Real estate in Calgary - another bubble?

[Calgary14]

Interesting and makes sense. Anyone new to the country and choosing between Van/Toronto or Calgary its really a big difference in terms of housing costs and quality of life. Of course I am biased but Calgary offers waaaaaay more affordable lifestyle and only 1 hour from the mountains for weekend recreation.

Of course Van/Toronto have a lot to offer as well and if money is no object they are great options, but for most people they have some sort of budget they want to follow

[J pold]

Originally Posted by Weitz

That would require the commercial renters to lower their prices.. from my understanding that hasn’t happened a whole lot. We moved from a sublease to another sublease because the rates right from the building weren’t good at all.

It's a tricky situation, for a lot of landlords they have reached their floor on what they can lease space out at and still get any return, particularly when competing with sublease space.

Imagine you owned a condo and the mortgage payment was $1,500/mth and you're looking to rent it out. The rental market crashes from the time you bought it and now you can only rent $1,200/mth so now you're taking a bath on it.

To makes things worse let's assume there is another condo in your building that's debt-free and the owner just wants to recovery utilities plus a little cash flow so they will rent it for $300/mth.

That's essentially the market we are in. A lot of landlords can't do negative return deals and the sublease market can so they get the action.

[blankall]

The increases in value in the Canadian dollar are also hurting our ability to attract international businesses. Plus, the downtown vacancy phenomena is global. So while rents may be cheaper in Calgary, they are even cheaper in places like the midwest, Texas, or even Mexico.

[Mull]

Originally Posted by blankall

The increases in value in the Canadian dollar are also hurting our ability to attract international businesses. Plus, the downtown vacancy phenomena is global. So while rents may be cheaper in Calgary, they are even cheaper in places like the midwest, Texas, or even Mexico.

I could be wrong... but in my mind-

Calgary historically also had its downtown rents driven by business developed locally, and not international business. Oil oil oil, and supporting oil oil oil. Throw in some Banking which is Canadian at least.

Have we ever really historically seen international firms set up large shops here that were not chasing oil money?

I wonder if there is an opportunity to chase TO and Vancouver mining HQ. I know more natural resources isn't what people want, but jobs are jobs. Companies like to have their HQ where they have industry, but if Kenney's low tax argument had ANY legs, you think these mining HQ would be the first to jump here given our high level of technical people in the City, close proximity to BC, and other attractive options listed in this thread.

Or maybe Kenney is using an outdated 1980's economic model and doesn't understand how the world works?

[CliffFletcher]

Good article on the real estate market in Canada.

The second-largest country in the world is running out of land

...Nearly 60 per cent of home sales last year in 18 communities in and around Toronto, Montreal, Vancouver and Ottawa were for single-family detached houses, according to data compiled from local real estate boards by Bloomberg News. Only about a quarter of the sales in these places were for apartments.

But when you look at what has been built in these same cities and their nearby bedroom communities over the last decade, the percentages are exactly reversed: 60 per cent of new housing stock is apartments, and just 25 per cent detached houses, according to government data compiled by Bloomberg. That mismatch has forced desperate bidders to vie for an increasingly constrained supply of single-family homes. In 2020, Canada’s benchmark home prices gained almost 15 per cent, with only Luxemburg posting a bigger increase, according to a data from the Dallas Fed.

Still, developers don’t seem to be responding. Though construction started on a record number of new homes in Canada’s metro areas in March, the percentage that were single family-detached actually fell to 19 per cent from 24 per cent the previous year, according to government data. While this ratio improved in April, new home starts slowed that month overall.

“If there is a problem it’s in the composition of the new supply,” said Robert Kavcic, an economist with the Bank of Montreal. “We don’t build single detached homes anymore. And it just so happens from a demographic perspective that’s what the market demands. So we’re kind of stuck on that front.”...

https://www.bnnbloomberg.ca/the-seco...land-1.1605274

Given the constraints on growth and detached home builds in Toronto, Ottawa, and Vancouver, and the fact the great majority of Canadians starting a family still want a detached home, Calgary should become an attractive destination.

[Fuzz]

Booo. Too many propel here already. Nothing good can come of this.

[blankall]

Originally Posted by CliffFletcher

Good article on the real estate market in Canada.



Given the constraints on growth and detached home builds in Toronto, Ottawa, and Vancouver, and the fact the great majority of Canadians starting a family still want a detached home, Calgary should become an attractive destination.

The article talks about the crisis, like building more detached homes in Toronto and Vancouver is an option. Sure, if you want to live a 1.5 hour commute away from downtown that's an option. Personally, I don't really see the advantage of living in Toronto/Vancouver but having to commute for 3 hours a day vs. living in Calgary.

I live in Vancouver proper. But if the choice was Abbottsford vs. Calgary, it would be a no brainer, Calgary.

Calgary, even with not the best economic situation, is growing at twice the rate Vancouver is, and housing affordability is likely the driving factor.

[MillerTime GFG]

Just as a heads up for anyone in the market...

OSFI dropped somewhat of a bombshell late yesterday with a decision to implement the new Stress Test qualifying rate of 5.25% to INSURED (less than 20% equity/down payment) mortgages as well as uninsured, up from the current 4.79%. Prior to yesterday, the industry had known for months about the increase to uninsured, but this change was out of left field.

Pretty disappointing decision to only give 10 days notice, but if you're in the market, you may want to pull the trigger soon if you're looking to max your qualifying limits. This new change will decrease qualifying by about 4%.

https://www.canada.ca/en/department-...ng-market.html

[blankall]

Originally Posted by MillerTime GFG

Just as a heads up for anyone in the market...

OSFI dropped somewhat of a bombshell late yesterday with a decision to implement the new Stress Test qualifying rate of 5.25% to INSURED (less than 20% equity/down payment) mortgages as well as uninsured, up from the current 4.79%. Prior to yesterday, the industry had known for months about the increase to uninsured, but this change was out of left field.

Pretty disappointing decision to only give 10 days notice, but if you're in the market, you may want to pull the trigger soon if you're looking to max your qualifying limits. This new change will decrease qualifying by about 4%.

https://www.canada.ca/en/department-...ng-market.html

I have very mixed feelings about these stress tests. The idea is to cool the market and make things more affordable for average Canadians (Also to prevent people from taking on too big of a mortgage that could be troublesome later on). However, the stress tests only affect working Canadians, and have no affect on the rich or foreign investors. These are the people really driving the prices up in Toronto and Vancouver.

[you&me]

Maybe I'm misunderstanding this, so maybe someone can help me out - why are the qualifying standards for uninsured mortgages stricter than insured?

To me, it seems that if someone is able to come up with >20% down, they're a more stable candidate than someone that scrapes together ~5%?

[blankall]

Originally Posted by you&me

Maybe I'm misunderstanding this, so maybe someone can help me out - why are the qualifying standards for uninsured mortgages stricter than insured?

To me, it seems that if someone is able to come up with >20% down, they're a more stable candidate than someone that scrapes together ~5%?

My understanding was always that the lender takes a greater risk with the insured. They provide insurance and typically provide lower interest rates. Therefore, they need to know that the borrower is more likely to be able to pay.

I could be off on this though. Not my area of expertise.

[tvp2003]

Originally Posted by you&me

Maybe I'm misunderstanding this, so maybe someone can help me out - why are the qualifying standards for uninsured mortgages stricter than insured?

To me, it seems that if someone is able to come up with >20% down, they're a more stable candidate than someone that scrapes together ~5%?

Mortgage insurance means the lenders is covered if there is a default (the insurance is more for them, not the borrower, since the borrower is legally liable for any shortfall that insurance has to pay out IIRC).

That's not the case for a conventional (uninsured) mortgage, where the only remedy for the lender is to sell the property (and hopefully that is enough to cover the remaining principal, but the risk is that it isn't).

[Mull]

Originally Posted by blankall

I have very mixed feelings about these stress tests. The idea is to cool the market and make things more affordable for average Canadians (Also to prevent people from taking on too big of a mortgage that could be troublesome later on). However, the stress tests only affect working Canadians, and have no affect on the rich or foreign investors. These are the people really driving the prices up in Toronto and Vancouver.

Checking -Are you aware the Liberal budget includes a tax on Foreign real estate investors?

[you&me]

Originally Posted by tvp2003

Mortgage insurance means the lenders is covered if there is a default (the insurance is more for them, not the borrower, since the borrower is legally liable for any shortfall that insurance has to pay out IIRC).

That's not the case for a conventional (uninsured) mortgage, where the only remedy for the lender is to sell the property (and hopefully that is enough to cover the remaining principal, but the risk is that it isn't).

I guess my understanding was OK, I just don't agree with the principle of it... Though, I'm considering from the perspective of the buyer, and not the lender.


I guess this is a good example of that golden rule - he who has the gold, makes the rules.

[blankall]

Originally Posted by Mull

Checking -Are you aware the Liberal budget includes a tax on Foreign real estate investors?

Yes. They've had similar taxes in Vancouver for many years. Vancouver saw a sudden surge in students buying multi-million dollar properties after the tax came into place.

Edit: A lot of the money being brought into Canada is being done illegally to start. For example, Chinese citizens are not allowed to take out $50k/year. Places like Macao are used to launder large amounts of money out of Asia. The problem with these foreign taxes is that they rely on investors honestly reporting who the true owner is. But you're dealing with a subset of people who are not honest to begin with.

https://www.businessinsider.com/how-...-money-2013-11

[troutman]

This home auction is interesting:

https://www.conciergeauctions.com/au...alberta-canada

Contact us today to register your bid for our stunning, custom home that offers 8,245 sq ft of living space with extraordinary mountain views on 4.77 acres. It also features a second kitchen and a rooftop glass deck with 360-degree views.

Enjoy a media theatre, wine cellar, sunroom and multiple entertaining areas with rich finishes throughout. For families or couples, this home marries lifestyle and luxury.

highest bid currently = $1,514,000

[you&me]

Originally Posted by troutman

This home auction is interesting:

https://www.conciergeauctions.com/au...alberta-canada

highest bid currently = $1,514,000

I've been following Concierge for a while now and it's super interesting... if for no other reason than they've found a way to take an even bigger piece of the transaction pie

[topfiverecords]

Originally Posted by troutman

This home auction is interesting:

https://www.conciergeauctions.com/au...alberta-canada

highest bid currently = $1,514,000

There’s certainly more interesting ways to waste one’s money.

[Looch City]

Ew, what an awful looking house for $1.5M. Terribly gaudy.

[Reaper]

Originally Posted by Looch City

Ew, what an awful looking house for $1.5M. Terribly gaudy.

Rich hillbillies have the worst taste.