Calgary Real Estate predictions?

[SeeGeeWhy]

Originally Posted by fundmark19

Good news everyone! If interest rates go to 10 I can still make the payments! My life would be very very boring but I could do it. I knew there must be one upside of getting married. DUAL INCOME! First paycheque of the month for both of us would go pay mtg second pay bills and living expenses.

Here's hoping you both keep your jobs!

[Buster]

My favorite indicator is the bond yield curve.

[fundmark19]

Well unless dentis offices just close randomly she we will be fine. I like to think I'm in a pretty safe job. But worst case scenerio I pick up a job at mcdonalds or doing night labor somewhere. And if I lose my job my mtg allows me 4 months of skip payments till I find a new one. I should be ok

[Winsor_Pilates]

Is that chart just detached houses? or averaging the costs of condos/townhouses too?

[cmyden]

Originally Posted by Winsor_Pilates

Is that chart just detached houses? or averaging the costs of condos/townhouses too?

It must be using condos and townhouses as well, because the median SFH in Calgary has been over $400k for a long time. Either that, or their source for prices is way off.

[1stLand]

77k seems low to me.......alot of new university grads make an average of 50k a year once graduating, assuming they get married to another person with an education within a few years, that is 100k a year and rising as they get more established in their careers.

Calgarian's are very educated. Other Canadian cities are not as young and well educated.
I do not foresee the average household income declining in Calgary. I see it plateauing as well as the average price of a SFH.

If interests rates stay reasonable and hover around 6 or 7%, I dont think we will see a huge decline in prices.

Don't buy into the "Buy now or be priced out forever" or "Wait for the crash" arguments at all.

[AFireInside]

Originally Posted by 1stLand

77k seems low to me.......alot of new university grads make an average of 50k a year once graduating, assuming they get married to another person with an education within a few years, that is 100k a year and rising as they get more established in their careers.

Calgarian's are very educated. Other Canadian cities are not as young and well educated.
I do not foresee the average household income declining in Calgary. I see it plateauing as well as the average price of a SFH.

If interests rates stay reasonable and hover around 6 or 7%, I dont think we will see a huge decline in prices.

Don't buy into the "Buy now or be priced out forever" or "Wait for the crash" arguments at all.

I would have guessed the household income to be around 80 - 85 k so I'm not surprised by the 77k number. Unfortunately there is information posted here that says it's 77k, your estimate of 50k/yr for a new grad is based on nothing..

50K a year for a brand new graduate is not THAAAAT common . I myself have been out for a couple years and do quite well, however when I first got out I was working for about 35 k/yr.. Several of my friends who graduated at the same time (with a range of degrees) were all in the same boat....

I don't think the housing market will completely crash, but I do think that the prices will decline.

If the interest rates hit 6-8% in the next couple years housing prices will have to come down there is no way around it. There are people who have mortgages at 2.5% when they have to renew and it's at 6% they are likely in a lot of trouble don't kid yourself.

Will this happen for sure? Who really knows...

[AFireInside]

Originally Posted by Sylvanfan

The income numbers are likely house hold income.

As for the 18% interest rates in the 1980's the country was in such a different place demographically you really can't compare it. It was an era where you simply had 4 kids all trying to borrow money from their 2 parents to start out in life. Going forward the demographics are much more balanced.

Also with the Bank of Canada now controlling interest rates they don't just arbitrarily set rates, they do it to keep inflation at certain levels. If they have to increase the rates to a level of 8%, it's because there has been enough inflation to make this a requirement. So things like incomes and the price of everything else will have or should have increased too.

Maybe I'm wrong on this, but isn't kind of clear that the government lowered to the interest rates to spur growth? Or prevent a complete collapse of the economy? Sounds like arbitrarily setting the rates to me... Obviously they do it to keep inflation at certain levels but they lowered to encourage growth and prevent disaster...

I agree I don't think they will come in and just set the rates at 8 or 9% for no real reason, but I simply cannot understand how anyone thinks the interest rates will not gradually increase to somewhere betwen 6 and 8%, seems inevitable to me...

I agree with you about the 1980's interest rates, different times.

Right now we are at an overnight rate of 0.25, RBC is predicting by the end of 2011 we well be at 3.5%

[Sluggo]

I would keep a close eye on the Chinese economy in the next couple of years, eventually the bubble will burst and its consequences will be worse than the mortgage crisis.

[Deegee]

Originally Posted by AFireInside

Right now we are at an overnight rate of 0.25, RBC is predicting by the end of 2011 we well be at 3.5%

The average rate from Chartered's predictions is 2.85% for an overnight (with most predictions current as of March, IIRC.

[albertGQ]

When people talk about the interest rates increasing to 6-8%, is everybody talking about the bank rate, prime rate, or another rate?

[Wookie]

Originally Posted by albertGQ

When people talk about the interest rates increasing to 6-8%, is everybody talking about the bank rate, prime rate, or another rate?

I'm not confident they can answer you.

[Wookie]

Conference board of Canada thinks the Calgary market is Balanced

http://www.calgaryherald.com/busines...797/story.html

CALGARY - A report by the Conference Board of Canada today says the short-term year-over-year price growth expectation for Calgary's resale housing market is in the five per cent to seven per cent range.

The board's report said Calgary's market is considered in the balanced territory.

[chemgear]

Report today - inflation already higher than expected - a "nasty surprise"?

http://www.financialpost.com/news-se...tml?id=2701613

[Sylvanfan]

Originally Posted by AFireInside

Maybe I'm wrong on this, but isn't kind of clear that the government lowered to the interest rates to spur growth? Or prevent a complete collapse of the economy? Sounds like arbitrarily setting the rates to me... Obviously they do it to keep inflation at certain levels but they lowered to encourage growth and prevent disaster...

Perhaps I used the wrong word. The BOC sets the rates based on their economic forecasts with the intention of keeping inflation at a certain level based on how the economy is performing. I suppose it is an arbitration like process to determine the number. What I meant was that they're not launching darts at a board or thinking along the lines of we had it at 0 so we better move it up to 8% to make back some money. If the rate was to move to 8%, it's because the economy is going full bore and needs to be reigned in. Just like it went so low to help prevent deflation.

So for a lot of people who'd be facing a higher interest rate on their mortgagte, they should also be making a better wage at the time.

[Slava]

I missed a few pages here, so my apologies if this is already covered somewhere, but I have a hard time seeing interest rates flying upwards. I do think that rates are going up, but this is likely a more slow and gradual increase. I say this for a few reasons:

1. An increase in rates means an increase in the already almost at par Cdn dollar. This means if they drive rates up too fast the dollar spikes and causes other problems for the economy that the central bank is not eager to have happen.

2. Inflation going forward is not as much of a concern as people might think. With the mountains of debt that we have both as governments and as general population the spending is just not there to drive up demand and increase prices.

I guess these things are silly to post, because if/when I'm wrong someone will pull this post out in a couple of years and give me the tried and true "told ya so", but I figured that I would put it out there anyway.

[amorak]

Originally Posted by Wookie

I'm not confident they can answer you.

I was talking about Prime, obviously, as that is what mortgages (you know, the subject of this thread) are pegged against...

[Wookie]

Originally Posted by amorak

I was talking about Prime, obviously, as that is what mortgages (you know, the subject of this thread) are pegged against...

Variable is based on prime fixed is often based on the corresponding bond yield. I wasn't really being serious though. It was in jest because of the way people were talking about "bank of Canada putting rates @ 8.0% and in the same sentence talking about an 8.0% mortgage"

[Potty]

http://www.scribd.com/doc/28454918/C...Housing-Bubble

Report prepared by a student about Canadian Housing. DISCLAIMER: It's not very balanced, but pulls a lot of interesting data together anyways.

Predicts bad things for overall market, but shows Calgary prices to be much more in line with historical norms than Vancouver, Toronto and Montreal (pg. 10 + 11)

I find the CMHC scorecard on page 24 pretty scary. 41.8% of mortgages insured by CMHC in 2008 were to rental or high-ratio homeowners.

Also, by the end of 2010, CMHC is on target to hold guarantees on over $500 billion in mortgage-backed securities, which taxpayers will be on the hook for if things go south. (pg. 25)

[photon]

Originally Posted by Potty

I find the CMHC scorecard on page 24 pretty scary. 41.8% of mortgages insured by CMHC in 2008 were to rental or high-ratio homeowners.

That seems two odd things to throw together. What are the individual portions I wonder.

How exactly does he define high-ratio homeowners? And it's interesting that he goes from high-ratio to high-risk to "massive sub-prime mortgage scheme" in a few sentences.

In the quote it talks about 40 year mortgages and mortgages with zero down.. while those are probably unwise mortgages, and may be defined as high-ratio for CMHC (hard to tell, I can't find any details in skimming the report linked), getting a 40 year mortgage while still having to qualify at a 40% debt/service ratio is VASTLY different than giving a mortgage that goes UP instead of down to someone who is unemployed like they were in the US.