Calgary Real Estate predictions?

[sevenarms]

Originally Posted by burn_this_city

Didn't we learn the wood condo lesson around 2000 when that entire complex burnt down by Erlton station?

That's what I was thinking. Wasn't this rule put in place after that fire?

[ExiledFlamesFan]

It'll be interesting to see how long it takes until real estate prices start dropping with $65-70/barrel oil.

We'll likely see a softening in the outlying commuter towns first (Airdrie, Okotoks), and then a drop in Calgary real estate.

Speaking as somebody who's family has made a living off Calgary real estate since the 70s it looks like it's time to batten down the hatches and try to weather another bust. Once the layoffs begin it could get very ugly.

[calgarygeologist]

Originally Posted by ExiledFlamesFan

button down the hatches

batten down the hatches

[Slava]

Originally Posted by ExiledFlamesFan

It'll be interesting to see how long it takes until real estate prices start dropping with $65-70/barrel oil.

We'll likely see a softening in the outlying commuter towns first (Airdrie, Okotoks), and then a drop in Calgary real estate.

Speaking as somebody who's family has made a living off Calgary real estate since the 70s it looks like it's time to batten down the hatches and try to weather another bust. Once the layoffs begin it could get very ugly.

I didn't look this up to be sure, but isn't $70 oil basically 2010? I mean yes it's down a lot from earlier this year and the historic highs, but I think people can adjust. It also isn't definitely a long term thing. Frankly, as soon as someone suggests that it's the 'new normal' I get skeptical. Same with 'this time is different'.

[ranchlandsselling]

Originally Posted by Slava

I didn't look this up to be sure, but isn't $70 oil basically 2010? I mean yes it's down a lot from earlier this year and the historic highs, but I think people can adjust. It also isn't definitely a long term thing. Frankly, as soon as someone suggests that it's the 'new normal' I get skeptical. Same with 'this time is different'.

In 2010 the cdn $ had a year high of par with the usd and a low of .92.



Oil went from $78 to $89 jan 10 to dec 10
with the conversion today wti is $74 (not wcs)

[ExiledFlamesFan]

Originally Posted by Slava

I didn't look this up to be sure, but isn't $70 oil basically 2010? I mean yes it's down a lot from earlier this year and the historic highs, but I think people can adjust. It also isn't definitely a long term thing. Frankly, as soon as someone suggests that it's the 'new normal' I get skeptical. Same with 'this time is different'.

No. The price of oil hasn't been this low since the depths of the great recession.

See the layoff thread for why this is a very big deal. This is the 1980s oil glut all over again.

[Slava]

It's not that I don't think it's a big deal (on my phone so adding emphasis where I wanted was difficult and I'm lazy!). I just think that this could be short-lived. I suppose it could drag on for years, but there are a lot of countries that will want to see the prices rise. That list includes the Saudis over the longer term.

I obviously hope it turns out to be more of a blip, or at least not a longer term issue. I do think that a lot of the big producers will be alright through this though, and hopefully the juniors can muddle through.

[ExiledFlamesFan]

Originally Posted by Slava

It's not that I don't think it's a big deal (on my phone so adding emphasis where I wanted was difficult and I'm lazy!). I just think that this could be short-lived. I suppose it could drag on for years, but there are a lot of countries that will want to see the prices rise. That list includes the Saudis over the longer term.

I obviously hope it turns out to be more of a blip, or at least not a longer term issue. I do think that a lot of the big producers will be alright through this though, and hopefully the juniors can muddle through.

Some history for you:
http://www.reuters.com/article/2014/...0I229320141014

It was not until late 1985 that the issue came to a head. The kingdom and OPEC finally agreed to reclaim market share, driving prices down to $10 a barrel but reestablishing themselves in the market. It took 16 years for prices to fully recover.

"They decided they had enough – they were the swing producer and they increased production and drove prices down dramatically," said Dr. Gary Ross, chief executive of PIRA Energy Group, who has followed oil markets since the 1970s.

This time around, Riyadh appears to be taking that stance from the start, with a focus on preserving the medium-term revenue of its 266 billion barrels of crude oil reserves rather than chase falling prices and sacrifice their market.

"From an economics point of view, it’s much better to let prices go way down," according to Philip K. Verleger, president of consultancy PKVerleger LLC and a former advisor to President Carter. The emerging price war is "a war of necessity."

The Saudis know what they are doing. How long the other OPEC members go along with it remains to be seen. But the Saudis are still the worlds largest oil producer and are still the worlds most powerful oil producer.

Judging by the market's reaction yesterday and today this is not a short term blip, unfortunately.

[ranchlandsselling]

Originally Posted by ExiledFlamesFan

Some history for you:
http://www.reuters.com/article/2014/...0I229320141014


The Saudis know what they are doing. How long the other OPEC members go along with it remains to be seen. But the Saudis are still the worlds largest oil producer and are still the worlds most powerful oil producer.

Judging by the market's reaction yesterday and today this is not a short term blip, unfortunately.

I'm not disagreeing with you, but to base your hypothesis on how the market reacted over two days isn't a good strategy. The market is very often quite irrational and rational people can also use that to their advantage and add to the irrationality.

[ExiledFlamesFan]

Originally Posted by ranchlandsselling

I'm not disagreeing with you, but to base your hypothesis on how the market reacted over two days isn't a good strategy. The market is very often quite irrational and rational people can also use that to their advantage and add to the irrationality.

This is not my hypothesis, and this is not based on the market. This is based on history and the actions of Saudi Arabia. The market reaction is just that, a reaction.

[Slava]

Originally Posted by ExiledFlamesFan

This is not my hypothesis, and this is not based on the market. This is based on history and the actions of Saudi Arabia. The market reaction is just that, a reaction.

Sure but you're basing your long term projection on an entirely short term reaction. Sure, it could be the long term that happens, or it could be that prices stabilize around here, and producers adjust. That would likely see prices rise from here again.

[ExiledFlamesFan]

Originally Posted by Slava

Sure but you're basing your long term projection on an entirely short term reaction. Sure, it could be the long term that happens, or it could be that prices stabilize around here, and producers adjust. That would likely see prices rise from here again.

I'm not sure I even understand your argument.

How are producers going to adjust and how are prices going to rise?

Here is the current situation: there is a glut of global oil, driving prices to lows we haven't seen since the great recession. We've got a serious supply side problem with the dominant producer continuing to release massive amounts of oil to market, further pushing down the price of oil.

[Slava]

Originally Posted by ExiledFlamesFan

I'm not sure I even understand your argument.

How are producers going to adjust and how are prices going to rise?

Here is the current situation: there is a glut of global oil, driving prices to lows we haven't seen since the great recession. We've got a serious supply side problem with the dominant producer continuing to release massive amounts of oil to market, further pushing down the price of oil.

I'm not arguing, I am giving a scenario where this doesn't have to drag on for 16 years. So what I suggest is that prices stabilize in and around here, or say $65. Some production gets cut and maybe some demand increases in Asia and prices rise again. Does that happen in a month? Clearly not. But it doesn't have to follow the same track as we saw from 1985 either. There are clearly different drivers in the market than what we saw back then.

[Mr.Coffee]

the reality is that profitability isn't just a function of price. Price is one input.

Costs are going to drop, people are going to make less, but not everything is just going to shut in. People will adjust.

[Jacks]

A few years ago people were saying that oil was going to $200 and would never drop below $100 again. I'll pass on long term predictions.

[ExiledFlamesFan]

Originally Posted by Jacks

A few years ago people were saying that oil was going to $200 and would never drop below $100 again. I'll pass on long term predictions.

I haven't made any long term predictions. The only prediction I've made is that 2015 is gonna be a very bad year.

Mr coffee, mass cost cutting involves mass layoffs. This is a reality we'll soon have to deal with. No point in burying your head in the sand.

[Mr.Coffee]

Originally Posted by ExiledFlamesFan

I haven't made any long term predictions. The only prediction I've made is that 2015 is gonna be a very bad year.

Mr coffee, mass cost cutting involves mass layoffs. This is a reality we'll soon have to deal with. No point in burying your head in the sand.

I'm not and I agree layoffs are going to happen.

Then costs will drop and activity will resume. This isn't like rigs will just stop and we'll be done with oil and gas here.

[ranchlandsselling]

Originally Posted by ExiledFlamesFan

This is not my hypothesis, and this is not based on the market. This is based on history and the actions of Saudi Arabia. The market reaction is just that, a reaction.

So maybe you should have put the rest of your post in quotes if it wasn't your thoughts .

You clearly said "judging by the market's reaction yesterday and today this is not a short term blip".


I simply stated basing the long term of what's going on, on how the market reacted over a often weak and low volume period isn't really sound reasoning whether you're right or wrong.

[ExiledFlamesFan]

Originally Posted by ranchlandsselling

So maybe you should have put the rest of your post in quotes if it wasn't your thoughts .

You clearly said "judging by the market's reaction yesterday and today this is not a short term blip".


I simply stated basing the long term of what's going on, on how the market reacted over a often weak and low volume period isn't really sound reasoning whether you're right or wrong.

What exactly is your argument here? The market is wrong? History doesn't repeat itself? Supply and demand doesnt exist?

I don't even know what you're getting at to be honest.

[ranchlandsselling]

Originally Posted by ExiledFlamesFan

What exactly is your argument here? The market is wrong? History doesn't repeat itself? Supply and demand doesnt exist?

I don't even know what you're getting at to be honest.

Don't worry about it.
Thread can continue without either of us going back and forth to explain to one another.