Real estate in Calgary - another bubble?

[CorsiHockeyLeague]

Has anyone taken advantage of this to refinance and get a bit more cash out?

[timun]

Originally Posted by edslunch

R-C1. Is that better or worse for me? I guess it would need a developer wanting to build a premium house - there have been a few of those built and sold recently on my street.

If you're in Altadore? Doesn't really make it any better or worse for you if yours is zoned R-C1. Yes, it means there won't be developers banging on your door looking to subdivide your lot and sell two semi-detached properties for $850,000+ apiece. But that's not stopping redevelopment of R-C1 properties, ripping down old 1950s bungalows and replacing them with comparatively monstrous 2000+ sqft, two or three-storey single family homes.

EDIT: You might have meant R-1 vs. R-C1. R-1 is really just a placeholder zone for detached homes in new neighbourhoods. R-C1, "Residential -Contextual 1", is for areas that are already developed. The idea is that R-C1 holds new homes to be within the context of the neighbourhood. It comes into play with respect to set backs (how far the building is from property lines), stuff like that.

[#-3]

Originally Posted by stampsx2

What does everyone think is driving this market? I have a hard time believing it’s all pent up demand.

Building materials are sky rocketing in price too, a combination of lost production capacity, high demand, and lack of inventory at wholesalers. Normally the need for home builders to keep building puts some downward pressure on prices, but margins on a $8.00 2x4 have got to be a lot better than margins on a $2.50 2 x 4, it changes the math on how many houses need to be built and at what price.

[Leondros]

Originally Posted by CorsiHockeyLeague

Has anyone taken advantage of this to refinance and get a bit more cash out?

Breakage fees were brutal but we added to our mortgage for some home improvements.

[Leondros]

Originally Posted by #-3

Building materials are sky rocketing in price too, a combination of lost production capacity, high demand, and lack of inventory at wholesalers. Normally the need for home builders to keep building puts some downward pressure on prices, but margins on a $8.00 2x4 have got to be a lot better than margins on a $2.50 2 x 4, it changes the math on how many houses need to be built and at what price.

This as well which is surprisingly that entirely a factor of COVID. All of the lumber producers are slowly learning they have the ability to set higher prices at the expense of retailers and builders. OSB last week was $59 which is insane, people are just straight up going to fiberglass for their firewalls now. For comparison pre COVID the same OSB was around $8.

[Cappy]

Originally Posted by CorsiHockeyLeague

Has anyone taken advantage of this to refinance and get a bit more cash out?

Was thinking of doing so. Maybe doing a few renovations with the cheap interest rate. Own a condo but absolutely no desire to leave at this point

[#-3]

Originally Posted by Leondros

This as well which is surprisingly that entirely a factor of COVID. All of the lumber producers are slowly learning they have the ability to set higher prices at the expense of retailers and builders. OSB last week was $59 which is insane, people are just straight up going to fiberglass for their firewalls now. For comparison pre COVID the same OSB was around $8.

It's not just wood though,

Gas prices have gone up what 70%?
Metal Prices have doubled
Wood Prices have almost tripled.
Food & Chemical prices are both up a noticeable amount.
I don't know, but it wouldn't surprise me to learn Linen and Plastic prices are going up.


I can't speak for all industries, but in my industry there was a decommissioning older production capacity at the start of COVID. The market came roaring back faster than anyone expected. The overran the existing capacity trying to catch up, and saw accidents/breakdowns. Wholesalers who cut inventories at the start of COVID have sold everything off now, and are having orders restricted by the producers who prefer selling directly to manufacturers and are months behind schedule. Because manufacturers have no secondary source of supply and have seen late delivery, they are moving aggressively to secure their inventories. Producer lead time and prices have doubled with no sign of slowing down, and even if they ever catch up and get their lead times under control, they still need to re-stock the wholesalers before things go remotely back to normal. We're realistically 6-12 months from anything like a market correction, and has be having a huge effect on cost of few construction, but should trickle down to price of resale property.

[timun]

Originally Posted by #-3

It's not just wood though,

Gas prices have gone up what 70%?

It's certainly higher now than it was in the early days of the pandemic—I paid 59.9¢/L for a tank of gas last April—but overall it's up <20% vs. March 2020. We were paying these prices in the spring of 2019, and I paid over $1.30/L in July 2018.

[Flamenspiel]

Originally Posted by #-3

It's not just wood though,

Gas prices have gone up what 70%?
Metal Prices have doubled
Wood Prices have almost tripled.
Food & Chemical prices are both up a noticeable amount.
I don't know, but it wouldn't surprise me to learn Linen and Plastic prices are going up.

Yep, what we are seeing is garden variety monetary policy based inflation. Welcome to the 1970s again, basically too much money chasing too few goods. At some point a group of politicians and economists will reach a consensus that they will have to choke the money supply. Make sure you all have your houses paid by then. Do we see 18-20% again? Probably not, but maybe 5-10, I could see that.

In the last 6 months or so, even tech prices are going up. I have not seen that in a very long time.

[Bill Bumface]

Originally Posted by Flamenspiel

Yep, what we are seeing is garden variety monetary policy based inflation.

One positive that could come out of this is inflating away a lot of the massive consumer debt that is kicking around, assuming salaries keep pace with inflation.

In Alberta, where we have a disconnect with salaries vs. the economy, it also will be super helpful. When dealing with existing labour forces, getting decreases in pay is really really hard. Letting the world inflate past stagnant wages is much easier. This is a chance to get our public and private wages back in line with the rest of the country.

[blankall]

Originally Posted by CorsiHockeyLeague

Has anyone taken advantage of this to refinance and get a bit more cash out?

....famous last words.

[Lubicon]

Originally Posted by Bill Bumface

One positive that could come out of this is inflating away a lot of the massive consumer debt that is kicking around, assuming salaries keep pace with inflation.

In Alberta, where we have a disconnect with salaries vs. the economy, it also will be super helpful. When dealing with existing labour forces, getting decreases in pay is really really hard. Letting the world inflate past stagnant wages is much easier. This is a chance to get our public and private wages back in line with the rest of the country.

Well I guess my employer is doing their best to help the Alberta economy. Year 7 of a wage freeze now.

[blankall]

Originally Posted by Bill Bumface

One positive that could come out of this is inflating away a lot of the massive consumer debt that is kicking around, assuming salaries keep pace with inflation.

In Alberta, where we have a disconnect with salaries vs. the economy, it also will be super helpful. When dealing with existing labour forces, getting decreases in pay is really really hard. Letting the world inflate past stagnant wages is much easier. This is a chance to get our public and private wages back in line with the rest of the country.

Don't see this happening.

Most businesses are under a huge crunch right now, with many struggling to keep up with existing expenses.

As for increasing interest rates, that will most certainly not have a positive effect on personal debt. We'd just see more people defaulting.

The most likely outcome is the further widening gap between the wealthy and the poor. If you already own stuff, it's going to get more valuable. If you rely on your wages for wealth, you are SOL.

[Monahammer]

Originally Posted by #-3

It's not just wood though,

Gas prices have gone up what 70%?
Metal Prices have doubled
Wood Prices have almost tripled.
Food & Chemical prices are both up a noticeable amount.
I don't know, but it wouldn't surprise me to learn Linen and Plastic prices are going up.


I can't speak for all industries, but in my industry there was a decommissioning older production capacity at the start of COVID. The market came roaring back faster than anyone expected. The overran the existing capacity trying to catch up, and saw accidents/breakdowns. Wholesalers who cut inventories at the start of COVID have sold everything off now, and are having orders restricted by the producers who prefer selling directly to manufacturers and are months behind schedule. Because manufacturers have no secondary source of supply and have seen late delivery, they are moving aggressively to secure their inventories. Producer lead time and prices have doubled with no sign of slowing down, and even if they ever catch up and get their lead times under control, they still need to re-stock the wholesalers before things go remotely back to normal. We're realistically 6-12 months from anything like a market correction, and has be having a huge effect on cost of few construction, but should trickle down to price of resale property.

NBR and PP are both ridiculously expensive compared to normal because of mask and glove production, among other medical supplies. I am sure it extends to other polymers and plastics too, as production is diverted towards the higher priced compounds.

[CliffFletcher]

Originally Posted by blankall

As for increasing interest rates, that will most certainly not have a positive effect on personal debt. We'd just see more people defaulting.

Not to mention dramatically increase the cost of servicing the enormous debt our governments have taken on. Which in turn would necessitate deep public spending cuts.

Originally Posted by blankall

The most likely outcome is the further widening gap between the wealthy and the poor. If you already own stuff, it's going to get more valuable. If you rely on your wages for wealth, you are SOL.

Who knew there would be a downside to government spraying out torrents of cash at a time when deficits were already at historic levels? But maybe this time will be different. Maybe for the first time since money was invented pouring made-up money into the economy will not lead to inflation.

[bizaro86]

Originally Posted by Lubicon

Well I guess my employer is doing their best to help the Alberta economy. Year 7 of a wage freeze now.

Thats rough. Its also what he was talking about. A wage freeze is possible, and is effectively a slow wage decrease from inflation. Cutting salaries in one go would reset things faster, but is even more disruptive and harder to do.

[blankall]

Originally Posted by CliffFletcher

Not to mention dramatically increase the cost of servicing the enormous debt our governments have taken on. Which in turn would necessitate deep public spending cuts.



Who knew there would be a downside to government spraying out torrents of cash at a time when deficits were already at historic levels? But maybe this time will be different. Maybe for the first time since money was invented pouring made-up money into the economy will not lead to inflation.

A lot of this is going to be compounded by the fact Canada was already in the midst of crisis involving a widening generational wealth gap and globalization. We're going to see a further cementing of a class system. Anyone with a job that doesn't require a lot training or that can be done overseas is going to be left behind. Anyone who isn't inheriting a huge amount of money from their parents isn't going to be able to make up for that shortfall via hard work.

Some of the takes in here....are very optimistic? A few simple rules:

1. Increased material and fuel costs will not result in employers paying their employees more.

2. Increased interest rates are not good for people with lots of debt. Canada just went through a period where both debt and money supply were rapidly increasing. Not good.

3. Inflation is never good for employees on fixed wages. The cost of living rises first. Salaries rise over time...if at all.

[bizaro86]

Originally Posted by blankall

A lot of this is going to be compounded by the fact Canada was already in the midst of crisis involving a widening generational wealth gap and globalization. We're going to see a further cementing of a class system. Anyone with a job that doesn't require a lot training or that can be done overseas is going to be left behind. Anyone who isn't inheriting a huge amount of money from their parents isn't going to be able to make up for that shortfall via hard work.

Some of the takes in here....are very optimistic? A few simple rules:

1. Increased material and fuel costs will not result in employers paying their employees more.

2. Increased interest rates are not good for people with lots of debt. Canada just went through a period where both debt and money supply were rapidly increasing. Not good.

3. Inflation is never good for employees on fixed wages. The cost of living rises first. Salaries rise over time...if at all.

I think there is going to be a big bifurcation. Jobs that can't be done remotely (retail, delivery driver, cleaner) will probably continue to grow in number. But supply of people available for those jobs will increase as people who used to have white collar jobs that can be outsourced will be competing for them. Things like payroll, some IT, call centers, etc are all going more and more offshore to save money. The cost of living in Canada makes Canadian labour uncompetitive in those areas. As those jobs disappear some of the people who used to do them will compete for "local" type jobs.

Higher end labour will still be in demand, and those who have a software engineering degree from Stanford will probably see their earnings rise much faster than inflation.

[blankall]

Originally Posted by bizaro86

I think there is going to be a big bifurcation. Jobs that can't be done remotely (retail, delivery driver, cleaner) will probably continue to grow in number. But supply of people available for those jobs will increase as people who used to have white collar jobs that can be outsourced will be competing for them. Things like payroll, some IT, call centers, etc are all going more and more offshore to save money. The cost of living in Canada makes Canadian labour uncompetitive in those areas. As those jobs disappear some of the people who used to do them will compete for "local" type jobs.

Higher end labour will still be in demand, and those who have a software engineering degree from Stanford will probably see their earnings rise much faster than inflation.

Don't disagree with that. I think we'll also see the cost of those higher end degrees continue to increase dramatically relative to wages. This will become another source of income disparity. Getting into these schools will also become more difficult, and people will rely on padding their resume with ultra-expensive extra-curricular activities.

[peter12]

Market seems to be steadying a bit here in Vancouver. We lost our bid to a cash offer, but it may have been a good thing as our original offer was probably an over-pay.