Calgary Real Estate predictions?

[chemgear]

Interesting little site: http://crackshackormansion.com/

I found a ton more on mls.ca

(Didn't somebody say you can't possibily go wrong investing in real estate?)

[chemgear]

Website only shows Vancouver silliness - I'm sure there is similiar stuff in Calgary (though probably not as bad.)

Good discussion of both sides here:

http://www.cbc.ca/thecurrent/2010/04/april-19-2010.html

But it's actually kinda painful/awkward to listen to the "there is no bubble" dude.

[Tron_fdc]

So you're drawing comparisons from Van to Calgary, with a website titled "Crack Shack or Mansion"?

Surely the crack shacks in Van will throw off that stat...... hahahaha j/k

I have a property in Bridlewood and one in Bankview, and it seems both of which have increased in value by about 10% over the last 18 months. I have no stat to back that up, other than listening to 4 different realtors assesments of my properties and what I would list for if I wanted to sell, and seeing what comparables are actually going for.

FWIW.

[starseed]

In Airdrie real estate is booming. Just last night 4 red hot houses got taken off the market a few blocks away from me.

[Tron_fdc]

You'll never find an unbiased view, there are always motives behind every opinion that I've ever seen when it comes to real estate. It's like the stock market, really.

I'm in no hurry to sell right now. I can afford both places, the renter in one is great and it's breaking even on cost, so unless there is a MASSIVE price drop on the horizon or I'm at risk of losing my job I'm not too concerned.

[chemgear]

Originally Posted by Tron_fdc

So you're drawing comparisons from Van to Calgary, with a website titled "Crack Shack or Mansion"?

Surely the crack shacks in Van will throw off that stat...... hahahaha j/k

I have a property in Bridlewood and one in Bankview, and it seems both of which have increased in value by about 10% over the last 18 months. I have no stat to back that up, other than listening to 4 different realtors assesments of my properties and what I would list for if I wanted to sell, and seeing what comparables are actually going for.

FWIW.

I make no comparisons (other than what one might want to imply with the initial title of this overall thread.) Just throwing interesting information out there.



Speaking of crack shacks though, did you know you can look them up at:

http://www.calgaryhealthregion.ca/pu...nspections.htm

Along with nice restaurants/spas/etc.

Again, just throwing it out there (though I do tease my friends that live in Kincora.)

[username]

I'd break it down like this:

- Intrest rates are going up, therein prices are going to rise (reduces demand)
- Calgary's population growth has been relatively flat (No increase in demand)
- Several condo buildings have resumed construction (increase in supply)
- Housing starts have been increasing due to the low rates (increase in supply)

All these points lead to an increase in supply while we see a decrease in demand. I don't see how prices go up. I admit this is a very simplisitic view of the real estate market but these are the main factors that affect the price.

[Sylvanfan]

Originally Posted by username

I'd break it down like this:

- Intrest rates are going up, therein prices are going to rise (reduces demand)

I think you meant that with interest rates going up, the cost to the consumer goes up. The payment on a 250,000 mortgage that someone was to work out today would be higher than what it was three weeks ago, and if rates continue to trend up, so will payments. Even though the cost in absolute dollars is the same the amount buyers are paying to get that money increases.

So even if a home maintains it's current value, it's going to cost the person buying it more money based on the assumption they are going to be borrowing most of the money to buy it.

[Wookie]

Originally Posted by fotze

I think people are saying you should sell because its going to drop again.

I have trouble with these debates because I have yet to find an unbiased view on either side.

There are the realtor/property owners who want/need the property values to increase so they find whatever stat supports that.

Then you have the people who don't own a home but want to own a home but are sickened by the price that you have to pay arguing the other side.

Yeah - it's a pretty tough industry to follow.

Looking at the supply (MLS) seems to be about 4 months SFH, and almost 4 months of condos. I wonder if people stop buying due to interest rates or this sudden buying spree dries up if this glut could cause another drop in prices. But then maybe people will just pull their listings? I can't imagine there are that many overextended people that are going to sell at basement prices either.

There was an article in the Globe today about commercial real estate and how there was so few distressed sales. Owners just didn't ever hit that point where they had to sell. As such there's not much going on.

Maybe that's what we'll see for awhile.

I'm kind of in the middle. Own 1.5 townhouse's up is good for me breaking even or coming out ahead, but not great for buying something bigger. Down is good for buying something bigger but not great for ditching the 1.5 townhouses. Although down helps get something else and maybe just keep the 1.5 townhouses.

Stupid houses.

[username]

Originally Posted by Sylvanfan

I think you meant that with interest rates going up, the cost to the consumer goes up. The payment on a 250,000 mortgage that someone was to work out today would be higher than what it was three weeks ago, and if rates continue to trend up, so will payments. Even though the cost in absolute dollars is the same the amount buyers are paying to get that money increases.

So even if a home maintains it's current value, it's going to cost the person buying it more money based on the assumption they are going to be borrowing most of the money to buy it.

That's exactly what I meant. A 250,000 mortgage is going to cost you more in a year than it does today. Hence the cost of house goes up without any increase in the value of the home.

Naturally this is going to reduce the demand for homes.....

[chemgear]

As a rough rule of thumb, a 1% increase in interest rate translates into a 8-10% increase in monthly mortgage payment.

Seeing as the banks jacked up their rates by 0.85% in a span of just two weeks - here is to hoping that the average Canadian household got a 7 - 9% pay raise over that same two weeks . . .

[photon]

Originally Posted by username

I'd break it down like this:

- Intrest rates are going up, therein prices are going to rise (reduces demand)
- Calgary's population growth has been relatively flat (No increase in demand)
- Several condo buildings have resumed construction (increase in supply)
- Housing starts have been increasing due to the low rates (increase in supply)

All these points lead to an increase in supply while we see a decrease in demand. I don't see how prices go up. I admit this is a very simplisitic view of the real estate market but these are the main factors that affect the price.

Other than the population growth (population is growing at 2.7% yoy in Calgary, which is what, 30,000 people?) those are all relevant. Also you can add in a lot of hidden inventory as people that tried and didn't sell are putting their stuff back on the market which increases supply.. mind you the supply isn't completely crazy like it was in spring 08, but it certainly is trending that way so it'll be interesting to see. Sales fortunately are better now than they were then so the absorption rate while high is much closer to balanced.

[Sylvanfan]

Originally Posted by photon

Other than the population growth (population is growing at 2.7% yoy in Calgary, which is what, 30,000 people?) those are all relevant. Also you can add in a lot of hidden inventory as people that tried and didn't sell are putting their stuff back on the market which increases supply.. mind you the supply isn't completely crazy like it was in spring 08, but it certainly is trending that way so it'll be interesting to see. Sales fortunately are better now than they were then so the absorption rate while high is much closer to balanced.

Although I do wonder how much of that was a last minute frenzy from people knowing rates were about to head up. There are probably a few buyers out there who got rate holds still looking around. It'll be interesting to compare sales in May to what sales were in March.

[photon]

Originally Posted by Wookie

But then maybe people will just pull their listings? I can't imagine there are that many overextended people that are going to sell at basement prices either.

That's what's been happening, is people just pulling their listings and the market is flooded with rental units. Especially condos, all those people that bought condos on spec to flip had to take possession or lose their deposit, and then they turned around and rented them for whatever they could.

I've spoken with a lot of people that did that.

In the condo I own downtown I'm still at 60% of the rent I was getting 3 years ago, just because there's so many out there available, or to put it another way I'm now renting the place fully furnished for the same price I was renting it unfurnished.

I'm lucky because this is a condo I purchased new and lived in many years ago, so the lower rents don't hurt me at all, but still.

But yeah, lots of people aren't going to eat the loss so they'll just take it off the market and just live with it or rent it.. if we see rates go up a lot though and prices go down, that might motivate more people to sell at basement prices.

[photon]

Originally Posted by Sylvanfan

Although I do wonder how much of that was a last minute frenzy from people knowing rates were about to head up. There are probably a few buyers out there who got rate holds still looking around. It'll be interesting to compare sales in May to what sales were in March.

That's true, and one expects this time of year to be higher anyway too. Still the sales graph doesn't look worryingly spiky, but we'll see.

[chemgear]

Originally Posted by fotze

Do you rent or own?

I own but I also do have a rental property.

[username]

Originally Posted by photon

Other than the population growth (population is growing at 2.7% yoy in Calgary, which is what, 30,000 people?)

Are you sure about this? Last I heard from stats Can was that our population growth was somewhat stagnant with a lot of people from Sask and out East moving back home.

[photon]

Originally Posted by username

Are you sure about this? Last I heard from stats Can was that our population growth was somewhat stagnant with a lot of people from Sask and out East moving back home.

Yup: http://www.rbc.com/economics/market/pdf/citytrend.pdf

The thing is in the media stagnant means down to sane levels from the "adding the population of Red Deer" levels we were at before

I saw one chart after the media started reporting about everyone going back to Saskabush and that that was terrible for our economy, and when you looked at the numbers sure the number of people going from Alberta to Sask increased, but the number the other way was still high enough that the net increase was still positive, and the inmigration from other provinces had increased too.

[troutman]

Will be interesting to see the results of the census I answered last week.

[username]

Originally Posted by photon

Yup: http://www.rbc.com/economics/market/pdf/citytrend.pdf

Thanks for that - excellent information in there.

I guess it would be good to know is if the 124% increase in housing starts and the 176% increase in building permits is going to create more supply than the increase in year over year population......

Either way, despite the fact that I own both a condo and a cabin, I still feel prices are going to be depressed over the next year. At best, I see prices holding where they are for the next year and then slowly increasing at a normal inflation rate.