Calgary Real Estate predictions?

[Winsor_Pilates]

Originally Posted by Tron_fdc

Fair enough, but they are using some stats to back it up. How reliable they are is probably debatable, but from what I'm seeing around the city it seems like prices have crept up a little.

All I need now is someone to overpay for my house in Bridlewood, allowing me to lowball a cabin owner in Kelowna.....it's all about timing baby

You might be in the perfect time to do this. I spent all summer selling real estate in the Okanagan and that market is still really bad. It is completely a buyers market and there are deals everywhere.
The big cities on the other hand are seeing a shift, and the buyers ability to strongarm the seller is disappearing.

The development I'm selling in Van now is already pretty much sold out in 3 days and we weren't even planning to start sales until October. Demand is just so high, we'd be stupid to wait. I also put a deposit down on a new condo today.

[Winsor_Pilates]

Originally Posted by AFireInside

Over the past year housing prices are down a considerable amount. They always, ALWAYS increase in spring and summer. So saying that housing prices have crept up a little is very common at this point in the year.

Do you have any stats to back this up? I don't follow the Calgary numbers too closely, but can't see this being true. Maybe 1-3% down from last year at most.

[AFireInside]

Originally Posted by Winsor_Pilates

Do you have any stats to back this up? I don't follow the Calgary numbers too closely, but can't see this being true. Maybe 1-3% down from last year at most.

http://www.housepriceindex.ca/Default.aspx
This is an interesting site I've just started checking out, I haven't looked at it a lot yet, so it may not be that good.


I've seen a lot of different stats. While I'm not really interested in revealing all the details of my life on a message board, (if I wanted to I'd login under my real name and have a facebook page ) I deal with housing sales/prices etc everyday at work.

I was actually just on a realtor's page (Jim Sparrow I think) and I believe he had stated that prices are down 7-9% over last year. But I guess it depends where you go for info and exactly what time frame you are dealing with. I've seen info that says a 3% reduction. If you go to Bob Truman's page (he is a realtor) up to date it looks like a 3% reduction over last year. But if you go back a few months (april) it looks like the market is down about 10% over the previous year. What I see daily looks higher than 3%, but I'm not interested in getting into a an argument/discussion about stats.

Imo it's too early to tell if the sales that occurred this summer are higher than they should be. These low interest rates may be skewing the data a little bit. I can't recall where I was reading (Maybe Bob Truman's page) that if we were in a normal market, our inventory combined with these low interest rates would drive prices up. This isn't really happening at least not by a large margin. Is it really a strong market? Or are first time buyers taking advantage of historically low interest rates, and buying during a typically busy time in the market? I guess we will find out in the fall, if sales and prices increase or decrease.

I think every post I have in this thread says to wait until fall/winter to see what happens....

It could be that first time buyers are taking advantage, buying their properties during a hot time. If sales fall off more than normal it would suggest that people got in the game earlier than they might have otherwise, to take advantage of the interest rates.

To be honest I can't recall when interest rates declined. If it was after last summer it seems to me that sales may be inflated because it's the first spring/summer period with low rates and buyers want to take advantage. Need to see how much sales taper off during the typically slower months.

So once again I'm back to my original idea of waiting until the winter to see what happens with the numbers.... It may very well remain stable, it's very difficult to accurately predict what will happen. To be honest I've had many many many discussions about housing prices in Calgary, and I'm beginning to get annoyed at myself. Just have to wait and see what happens by the end of the year. I think I may be just completely sick of talking about this stuff... Whatever happens, happens and there are people on both sides, those who think prices will rise (usually those who have just bought, or those in the sales industry), and those who don't (those waiting to buy). You won't change the minds of anyone on either side of the fence.


I hope this post makes sense, it's late, I just randomly woke up, and this whole post may be contradictory nonsense..... lol.

[Winsor_Pilates]

Originally Posted by AFireInside

I've seen a lot of different stats. While I'm not really interested in revealing all the details of my life on a message board, (if I wanted to I'd login under my real name and have a facebook page ) I deal with housing sales/prices etc everyday at work.

I was actually just on a realtor's page (Jim Sparrow I think) and I believe he had stated that prices are down 7-9% over last year. But I guess it depends where you go for info and exactly what time frame you are dealing with. I've seen info that says a 3% reduction. If you go to Bob Truman's page (he is a realtor) up to date it looks like a 3% reduction over last year. But if you go back a few months (april) it looks like the market is down about 10% over the previous year. What I see daily looks higher than 3%, but I'm not interested in getting into a an argument/discussion about stats.

Not trying to argue with you, just wanted to see where you were getting your stats. If you're going to make strong statements like "Over the past year housing prices are down a considerable amount", you should be able to show evidence.
Every Calgary realtor should get a monthly report from CREB which very simply shows the year to year increase or decrease in avg prices.
It's really not even a matter of argument/discussion, just factual stats.
A quick search through CREA shows this:

"The average price of a single family Calgary metro home in August 2009 was $454,130, showing an increase of four per cent from July 2009, when the average price was $436,782, and showing an increase of three per cent from August 2008"

So not only are prices not down a considerable amount, it doesn't even seem like they are even down at all.
But then again, I'm in real estate sales so I'm probably a liar making up numbers

edit: just wanted to add this part from the CREA stats
"The average price of a single family Calgary metro home in August 2009 without the $10.3 million-sale would be $446,413—coming in just above the average price one year ago."

Still up, or atleast even

[Wookie]

TORONTO - Economist and author Jeff Rubin, who predicted the bursting of Canada’s last major housing bubble, warns many Canadians will soon regret the hefty prices they’re paying to enter the property market.

http://www.calgaryherald.com/busines...155/story.html

CALGARY - Calgary’s vacancy rate has nearly doubled in the past year, pushing down rental rates, Canada Mortgage and Housing Corp. said Wednesday.

CMHC said job losses, fewer people moving to Calgary and lower home prices have boosted the vacancy rate in the past year.

http://www.calgaryherald.com/busines...819/story.html

Carney warns banks, consumers on debt

As of October, growth in mortgage credit had climbed 7.1% over a 12-month period, and 7.5% month-over-month. Meanwhile, credit contracted in the last two recessions.

http://www.calgaryherald.com/busines...011/story.html

All this cheap money going to make for a drop in housing prices in the years to come?

[Tron_fdc]

^^^^^^

That's what I'm betting on. I'm going to list my rental in Feb/March, then wait for housing prices to drop when they raise interest rates, and buy a cabin next winter.

I stand to make some pretty decent cash on my rental as it is, so even if housing prices hold where they are or increase next year, at the very least I get one hell of a trip to Vegas.

[burn_this_city]

That scenario might burn people who bought in 06-07 but I doubt the drop will be significant enough to affect people who bought after the 20ish% drop.

The biggest flaw in his assumptions are that oil will return above $100 a barrel. Last I heard there was 4-5 million bpd of spare capacity. Plus 350-500,000 bdp of additional capacity is set to start hitting the markets next year.

[moncton golden flames]

imo, in the states, the bubble is only half burst. alt-a and options arms mortgages will start defaulting by middle of next year. this second half of the american bubble is said to equal the first half in terms of 'value'. these mortgages are the types where the purchaser didn't have to verify income....scary.

starting next year, i see another housing price 'crash' and i believe that might trigger the commercial bubble to implode in the states. alberta may be somewhat insulated, but even our economy can only handle so much of a beat down.

[Slava]

Jeff Rubin also predicted that the stock market was going to close at 16,200 at the end of 2008. In case you were living under a rock he was off....by about 8000 points!

[moncton golden flames]

Originally Posted by Slava

Jeff Rubin also predicted that the stock market was going to close at 16,200 at the end of 2008. In case you were living under a rock he was off....by about 8000 points!

then it's a good thing i'm talking about the housing bubble and not the stock market. admittedly, i thought he was on crack when he mentioned he was bullish on the stock market.

he is not the only one to talk about the next wave of the bubble. i've looked at spreadsheets directly off of government websites, that shows the dollar figure amounts involved with those 2 types of mortages. if you understand what these types of mortgages are and how they were used, i think you'll see the housing related (not stock market) issues to come.

[cmyden]

I think it's interesting how much people have attributed home prices in Calgary to the local economy, ie: the price of oil, nat gas, etc.

While it has some impact, I think it's becoming increasingly clear that home prices all across this great nation of ours bubbled up from 2005-2007 because of credit expansion. Of course, people in Vancouver will tell you it's because of the Olympics. Everyone has their own localized rationale.

We don't have Freddie or Fannie to blame, but rather a government backed insurance program (CMHC) that allowed banks to loan money without bearing risk.

And people should look in the mirror as well, taking on greater and greater amounts of debt fueled only by expectations of never ending price increases rather than fundamentals.

[Slava]

Originally Posted by moncton golden flames

then it's a good thing i'm talking about the housing bubble and not the stock market. admittedly, i thought he was on crack when he mentioned he was bullish on the stock market.

he is not the only one to talk about the next wave of the bubble. i've looked at spreadsheets directly off of government websites, that shows the dollar figure amounts involved with those 2 types of mortages. if you understand what these types of mortgages are and how they were used, i think you'll see the housing related (not stock market) issues to come.

I see your point here, but all I'm saying is that just because he called the bubble last time around doesn't mean that this prediction is correct. I think that there is a fair amount of fear of a housing bubble because this is still fresh in the minds of people. Only time will tell, but if a lot of the issues were purged from the system in the last year then we aren't in as bad a situation as some might imply.

[macker]

In times of inflation hard assets are the place to be. This includes oil, gas, gold, farmland and real estate etc.etc. They hedge against inflation. The US Federal Reserve has trippled their balance sheet and printing money is always good for hard assets. Paper currency around the world is suspect and the move to hard assets is on. The next bubble is the long term US government bond market. Would you lend money to the US for 30 years at 4-5% in USD. We have commodity shortages developing and this along with the US printing so much money will eventually lead to inflation. This may take 1-3 years but it is going to happen. I don't see a Canadian housing market bubble in the next 1-3 years. Jeff Rubin is not as credible as Benjamin Tal if you are going to listen to an economist and he says no bubble....

[moncton golden flames]

here is a small collection of videos on the subject, i'm sure you will see a trend in the forecasts. the last video is the one where he explains how to get to the spreadsheets that are available on government websites, so you can see the evidence for yourself.

http://www.youtube.com/watch?v=0YcbGy3Xr9I

http://www.youtube.com/watch?v=9HCNuQrKoWM&NR=1&feature=fvwp

http://www.youtube.com/watch?v=a3g6Yr5S7cg&feature=related

http://www.youtube.com/watch?v=0vJYW3KoXOM&feature=related

http://www.youtube.com/watch?v=AqbNO54SVDc&feature=related

http://www.youtube.com/watch?v=pmeBSWI9sF8

[kevman]

Originally Posted by fotze

For interest sake, the average house sale price in Calgary since April 2006.

Stats are funny like that eh? If you draw that line from April '07 it's going to look a whole lot different. What does concern me, as someone from the outside looking in, is the increase in house prices over the fall and winter months that typically show a decrease in price. What I'm wondering is, how much of this is a direct result of the incredibly low interest prices? Furthermore, how many people are only able to afford the homes they live in because of these low interest prices? I see no reason, from and economic and industry perspective, that the house prices should be going up that much over the slow winter months.

[Wookie]

Originally Posted by Slava

Jeff Rubin also predicted that the stock market was going to close at 16,200 at the end of 2008. In case you were living under a rock he was off....by about 8000 points!

I actually thought the points in the article were valid yesterday when I read it, today when I thought to link it I noticed it was Jeff Rubin and suddenly didn't want to post it haha. That said, I thought what was said was interesting it warrented some attention and didn't want the Rubin part to influence me so I posted it.

So you have no concerns about the flurry of house buying and upward pressure on prices and it having anything to do with LOW interest rates and the potential for problems in the future?

[Slava]

I can't say that I have absolutely no concern at all. I just think that the recent rush to buy is because of the lower interest rates and that is a very different situation than a pure credit bubble or "NINJA" loans (No Income No Job) where there is no hope for repayment.

Eventually rates will rise....we are at the pure low, so you don't have to be a genius to see that! But will they hit the rates we saw in the early 80's? I doubt it.

[Wookie]

Originally Posted by Slava

I can't say that I have absolutely no concern at all. I just think that the recent rush to buy is because of the lower interest rates and that is a very different situation than a pure credit bubble or "NINJA" loans (No Income No Job) where there is no hope for repayment.

Eventually rates will rise....we are at the pure low, so you don't have to be a genius to see that! But will they hit the rates we saw in the early 80's? I doubt it.

I wasn't thinking rates in the early 80's, even 8% would cause me to be paying 10k more a year to my mortgage. My payments would increase from their current amounts anywhere from 38% to 58% depending on my amortization.

I don't think we're heading for a huge tumble, nor do I think we're heading for 8.0% necessarily, but I do think a lot of people are buying houses because they came down "a little" and rates are down "a lot."

Now an inflationary time is a great time to own hard assets, but I'm not sure if real estate is one of them as it's mostly financed by large amounts of debt which is largely dependant on interest rates. I can't recall if I'm completely wrong on this, so jump in if you know better I'm just trying to think my way through it.

Yes cash is the worst place to be during times of inflation, but is residential real estate much better? Didn't the 80's housing bust happen due to inflation which made for sky high interest rates?

[Winsor_Pilates]

Originally Posted by cmyden

While it has some impact, I think it's becoming increasingly clear that home prices all across this great nation of ours bubbled up from 2005-2007 because of credit expansion. Of course, people in Vancouver will tell you it's because of the Olympics. Everyone has their own localized rationale.

I don't think that's fair. Most people in Vancouver attribute very little of the rising real estate sales / prices to the Olympics. The main factors have been interest rates and a slow down in new construction reducing supply. I don't think even 1% of my buyers in the last year were heavily motivated by the Olympics.

Most of the developers I work with aren't banking on the Olympics either. The industry will pretty much shut down during it, and no one is expecting a huge influx of Olympic tourist spending on Real Estate. People seem to be quite cautious of banking on the Olympics and I think that's pretty smart.

[Winsor_Pilates]

For the mortgage experts here, any recommendations to this situation?
I have a place ready at the beginning of 2012 and can lock in either:
3yr @ 4.5 (until 2015)
5yr @ 5.5 (until 2017)

Which one I pick will depend on what I think 2015-2017 might look like for interest rates. Any suggestions?