Although that one's good, I thought the thread that spawned the thread you posted was hilarious. By searching for it, I just realized you were the one that started that thread.
It'll be interesting to see where the Calgary real estate markets heads following the glut of oil thanks to the US-Saudi Arabia price war. The excess supply has already pushed down the price more than $20/barrel in the past 6 months. This downward trend will eventually take a toll on the bottom lines of the energy companies.
I'll be in the market for real estate in Calgary in the next 6-8 months and I'm hoping for a drop in prices.
It'll be interesting to see where the Calgary real estate markets heads following the glut of oil thanks to the US-Saudi Arabia price war. The excess supply has already pushed down the price more than $20/barrel in the past 6 months. This downward trend will eventually take a toll on the bottom lines of the energy companies.
I'll be in the market for real estate in Calgary in the next 6-8 months and I'm hoping for a drop in prices.
My guess (and this is a complete guess) is that they remain steady for the next little while or the price increases continue, but at a slower pace. I can't see prices going down and if they do they'll bounce right back.
My guess (and this is a complete guess) is that they remain steady for the next little while or the price increases continue, but at a slower pace. I can't see prices going down and if they do they'll bounce right back.
What's your logic behind this thinking?
Calgary real estate has historically correlated very closely with the price of oil. When the oil market bottomed out in the early 80's, house prices dropped around 40% in Calgary. When there was a peak around 1990, there was a 25% jump in housing prices in Calgary. Throughout the 90's the price of oil was relatively stable and so was the RE market in Calgary. Into the 2000's before the great recession we saw an explosion in the price of oil and of course this correlated with real estate prices in Calgary.
If oil continues to drop or oil @ $70-80/barrel is the new norm I would expect the Calgary real estate market to follow closely once again. History does repeat itself.
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Prices for WCS which is what bitumen sells for are higher than this time last year. I think the effects of the price drop are overstated here. We've had the Canadian dollar soften quite a bit which has insulated things. If we had a prolonged drop to the $50-60 range we would see a drop in real estate, at these prices I think we're ok.
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The significant drop in oil in 08/09 only caused the Calgary real estate market to stumble slightly before it climbed out and recovered even higher, and that decrease in the price of oil was an absolute monster compared to what we are seeing now. The only thing 08/09 did to everyone is make us hit the panic button much faster these days at any sign of a slight slow down. At this point I for one am not worried.
The significant drop in oil in 08/09 only caused the Calgary real estate market to stumble slightly before it climbed out and recovered even higher, and that decrease in the price of oil was an absolute monster compared to what we are seeing now. The only thing 08/09 did to everyone is make us hit the panic button much faster these days at any sign of a slight slow down. At this point I for one am not worried.
Using the Teranet house price index, the Calgary market had already peaked on August 2007 as higher interest rates began to have an impact. At its low, the Calgary market fell 17.6% and the 2007 peak was only surpassed early this year.
But oil prices were still going up in that time frame and didn't peak until July 2008. So while oil prices are important, I would say interest rates are even more so. The downturn would have been worse without the historically low mortgage rates at that time.
Using the Teranet house price index, the Calgary market had already peaked on August 2007 as higher interest rates began to have an impact. At its low, the Calgary market fell 17.6% and the 2007 peak was only surpassed early this year.
But oil prices were still going up in that time frame and didn't peak until July 2008. So while oil prices are important, I would say interest rates are even more so. The downturn would have been worse without the historically low mortgage rates at that time.
Exactly. The drop in oil prices in the 80s had such a dramtic effect on house prices because people were paying 20% interest on their mortgages. More recent drops in prices in the last 6 years havn't had such a dramatic effect given people are paying less than a quarter of that.
With the rent prices going on, I think sellers have the option to consider pulling the property off the market and renting out instead of lowering price to sell. You might be lucky seeing maybe a 3-4% drop at most depending on the community, but I wouldn't bet on overall bottoming out.
house prices in Calgary will never come down again. At least from this level. Sure if SHF prices hit 1 million and drop to 900k then prices have come down. But from this level we're still on a one way trajectory to the moon. No way possible in any scenario from any rational argumentation could house prices possibly fall. Not with the amount of government intervention in house prices and interest rates. Housing makes up too much of the economy and if the government lets prices drop there will be a huge economic collapse for the entire economy and the banking sector. So there is really zero risk in housing unless you think the government of Canada and the bank of Canada is about to magically disappear somehow. I would love to see one rational case for house prices falling.
house prices in Calgary will never come down again. At least from this level. Sure if SHF prices hit 1 million and drop to 900k then prices have come down. But from this level we're still on a one way trajectory to the moon. No way possible in any scenario from any rational argumentation could house prices possibly fall. Not with the amount of government intervention in house prices and interest rates. Housing makes up too much of the economy and if the government lets prices drop there will be a huge economic collapse for the entire economy and the banking sector. So there is really zero risk in housing unless you think the government of Canada and the bank of Canada is about to magically disappear somehow. I would love to see one rational case for house prices falling.
How about a rational case proving the 'economy and government' has the power to prevent a market drop?
Exactly. The drop in oil prices in the 80s had such a dramtic effect on house prices because people were paying 20% interest on their mortgages. More recent drops in prices in the last 6 years havn't had such a dramatic effect given people are paying less than a quarter of that.
Rates can only go one way from here
Quote:
Originally Posted by DoubleF
With the rent prices going on, I think sellers have the option to consider pulling the property off the market and renting out instead of lowering price to sell. You might be lucky seeing maybe a 3-4% drop at most depending on the community, but I wouldn't bet on overall bottoming out.
Rent has been sky high because so many people are moving to Calgary to work. Rent will significantly drop if oil decreases and less people are moving to the city or more people are going back to where they came from.
As a born and raised Calgarian I have seen the highs and lows of our petro based economy. In the long term I expect Calgary to continue to prosper but it is naive to think that there will not be ups and downs with the volatility of oil.
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Rent has been sky high because so many people are moving to Calgary to work. Rent will significantly drop if oil decreases and less people are moving to the city or more people are going back to where they came from.
As a born and raised Calgarian I have seen the highs and lows of our petro based economy. In the long term I expect Calgary to continue to prosper but it is naive to think that there will not be ups and downs with the volatility of oil.
Sorry, I forgot to mention I was talking about the time between 6-8 months. Not long term forecast or comparing overall rent and prices to the price of oil.
November - February is a good time to buy before activity picks up again. You said you were looking for property soon, right?
How about a rational case proving the 'economy and government' has the power to prevent a market drop?
the bank of Canada had infinite money and will opt to monetize debt rather than restructure/default/let big banks fail etc. Just like the US is doing now. Evidence? Low rates and the bond market which is made up primarily of central banks buying their own country's treasuries. The will never let the housing market drop. In a crisis they will flood banks with cash and drop to negative rates and make sure that while people may be stuck and not be able to sell their homes, they won't be kicked out or foreclosed on. It will be a "zombie-like" state. The worst thing someone can be doing now is saving cash and holding out for a significant pull back in house prices which will never happen.
I just want to hear one rational scenario of how the housing market will drop a significant level (%20-%40). The market could drop %5-10 tops but that won't be enough to create a crisis and hardly worth holding out for.
City has approved taller wood framed building to be constructed. At the advantage of only 20% cost savings at the most, I'm not sure cheapning the already insufficient building codes is worth it.
City has approved tallker wood frame building to be constructed. At the advantage of only 20% cost savings at the most, I'm not sure cheapning the already insufficient building code is worth it.
who's willing to bet those cost savings won't be passed on to the end consumer. It will be the developers that profit. The main costs associated with real-estate in Calgary is land price and labor, NOT materials. If I was in the market to build my own house it would be out of concrete not wood.
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City has approved taller wood framed building to be constructed. At the advantage of only 20% cost savings at the most, I'm not sure cheapning the already insufficient building codes is worth it.
The article states that wood is a more environmentally friendly material. Is that really the case? I would have thought that concrete might be more environmentally friendly especially compared with LVL.
The article states that wood is a more environmentally friendly material. Is that really the case? I would have thought that concrete might be more environmentally friendly especially compared with LVL.
I've heard tree huggers say wood is not environmentally friendly because it takes eon to grow trees. Concrete or cement is just limestone and they are not environmentally friendly now, how so? You can't win with them.
Wood framed building that tall you will have moisture, foundation shifting or post tension cable to deal with. I can almost guarantee that the savings won't be that big for consumers but it'll be quicker for the builders to construct and that translates into more profits for them. It'll be the consumers holding the bag at the end as usual.
Last edited by darklord700; 10-29-2014 at 10:48 AM.
