentioned that it appears that it is young professional couples buying in the 300 - 450k range that are moving the market right now. No one is buying condos, no one is buying above 500k, and investors are still sitting on the side.

Ducay, I think the lesson I've learned the most from this (which is my first home purchase) is to set goals for yourself and try not to "win" against the market all the time. As long as you are getting what you want out of your purchase, and being reasonable about it, you will be able to sleep at night despite the doom and gloom headlines that can permeate through the media.

[Ducay]

Originally Posted by SeeGeeWhy

Ducay, I think the lesson I've learned the most from this (which is my first home purchase) is to set goals for yourself and try not to "win" against the market all the time. As long as you are getting what you want out of your purchase, and being reasonable about it, you will be able to sleep at night despite the doom and gloom headlines that can permeate through the media.

For us, the main issue is mainly people telling us to wait for the market to come down more. We're looking at buying in the summer (by August) and I really don't want to rent a place just to wait and see if the market does come down a bit more.
Am I crazy for wanting to buy? Depending on what we end up with, we'd likely be in that place for 4-5 years.

[SeeGeeWhy]

Established communities don't seem to be eroding as much as new communities.

Also, my realtor pointed out that the number of offer presentations he has been involved with in the past few weeks has increased dramatically over the last few months. Not surprising for springtime, but certainly a good sign that the market is at least following some of its "tried and true" rules regarding seasonality.

A second point about offers recently is that many on the buy side are still trying to low ball and being outright rejected by sellers as most listings have undergone "the proper price correction" (his words).

[SeeGeeWhy]

Originally Posted by Ducay

For us, the main issue is mainly people telling us to wait for the market to come down more. We're looking at buying in the summer (by August) and I really don't want to rent a place just to wait and see if the market does come down a bit more.
Am I crazy for wanting to buy? Depending on what we end up with, we'd likely be in that place for 4-5 years.

Yeah, now we're in the same boat, receiving the same advice.

This message sounds very similar to those telling people who invest in equities to hold off because the stock market should be retreating more.

Seriously, who gives a flying fata if you time each transaction perfectly?

What is the downside of buying now? And what is the probability of that occurring?

You buy now and the market drops another 10% in a year.

More people get in and the market recovers.

Then interest rates spike a year after that.

Then the market gets flooded with houses that people are defaulting on.

So the market goes down again...

ad naseum.

Are you in your house to make money, or are you in it to live there?

That's the way I look at it, and I intend to buy if I see something I like, even if I do agree that the market is likely to go a bit lower in the coming months.

I'd rather get settled in and moving towards other things instead of sitting reading charts and articles, worrying about how well timed all of my actions are.

Two things we will try to do, is stay as close to the inner city as possible where we're more confident in the value of the property, and not to buy the most we can afford.

[SeeGeeWhy]

Originally Posted by fotze

Yes I think you are crazy. The market hasn't even come close to being affected by all the layoffs yet. You can totally take advantage of this.

This is very true. Are you trying to sell and then get back in when the effects of layoffs impact the real estate market?

[Claeren]

Originally Posted by SeeGeeWhy

Yeah, now we're in the same boat, receiving the same advice.

This message sounds very similar to those telling people who invest in equities to hold off because the stock market should be retreating more.

Seriously, who gives a flying fata if you time each transaction perfectly?

What is the downside of buying now? And what is the probability of that occurring?

You buy now and the market drops another 10% in a year.

More people get in and the market recovers.

Then interest rates spike a year after that.

Then the market gets flooded with houses that people are defaulting on.

So the market goes down again...

ad naseum.

Are you in your house to make money, or are you in it to live there?

That's the way I look at it, and I intend to buy if I see something I like, even if I do agree that the market is likely to go a bit lower in the coming months.

I'd rather get settled in and moving towards other things instead of sitting reading charts and articles, worrying about how well timed all of my actions are.

Two things we will try to do, is stay as close to the inner city as possible where we're more confident in the value of the property, and not to buy the most we can afford.

So you first admit to losing what must amount to half a years average Canadian salary (or more) on your home (and how lucky you are that is was not 2-3 times that amount) and now tell someone else to just not worry about it and do whatever they feel like because how bad can it be??

Wow.


I think in some ways this is exactly why the world has such a problem with real estate, and why it is going to keep getting worse for a while to come. An entire generation that cannot quite rationalize just how much money is changing hands. I have so many friends with this same attitude that have purchased $500,000+ homes like they were candy with zero appreciation for just how much money half a million dollars is and what basic mean revision in home prices would mean to their personal financial bottom line.



Claeren.

[Red]

Originally Posted by fotze

Doing the math it seems to be about $35-45k which I would guess is about half a years salary. I know it doesn't change much of anything, just putting that out there.

When you include interest paid over time it's more like $120K. And that's your after tax money (200K earned). It's like saving an extra $1000 every month for the next 10 years. That's significant.

[Winsor_Pilates]

Originally Posted by SeeGeeWhy

Yeah, now we're in the same boat, receiving the same advice.

This message sounds very similar to those telling people who invest in equities to hold off because the stock market should be retreating more.

Seriously, who gives a flying fata if you time each transaction perfectly?

What is the downside of buying now? And what is the probability of that occurring?

You buy now and the market drops another 10% in a year.

More people get in and the market recovers.

Then interest rates spike a year after that.

Then the market gets flooded with houses that people are defaulting on.

So the market goes down again...

ad naseum.

Are you in your house to make money, or are you in it to live there?

That's the way I look at it, and I intend to buy if I see something I like, even if I do agree that the market is likely to go a bit lower in the coming months.

I'd rather get settled in and moving towards other things instead of sitting reading charts and articles, worrying about how well timed all of my actions are.

Two things we will try to do, is stay as close to the inner city as possible where we're more confident in the value of the property, and not to buy the most we can afford.

I would recommend looking at a home purchase from both an investment standpoint, and a place to live standpoint. Too many people only look at it one way or another.

You are right in a lot of ways. If you can get a home you love, and a price you can afford, and mortgage rates that are lower then seen in decades I don't think you're a fool for doing so now. It makes sense in a lot of ways.

Prices will likely go down some more, but as you said that's not everything when it comes to buying a home. Don't be afraid to buy now, just know what you're getting in to and realize that you're probably sacrificing the lowest price for the other benefits you've listed.

[Nancy]

Originally Posted by Winsor_Pilates

I would recommend looking at a home purchase from both an investment standpoint, and a place to live standpoint. Too many people only look at it one way or another.

You are right in a lot of ways. If you can get a home you love, and a price you can afford, and mortgage rates that are lower then seen in decades I don't think you're a fool for doing so now. It makes sense in a lot of ways.

Prices will likely go down some more, but as you said that's not everything when it comes to buying a home. Don't be afraid to buy now, just know what you're getting in to and realize that you're probably sacrificing the lowest price for the other benefits you've listed.

Sounds like someone takes their work home with them.

[Winsor_Pilates]

Originally Posted by Nancy

Sounds like someone takes their work home with them.

Actually, I'm at work right now.