Real estate in Calgary - another bubble?

[topfiverecords]

Originally Posted by Hemi-Cuda

They've been saying that for the last 10 years. Vancouver/Toronto show no signs of slowing down, and as more people are priced out of those markets more will start looking towards Alberta. IMO I think the era of finding a detached house of any size for under $500k is gone for good in Calgary

Nah, there are still plenty of detached homes currently listed between $299k-400.

[blankall]

Originally Posted by Reaper

So, lets go with the definition of several and use the minimum amount of 3x. You're claiming that people were making approximately $40/hour in Calgary at fast food restaurants? Really? The most I have seen is $5/hour over minimum wage to start in Calgary for fast food restaurants. If you have any information I'd like to apply at this mythical fast food restaurant where I can earn $45/hour. I would bet there are thousands of people in Calgary who would quit their jobs without notice if they could make that kind of money.

Minimum wages in 2005 were between $7.20 and $8.86. They don't breach $9 until 2008:

https://www150.statcan.gc.ca/n1/pub/.../tbla1-eng.htm

I definitely saw signs in Calgary advertising starting wages north of $20/hour.

[Weitz]

Originally Posted by you&me

West side... Some stuff is selling, but lots that have been on the market 40, 60, 90 days and/or relisted.

Interesting. I’m also on the west side and my neighbourhood is selling like hot cakes. There isn’t any on the market currently (not unusual for time of year).

[RichieRich]

Housing bubble indeed… the balloon continues to inflate further and further
Some light and entertaining reading here.

https://www.greaterfool.ca/2022/01/26/the-fail-3/

[Slava]

Originally Posted by RichieRich

Housing bubble indeed… the balloon continues to inflate further and further
Some light and entertaining reading here.

https://www.greaterfool.ca/2022/01/26/the-fail-3/

Well firstly, that's just the usual lazy analysis we see all the time about the "Canadian" housing bubble. I see it constantly and sure, it's true, as long as the market is purely Toronto and Vancouver. It's been mentioned many times though, that this isn't case across Canada and it's obvious to anyone looking for longer than a minute at the data.

And of course...anyone quoting David Rosenberg as some kind of authority on any forecasting is just out to lunch. Was that guy right at some point on something that I'm unaware of? He's been predicting a crash non-stop for as long as I can recall. I'm pretty sure we should be back in a post-apocalyptic wasteland if his predictions were actually in the realm of reality.

[kevman]

That guys still blogging!?

If you live in Toronto or Vancouver and listened to him 13 years ago you missed out on a pretty historic run.

[kevman]

Well, in case you missed the news, Vancouver real estate’s officially topped, and has begum the greasy slide back to that dark, sad place we call ‘the mean.’

https://www.greaterfool.ca/2011/07/

10 years later and Vancouver's house prices doubled from $898k in July 2011 to $1,800k in July 2021. Scrolling through his entries I remember reading them while in the market for a house. I don't know if it was the best investment I could have made in the last 10 years (excluding the intangibles that come with owning a home) but I'm sure glad I didn't sit on the side lines waiting for his bust that never came.

Ol' Garth has made a living off of his doom and gloom blog while being utterly wrong for more than a decade now.

[blankall]

Originally Posted by kevman

https://www.greaterfool.ca/2011/07/

10 years later and Vancouver's house prices doubled from $898k in July 2011 to $1,800k in July 2021. Scrolling through his entries I remember reading them while in the market for a house. I don't know if it was the best investment I could have made in the last 10 years (excluding the intangibles that come with owning a home) but I'm sure glad I didn't sit on the side lines waiting for his bust that never came.

Ol' Garth has made a living off of his doom and gloom blog while being utterly wrong for more than a decade now.

Vancouver will continue to follow a similar pattern unless there's an extreme widespread global economic collapse. They'll be adjustments, but the general trend will always be up. Everyday there are fewer detached houses available and more people move to the area. Many people living in the burbs would prefer a more central place.

Obviously, if you can time the adjustments properly, you can make out like a bandit. Buying a place down 20-30% that goes back to pre-adjustment value in 2 years is a massive win. Timing the adjustments is easier said than done though.

The idea that Vancouver proper housing will drop and then be affordable to every working person is absurd. There simply aren't enough houses to get anywhere close to reaching that demand.

[Jason14h]

Originally Posted by blankall

Vancouver will continue to follow a similar pattern unless there's an extreme widespread global economic collapse. They'll be adjustments, but the general trend will always be up. Everyday there are fewer detached houses available and more people move to the area. Many people living in the burbs would prefer a more central place.

Obviously, if you can time the adjustments properly, you can make out like a bandit. Buying a place down 20-30% that goes back to pre-adjustment value in 2 years is a massive win. Timing the adjustments is easier said than done though.

The idea that Vancouver proper housing will drop and then be affordable to every working person is absurd. There simply aren't enough houses to get anywhere close to reaching that demand.

Plus Canada's largest industry is facilitating money laundering and Vancouver is the corporate headquarters

[jwslam]

Originally Posted by Jason14h

According to this site, 50% of employees earn over $120,000K in Calgary (Note - These stats seem a bit high but the average Calgary household made $140,000K last year so maybe not?)

http://www.salaryexplorer.com/salary...3324&loctype=3

So really to afford a million dollar home you need one person earning the median salary in Calgary of $120,000K, and one person earning $65,000 (75% of the Calgary population according to above site) in a two income household to afford a million dollar home

Originally Posted by chedder

Kind of off topic but that 120,000 average individual income seems way out of whack with what literally every other site says. The alberta government says the median family income is $105,000. CMHC says around the same.

Most sites put the average individual salary around $60,000 which matches what national surveys say. (54,000 for canadians) So your average household is not buying million dollar houses right off the bat (which seems obvious).

Originally Posted by Torture

That number is way out to lunch. I regularly look at compensation data and there's no way the average salary in Calgary is anywhere close to $120k.

Average is a horrible way to define what "typical" or "normal" means

Example: We have 5 people
A has $5
B, C, D each have $10
E has $1000

Suddenly the "average person" has $207
Average is calculated as (1000+10+10+10+5)/5

But really the median is $10
The median is the central number of a data set. Arrange data points from smallest to largest and locate the central number. This is the median. If there are 2 numbers in the middle, the median is the average of those 2 numbers.

[Jason14h]

Originally Posted by jwslam

Average is a horrible way to define what "typical" or "normal" means

Example: We have 5 people
A has $5
B, C, D each have $10
E has $1000

Suddenly the "average person" has $207
Average is calculated as (1000+10+10+10+5)/5

But really the median is $10
The median is the central number of a data set. Arrange data points from smallest to largest and locate the central number. This is the median. If there are 2 numbers in the middle, the median is the average of those 2 numbers.

Did you check the website I linked …. I know the answer is no cause they give both mean and median salaries! And the ones I used were the mean (unless their graphs that’s say “X % of calgarians make this salary are wrong )

Thanks for the stats lesson though ��

[GGG]

Median after tax family income in Alberta is about 100k. This can easily support the median SFH. Calgary market can support price increases.

[boogerz]

The median gross household income in Calgary is definitely not $140,000 per year or $100k after tax. I don't know that Calgary was even hitting that high of a median household income just before the 2014/15 crash either. A household income that high means at least one person in the household is a 1%er or both parents have above average jobs.

Calgary Economic Development's published marketing material (here) shows median household income at around $100k ($75k after-tax) with only about ~9% of total households earning an after-tax household income greater than $140k ($100k after tax).


If we're assuming average household income at $75k after-tax and a median detached house price of $525k (per the latest CREB stats), the $2100/month mortgage payment (10% down) is about a third of the median family's monthly take-home income. That increases to half of a median family's take-home income by the time you add in the other costs of home ownership (e.g. insurance, utilities, maintenance, etc.).

We're not in bubble territory yet, but Calgary's house affordability is already at the limits of what an average family can afford.

[GGG]

I used family income intentionally and compared it to SFHs intentionally.

https://www150.statcan.gc.ca/n1/en/p...df?st=f6pawgfY

In Canada Couples with children under 65, the drivers of SFH demand have a after tax income of 105,000.

If you are using median household and unattached individuals you need to consider all forms of housing including rentals and homeless shelters as all incomes are included. Or at least include townhouses(299k) and apartments (230k median)

[CliffFletcher]

Originally Posted by GGG

I used family income intentionally and compared it to SFHs intentionally.

https://www150.statcan.gc.ca/n1/en/p...df?st=f6pawgfY

In Canada Couples with children under 65, the drivers of SFH demand have a after tax income of 105,000.

I expect the increasing tendency of adult children to live at home through their 20s is skewing household income figures. A household with dad earning 70k, mom earning 60k, 27 year old daughter earning 50k, and 25 year old son earning 40k aren’t really as affluent as the $220k household income would suggest. When it comes to house affordability, two of those people probably aren’t contributing to mortgage payments.

[you&me]

Originally Posted by CliffFletcher

I expect the increasing tendency of adult children to live at home through their 20s is skewing household income figures. A household with dad earning 70k, mom earning 60k, 27 year old daughter earning 50k, and 25 year old son earning 40k aren’t really as affluent as the $220k household income would suggest. When it comes to house affordability, two of those people probably aren’t contributing to mortgage payments.

I won't pretend to know how the stats for household income are calculated, but... Is it really likely that 27 yo living at home making $50k per year isn't contributing? Ewwww

[jwslam]

Originally Posted by you&me

I won't pretend to know how the stats for household income are calculated, but... Is it really likely that 27 yo living at home making $50k per year isn't contributing? Ewwww

I don't have adult children, but my mentality would be that parents lived here and afforded to live here while raising you... an adult child's ability to produce income does not need to financially contribute to household expenses (unless you're crypto farming in the basement or mooching in other ways more than childhoold years)

[The Yen Man]

Originally Posted by jwslam

I don't have adult children, but my mentality would be that parents lived here and afforded to live here while raising you... an adult child's ability to produce income does not need to financially contribute to household expenses (unless you're crypto farming in the basement or mooching in other ways more than childhoold years)

I mean, I lived with my parents even after a few years graduating, and once I started making money, I contributed about $500 a month. Not a huge amount, but my first job paid $30K a year. So I would think most adult children who live with their parents would contribute something, especially if the parents aren't highly paid professionals.

[boogerz]

Originally Posted by you&me

I won't pretend to know how the stats for household income are calculated, but... Is it really likely that 27 yo living at home making $50k per year isn't contributing? Ewwww

In some cultures there is no expectation for the kid to contribute financially (even if the kid is a single working professional in their late-20s) because there is a natural transition where the kid will take over the household and provide for their parents. That's common amongst Sikh families and it's not uncommon in most of Asia either. I also know of white people in Toronto (including a good friend of mine) that have a similar type of arrangement with their in-laws/parents.

To Cliff Fletcher's point, those types of situations would definitely skew household income for that household. Although Calgary's median household income and house prices are low enough that it doesn't appear to be common in Calgary yet

[puckedoff]

I can't imagine there are enough families with two kids making combined $90K a year and still living at home that it would skew the stats in any meaningful way.