Time to sell?

[Sylvanfan]

Originally Posted by Old Yeller

Some of the houses my girlfriend and I looked at 2 months ago have dropped in price by $20,000... unfortunately it's all relative as my place has probably dropped in value by a similar percentage.

Hard to say....in terms of total dollars you might do quite well to upgrade as places in the mid range could have fallen by say 8% but the entry level is down on 5% type of thing. It's all about whats for sale and what price range has the most places for sale.

Even if your place has dropped 8% in the past three months....8% of 300k is a smaller loss than 8% of 450k is. As much as everyone would love to sell their house for top dollar and buy their next one for a bargain basement rate....it doesn't always work that way. Unless you can store your stuff and live in a box for a few months in the mean time.

[Mike Oxlong]

Originally Posted by Winsor_Pilates

I think things will go back up. Sept-Nov are pretty good months for real estate and i predict prices will go back up over this time.
Having said that, I believe Calgary is still a risky investment. Eventually prices will fall quite a bit, just not yet IMO. I'd sell next spring if I was trying to make a profit.

I am interested to hear why you think prices are going to fall quite a bit.

[mykalberta]

I personally dont think prices will fall unless there is adverse political pressure put on the Alberta economy.

Although housing prices have gotten to a level where there is no longer that room for 125% increase potential. There is a limit as to how much people make, even if you do take 2 full time incomes into account.

At the moment, 99% of single income arrangements cannot afford a brick and mortar home.

MYK

[photon]

Originally Posted by OracleOfCalgary

True that the market normally cools slightly in the winter. Does anyone really believe that market norms really apply to Calgary currently? A 60% Y-O-Y appreciation is not normal.

Things happen for a reason, and while it's a non-normal market it is still influenced by the same pressures.

60% is not normal though and not sustainable.. nice when it was available, but I think we're hopefully settling down to something more reasonable and workable. I mean 15% per year would still be a HUGE boon for real estate investors who are happy if the market is at 5% per year.

[Old Yeller]

Originally Posted by Sylvanfan

Unless you can store your stuff and live in a box for a few months in the mean time.

Well I haven't lived with my parents in a decade, but we could move back in there...

On second thought I'll take living in a box.

[photon]

Originally Posted by mykalberta

At the moment, 99% of single income arrangements cannot afford a brick and mortar home.

MYK

That's simply not true. Affordability is still quite high in Alberta, and there are places to be had for reasonable prices... $1400 a month for a house is still reasonable considering our salary levels here.

Plus single income arrangements aren't the norm in Alberta. Employment participation is 70%, highest in the country (which is interesting when you think of the stereotype of "family values" stay at home parent that Alberta has).

Lots of single income arrangements can't afford a home, but it's not 99%.

[photon]

Originally Posted by mykalberta

I personally dont think prices will fall unless there is adverse political pressure put on the Alberta economy.

Oh, and I think I agree with you there.. I think the biggest risk to Alberta at this point is something like Ottawa banning Oil Sands development or something like that.

[photon]

Originally Posted by fotze

Haven't they been saying Vancouvers housing boom is going to bust for the past 15 years and it hasn't yet????? (I don't really know, just asking)

Yeah, the economics there don't support the prices (70% of income going to an average house, and people go nuts because Calgary is at 40%), but people are still moving there and the whole Olympics thing, plus they are land-constrained.

Be interesting to see what happens after the Olympics.

[Nabber]

This is the pattern I have seen every since I've been in real estate. During the summer most homeowners would rather enjoy the weather than sell their home. As soon as summer nears end everyone wants to sell which in turn puts more listings on the market, more listings equals more choice which brings prices down.

Then January comes, the holidays are over and people starting getting more interested in buying a home for many different reasons, they're not busy with holidays, want to be settled for summer, etc. This brings demand up which is when prices go up.

That said like Photon mentioned, Calgary is still growing with large amounts of people moving here, homes are still selling, realtors just have to put more effort for that to happen now ha ha.

[Thunderball]

Prices will have to fall because there is simply no real limit to Calgary's growth. Calgary is artificially expensive by a fairly substantial margin. Supply has the ability to catch up to demand, especially if the O&G sector continues to calm down (let alone any possible downturn or recession). Unlike Vancouver, for example, Calgary has no geographic limitation or political limitation for growth. Calgary can build up and out as much as they need to in order to accomodate the growth... infrastructure is the only real limitation, but that can easily be remedied if the political will is there. As well, the satellite cities are also capable of absorbing growth indefinitely as they too have no real geographical or political limitation on growth. Vancouver is justifiably expensive because there is simply nowhere else to go... even building up is becoming a challenge in the main city.

[photon]

I don't agree that the infrastructure is easily remedied, the cost and labour are the constraints on that. The more you try to do at once, the more expensive doing it gets to the point that it's not reasonable to do it right away.

But long term yes I agree that eventually supply will catch up with demand, the question is will prices fall dramatically, or will they plateau. Either way, by that time I plan on being well into my exit strategy.

EDIT: And with the tens of billions of dollars worth of projects on the books and the increase in demand for unconventional oil, the risks for a downturn in oil and gas are things like the government doing something harsh against it or the price going back down below $15/bbl.

[Winsor_Pilates]

Originally Posted by Mike Oxlong

I am interested to hear why you think prices are going to fall quite a bit.

See Thunderball's post a few above. It pretty much sums up exactly what I would say.
Calgary is not Vancouver, and prices similar to Vancouver can not last. Supply will catch up to demand at some point in Calgary and prices will go down.
If Calgary was surrounded by Water on 3 sides, and had a more steady growth from a number of industries over the course or 6-10 years, then I would expect the high prices to stay that way. The number one factor in Real Estate is location, and in Calgary, it's too easy to pick great locations.

[Thunderball]

Originally Posted by photon

I don't agree that the infrastructure is easily remedied, the cost and labour are the constraints on that. The more you try to do at once, the more expensive doing it gets to the point that it's not reasonable to do it right away.

But long term yes I agree that eventually supply will catch up with demand, the question is will prices fall dramatically, or will they plateau. Either way, by that time I plan on being well into my exit strategy.

EDIT: And with the tens of billions of dollars worth of projects on the books and the increase in demand for unconventional oil, the risks for a downturn in oil and gas are things like the government doing something harsh against it or the price going back down below $15/bbl.

I meant infrastructure long term... I wasn't overly clear on that. Its easier to build infrastructure, roads and LRT than it is to raise land from the sea or level mountains. Calgary can do the former and should never have any need for the latter.

[photon]

Definately. At least not until the seas rise and Calgary becomes beachfront property!

[arsenal]

Originally Posted by photon

Definately. At least not until the seas rise and Calgary becomes beachfront property!

All the more reason to pray for global warming

[Bend it like Bourgeois]

I don't see the difference between us and Vancouver.

You can't create land in downtown calgary any more than you can create it in downtown Vancouver.

Sure you can build in the burbs, but you can build in the burbs of Vancouver too. The only difference is commute time.

I think as long as our population is growing, so will real estate prices in Calgary. (which is not to say that all prices will grow equally).

[ken0042]

Originally Posted by Bend it like Bourgeois

I don't see the difference between us and Vancouver.
(snip)
The only difference is commute time.

And for me, that's the key. Today, if I want to build a house outside of metro Vancouver on what is now farm land, I'm looking at a 90 minute commute assume light traffic. In Calgary, with good traffic you are looking at 25 minutes.

So that leaves somebody like me saying it's not so bad for me to live in the sticks, the commute time isn't bad. As opposed to Vancouver where I would be saying I'd be willing to pay more to drive less. And in Calgary we have a lot of growing to do to get to that point.

Add to that the people who are having houses built, they will be selling their current house to move into the new one. That provides extra inventory and a price drop.

I agree with others the "time to sell" was this spring; assuming you had the cardboard box ready to go. My spidey senses tell me we will see a drop until February, and it will come back up, but not to the levels we had this spring. So maybe a 10-15% drop, then a 4-6% increase. Net loss 6-9%.

Which still leaves people like me who bought prior to 2005 with more equity than I could have imagined when I bought my house.

[Cowboy89]

From a financial perspective I'd like to offer that there's no reason for prices to rise substantially near term (6-18 months) and plenty of reasons for them to fall. We live in Calgary at $70 Oil, High labor costs, High materials cost, labor shortages, infrastructure shortcomings, and a glut of properties bought on spec over the past couple of years simply for investment purposes that have helped artificially increase prices further. If anything over time any number of these factors subsides. 'Concrete Equities' is advertising on Radio for the average joe to invest in real estate in Calgary and abroad. Note to anyone not in tune with the financial world: When investments come looking for Joe six-pack who listens to CJAY 92 as opposed to the other way around, something has fundamentally changed as their current investors who have already enriched themselves no longer have an appetite to invest more. This means that either the risk of the investment has increased substantially or the foreseeable profit has diminished, or a combination of both. Also another sign to get out is that one of my 'Get rich Quick' friends (who is still a 'thousandarie') is piling into a construction group that are starting a condo conversion project with what he says are "Guaranteed 40% returns" (heard different variations of that quote over the past 5 years from him but to no avail).

[Claeren]

Originally Posted by Cowboy89

From a financial perspective I'd like to offer that there's no reason for prices to rise substantially near term (6-18 months) and plenty of reasons for them to fall. We live in Calgary at $70 Oil, High labor costs, High materials cost, labor shortages, infrastructure shortcomings, and a glut of properties bought on spec over the past couple of years simply for investment purposes that have helped artificially increase prices further. If anything over time any number of these factors subsides. 'Concrete Equities' is advertising on Radio for the average joe to invest in real estate in Calgary and abroad. Note to anyone not in tune with the financial world: When investments come looking for Joe six-pack who listens to CJAY 92 as opposed to the other way around, something has fundamentally changed as their current investors who have already enriched themselves no longer have an appetite to invest more. This means that either the risk of the investment has increased substantially or the foreseeable profit has diminished, or a combination of both. Also another sign to get out is that one of my 'Get rich Quick' friends (who is still a 'thousandarie') is piling into a construction group that are starting a condo conversion project with what he says are "Guaranteed 40% returns" (heard different variations of that quote over the past 5 years from him but to no avail).

Concrete Equities is, incidently, a horrible little company. <MOD EDIT: Removed baseless comment> They only stay a float because they pray on the uninformed and because the market has been even stronger then their own incompetence - which says more about the market then them....



Claeren.

[Claeren]

Originally Posted by mykalberta

There is a limit as to how much people make, even if you do take 2 full time incomes into account.

At the moment, 99% of single income arrangements cannot afford a brick and mortar home.

MYK

This is a serious threat to the market. PArt of the reason prices kept rising was that speculators who had made a lot of money were able to afford more and more houses. That doesn't mean that the end buyer who wants that house can even qualify for the mortgage!!

Even qualifying for $280k (until recently the entry level price for a one bedroom condo for much of the city) is difficult for most single income people. Yo uneed what, $70k/yr to qualify for that as a first time buyer?!

Add to that the stricter lending criteria and there are a LOT of people out of the market. Basically it had gotten to the point that speculators were just buying from other speculators. Now that the speculators are getting out of the market....


And remember that relative to inflation even flat home pricing is actually losing ~4.5%+/yr. If prices drop and stablize at 10% over the next year they have actually dropped ~15%.


And i think a LOT of people think prices are going to rise come Spring and are waiting 'til then to sell....



Claeren.