Calgary Real Estate predictions?

[chemgear]

Originally Posted by Realtor 1

Hiking the down payment to 10% would be crazy. I think it would kill any recovery we have seen.
For many of my buyers 5% is a good chunk of change. I think 5% is a great number because it shows that you can save but doesnt have to leave you stranded for years in recovery mode.

I'm not sure I would call it "crazy" per se. But it would certainly speed the process/correction that is already taking place. Given the increasing pace and current record high loads of debt that the bank, BoC, government and media are waxing about - I would suggest the "any recovery" you mention is probably inherently unsustainable.

Originally Posted by Patrick

I dont agree it would hurt 1st time buyers. Most people can meet 10% fown based on equity in their 1st home, etc when they sell it.

Anyhow, back to this as well. I linked this figure before, but I haven't confirmed the numbers. If it is correct, then it is rather insane considering the average would have to include people buying larger homes from their initial "starter" and still not having any decent amount of equity.

http://2.bp.blogspot.com/_0YOsyi5WbL...quity+5%25.Bmp

[AFireInside]

Originally Posted by Realtor 1

Hiking the down payment to 10% would be crazy. I think it would kill any recovery we have seen.
For many of my buyers 5% is a good chunk of change. I think 5% is a great number because it shows that you can save but doesnt have to leave you stranded for years in recovery mode.

5% is a good chuck of change because the prices are high. 6 years ago 10% would be equivalent. Thats crazy.

[chemgear]

Hmmm, I must have missed this article earlier:

http://www.financialpost.com/Nobody+...099/story.html

TransUnion, one of the two credit rating agencies in Canada, says each Canadian consumer who is actively borrowing had average debt of $25,163 in the third quarter, excluding their mortgage. That's up 4.3% from last year.

[kevman]

Originally Posted by AFireInside

5% is a good chuck of change because the prices are high. 6 years ago 10% would be equivalent. Thats crazy.

Is it really that crazy? If you were in the market for an average priced home in Calgary at $400,000 you'd need a down payment of $40,000 at 10%. A mortgage of $360,000 ($400,000 - 10%) over 25 years would have a monthly payment of ~$2,000. Rent on a 2 or 3 bedroom condo/house depending on location can be had for $1,000 - $1,200 a month. So with that in mind an average person should be able to save up a 10% down payment in 3-4 years based solely on the difference between rent and a mortgage not including additional saving.

So I guess my question is, is 3-4 years an unacceptable length to have to wait to save up a down payment?

Furthermore, to qualify for a mortgage of $360,000 over 25 years at 4% you'll need a combined income of ~$90,000/year. If you're earning that kind of money it really shouldn't be too difficult to save up $40,000 in a few years.

I know all my math was relatively simple and some people will obviously have a harder time saving then others due to factors outside of their control but to simply dismiss 10% as crazy is, well, crazy in my opinion.

[MacFlame]

added info/

Originally Posted by kevman

Is it really that crazy? If you were in the market for an average priced home in Calgary at $400,000 you'd need a down payment of $40,000 at 10%. A mortgage of $360,000 ($400,000 - 10%) over 25 years would have a monthly payment of ~$2,000. Rent on a 2 or 3 bedroom condo/house depending on location can be had for $1,000 - $1,200 a month. So with that in mind an average person should be able to save up a 10% down payment in 3-4 years based solely on the difference between rent and a mortgage not including additional saving.

So I guess my question is, is 3-4 years an unacceptable length to have to wait to save up a down payment?

Furthermore, to qualify for a mortgage of $360,000 over 25 years at 4% you'll need a combined income of ~$90,000/year. If you're earning that kind of money it really shouldn't be too difficult to save up $40,000 in a few years.

I know all my math was relatively simple and some people will obviously have a harder time saving then others due to factors outside of their control but to simply dismiss 10% as crazy is, well, crazy in my opinion.

Are you renting right now? While there may be some condo/homes in that price range, the vast majority of 2-3 bedroom houses are certainly not in the price range. A 3 bedroom home could be 1700 plus in Calgary. A $1000 might get you an apartment, but even that may vary quite a bit.


In fact, in all of Calgary (rentfaster.ca), there are 26 pages of listings, on page 5, rent exceeds 1300.00 per month.

[gottabekd]

Originally Posted by MacFlame

added info/


Are you renting right now? While there may be some condo/homes in that price range, the vast majority of 2-3 bedroom houses are certainly not in the price range. A 3 bedroom home could be 1700 plus in Calgary. A $1000 might get you an apartment, but even that may vary quite a bit.

In fact. I just did a quick check on rentfaster .ca. In both the the NW and SW, there are 15 pages (or more) of listings. After page 2, the listings exceed 1300.00 per month. Just sayin....

I've heard rumblings (maybe a few pages back in this thread) that there are more and more vacant rental homes. So, maybe that will drives down the prices a bit. Still, I would think $1400 would be on the lower end of the scale. Anything cheaper, and you might not want to live there.

[MacFlame]

Originally Posted by gottabekd

I've heard rumblings (maybe a few pages back in this thread) that there are more and more vacant rental homes. So, maybe that will drives down the prices a bit. Still, I would think $1400 would be on the lower end of the scale. Anything cheaper, and you might not want to live there.

Agreed. The argument could be made, however, that if mortgage lending tightens, less people will be able to purchase a home, leaving more people in the rental market, which may actually drive rent higher in the long term....but you're right, in the short term, landlords would be forced to lower rent due to the influx of rental units.

I'm not sure what the answer is......

[Winsor_Pilates]

Originally Posted by MacFlame

A $1000 might get you an apartment, but even that may vary quite a bit.

The median 2 bedroom apartment rental in Calgary is just over $1000; but yeah if you're looking at houses, good luck at that price range.

Originally Posted by gottabekd

I've heard rumblings (maybe a few pages back in this thread) that there are more and more vacant rental homes. So, maybe that will drives down the prices a bit. Still, I would think $1400 would be on the lower end of the scale. Anything cheaper, and you might not want to live there.

It's hard to find stats on houses, but the apartment vacancy rate in Calgary actually decreased in 2010 for the first time since 2006.

[pepper24]

Originally Posted by Realtor 1

Hiking the down payment to 10% would be crazy. I think it would kill any recovery we have seen.
For many of my buyers 5% is a good chunk of change. I think 5% is a great number because it shows that you can save but doesnt have to leave you stranded for years in recovery mode.

If 5% is a good chunk of change for many of your buyers then these buyers are going to be in trouble when rates eventually start trending up putting downward pressure on the market.

[bomber317]

Originally Posted by kevman

So I guess my question is, is 3-4 years an unacceptable length to have to wait to save up a down payment?

I believe that is doable now, but say you were doing that in 2000-2004 and waiting 2-4 years to save to get another 5% down payment. You would be falling farther behind because of the crazy run that real estate had.

I don't have any data for renting, but didn't rent go up as well during the real estate run?

I think it is crazy how much real estate has gone up, with the differences of how much 10% down payment got you in 2000 versus 2010.

[chemgear]

Originally Posted by fotze

Its been pretty almost exactly 2 years since this thread started.

The average single family home in Jan 2008 was at $455,297.
The latest average is for November 2010 at $455,460

I've been waiting patiently for this bubble to burst. I'm starting to get blue bubbles.

Hehe, didn't you just switch your view 180 degrees only back in July/few months ago?

To be fair though, median for January 2008 was $410,00, median for December 2010 was $389,000. Still tons of downward pressures with little concrete upside imo.

And real estate is generally pretty slow, in this case a bit like a slow motion train wreck of debt. Everything is so much faster only because housing is so illiquid.

[Slava]

Seems to me that there is a lot more cheering and hoping for a crash here in this thread(which is sad considering the number of people that will be hurt by this) as opposed to actual evidence?

[chemgear]

Originally Posted by fotze

Now that I have paid off my mortgage and want to buy a rec property, my viewpoint has miraculously turned 180 degrees. The worlds going to crap and I'm going to get a deal if I just wait.

Ahhh, nothing implied (or "I told you so") - I was going by your own post/comment.

Thus the "" - I agree, the post is interesting. Good data and different viewpoints to consider.

[CM ONE]

Originally Posted by Slava

Seems to me that there is a lot more cheering and hoping for a crash here in this thread(which is sad considering the number of people that will be hurt by this) as opposed to actual evidence?

You think this place is bad? Everytime the CBC runs a story on the interest rates the comment section goes wild with people seemingly ecstatic that their fellow Canadians are going to be screwed and it's their own fault for poor planning. I really do not understand the bitterness.

Why do people want this?

[chemgear]

Originally Posted by Slava

Seems to me that there is a lot more cheering and hoping for a crash here in this thread(which is sad considering the number of people that will be hurt by this) as opposed to actual evidence?

Really? I have found a lot of good data, articles and information in here that I wouldn’t have necessarily found otherwise – for upside and downside. I’m not remotely an expert and I appreciate the chance to see other view points and have the opportunity to consider them.

However, I’ve never understood that particular argument/making it personal myself. Viewpoints of individuals on an internet forum thread are not going to fundamentally cause the value of housing/stock/anything else to materially change. (Probably a good thing? ) The point is the discussion/sharing of information and viewpoints for me.

The person who is down on the performance of the Flames and rest of season isn’t causing/cheering for lower earnings by Saddledome workers due to lack of playoff games. Somebody who believes Apple stock is overpriced based on market fundamentals isn’t maliciously hoping or want financial ruin for the tens of thousands of people who happen to hold that stock. Somebody noticing an asteroid inbound to Earth isn’t dancing and cackling with glee at the possible extinction of mankind – okay, that was overboard.

Nobody would make the arguments above and yet one has to sit on one side of the argument or otherwise . . . it is “sad?” Saying one feels that a certain investment is overpriced isn’t saying “Gee, I really hope people get royally frakked.”

And really, the emotional repercussions of any market adjustment up or down doesn’t (and shouldn’t?) really factor into the analysis. In the US, the downstream consequential emotional impact of people losing homes that they could not afford in no way prevented a market correction in prices.

[burn_this_city]

Originally Posted by fotze

Its been pretty almost exactly 2 years since this thread started.

The average single family home in Jan 2008 was at $455,297.
The latest average is for November 2010 at $455,460

I've been waiting patiently for this bubble to burst. I'm starting to get blue bubbles.

To be fair I think the peak happened prior to the threads creation, June or July 2007..

[burn_this_city]

This is one of those threads where a lot of people were right, at different times.

[Table 5]

Originally Posted by Slava

Seems to me that there is a lot more cheering and hoping for a crash here in this thread(which is sad considering the number of people that will be hurt by this) as opposed to actual evidence?

I think people wouldn't mind seeing a bit of a crash because they think housing prices in Calgary (and by extension Edmonton and Saskatchewan) are out of whack with common sense, and would like them to come back to more sane levels so they can buy in.

I've considered moving back to Calgary a few times to be closer to family, and every time I look at the housing market, the math doesn't make sense to me. It's a mid-sized city with mid-sized amenities, yet demands big-city housing prices. It's hard to get excited about it when you compare to what else is out there for the money. Obviously there are other things to consider in a city than price, but to a lot of people, myself included, Calgary doesn't seem like the biggest value out there anymore. I like the city, but paying 400k for some crappy bungalow that needs a total renovation? No thanks.

[chemgear]

Originally Posted by burn_this_city

This is one of those threads where a lot of people were right, at different times.

Yup, it's not a matter of being right or wrong. The data and viewpoints continually flow in and change over time. The discussion is good.

Originally Posted by Table 5

I think people wouldn't mind seeing a bit of a crash because they think housing prices in Calgary (and by extension Edmonton and Saskatchewan) are out of whack with common sense, and would like them to come back to more sane levels so they can buy in.

Crash or correction, a shift back to long term fundamentals would diversify the economy a bit. Rather than throwing money into a single sector/something that might be unsustainable, households could potentially be diverting those funds to other sectors which would make any recovery more robust and less fragile going forward. A bit like not having all your eggs in one basket? And of course, the worry that increasing rates of household debt may not be sustainable forever.

http://www.theglobeandmail.com/repor...rticle1735997/

Construction jobs, which have accounted for about 33 per cent of the job market’s recovery post-recession, are largely dependent on a booming housing market. And with housing starts expected to tail off in the next year, the jobless rate will likely rise as construction companies lay off workers.

[pepper24]

Originally Posted by Slava

Seems to me that there is a lot more cheering and hoping for a crash here in this thread(which is sad considering the number of people that will be hurt by this) as opposed to actual evidence?

1. There is tons of evidence for a correction from posters linking website along with their own analysis. Read the thread.

2. It's funny how posters that work in the industry and paid commision appear to make up a good chunk of the minority (not picking on you specifically). Just saying.

3. The unfortunate part of unsustainable growth is that the correction can be just as sharp. Yes, a lot of folks will be hurt by a correction but at the same time a lot of people were hurt by the boom. Not everyone works in cushy jobs that benefited from the boom and a lot are in worse shape today. Housing costs are most peoples biggest expense.