Calgary Real Estate predictions?

[polak]

Just when I got a down payment for a condo ready.

####ing nonsense.

[Bill Bumface]

Originally Posted by polak

Just when I got a down payment for a condo ready.

####ing nonsense.

ummmm... in your situation, this is good news. You may have a chance at getting more for your money pretty soon. At the very least, you should have less competition.

I bought in 2009. It was scary, from the whole "Maybe I'll lose my job" perspective, but man was that a good time to buy.

[polak]

Originally Posted by hulkrogan

ummmm... in your situation, this is good news. You may have a chance at getting more for your money pretty soon. At the very least, you should have less competition.

I bought in 2009. It was scary, from the whole "Maybe I'll lose my job" perspective, but man was that a good time to buy.

No my frustration comes from the fact that I have a prebuild in mind and now I'm going to have to hold off. O'well. I'm just impatient and don't want to pay rent.

I should probably hold for half a year at least to see how this plays out.

[CaptainYooh]

Originally Posted by ExiledFlamesFan

I'm starting to sound like a broken record. There will be mass layoffs and 2015 will be a very bad year...

This is an overly general and simplified prediction, I think, and it needs at least some qualification.

I've had a chance to speak to our former Minister of Energy during a recent fundraiser event (nothing personal, we just happened to stand next to each other in a big group during the reception). I asked him what did he see during his tenure as a minister in big O&G companies' leadership strategy when oil prices go down? His response was quite practical and made a lot of sense to me:

He said that most O&G large projects in construction do proceed and progress along, as they are already financed and there is not much financial sense in slowing them down. What suffers first and hardest are design companies, because the investment stream slows down and no new project design work is authorized until prices stabilize and project pro-forma can be established based on some realistic forecast. Because Calgary has a larger number of O&G design companies than, say, Edmonton, we could see more layoffs in that field in 2015, while Edmonton might be less affected by that in 2015. If oil prices stay depressed over the entire 2015 AND some of larger projects in construction get closer to completion, we might see more layoffs in the actual oil patch field across the Province. Then, the provincial net migration slows down and only then the real estate prices are likely going to start getting downward pressure, as the supply could be exceeding the demand. However; he did not believe that the prices are going to fall below manageable levels.

CMHC has just released its housing forecast for the Province of Alberta and it's not gloomy or dark (and CMHC is very conservative in its predictions normally). Also, for the first time, they've released their 3-yr forecast. A mild slowdown across the board each year in 2015, 2016 and 2016 for new and re-sale housing; but nothing too drastic and small volume increases are still in forecast for each year.

What's more significant, is the impact of rising interest rates on the real estate market. I've been at a presentation three weeks ago, where all six panel discussion members from the financial industry predicted real 5-yr mortgage rates increasing and staying above 6% in 5 years. That will definitely have some negative impact on the volume and prices of housing in Alberta (and Canada).

In summary, if I were thinking of buying or refinancing my own home now, I'd look for a good deal now, as December is traditionally the worst month for the homebuilders and good discounts could be found are all over Calgary and Edmonton new housing market. I'd also lock down my mortgage for 5 years, while the rates are still near 3%, which is likely the lowest we're going to see in our lifetimes.

If I were thinking of a speculative investment in real estate, I'd be waiting a few more months for the peace of mind, I suppose.

[ExiledFlamesFan]

Originally Posted by CaptainYooh

This is an overly general and simplified prediction, I think, and it needs at least some qualification.

I've had a chance to speak to our former Minister of Energy during a recent fundraiser event (nothing personal, we just happened to stand next to each other in a big group during the reception). I asked him what did he see during his tenure as a minister in big O&G companies' leadership strategy when oil prices go down? His response was quite practical and made a lot of sense to me:

He said that most O&G large projects in construction do proceed and progress along, as they are already financed and there is not much financial sense in slowing them down. What suffers first and hardest are design companies, because the investment stream slows down and no new project design work is authorized until prices stabilize and project pro-forma can be established based on some realistic forecast. Because Calgary has a larger number of O&G design companies than, say, Edmonton, we could see more layoffs in that field in 2015, while Edmonton might be less affected by that in 2015. If oil prices stay depressed over the entire 2015 AND some of larger projects in construction get closer to completion, we might see more layoffs in the actual oil patch field across the Province. Then, the provincial net migration slows down and only then the real estate prices are likely going to start getting downward pressure, as the supply could be exceeding the demand. However; he did not believe that the prices are going to fall below manageable levels.

CMHC has just released its housing forecast for the Province of Alberta and it's not gloomy or dark (and CMHC is very conservative in its predictions normally). Also, for the first time, they've released their 3-yr forecast. A mild slowdown across the board each year in 2015, 2016 and 2016 for new and re-sale housing; but nothing too drastic and small volume increases are still in forecast for each year.

What's more significant, is the impact of rising interest rates on the real estate market. I've been at a presentation three weeks ago, where all six panel discussion members from the financial industry predicted real 5-yr mortgage rates increasing and staying above 6% in 5 years. That will definitely have some negative impact on the volume and prices of housing in Alberta (and Canada).

In summary, if I were thinking of buying or refinancing my own home now, I'd look for a good deal now, as December is traditionally the worst month for the homebuilders and good discounts could be found are all over Calgary and Edmonton new housing market. I'd also lock down my mortgage for 5 years, while the rates are still near 3%, which is likely the lowest we're going to see in our lifetimes.

If I were thinking of a speculative investment in real estate, I'd be waiting a few more months for the peace of mind, I suppose.

-your first few points have already been mentioned many times in this and the layoff thread. Construction projects that have already started generally continue, those that are planned are shelved.
-major oil companies are already in a hiring freeze and have been for months.
-check Realtor 1 for housing data. It's not looking good. Checkout his "Market trends" topic in his subforum. We've already seen increased supply and decreased demand over the past 4 months. This is not even talking into account Nov, in which the price of oil dropped ~30%.

Being a born and raised Calgarian and growing up in a family that makes it's income off Calgary real estate since the 1970's, you are very aware of the booms and busts of our petro based economy. The 2010-2014 boom is over, nobody can deny that.

I guess for some people there is no convincing, and the proof will truly be in the pudding.

It bears repeating. During the last bust (2008-2009), our unemployment rate doubled, housing prices fell by 10-20%, and we had negative interprovincial migration.

[CaptainYooh]

Originally Posted by ExiledFlamesFan

...

It bears repeating. During the last bust (2008-2009), our unemployment rate doubled, housing prices fell by 10-20%, and we had negative interprovincial migration.

... and it bears repeating that a lot of that was caused by a US-initiated credit crunch; lenders weren't lending much those days to neither businesses nor homebuyers, because of the near-collapse of their banking system. That's the most important qualifier, which you keep omitting. No one is arguing that the O&G industry will be coping with tougher times in 2015. Also, no one knows when the oil prices recover. Everyone knows though that they will, eventually, as they always do. There is no credit crisis on the horizon at this point. Not a single Canadian lender has been warning about credit-tightening so far and, on the contrary, lenders' business development people are actively looking for new real estate credit with both new and existing customers.

[ExiledFlamesFan]

Originally Posted by CaptainYooh

... and it bears repeating that a lot of that was caused by a US-initiated credit crunch; lenders weren't lending much those days to neither businesses nor homebuyers, because of the near-collapse of their banking system. That's the most important qualifier, which you keep omitting. No one is arguing that the O&G industry will be coping with tougher times in 2015. Also, no one knows when the oil prices recover. Everyone knows though that they will, eventually, as they always do. There is no credit crisis on the horizon at this point. Not a single Canadian lender has been warning about credit-tightening so far and, on the contrary, lenders' business development people are actively looking for new real estate credit with both new and existing customers.

Sure. If you'd like to compare our current times to the last oil glut in the mid 80's, the unemployment rate in Alberta shot up to 12%, people walked away from their houses, AB went into a deep recession, and Calgary housing prices dropped ~30%.

Busts happen in Alberta. They've happened before and they will happen again.

[CaptainYooh]

Originally Posted by ExiledFlamesFan

...Busts happen in Alberta. They've happened before and they will happen again.

It's so easy predicting a real estate bust in Alberta. Eventually they happen and you look like an "I told you so!" oracle. Guess what, North American real estate market is cyclical and, yes, it has been going up and down every decade or so on average in the last 100 years. just like the resource and mining industries. So, what have you been really saying then? Are you predicting a real estate bust in Calgary in 2015? Then clarify and qualify it by saying: "I see a __% decline in Calgary real estate valuations by the end of 2015, because Calgary 2015 net migration is going down __% and Calgary unemployment rate is going up ___% based on this, this and this data." Don't wanna do that, I presume? I wouldn't either.

CMHC real estate analysts and economists did that for Canada, Alberta and Calgary and they do not agree with your doom and gloom pessimism for 2015, 2016 and 2017. They can be wrong and they have been wrong occasionally in the past. But I would still trust their forecast more than yours based on the analysis you have provided so far.

[ExiledFlamesFan]

Originally Posted by CaptainYooh

It's so easy predicting a real estate bust in Alberta. Eventually they happen and you look like an "I told you so!" oracle. Guess what, North American real estate market is cyclical and, yes, it has been going up and down every decade or so on average in the last 100 years. just like the resource and mining industries. So, what have you been really saying then? Are you predicting a real estate bust in Calgary in 2015? Then clarify and qualify it by saying: "I see a __% decline in Calgary real estate valuations by the end of 2015, because Calgary 2015 net migration is going down __% and Calgary unemployment rate is going up ___% based on this, this and this data." Don't wanna do that, I presume? I wouldn't either.

CMHC real estate analysts and economists did that for Canada, Alberta and Calgary and they do not agree with your doom and gloom pessimism for 2015, 2016 and 2017. They can be wrong and they have been wrong occasionally in the past. But I would still trust their forecast more than yours based on the analysis you have provided so far.

Funny that you demand facts yet completely ignore every factual statement I've made in my past 2 posts.

This has nothing to do with "North American cyclical real estate" and that is the error in your view. Calgary isn't a typical north american city. If you can't acknowledge that then there's no point in discussing this with you.

Calgary is a petro economy. Unemployment, GDP, and real estate all closely follow the price of oil in Calgary and have done so for the past 40 years. Oil at $35/barrel (god forbid) would have a devastating impact on the Calgary economy.

[CaptainYooh]

Just leave the oil price argument aside for a moment. You are getting a bit hang up on it. I don't think anyone here is disagreeing with the importance and impact of oil prices on the Alberta economy.

If you look carefully at the Alberta and Calgary historic real estate market performance, you will notice that it is not out of sync with the rest of the Canadian real estate market performance. Its valleys and dips are often higher/deeper, because of the "close to home" factor you mention and that's true, how could it not be? But the general behaviour of the market in Calgary follows the major macro-economic factors influencing the Canadian and global economy.

[T@T]

Originally Posted by ExiledFlamesFan

Sure. If you'd like to compare our current times to the last oil glut in the mid 80's, the unemployment rate in Alberta shot up to 12%, people walked away from their houses, AB went into a deep recession, and Calgary housing prices dropped ~30%.

Busts happen in Alberta. They've happened before and they will happen again.

Depending where in the city in some cases it was almost 50%, My uncle bought a big old beautiful house in the Bridgeland hills with a great city view for $36k from the bank in 1982. history showed it was bought for $62.5 in 1979.

I remember almost a full page in the herald daily dedicated to "bank sales" ...it was unreal.

[Righteous1]

So i've got a pile of cash (literally) and a bunch on my account that i've just saved for no reason at all. Was thinking about buying a house..buy now or after all these out of provincers leave when their are no jobs left?

[Yoho]

Originally Posted by Righteous1

So i've got a pile of cash (literally) and a bunch on my account that i've just saved for no reason at all. Was thinking about buying a house..buy now or after all these out of provincers leave when their are no jobs left?

If you have (literally) a pile of cash I would get into a bidding war for something in the burbs now.

[Red]

Originally Posted by Righteous1

So i've got a pile of cash (literally) and a bunch on my account that i've just saved for no reason at all. Was thinking about buying a house..buy now or after all these out of provincers leave when their are no jobs left?

1. Record high prices
2. 70%+ ownership rate
3. Highest debt levels ever
4. Emergency interest rates about to go up in the next year
5. Oil collapsing
6. IMF, CHMC and every credit ratings org under the sun conclude that houses are overpriced and out of whack with fundamentals
   

Why wait? Perfect time to buy your first home.

[darklord700]

http://calgaryherald.com/business/en...opec-producers

"In its most recent forecast, the International Energy Agency said growth in demand for all forms of energy will grow 37 per cent by 2040, with oil demand rising by 15 per cent. Meeting that demand will require companies to invest, and the IEA cautioned against complacency in the current oversupply situation, pegging the amount that needs to be invested for future demand at $900 billion per year between now and 2030. The current environment is unlikely to encourage that activity.

Without that level of investment, the world risks an oil price spike, which is usually a one-way ticket to economic recession."

[Drummer]

2040? 25 years is way to far away to be making specific forecasts. That's so silly it shouldn't even be called a forecast, but rather a thought, or a "possible scenario".

[tvp2003]

Recall this being discussed earlier -- CMHC releases data on foreign ownership of condos:

http://www.theglobeandmail.com/repor...ticle22101935/

In some select city areas, notably in Vancouver and Toronto, the rates are higher, according to the statistics released Tuesday.

Vancouver’s Burrard Peninsula, for instance, has a rate of 5.8 per cent while Toronto’s core is at 4.3 per cent, according to the numbers unveiled for the first time by CMHC, in its latest report on rental apartment vacancy rates.

The percentage of foreign condo ownership for Vancouver is 2.3 per cent, while it stands at 1.5 per cent for Montreal and 0.2 per cent for Calgary. The report covers the period up to the end of October.

Critics say that condos have become a handy place to park money, particularly for wealthy investors from China, and that the units end up staying empty or only briefly occupied.

[ranchlandsselling]

Originally Posted by tvp2003

Recall this being discussed earlier -- CMHC releases data on foreign ownership of condos:

http://www.theglobeandmail.com/repor...ticle22101935/

Colour me shocked!! Oh no wait, that's what was kind of expected and certainly should quiet those "OH NOES, the immigrants are causing housing to be too expensive!!!" Well, probably not, they'll find something else - and the current oil price decline will distract them for a bit too.

[Winsor_Pilates]

Originally Posted by tvp2003

Recall this being discussed earlier -- CMHC releases data on foreign ownership of condos:

http://www.theglobeandmail.com/repor...ticle22101935/

I read this earlier, and it's nice to see some numbers on this.
Especially here in Vancouver, it's really tiring to hear the same argument over and over about half of downtown condos being foreign owned and other exagerations like that.
Wealthy immigration on the other hand is a huge factor.

[darklord700]

If I have money I wanted to hide overseas, buying the not so liquid condos will not be on my list of things to do. I can think of many better ways to park my cash outside of my country. This survey doesn't suprise me much.