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Old 01-26-2022, 12:51 PM   #1081
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It's more babyboomers donating than Gen Xers. Gen Xers didn't have nearly the same economic opportunities that Babyboomers did. The dividing wealth gap has been a slow process. The Gen Xers are somewhere between Babyboomers and Millennials, in terms of their wealth.

But yes, the unfortunate reality is that if you want your children to do well, you will likely have to pay more for it than previous generations did. And people who don't have the luxury of having parents to support them more financially, are simply going to have a much tougher time.
agree with everything you are saying (and Jason14h too)


anyways our family is ahead of most and very fortunate, no doubt, but I do think there could be some reckoning coming on the front of what (post-boomer*) parents can provide (unless/until maybe the silent generation/early boomer grandparents die- sadly)


*and look I totally get it, there is some lazy shorthand to generational generalizations, and its not like all the boomers are bathing in wealth either

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Old 01-26-2022, 12:55 PM   #1082
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A major reason that Boomers have some money is that many of them have come into inheritance. Their parents who's wealth was somewhat influenced by them being able to sell their houses to their kids for big gains and at high interest rates have aged out of the population and were able to return some of that back to the Boomer children.

So a lot of those Boomers likely didn't expect to do this, but came into money they didn't previously have.

Even a poor income earner like myself has a financial plan to get to retirement and live it out based on whatever money I could generate for myself. Even though there likely will be some form of inheritance that lands at some point in the future. If that does, it will be like found money...won't want to spend it foolishly, but probably can be convinced to think that helping my kids get started with a place to live isn't a foolish way to spend it...at least not as foolishly as buying a new Porsche.
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Old 01-26-2022, 01:05 PM   #1083
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The idea of a bubble "popping" in Calgary seems a little silly at this point.

We're a few months into the first signs of life in the market, and some people are already forgetting the fact that the entire Calgary market has essentially been flat for a decade...

That said, Calgary is the most affordable big market in Canada relative to incomes. Regardless of factors that would contribute to a bubble popping in other markets, Calgary should fare relatively well.
http://34.66.255.77/index.php/6-metros/

Up a whopping 7% or so in the last 15 years. One of those things (two including Edmonton) is not like the others.

Side note, does anyone remember that Plunge-O-Meter guy from 2006/07? Here we are 15 years later and his "price target" of homes returning to sub $300,000 never did materialize.
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Old 01-26-2022, 01:15 PM   #1084
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Interest rates have also been at historical lows for the last 14 years. If they go up (which they basically have to at this point), housing prices are most likely going to respond. A 1M mortgage at 2.5% is the same payment as a $770K mortgage at 5%. And even 5% is low historically. At 6-6.5% (basically where were were pre-2008), that payment gets you about $650-700K.

I imagine governments will do everything they can to not raise the rates that much (if only for their own debt obligations), but then we'll likely just see higher inflation which also devalues the asset.
Yep. Governments will either raise interest rates or let inflation run rampant.
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Old 01-26-2022, 01:16 PM   #1085
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http://34.66.255.77/index.php/6-metros/

Up a whopping 7% or so in the last 15 years. One of those things (two including Edmonton) is not like the others.

Side note, does anyone remember that Plunge-O-Meter guy from 2006/07? Here we are 15 years later and his "price target" of homes returning to sub $300,000 never did materialize.
That's a great link for anyone wondering where a lot of the money flowing into Calgary is coming from.

In July of 07, the avg Calgary price was 10% above Toronto; now Toronto is ~3x.

At the same point, Vancouver was only 20% higher than Calgary; now the avg home in Vancouver is nearly 4x the average in Calgary.

A $500k mortgage in Calgary in July of 07 would result in essentially zero net gain outside of the portion of payments going principle. The same mortgage holder in Vancouver and Toronto would each have over a million dollars in equity built up... And that's average. In two cities with millions of people... TRILLIONS of dollars of equity sloshing around.

Edit - Even someone in Ottawa has gone from their home being 40% less than the average in Calgary to having built up nearly enough equity to pay cash for the average Calgary home today.

Last edited by you&me; 01-26-2022 at 01:27 PM.
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Old 01-26-2022, 01:17 PM   #1086
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Yep. Governments will either raise interest rates or let inflation run rampant.
At this point raising interest rates isn’t going to affect inflation. Probably why they didn’t raise it today. At least not yet.
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Old 01-26-2022, 01:20 PM   #1087
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Are people with children overly concerned with walkability, entertainment, culture, and restaurants? I have a 2.5 year old and basically none of those rate highly on my pyramid of needs.
Yes. I love cars, but have found myself inherently happier walking for basic errands. I loathe when I need to get something that isn't in walking distance and have to pile the kids in the car.

Every weekend is some kind of walking adventure with the kids. Coffees & treats, the Zoo, Central Library, St. Patricks Island, River bike rides starting from home, walking to toboggan or skate, grabbing some takeout for a picnic, etc.

I'm infinitely happier living in a smaller house but spending so much time outside of it with my family. Agreed with everyone else on walking to school/daycare as well.
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Old 01-26-2022, 01:29 PM   #1088
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am I the only (GenX) one who is soon to be in the life stage where I'm supposed to be the mythical donor parent, who is wondering where the 200k per child is going to come from?
I think the era of living inter-generational wealth transfer will be short-lived. The Silent Generation and Boomers were able to get on the housing ladder younger and pay off mortgages, giving them a decade or more in prime earning years to build up a nest egg outside their home. Many Gen Xers and Millennials won’t have homes paid off until retirement, and will need to live off their own inheritances in old age. They won’t he able to pass property on to their own children until they’re dead. Which, given life expectancies, won’t be in the hands of those children until they’re middle-aged themselves.
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Old 01-26-2022, 01:36 PM   #1089
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That's a great link for anyone wondering where a lot of the money flowing into Calgary is coming from.

In July of 07, the avg Calgary price was 10% above Toronto; now Toronto is ~3x.

At the same point, Vancouver was only 20% higher than Calgary; now the avg home in Vancouver is nearly 4x the average in Calgary.

A $500k mortgage in Calgary in July of 07 would result in essentially zero net gain outside of the portion of payments going principle. The same mortgage holder in Vancouver and Toronto would each have over a million dollars in equity built up... And that's average. In two cities with millions of people... TRILLIONS of dollars of equity sloshing around.

Edit - Even someone in Ottawa has gone from their home being 40% less than the average in Calgary to having built up nearly enough equity to pay cash for the average Calgary home today.
So just because other Canadian cities are worse than Calgary, it means we're heading in that direction as well?

I don't see it.

Canadian home prices are way higher than rhe OECD average. At some point, it starts to hurt economic activity with all our money tied up in real estate.
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Old 01-26-2022, 02:05 PM   #1090
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So just because other Canadian cities are worse than Calgary, it means we're heading in that direction as well?

I don't see it.

Canadian home prices are way higher than rhe OECD average. At some point, it starts to hurt economic activity with all our money tied up in real estate.
But the data already shows that the housing markets of Vancouver, Toronto, and Calgary aren't actually linked. So major "bubble poppings" in those jurisdictions probably won't have an overall large effect on this market. Central bank just opted to keep a low interest rate though, so I think (as i have previously predicted here) we are taking the inflationary route to try and drive down some of this debt. Punishes all the savers out there, but our government was not a saver. Without an increase to interest rates, I am not sure what mechanism will cool down any housing market in Canada.
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Old 01-26-2022, 02:09 PM   #1091
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But the data already shows that the housing markets of Vancouver, Toronto, and Calgary aren't actually linked. So major "bubble poppings" in those jurisdictions probably won't have an overall large effect on this market. Central bank just opted to keep a low interest rate though, so I think (as i have previously predicted here) we are taking the inflationary route to try and drive down some of this debt. Punishes all the savers out there, but our government was not a saver. Without an increase to interest rates, I am not sure what mechanism will cool down any housing market in Canada.
Calgary also had somewhat of a slow pop, post the last oil boom. There was a point where everything in Calgary was ridiculously priced. People working in fast food restaurants were getting paid several times the national average. Then the boom ended and some things dropped in price dramatically, while others just kind of lingered or dropped slowly.
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Old 01-26-2022, 02:10 PM   #1092
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So just because other Canadian cities are worse than Calgary, it means we're heading in that direction as well?

I don't see it.

Canadian home prices are way higher than rhe OECD average. At some point, it starts to hurt economic activity with all our money tied up in real estate.
No. I said nothing at all like that and frankly don't see Calgary heading that way either.

You specifically asked "Is there a reason for the housing market to be this hot though?" and the link kevman posted illustrates a big part of the reason the Calgary market is (finally) picking up is the enormous amount of equity that's been built up by millions of Canadians over the past 15 years...

Let's be honest, the majority of those paper millionaires aren't exactly astute investors and were simply along for the ride, but I'm sure a good number of them looking at Calgary real estate now are expecting lightning to strike twice.
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Old 01-26-2022, 02:15 PM   #1093
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So just because other Canadian cities are worse than Calgary, it means we're heading in that direction as well?

I don't see it.

Canadian home prices are way higher than rhe OECD average. At some point, it starts to hurt economic activity with all our money tied up in real estate.
I don't see Calgary's current housing market being in any sort of bubble, to be honest. Right now, house prices relative to average income in Calgary is still pretty good. Could there be a slight correction to curb the recent spike? Sure, but I think you'll be sorely disappointed if you're waiting for some sort of bubble to burst before diving into the market.
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Old 01-26-2022, 02:20 PM   #1094
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Oil prices are up very meaningfully as well, which is good for Alberta real estate and bad for real estate basically everywhere else in Canada.
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Old 01-26-2022, 02:21 PM   #1095
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But the data already shows that the housing markets of Vancouver, Toronto, and Calgary aren't actually linked. So major "bubble poppings" in those jurisdictions probably won't have an overall large effect on this market. Central bank just opted to keep a low interest rate though, so I think (as i have previously predicted here) we are taking the inflationary route to try and drive down some of this debt. Punishes all the savers out there, but our government was not a saver. Without an increase to interest rates, I am not sure what mechanism will cool down any housing market in Canada.
And this is where the housing market can serve as a good analogy to the larger economic situation the Government of Canada has put us in.

The government has essentially taken out an enormous mortgage (national debt), except they have some measure of control that your typical homeowner doesn't; namely controlling interest rates (cost of debt servicing) or controlling the relative size of the debt (inflation). Can you imagine if the typical homeowner could control their mortgage rate, or the relative market value of their home? That's essentially what the government is doing, except since they can't really lower rates anymore, they're going to make the debt less bad by making everything else more expensive... The person taking out a million dollar mortgage in Toronto back in '07 might have seemed a little nutty, a little reckless; now it wouldn't raise any eyebrows... That's the path the government is looking to follow.
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Old 01-26-2022, 02:24 PM   #1096
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I don't see Calgary's current housing market being in any sort of bubble, to be honest. Right now, house prices relative to average income in Calgary is still pretty good. Could there be a slight correction to curb the recent spike? Sure, but I think you'll be sorely disappointed if you're waiting for some sort of bubble to burst before diving into the market.
++

It has been stated before - But to reinforce - Calgary housing is the most affordable city in North America compared to income.

So if you are looking to buy ANYWHERE in NA, based on value investing, Calgary should be the pick.

And if a lot of people start thinking that way, prices will get driven up, like in every other major city in the country except Calgary and Edmonton.

We already survived the worst with low Oil, net migration, crazy job loss, and a pandemic. What are people expecting to keep going wrong to drive prices lower?

Interest rates? Well every other city will literally be hit harder then Calgary, as we are the MOST AFFORDABLE already.

If Calgary house priced drop it will be because the rest of the country has completely imploded housing wise - And Calgary will see the lowest % drop I can almost guarantee.

It doesnt mean you should run out and invest in Calgary housing , the entire Canadian market could easily collapse dragging Calgary down a bit with it/stagnanting prices for another decade, but there just isnt market room for a large price decrease unless (somehow) another large % of people were to loose their jobs - And if a pandemic and oil crises didnt already max that out I am not sure what could!
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Old 01-26-2022, 02:25 PM   #1097
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I'm still not really bullish on the Calgary market. The homes around me are still on the market for many months / relisted repeatedly; the homes I watch as a next move are the same, so from where I'm at some parts of the Calgary market are hot, but not the part I'm (interested) in.

Generally speaking, I think it comes down to bazillions of new dollars in the economy, looking for a place to be spent, combined with still-historically low interest rates... Eventually some of that excess is bound to spill over into a 1mm+ person city in a G7 country (even if it's shocking that it took this long)... Anecdotally, it seems a lot of that spill over is coming from other markets where homeowners can take out a small portion of their home equity and pay cash for a home in said 1mm+ person city in a G7 country... I would not want to be a landlord in Calgary, certainly not if I'm planning on positive cashflow in the near-term.

And if you think Calgary real estate is "hot", you should take a look at literally any other asset class...
Where is around you?
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Old 01-26-2022, 02:43 PM   #1098
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Where is around you?
West side... Some stuff is selling, but lots that have been on the market 40, 60, 90 days and/or relisted.
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Old 01-26-2022, 02:52 PM   #1099
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I don't see Calgary's current housing market being in any sort of bubble, to be honest. Right now, house prices relative to average income in Calgary is still pretty good. Could there be a slight correction to curb the recent spike? Sure, but I think you'll be sorely disappointed if you're waiting for some sort of bubble to burst before diving into the market.
A $600k place with 20% down at a 2.49% rate has a monthly payment of $1,891. An $800k place has a payment of $2,521. Obviously, you have taxes and other expenses on top.

However, as long as the rates along this kind of borrowing, prices will stay somewhat high. There is always someone willing to spend what they can. If it only costs about $300/month to borrow another $100k, and that's what gets you the place you really want, many people will pay it. $800k sounds like an astronomical amount of money, but when you break down payments, for a two income house, it's really not that much compared to what most people are paying for rent in most parts of North America.
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Old 01-26-2022, 02:54 PM   #1100
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People working in fast food restaurants were getting paid several times the national average.
So, lets go with the definition of several and use the minimum amount of 3x. You're claiming that people were making approximately $40/hour in Calgary at fast food restaurants? Really? The most I have seen is $5/hour over minimum wage to start in Calgary for fast food restaurants. If you have any information I'd like to apply at this mythical fast food restaurant where I can earn $45/hour. I would bet there are thousands of people in Calgary who would quit their jobs without notice if they could make that kind of money.
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