Calgary Real Estate predictions?

[Slava]

Originally Posted by calculoso

Not sure I agree with that. There aren't too many investments that I could own worth over half a million dollars already...

That is just because of borrowed money though. You could borrow a bunch of money and have the same impact with a lot of other investments actually.

I don't know what prices are going to do over the next short while...maybe drop by 5-10%, but maybe just stay pretty flat. Interest rates aren't exactly rocketing up here, and mortgage rates are pretty flat. Last I saw mortgage rates were dropping...sure that won't last forever, but its not a time to panic one way or the other either.

[newts]

Originally Posted by pepper24

I still think that housing prices are going to continue to drop. The party driven by low interest rates is coming to an end. The bubble is bursting and will continue to do so.

My thoughts:

House prices will continue to drop due to a glut of inventory, lack of quality inventory in the mid range price bracket, over development in the suburbs within the last few years, and an average to sub average economic climate in the city.

The media has made such a big deal out of interest rate increases, and have really distorted people views. 4 years ago today, right in the middle of Calgary's biggest real estate boom in recent history, prime rate was at 6%. More than double what it is today. Yes, rates will rise, but right now you can get yourself into a 5 year fixed term at a shade over 4%. What's scary about that? You should be scared of interest rates if you extend yourself to the max in variable scenario...but in the end your lender has to approve you to get into this volatile situation anyway. Lenders have tightened...most won't let you leverage yourself to the max and get yourself and themselves into a bad situation.

Economic factors will play the biggest role in where pricing goes in this city. Renewed confidence in energy capital markets and increasing natural gas prices are keys to a strong market in Calgary. Those are the keys to positive migration to the city. This is the key to solving some of the issues I identified in the first part of my post.

Interest rate increases are a function of the economy improving as a whole. Hopefully as rates start to rise, the BOC is making those adjustments to coincide with an improving economy, and hopefully coincide with an improving US economy as well.

[Shazam]

Originally Posted by pepper24

If you sell high, your next place is high. If you sell low, your next place is low. Net sum game technically assuming you need a place to live. Add in real estate costs, up-keep, property taxes, compound interest over amortization etc. and it's a negative game.

That's why I cringe when people say that buying a home is a great investment. It's a necessity and an investment in your lifestyle but financially there are much better investments.

Buying a house is a great inflation hedge.

I really have no idea how people can say that renting is better. Over the long term rents always go up. Renters still pay maintenance and taxes. Renters pay rent forever. You're subject to the capriciousness of a landlord.

[chemgear]

Originally Posted by V

Not really. You sound like 1 of 2 things:

1) A liar that is trying to misrepresent his position.

2) A masochist. No one normal prognosticates the fact that they're going to lose 50 grand in a month, then loses 50 grand in a month and is happy about losing 50 grand in a month.

I'm not sure which one it is, but I'm leaning towards 1.

What is there to misrepresent? That I own a home and have an investment property? LOL, what would lying about that get me here? As for being "happy", like I said before, it's the economy factors and how they work that interest me. Cashing out on the real estate investment it not my call alone and I'm lucky enough to not be overly concerned with the value of my current home (and as mentioned I'm looking for a larger one perhaps.)

Why all the directed angst sir? I'd like to think I'm listing factual numbers and trying to interpret them logically given my little amateur knowledge - it's not like I'm saying the "world is gonna implode omgomgomg."

I try to look at finances logically and not emotionally - and that logic also requires me to look at my own situation and say hey, you know, I might lose some value here. Though to be fair, I realize housing can be an emotional topic.

Originally Posted by Slava

That is just because of borrowed money though. You could borrow a bunch of money and have the same impact with a lot of other investments actually.

He is somewhat right in that you can leverage yourself pretty heavily/quickly in real estate as compared stocks for example. It's also a problem if you don't pay attention to the market and leverage yourself too much and things shift downwards.

Originally Posted by newts

Interest rate increases are a function of the economy improving as a whole. Hopefully as rates start to rise, the BOC is making those adjustments to coincide with an improving economy, and hopefully coincide with an improving US economy as well.

I'd agree with you normally, but as mentioned before the increased debt levels during a recession is kinda scary. That ~$40,000 consumer debt for every man, woman and child thingy could be an upper limit that people can carry. Who knows though, maybe people can continue to borrow more.

[V]

Originally Posted by chemgear

I try to look at finances logically and not emotionally - and that logic also requires me to look at my own situation and say hey, you know, I might lose some value here. Though to be fair, I realize housing can be an emotional topic.

See, this is utter garbage, and it's the reason why more than a couple people here don't get you. Your posts are laced with pure joy. It's not a sound presentation of the facts, ala cmyden. It is unadulterated enthusiasm. And it's not that text is hard to read. It's plain as day.

I assume you are misrepresenting yourself intentionally because the guy waiting for the prices to drop is motivated to present the numbers in a specific way, something you were called on far earlier in the thread.

Personally, I don't care. I own one house. If prices drop I am not impacted in the least. My $390k house would have to drop to about $150k for me to start becoming worried.

[chemgear]

Everything else being equal, given that I'm looking at upsizing, a drop in prices would help me (and could be financially beneficial) so I do care. I like seeing market forces at work and trying to understand things that affect where I try to invest my money. I don't mind looking at things bearishly (seems like most tend to be heavy bull when it comes to real estate.)

Like I was saying to Sylvanfan, I certainly don't mean to be a jerk in my eagerness to follow the market/babbling out loud.

It's not like my amateur analysis actually affects the outcome but I can cheer like Kevman instead if it's better than my ramblings:

"Come on housing market crash! "

(btw, I'm not convinced there is a crashing coming - a correction certainly; before people get more upset lol.)

[Skyceman]

Calgary house prices below pre-recession levels

Calgary is the only major Canadian market with house prices remaining below their pre-recession peak, according to a national survey of six centres across the country.

And the city also had one of the lowest year-over-year house price gains in Canada in May, said the Teranet-National Bank House Price Index, which was released Wednesday.

Read more: http://www.calgaryherald.com/busines...#ixzz0v5OcYBQ9

[Cowboy89]

Originally Posted by Slava

That is just because of borrowed money though. You could borrow a bunch of money and have the same impact with a lot of other investments actually.

I don't know what prices are going to do over the next short while...maybe drop by 5-10%, but maybe just stay pretty flat. Interest rates aren't exactly rocketing up here, and mortgage rates are pretty flat. Last I saw mortgage rates were dropping...sure that won't last forever, but its not a time to panic one way or the other either.

You can also diversify better with other investments (You can't own a garage in Vancouver, a living room in Toronto and a kitchen in Calgary) and keep a level of liquidity unmatched by real estate.

[The Yen Man]

I apologize if I've misread the intent of your posts Chemgear, but when I read your posts, it feels like you're almost downright giddy at any potential market crash. It does come across (at least when I read it) like you're just waiting in happy anticipation for housing prices to implode. Everytime I see this thread bumped and see that you're the last person to bump it, I'm thinking "oh boy, I bet Chemgears found some more negative news about the market that he's happily sharing with everyone with all his emoticons".

Logicially, I just can't see why you'd be happy with a market crash if you own properties. That's a pretty big price to pay just to get the satisfaction of telling people "I told you so!".

[username]

He is somewhat right in that you can leverage yourself pretty heavily/quickly in real estate as compared stocks for example. It's also a problem if you don't pay attention to the market and leverage yourself too much and things shift downwards.

I'm not sure how much you invest in the stock market but you can leverage yourself just as easily there. The big difference and the big reason why stocks are a better investment is they are much more liquid than owning a property.

[Old Yeller]

Not that I'm hoping for a market crash, but I'm also looking to upsize and can kind of see where chemgear is coming from in that situation.

I got in at the right time and have a tonne of equity in my current house, but if my starter home goes down by 10-15% in value compared to the place we're looking at buying, it still has the potential to save my wife and myself thousands of dollars.

Of course my neighbor listed his home for an absurdly low price and it still took over 3 months to sell and he finally sold it to a rental company that probably bent him over backwards further because he didn't want to carry two mortgages for any length of time.

It's a tough market out there right now.

[Pinner]

Originally Posted by fotze

I think a house is absolute nazi like forced savings for most. It is tangible, easily understandable and much less volatile than other investments.

One thing people forget about housing is that unless your downsizing or moving into a cheap market or a box under a bridge, what your house is worth doesn't really matter, you have to live somewhere.

And then consider the interest you pay on that mortgage

A single young guy that can afford some risk, should take some.

[Frank MetaMusil]

Originally Posted by Pinner

One thing people forget about housing is that unless your downsizing or moving into a cheap market or a box under a bridge, what your house is worth doesn't really matter, you have to live somewhere.

And then consider the interest you pay on that mortgage

A single young guy that can afford some risk, should take some.

You'd think most landlords factor that into their monthly rent charged already as well......

[Pinner]

Originally Posted by Frank MetaMusil

You'd think most landlords factor that into their monthly rent charged already as well......

No kidding, alot of young single guys live with other people, roommates, parents, family members etc. Live on the cheap and invest in Oil/Gas, probably lots of information on this board.

[chemgear]

Originally Posted by The Yen Man

I apologize if I've misread the intent of your posts Chemgear, but when I read your posts, it feels like you're almost downright giddy at any potential market crash. It does come across (at least when I read it) like you're just waiting in happy anticipation for housing prices to implode. Everytime I see this thread bumped and see that you're the last person to bump it, I'm thinking "oh boy, I bet Chemgears found some more negative news about the market that he's happily sharing with everyone with all his emoticons".

Logicially, I just can't see why you'd be happy with a market crash if you own properties. That's a pretty big price to pay just to get the satisfaction of telling people "I told you so!".

Nono Yen Man, please don’t worry about apologizing – I am sure my posts might be interpreted as such. Thanks for your post. So if anything, I can apologize if it sounds like I’m dancing in the streets and p33ing all over people’s homes.

Like I said, I’m looking to perhaps buy a larger place so a lower price point would help me for sure. And when I see something interesting on this topic, I do try to link it here for discussion. I try not to slant (or cherry pick) things as I hope the numbers are simply what they are – and I try to gather my opinion based on that. No going to lie though, I do have a hard time finding legitimate bull articles. I do miss stuff and I like this thread because others point out different things (like the prospect of hitting peak inventory this year which I had not considered at all.) But at the end of the day, it’s just my opinion and I can be just as easily wrong as I can be right.

I don’t think the market will crash outright but even if I did, I’m really not sure why it would matter. It’s just my/your/our opinion and we don’t actually have control of the market. What does it matter if I think the market will go up/down/sideways/purple giraffes? Even if I wanted, I don’t have access to a magical switch to crash it into the ground. I have no control over what happens – I’m just trying to do the analysis with what information I can find. Maybe people think I’m a moron for my opinion but let me know what I might be missing - that’s more beneficial to the discussion than name calling (don’t mean you Yenman.)

Again, I don’t necessarily mean for my posts to be “giddy” or for people to take them personally. Given my circumstances, it would certainly be beneficial so perhaps I am positive about that. I know housing can be a touchy subject as people often take it as a personal affront if you think prices might come down – as if you were p33ing on their specific home for some reason. Would people feel better about posts saying “housing will double next month!!” that are not backed by any logical information at all? I don’t think feelings/personal attacks should factor into the analysis at all.

And by the same token, I certainly do apologize if I ever direct anything personally negative to anyone in this discussion, as that defeats the point of the ongoing thread discussion. However, if people are upset that I have a different opinion, then I don’t know what to do other than ask for some guidance to show me where your analysis springs from. It’s not a matter of being right or wrong - I’d hope that I would be mature enough to educate myself more with an open mind.

(And I do like emoticons – they remind me that this is a forum of normal people and anything here isn’t/shouldn’t be life or death or taken overly personally.)

[chemgear]

Originally Posted by fotze

I think a house is absolute nazi like forced savings for most.

Oh no! Godwin's Law!

Totally kidding - you're probably right.

[Skyceman]

Signs of continuing softening in Calgary housing market

Preliminary unofficial MLS data shows Calgary’s housing market continued to soften in July with sales plunging from year-ago levels and the average sale price falling from the previous month.

According to the figures on the website of realtor Mike Fotiou, of First Place Realty, so far this month until Thursday there have been 843 single-family homes sales in the city compared with 1,585 sales for the entire month of July 2009.

Read more: http://www.calgaryherald.com/busines...#ixzz0vB3vvXty

[Khel]

So I've purchased a place, but now I have to decide whether I want to go with variable or fixed rate for the next 5 years?

I've been preapproved at 2% variable (to start) and 4.1% fixed... Is it safer to lock in or take my chances?

[chemgear]

I believe most people (and the data) suggests that variable has been historically better.

But the Bank of Canada is in the process of raising rates so I'm not too sure now. There was this article recently but I am sure there are much more knowledgeable people that can provide more information/analysis:

http://www.financialpost.com/news/Va...442/story.html

[chemgear]

Actually, another recent link for you about the subject:

http://www.canadianmortgagetrends.co...-term-but.html



There is also a good article by Moshe Milevsky that is linked within. Hope this helps a little.