Real estate in Calgary - another bubble?

[blankall]

Originally Posted by 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.

Condo sales in Vancouver remain depressed due to low occupancy in the downtown core and the insurance crunch. Personally, I think it's a good time to buy an entry level condo. But obviously, who knows what will happen in the future.

The insurance crunch is an issue across the board in Canada. Most stratas have starting upping their deductibles massively. There's only a few insurers actually providing enough insurance, and the ones that have have upped their rates substantially.

We won't know how the real condo market stands until after Covid restrictions are lifted and international occupancy increases again.

[stampsx2]

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.

I’ve seen this as well. Just a walk through home depot and a single 2x4 is now $7.50. It was $3 a year ago. I’m assuming it’s because everyone’s doing reno’s now. You have to wonder if new home prices will go up because of increased materials costs?

[CorsiHockeyLeague]

The answer is yes. I got a quote from a builder last year for materials that was about 130k. Now it's closer to 200.

[I-Hate-Hulse]

Originally Posted by blankall

The insurance crunch is an issue across the board in Canada. Most stratas have starting upping their deductibles massively. There's only a few insurers actually providing enough insurance, and the ones that have have upped their rates substantially.

Quoted for emphasis. This is a serious existential threat to the apartment condo as a viable form of housing. Rising premiums (and special assessments) will make the economic decision to pass on condos in favor of detached housing. (Townhouses will fare better though)

Here's a good article on the problem:

https://www.canadianunderwriter.ca/f...verage-crisis/

[SportsJunky]

Yeah, with raw material costs going up across so many industries, the cost of a home will definitely go up. Lumber alone has added tens of thousands of dollars to the cost of a house and the builders can't/won't absorb that. I talked to the GM for a large Alberta homebuilder yesterday about this. He says that most builders have sold off the bulk of their houses in inventory and going forward they will now have to pass on all these cost increases from the various suppliers.

[Sliver]

Originally Posted by CorsiHockeyLeague

The answer is yes. I got a quote from a builder last year for materials that was about 130k. Now it's closer to 200.

Holy crap, man. That's nucking futs.

I may have lucked out. I take possession of my new build in three weeks. Looks like we squeaked that in under the wire.

[Fuzz]

Originally Posted by Sliver

Holy crap, man. That's nucking futs.

I may have lucked out. I take possession of my new build in three weeks. Looks like we squeaked that in under the wire.

Are you moving out of Shangri-La???

[Sliver]

Originally Posted by Fuzz

Are you moving out of Shangri-La???

Never. Gonna be neighbours with your Dad on the weekends.

[Fuzz]

Originally Posted by Sliver

Never. Gonna be neighbours with your Dad on the weekends.

Oh, one of YOU! Just don't drive the highway like an idiot and we can maybe get along. At least I know you won't have a dog annoying me. I'll see if I can send a bear or 2 your way, though.

[topfiverecords]

Originally Posted by stampsx2

I’ve seen this as well. Just a walk through home depot and a single 2x4 is now $7.50. It was $3 a year ago. I’m assuming it’s because everyone’s doing reno’s now. You have to wonder if new home prices will go up because of increased materials costs?

Yes they have and will continue to. Just discussed this with two builders this morning. HVAC prices are rising due to metal pricing going up. Shortages across the board. Lumber is 3X normal, mostly due to low supply.

[bizaro86]

Originally Posted by I-Hate-Hulse

Quoted for emphasis. This is a serious existential threat to the apartment condo as a viable form of housing. Rising premiums (and special assessments) will make the economic decision to pass on condos in favor of detached housing. (Townhouses will fare better though)

Here's a good article on the problem:

https://www.canadianunderwriter.ca/f...verage-crisis/

I'm not sure if that is existential. I do think it will reduce the advantage on insurance costs condos previously had.

I'm on the board of a 38 unit building. We just renewed our policy for ~$31k, which is a big increase compared to a couple of years ago. But thats still only $815 per unit. Plus I pay a bit over $200/year personally for contents and deductible buy-down, so the total is a shade over $1000/unit.

My home insurance on my single family home is about twice as much iirc, with no claims in the 12 years I've owned it. My house is probably about 2x as big and 2x as valuable as the condos in question. So on most reasonable comparisons the condo insurance is still cheaper. It used to be a lot cheaper, as my house has gone up less than the condo.

Anyway, I agree that its a big problem, and the higher fees that it has caused have hurt condo values recently. But recent increases have been less (that was 5% this year after 30% last year) which helps as well.

[stampsx2]

Anyone know if the price of basement development has gone up because of the increased material costs lately. I had one person tell me it’ll be like $54,000 for a 700ft basement which sounds ridiculous if you ask me. The city only considers a developed basement worth $30,000- $40,000 depending on the size of the basement.

[Table 5]

I wonder if it makes sense to wait (perhaps by next year?) to do major renos right now till the material supply issues works themselves out...or is this more or less the new normal we can expect? Even if prices go back down, something tells me they won't go all the way back.

[Leondros]

Originally Posted by Table 5

I wonder if it makes sense to wait (perhaps by next year?) to do major renos right now till the material supply issues works themselves out...or is this more or less the new normal we can expect? Even if prices go back down, something tells me they won't go all the way back.

Its an interesting question. We are doing a pretty large project - and you would be surprised what it is... We are building a garage but the amount of concrete rivals that of 1 level of a small condo parkade as we are building the garage under our backyard (tough to explain). Does anyone happen to know whether concrete prices are increasing as well? I would assume from a supply chain perspective they should be relatively fine?

[bizaro86]

Originally Posted by Table 5

I wonder if it makes sense to wait (perhaps by next year?) to do major renos right now till the material supply issues works themselves out...or is this more or less the new normal we can expect? Even if prices go back down, something tells me they won't go all the way back.

If I was doing a discretionary project where wood was a major part of the cost (eg fence or deck) I'd definitely wait. The price will probably stay higher than it was last year for a long time, but it could still go down tons from here and that would be true.

The mills are all ramping up, so supply will be getting added.

[topfiverecords]

Originally Posted by Leondros

Its an interesting question. We are doing a pretty large project - and you would be surprised what it is... We are building a garage but the amount of concrete rivals that of 1 level of a small condo parkade as we are building the garage under our backyard (tough to explain). Does anyone happen to know whether concrete prices are increasing as well? I would assume from a supply chain perspective they should be relatively fine?

A rising tide lifts all boats...

[I-Hate-Hulse]

Originally Posted by bizaro86

I'm not sure if that is existential. I do think it will reduce the advantage on insurance costs condos previously had.

I'm on the board of a 38 unit building. We just renewed our policy for ~$31k, which is a big increase compared to a couple of years ago. But thats still only $815 per unit. Plus I pay a bit over $200/year personally for contents and deductible buy-down, so the total is a shade over $1000/unit.

Ahh... but your condo sounds like it has a clean claims history. Put 2-3 medium sized claims and that will sky rocket, if you can get coverage at all.

One of my old condos in Victoria Park (flood affected and had a few water leak claims since) struggles to get insurance leading to sky-high condo fees and deductibles. Economically, it's a utter disaster for owners, especially at current values.

The worst part of it all is how powerless you are in an apartment style condo. Each of those 38 people in your complex can put your complex into economic ruin. Sadly, as a Board member you really see how the lowest common denominator surfaces and how little you can prevent it.

[Winsor_Pilates]

Originally Posted by blankall

Condo sales in Vancouver remain depressed due to low occupancy in the downtown core and the insurance crunch. Personally, I think it's a good time to buy an entry level condo. But obviously, who knows what will happen in the future.

The insurance crunch is an issue across the board in Canada. Most stratas have starting upping their deductibles massively. There's only a few insurers actually providing enough insurance, and the ones that have have upped their rates substantially.

We won't know how the real condo market stands until after Covid restrictions are lifted and international occupancy increases again.

The BC government announced they'll restrict Best Terms Pricing from insurers last December.
It hasn't fully been implemented yet but that should help the insurance premium costs.

Should add that condo sales are definitely not depressed right now. Plenty of multiple offers going on and 2 notable high rise presales just sold out the entire towers in 4-5 days.

[blankall]

Originally Posted by Winsor_Pilates

The BC government announced they'll restrict Best Terms Pricing from insurers last December.
It hasn't fully been implemented yet but that should help the insurance premium costs.

Should add that condo sales are definitely not depressed right now. Plenty of multiple offers going on and 2 notable high rise presales just sold out the entire towers in 4-5 days.

The condo real estate market in Vancouver is turning. Like I said earlier, from what I observed during my purchase was that houses got hit by massive demand in early January and since then the demand has been shifting down to towhouses, multi-bed condos, 2 bed condos, to single bed condos, as people get priced out of their more idea option.

There's still a lot of places sitting, in downtown especially. I own a unit downtown, and there are 8 units sitting. Typically units do not sit at all in my building. There's definitely a lot more available with condos, generally. The prices of condos, especially downtown, are not keeping pace with price of other inventory.

I think the "multiple offers" thing is a bit of a game. It seems like the real estate agents have just started purposely underpricing listings to encourage multiple offers. This a practice ubiquitous in Toronto and somewhat common in Vancouver in the past. Now, it's become the norm in Vancouver.

[blankall]

Originally Posted by I-Hate-Hulse

Ahh... but your condo sounds like it has a clean claims history. Put 2-3 medium sized claims and that will sky rocket, if you can get coverage at all.

One of my old condos in Victoria Park (flood affected and had a few water leak claims since) struggles to get insurance leading to sky-high condo fees and deductibles. Economically, it's a utter disaster for owners, especially at current values.

The worst part of it all is how powerless you are in an apartment style condo. Each of those 38 people in your complex can put your complex into economic ruin. Sadly, as a Board member you really see how the lowest common denominator surfaces and how little you can prevent it.

The water deductible in my building went up to $1,000,000. Only found one insurer that will insure the condo. Sure enough, as soon as I got the new insurance, one of the pipes in the wall burst and flooded my unit. Now my insurance has doubled.