Real estate in Calgary - another bubble?

[Hemi-Cuda]

Originally Posted by rohara66

I can see a small correction... 5-10%... but anyone waiting for a "bubble to bust" is going to be waiting for a while a while for a 20, 30, 40% drop. Not gonna happen.

I don't see the listing prices dropping any time soon/ever, but maybe the tens of thousands of dollars over asking price without an inspection might ease off

[opendoor]

If there's a recession and job losses, prices will soften like they do every time. But yeah, I'm skeptical that we're going to see a huge drop or anything. For one, prices have already dropped a fair bit from the peak (as much as in some recessions). And also, unless Western governments want to bankrupt themselves, interest rates probably aren't going to go a lot higher.

[Matata]

The govt has big plans for population growth and the nice places to live in this country are pretty limited. The major cities already have stretched infrastructure and are all trying to steer away from sprawling urban design and into higher density. Affordable housing is coming in the form of large residential buildings, not SFHs. It's not too hard to imagine that in only a few decades SFHs will eventually only be available to the wealthy, on 50+ year mortgages or passed on generationally.

[you&me]

Originally Posted by opendoor

If there's a recession and job losses, prices will soften like they do every time. But yeah, I'm skeptical that we're going to see a huge drop or anything. For one, prices have already dropped a fair bit from the peak (as much as in some recessions). And also, unless Western governments want to bankrupt themselves, interest rates probably aren't going to go a lot higher.

Which peak?

There was a headline in the Herald a few days ago about prices hitting an all time high and then there's some segments of the market that still haven't recovered to their 2013 levels... This is not a one-size-fits-all situation.

[blankall]

Originally Posted by Matata

The govt has big plans for population growth and the nice places to live in this country are pretty limited. The major cities already have stretched infrastructure and are all trying to steer away from sprawling urban design and into higher density. Affordable housing is coming in the form of large residential buildings, not SFHs. It's not too hard to imagine that in only a few decades SFHs will eventually only be available to the wealthy, on 50+ year mortgages or passed on generationally.

It's gotten to the point where all the secondary cities around the big cities are already stretched too thin. Place like Kelowna, Guelph, Hamilton, Kingston, etc... are no longer affordable relative to local wages.

Unless there's a fundamental change in both zoning and land development, things just do not add up. Canada is expected to reach 50 million people in just over 20 years.

The solution is to open up massive swaths of land along the border to residential development or see property prices continue to rise. Even then, the area around the great lakes and through the prairies along the border isn't super desirable.

Alberta does have an opportunity to get ahead of this. They could develop the land between Calgary and the border, running through Lethbridge. That would require some massive amount of new renewable and/or nuclear energy sources though.

[Cecil Terwilliger]

Originally Posted by blankall

It's gotten to the point where all the secondary cities around the big cities are already stretched too thin. Place like Kelowna, Guelph, Hamilton, Kingston, etc... are no longer affordable relative to local wages.

Unless there's a fundamental change in both zoning and land development, things just do not add up. Canada is expected to reach 50 million people in just over 20 years.

The solution is to open up massive swaths of land along the border to residential development or see property prices continue to rise. Even then, the area around the great lakes and through the prairies along the border isn't super desirable.

Alberta does have an opportunity to get ahead of this. They could develop the land between Calgary and the border, running through Lethbridge. That would require some massive amount of new renewable and/or nuclear energy sources though.

Building more houses is completely irrelevant if only the rich can buy them. No amount of supply will bring housing prices in line with wages. Not without collapsing the whole system. Housing needs to be made available to regular people and where the jobs are located (big cities). Wages also need to be increased.

Any approach needs to be multi pronged. Build more, remove all tax breaks for rental property owners and heavily tax anyone owning more than one property, ban foreign ownership, give tax breaks and incentives to first time buyers. Then heavily incentivize multi family developments and restrict endless urban sprawl. Our cities can’t afford that type of infrastructure. And out east they’re eating into valuable farmland. Calgary is unique that we have basically few natural barriers unlike TO, Mtl and Vancouver. But it doesn’t mean we should just build to the horizon, the infrastructure is too expensive to maintain. Not unless we double property taxes on SFHs.

[blankall]

Originally Posted by Cecil Terwilliger

Building more houses is completely irrelevant if only the rich can buy them. No amount of supply will bring housing prices in line with wages. Not without collapsing the whole system. Housing needs to be made available to regular people and where the jobs are located (big cities). Wages also need to be increased.

Any approach needs to be multi pronged. Build more, remove all tax breaks for rental property owners and heavily tax anyone owning more than one property, ban foreign ownership, give tax breaks and incentives to first time buyers. Then heavily incentivize multi family developments and restrict endless urban sprawl. Our cities can’t afford that type of infrastructure. And out east they’re eating into valuable farmland. Calgary is unique that we have basically few natural barriers unlike TO, Mtl and Vancouver. But it doesn’t mean we should just build to the horizon, the infrastructure is too expensive to maintain. Not unless we double property taxes on SFHs.

I don't disagree with a lot of what your are stating, but we do need more supply.

Also, increasing wages without increasing supply is only going to ramp up pricing. We're in a situation, where due to the shortage of available units, people are just throwing stupid amounts of money at housing, both for rental and purchase. Increasing wages is only going to further drive lower income people out and put that money into the pockets of the landlords and investors.

As for farmland, Canadians want to hold onto this dream of having farmland that's also close to major cities. That's simply not sustainable with the kind of growth we're seeing. The farmland is going to have to expand further out from the cities.

I'm a huge proponent of increased density and moving away from the model of single detached housing. However, there are so many people coming into Canada, even that won't be enough.

[Fighting Banana Slug]

Originally Posted by Cecil Terwilliger

Building more houses is completely irrelevant if only the rich can buy them. No amount of supply will bring housing prices in line with wages. Not without collapsing the whole system. Housing needs to be made available to regular people and where the jobs are located (big cities). Wages also need to be increased.

Any approach needs to be multi pronged. Build more, remove all tax breaks for rental property owners and heavily tax anyone owning more than one property, ban foreign ownership, give tax breaks and incentives to first time buyers. Then heavily incentivize multi family developments and restrict endless urban sprawl. Our cities can’t afford that type of infrastructure. And out east they’re eating into valuable farmland. Calgary is unique that we have basically few natural barriers unlike TO, Mtl and Vancouver. But it doesn’t mean we should just build to the horizon, the infrastructure is too expensive to maintain. Not unless we double property taxes on SFHs.

Curious as to what you mean by tax breaks for rental property?

[81MC]

Originally Posted by Fighting Banana Slug

Curious as to what you mean by tax breaks for rental property?

I’m assuming he’s referring to the long list of things rental property owners can claim:
Advertising
Insurance
Interest and bank charges
Office expenses
Professional fees (includes legal and accounting fees)
Management and administration fees
Repairs and maintenance
Salaries, wages, and benefits (including employer's contributions)
Property taxes
Travel
Utilities
Motor vehicle expenses
Other rental expenses
Prepaid expenses

Feels like a bit of catch 22 tbh. You absolutely need rentals, because no matter how low you want the barrier to entry into ownership to be, you will always be competing with people with more money. Like the 20 year old university students who happen to have their name in the ownership of multimillion dollar homes.

But, I really feel buying real estate just to make profit through rental needs to be stopped. Though I don’t think that’s a reality in a globalized world. ‘Foreign ownership’ is the easiest thing to get around so it would be making it harder for upper-middle class folks to make money while the wealthy have carte-blanche on property

[blankall]

Originally Posted by 81MC

I’m assuming he’s referring to the long list of things rental property owners can claim:
Advertising
Insurance
Interest and bank charges
Office expenses
Professional fees (includes legal and accounting fees)
Management and administration fees
Repairs and maintenance
Salaries, wages, and benefits (including employer's contributions)
Property taxes
Travel
Utilities
Motor vehicle expenses
Other rental expenses
Prepaid expenses

Feels like a bit of catch 22 tbh. You absolutely need rentals, because no matter how low you want the barrier to entry into ownership to be, you will always be competing with people with more money. Like the 20 year old university students who happen to have their name in the ownership of multimillion dollar homes.

But, I really feel buying real estate just to make profit through rental needs to be stopped. Though I don’t think that’s a reality in a globalized world. ‘Foreign ownership’ is the easiest thing to get around so it would be making it harder for upper-middle class folks to make money while the wealthy have carte-blanche on property

We should more heavily tax speculators for sure. For example people who've never lived in a property and just flip it, should be taxed at a high level.

However, as you say we do need rental stock. If someone chooses to use a rental property as a long term investment, I don't see an issue with that. Renting is far from merely passive income. It requires a fair bit of work and risk. It also creates a rental unit for a renter. If that person happens to make money over time, I don't see what the issue is.

Once again the issue is supply. The only reason people are making big profits off secondary investment units is because there isn't enough supply.

[Yoho]

Originally Posted by blankall

We should more heavily tax speculators for sure. For example people who've never lived in a property and just flip it, should be taxed at a high level.

However, as you say we do need rental stock. If someone chooses to use a rental property as a long term investment, I don't see an issue with that. Renting is far from merely passive income. It requires a fair bit of work and risk. It also creates a rental unit for a renter. If that person happens to make money over time, I don't see what the issue is.

Once again the issue is supply. The only reason people are making big profits off secondary investment units is because there isn't enough supply.

I don’t know if investors are making “big profits” with these interest rates and cost of housing.

[Fighting Banana Slug]

Originally Posted by 81MC

I’m assuming he’s referring to the long list of things rental property owners can claim:
Advertising
Insurance
Interest and bank charges
Office expenses
Professional fees (includes legal and accounting fees)
Management and administration fees
Repairs and maintenance
Salaries, wages, and benefits (including employer's contributions)
Property taxes
Travel
Utilities
Motor vehicle expenses
Other rental expenses
Prepaid expenses

Feels like a bit of catch 22 tbh. You absolutely need rentals, because no matter how low you want the barrier to entry into ownership to be, you will always be competing with people with more money. Like the 20 year old university students who happen to have their name in the ownership of multimillion dollar homes.

But, I really feel buying real estate just to make profit through rental needs to be stopped. Though I don’t think that’s a reality in a globalized world. ‘Foreign ownership’ is the easiest thing to get around so it would be making it harder for upper-middle class folks to make money while the wealthy have carte-blanche on property

I assume the same, but deducting expenses isn't tax break: all businesses do that ("It's a write-off, Jerry!").

I understand the complaint of taking supply off the market for short-term Airbnb type scenarios, but I don't really see the issue as a tax one, unless Cecil has other ideas.

[shermanator]

Originally Posted by shermanator

I live in Altadore. My elderly neighbour put her house up for sale in the lot next to ours. It is one of only two lots on our block that aren't newer infills and the only one that is a full size 50 * 120 lot. It's listed for $900,000 and is being marketed as a tear down.

The last few days, the number of ######bags in Tesla's that have rolled up to check out the lot is higher than usual.

Update: Honest Door says this sold Friday for $150,000 over asking. Insane.

[nik-]

Altadore is a nice area, but over a million for a teardown is insane. They're going to be in for 1.8 by the time they're done.

[blankall]

Originally Posted by Yoho

I don’t know if investors are making “big profits” with these interest rates and cost of housing.

I know multiple investors who paid cash for houses in the past year. They won't make money this year, but they will in the next ten. Housing prices were depressed in Vancouver for the last year, particularly in the range above $2.5 million.

If I had an extra $3 million lying around, I'm fairly confident I could make myself richer.

Meanwhile, anyone trying to enter the market with a mortgage just saw their affordability dwindle.... It is the way. The Canadian economy truly is between a rock and a hard place.

[greyshep]

Originally Posted by shermanator

Update: Honest Door says this sold Friday for $150,000 over asking. Insane.

Originally Posted by nik-

Altadore is a nice area, but over a million for a teardown is insane. They're going to be in for 1.8 by the time they're done.

Hey now! According to some on here we are the dolts that dont recognize the "value" here. Surely they will make money hand over fist with this prudent investment.

Also 800k for the teardown/rebuild wont get them much, they will be in for much more than 1.8 when all is said and done.

[chemgear]

Originally Posted by chemgear

Time to raise it to an even million.

Originally Posted by shermanator

Update: Honest Door says this sold Friday for $150,000 over asking. Insane.

Huh, I was too low.

[81MC]

I figured out what I hate about in-fills (well, beyond the atrociously redundant design, overwhelming streetfeel, and the ######y boring owners)…they hack down all the hood trees and plants to make way for their stupidly large house. There should be protections in place for trees man.

[Hemi-Cuda]

Originally Posted by 81MC

I figured out what I hate about in-fills (well, beyond the atrociously redundant design, overwhelming streetfeel, and the ######y boring owners)…they hack down all the hood trees and plants to make way for their stupidly large house. There should be protections in place for trees man.

I really don't blame those who opt for a larger house vs a larger yard. In Calgary you get to enjoy your backyard for 5 months if you're lucky, might as well put a preference on the house that you'll be spending the other 7-8 months of the year in

[Knut]

Originally Posted by 81MC

I figured out what I hate about in-fills (well, beyond the atrociously redundant design, overwhelming streetfeel, and the ######y boring owners)…they hack down all the hood trees and plants to make way for their stupidly large house. There should be protections in place for trees man.

You should see the infill they put in at 120th Ave in Lake Bonavista.

https://www.realtor.ca/real-estate/2...lake-bonavista

It does not fit the neighborhood whatsoever. I am not even sure how it got approved.