The exodus begins

[photon]

And we're definately net gaining people... Alberta added the population of Red Deer last year. Net. That's insane.

[SaskaBushFire]

Saskatoon is under going a similar boom that Calgary has experienced over the last decade or so. Our market for houses is sky rocketing, the average price was somewhere around 175ish about a year or so ago, we are up to 250 now and projected 350 by next year. Bidding wars over the crappiest little houses, going in under 24 hours, going before they even hit the market. It is nuts, and sucks because I am just getting into a position to buy a house. Luckily I have a Dad with 2 houses in one of the nicest areas of the city, so I am bound to get one of those 2, but for the here and now I will be stuck in a Condo (which is also over priced) or a crap box.

The problem with SK is that the wages are not riseing as fast as the living costs. This is something that needs to be changed very soon. All of these ex Albertans coming over and buying houses with cash sure has screwed up the market

[Rhettzky]

Originally Posted by SaskaBushFire

All of these ex Albertans coming over and buying houses with cash sure has screwed up the market

Most of these Ex-Albertans are former Ex-Saskatoonians anyways.

[Muta]

Well, I bought a condo just off of downtown earlier this month in a new development, and the only way I could have done it was going in it with my brother. Otherwise, someone my age could not have afforded such a place. And this is with me pretty much dedicating all my earnings to paying for this place.

Lucky for me, I guess, we're gonna live in it for 13-14 months, then sell it or rent it out. Since I'm not in a relationship and barely have any possessions, I'm just gonna take my share of the equity and screw off to a different (cheaper) country if we do, indeed, sell it. This housing market is ridiculous, and if it keeps up I'm not sure how anybody just entering the market will ever be able to afford more than a toolshed coming out of university!

[SaskaBushFire]

Originally Posted by Rhettzky

Most of these Ex-Albertans are former Ex-Saskatoonians anyways.

I guess my joke was over your head a bit... one of the main reasons that housing prices got so high in Calgary was the influx of people from other provinces, lots from Saskatchewan, bidding the crap out of each other and making junk look like gold on the market. Now those people are once again screwing over the market

[urban1]

Calgary is nice but who would want to move here and pay $400,000 to live in Forest Lawn or $500,000 in McKenzie Lake. If youre coming from elsewhere on the Prairies, the East coast, or eastern BC, how is that at all attractive? What motivation do you have to move here? 3 years ago Calgary was attractive. Higher incomes and lower taxes combined with housing prices comparable to these other regions I mentioned above made Calgary a great choice and one where you would end up ahead.

[McG]

speaking personally, every time i leave alberta i always come back...and it is always back to calgary.

my company transferred me to st albert from calgary 2 years ago and its great! i have lived around the world and there is no place in canada or elsewhere i would rather live. its alberta and given a choice...its calgary. but right now its st. albert and its great for my kids.

i guess its a matter of choice.

one thing that i don't get though is how young people starting out are expected to make it. its crazy. but in an up market...managed properly people make money and build equity.

i don't think there is any exodus. i don't think that the housing market is going down. and i don't think that there is any shortage of people willing to move to calgary.

as far as the manhattan per square foot for AAA office space goes...that would be the reason for the 4 new office towers going in...and the new encana tower being built in the fall.

toronto and vancouver have all had their price increases for various reasons...and i for one think its great that alberta is booming again.

[Dynamic]

As a 21 year old that makes a decent buck in booming Alberta, it means nothing if you can't buy a home. I can't afford a decent house even in Slave Lake which is pretty sad. Luckily my grandparents are giving me some land and I have found a house that the owners are basically giving me to move it off their land.

When I got a house inspector to come look at it he said that the house I am buying for 5k on a property in Edmonton would easily go for 300k. Its still gonna cost 50k plus for me to get everything set up but what about everybody else???

[ricoFlame]

real estate prices are out of control in virtually every community located along the highway 2 corridor, this is becoming more than just a calgary and urban issue. I'm thinking about heading out to the middle of BF nowhere in order not have to live in some craphole or a tiny POS, or having to pay ridiculously high rent. whatev, these things have a way of working themselfes out i guess.

[LockedOut]

Is anyone able to answer this? What kind of annual income would an individual or a couple need to be making, minimum or recommended, to afford an average priced home in Calgary, which I believe is around $460,000, on a 25 year mortgage? 40 year mortgage?

[Thunderball]

Originally Posted by LockedOut

Is anyone able to answer this? What kind of annual income would an individual or a couple need to be making, minimum or recommended, to afford an average priced home in Calgary, which I believe is around $460,000, on a 25 year mortgage? 40 year mortgage?

Just fooling around on the MLS.ca website and going on a 25 year mortgage... I'd say at least $72,000 a year or $6,000 a month. That's assuming a monthly mortgage payment of around $2,700/mth. That is an average of $3,000/month per person, or two people making $36,000/year after taxes.

It doesn't leave a huge threshold for savings either. More comfortably would be about $96,000/yr. - $8,000 a month, or an average of $48,000/yr - $4000/month per person.

Its not a real educated answer, but just a little fooling around with basic math. I'm also assuming one already has the downpayment monies somehow.

[Sylvanfan]

Originally Posted by LockedOut

Is anyone able to answer this? What kind of annual income would an individual or a couple need to be making, minimum or recommended, to afford an average priced home in Calgary, which I believe is around $460,000, on a 25 year mortgage? 40 year mortgage?

Depends on what you have to put down. If you have 5% than you'd need to be making about 100 as a couple for a 25 year mortgage right now. The thing thats hurting most people is the down payment for a 460k house as 5% of that is 23 g's.

But the question people have to ask themselves is do you need to start out in an average house? It's called starting because you have to get in and build your way up. Get the 14500 together for a 250k condo, use that help save up money. If the market continues to go up and your condo is worth 280k a year later, suddenly you have 30k plus the 14 k you put in and you can upgrade. It's not the mortgage payment people can't afford, it's the down payment. But a lot of people fail to see that, even if the market goes down, the first thing to go generally is middle range to upper mid housing. So if your in on the low end of the scale you generally won't take a bath.

[urban1]

Its not just the down payment people cant afford.

Not everyone is a professional working in oil and gas.

Take a cop or a bus driver who is in his late 20s with a wife and a young kid. Assume the cop/busdriver makes $60,000 gross and the wife works part-time only because daycare is too expensive and she makes $20,000 gross. The family takes in $80k per year gross.

Assume a price of $400,000 for a house (lower than the average price of $460,000). And assume this family was able to save a 5% downpayment before they had their kid and will put $20,000 down. The mortgage principle is $380,000.

Assuming a rate of about 6.5% and 25 year ammort, your mortgage payment is going to be about $2,500 per month. Depending on their exact tax situation, the familys $80,000 gross income might be about $54,000 net which is about $4,500 monthly.

That $4,500 monthly minus $2,500 for your mortgage is only $2,000 left for all your other expenses like car payment, daycare for a couple of days per week, and then utilities, and food, and kids arent cheap.

Its gonna be real tight and you better hope nothing unexpected happens. And you want a second or third kid and to save for their college, your retirement, and a vacation every so often?

And your example of a condo as a starter home has the problem that housing on average goes up at the rate of inflation. The past couple of years where you could have bought a condo for $200k and then it almost doubles in value are gone. In a market where you can rent for cheaper than buying and housing isnt appreciating, you can be better off renting and saving the difference instead of earning a bare minimum in appreciation but paying a ton of interest.

Its funny how everyone is a real estate expert these days. A couple of years of a hot market and too many house flipping shows on TV and eveyone thinks its normal for a mid 20s family to have a $500k+ house.

Originally Posted by Sylvanfan

Depends on what you have to put down. If you have 5% than you'd need to be making about 100 as a couple for a 25 year mortgage right now. The thing thats hurting most people is the down payment for a 460k house as 5% of that is 23 g's.

But the question people have to ask themselves is do you need to start out in an average house? It's called starting because you have to get in and build your way up. Get the 14500 together for a 250k condo, use that help save up money. If the market continues to go up and your condo is worth 280k a year later, suddenly you have 30k plus the 14 k you put in and you can upgrade. It's not the mortgage payment people can't afford, it's the down payment. But a lot of people fail to see that, even if the market goes down, the first thing to go generally is middle range to upper mid housing. So if your in on the low end of the scale you generally won't take a bath.

[ken0042]

Originally Posted by urban1

Assume a price of $400,000 for a house (lower than the average price of $460,000). And assume this family was able to save a 5% downpayment before they had their kid and will put $20,000 down. The mortgage principle is $380,000.

Assuming a rate of about 6.5% and 25 year ammort, your mortgage payment is going to be about $2,500 per month. Depending on their exact tax situation, the familys $80,000 gross income might be about $54,000 net which is about $4,500 monthly.

That $4,500 monthly minus $2,500 for your mortgage is only $2,000 left for all your other expenses like car payment, daycare for a couple of days per week, and then utilities, and food, and kids arent cheap.

Or, start looking at houses for under $300K. I just looked on MLS and found about 20 three bedroom homes that weren't in Forest Lawn (or comperable areas.) And look at a more realistic interest rate of 5.5%. Now your mortgage is $1750. Or even take that mortgage and span it out over a longer period.

It can be done- it just can't be done if you feel you have to keep up with the Jones'.

Of course, having said all of that, I happen to be quite lucky to have bought when I did.

[Vulcan]

I sold my house and got out of Calgary in 02. I've been kicking myself that I left too early and missed the big rise in property values but where I'm living now, values have more than doubled in the last four years. Still cheap compared to Calgary or Vancouver but as baby boomers retire and move out, prices in small towns should skyrocket. With these people moving out of the big cities, vacancies should increase there, driving prices down. Just my ramblings.

[photon]

Originally Posted by urban1

Its not just the down payment people cant afford.

Not everyone is a professional working in oil and gas.

But everyone that wants to live in Calgary has to pay the market value for homes. So they can increase their down payment (borrow it from parents), buy a smaller place, or extend their mortgage over a longer time span. Or they have to move somewhere else.

It sounds like you don't think it's right or fair, but the market doesn't take your sentiments into account; it doesn't care what you think.

Its gonna be real tight and you better hope nothing unexpected happens. And you want a second or third kid and to save for their college, your retirement, and a vacation every so often?

Agreed, people have to look at their whole lives when making a house decision. But again some feeling of what's fair doesn't impact things. Plus the biggest unexpected thing could be interest rates. Personally I think they'll stay low for quite a while, but if they do go up that'll have a huge impact.

While Calgary seems expensive now to us, it's still low compared to other places around the world in terms of amount of income needed to buy a home.

And your example of a condo as a starter home has the problem that housing on average goes up at the rate of inflation. The past couple of years where you could have bought a condo for $200k and then it almost doubles in value are gone. In a market where you can rent for cheaper than buying and housing isnt appreciating, you can be better off renting and saving the difference instead of earning a bare minimum in appreciation but paying a ton of interest.

I agree with this in that some markets it can be better to rent than to own... However I'm interested in what kind of growth you think we'll see in the housing market going forward, and what economic indicators you use to determine that.

[Sylvanfan]

I don't know, if you put 5% down on a condo, live in it as opposed to rent it and the property grows at the rate of inflation chances are you'll come out ahead. IMO you put down 5% into something and get growth on 20 times the amount you put in and if you live there it's tax free. IMO that 12500 is netting you a say a conservative 3% retun on 250k, well that 12500 made you 10500 in one year. Name me a low risk investment that will give you that type of return, tax free. You can invest that money in RRSP's but 12500 needs to grow at a much higher percentage for a number of years to outpace the 250k condo growing at 3%. Than factor in what you're paying in rent and who knows. And don't kid yourself investing in stocks, mutual funds is as volatile or more risky than real estate is.

I mean it comes down to what you need and what you want. You need a place to live, but if you're a single person you don't need to live in a house. You can get by renting a room off someone, thats really all you need. But doesn't mean it's a dumb idea to buy a 2 bedroom condo rent out half of it and pay a bit more, especially if the rental prices are good. If you have a family with two kids than you probably need something with 2-3 bedrooms and a bit more space, but it doesn't mean you need a house, maybe a townhouse or duplex will do.

[Muta]

Originally Posted by Sylvanfan

I don't know, if you put 5% down on a condo, live in it as opposed to rent it and the property grows at the rate of inflation chances are you'll come out ahead. IMO you put down 5% into something and get growth on 20 times the amount you put in and if you live there it's tax free. IMO that 12500 is netting you a say a conservative 3% retun on 250k, well that 12500 made you 10500 in one year. Name me a low risk investment that will give you that type of return, tax free. You can invest that money in RRSP's but 12500 needs to grow at a much higher percentage for a number of years to outpace the 250k condo growing at 3%. Than factor in what you're paying in rent and who knows. And don't kid yourself investing in stocks, mutual funds is as volatile or more risky than real estate is.

As a recent graduate / low-income earner (obviously), that's what i did. It's even better if you can go into it with someone else, and accept the fact that at 23 or 24, you're not going to get the mansion that today's salaries say you should be getting.

[Incinerator]

Originally Posted by Sylvanfan

I mean it comes down to what you need and what you want. You need a place to live, but if you're a single person you don't need to live in a house. You can get by renting a room off someone, thats really all you need. But doesn't mean it's a dumb idea to buy a 2 bedroom condo rent out half of it and pay a bit more, especially if the rental prices are good. If you have a family with two kids than you probably need something with 2-3 bedrooms and a bit more space, but it doesn't mean you need a house, maybe a townhouse or duplex will do.

Exactly, young people often get scared by the media's propaganda that ANYTHING in Calgary will cost $420K and that is the MINIMUM price of entry for them when the fact is this could not be anymore further from the truth. Just because the AVERAGE price is $420K doesn't mean you have to buy something in that range.

There are plenty of affordable housing products in the sub-$300K range with 1 or 2 bedrooms as long as you're not that picky. A lot of first time buyers today often have unrealistic expectations that are not in-line with reality. For $250K-300K you can still get a 2 or 3 bedroom townhouse but it won't be downtown and it probably won't be 2 and a half bath. On the flip side it doesn't have to be Forest Lawn either if you know where to look, or know someone who does.

Adjust your expectations accordingly to your needs and budget instead of your fantasies and you will do just fine. Once you have something in hand you can move around in the market every year or two and eventually you'll move up to the average single family home. What Sylvan described above is the modus operandi of virtually every smart first time buyer I've known and they've all done quite well. On the other hand, having the bitter "Nova Scotian 'Calgaria' attitude" will only get you nowhere when either the market here leave you in the dust or you're stuck in Halifax with no job and an oceanfront property perfect for retiring in. Take your pick.

[metallicat]

The problem is though, even a place for 250-350 is completely unaffordable for a person like myself. I make about 50,000 a year, but being a single income guy, I can't afford anything in Edmonton, let alone Calgary. I dropped the ball by not buying something last year...anything.