Calgary Real Estate predictions?

[chemgear]

Heh, "mostly through" April now.

First time Home Buyer sales are still down versus the brutal 2010 year. Prices up slightly as a result but sales to list price ratios continue to be stable below 100%.

http://calgaryrealestatereview.com/2...l-estate-blog/

To be fair pending looks to be inching back up slightly towards the 2010 levels. As always, it'll be interesting if 2011 will continue to be worse than 2010 - which itself was the worst in a decade (even more interesting considering the growth in the city since then.)

Mike F has a comment on his on blog as well - looks like the "parasite communities" are down even more, 25% versus last year.

[chemgear]

April is in the bag. Kudos to Mike F. as always - prices of homes that are selling are up slightly 0with first-time home buyers kicked/slowed out of the market. Prices of actual homes continue to slide with sales to listing ratios still solid at less than 100% as per the last 12+ months(?)

Sales are ~10% down even versus the "worst in a decade" of 2010. CREB is still forecasting 20% increase from those terrible levels - things better pick up soon or they'll have to revise it. Pending numbers went up a bit near the end of the month but are back below last year - so a good part of May will probably be lower than last year as well. That still boggles my mind a bit considering how many more people the city has added in the last 10 years for it to be that low.

Inventory is actually relatively low versus last year and we will see how everybody's MASSIVE oil bonus cheque may offset the increasing cost of everything (gasoline, food, etc.)

Interesting times.

http://findcalgary.com/

[kevman]

A growing number of homeowners in Alberta are struggling to meet their mortgage payments as Calgary suffers a six-year real estate decline that is only recently showing signs of improvement.

http://www.theglobeandmail.com/repor...rticle2010293/

[chemgear]

Originally Posted by kevman

http://www.theglobeandmail.com/repor...rticle2010293/

Oil prices! Oil prices! Oil prices! Oil prices! Oil prices!

[Cowboy89]

Originally Posted by chemgear

Oil prices! Oil prices! Oil prices! Oil prices! Oil prices!

They have taken more than a $8/bbl tumble today!

[chemgear]

Originally Posted by Cowboy89

They have taken more than a $8/bbl tumble today!

[zuluking]

Originally Posted by Cowboy89

That's running gag for me, because in Calgary if you live in a house in the inner city you typically live in either wartime, shoddy built, modular bungalow housing, 1950s and 60s era modular cookie cutter bungalow housing, or a rebuild/reno that has styling inspired by what you will find a 30 minute drive from downtown.

You can't get the mature landscape that comes with inner city though. It'll be another 30 - 50 years in the 'burbs before a tree can compete with the 2-story stuccos.

[Old Yeller]

Originally Posted by kevman

http://www.theglobeandmail.com/repor...rticle2010293/

I like that the article talks about how Alberta has a much worse track record for late payments on mortgages than the rest of the country and how .83% haven't made a payment in 3 months.

Then it compares it to the States where 8% of people are late on their mortgages.

Doesn't seem like the housing crisis in the States is anywhere near over if almost 1 in 10 people are 3 months late on their mortgage payments.

[chemgear]

2010 had the worst sales numbers in a decade. 2011 tallies are just under that total so far. Will we see a big pick up in the summer? It normally is the busiest time - CREB's forecast calls for a 20% bump for the year average; which will require a 30%+ increase versus 2010 for the rest of the year.

[kevman]

Originally Posted by chemgear

Will we see a big pick up in the summer?

I think we might see a slight pick up in the summer based on the purely unscientific fact that spring and as a result summer were a little late to the party this year. Nobody likes house hunting or moving when the ground is covered in snow and the ground was covered with snow for a surprisingly long time this year...

One thing my simple supply and demand based mind can't figure out is why inventory is so low. If we are truly headed for lower prices shouldn't there be an abundance of inventory? I know in the areas I monitor there is very little for sale. When it takes months at a time for new homes to come on the market people are a little more aggressive when it comes to making a move. The homes that are actually selling seem to sell in days and not months.

So why is inventory so low?
The bear in me thinks that there might be an unusually high number of homeowners that bought in the last few years that are underwater. These homeowners would need to pay to sell their home scaring them away from listing them.
The bull in me thinks that the economy is picking up and immigration seems to be up so inventory is low because, well, inventory is low…(ie, demand > supply) However the slow sales debunk this pretty quick…


Speaking of economy… Someone else mentioned earlier in this thread that Calgary has something that Phoenix or Vegas do not and that’s jobs.

The following is a chart of home prices in Houston over the last 5 years. Prices have been pretty flat when the rest of the US has plunged…

http://www.har.com/mls/dispPressRelease.cfm

Here is Houston’s annual appreciation rate
http://forecastchart.com/prices-home-houston.html

For comparison, here’s Phoenix
http://forecastchart.com/prices-home-phoenix.html

Houston, like Calgary, has a strong economy driven by oil where as Phoenix had an economy driven by house sales…

However Houston probably avoided a bust because it also looks like they never boomed…

[Tron_fdc]

While I like to read all the hard facts, I can't help but notice some of the soft facts I see around town.

- I work in the south east, and there is a pile of service companies, freight companies, and light industrial around me. A lot of them have "help wanted" billboards, advertising everything from casual labour to skilled trades. 2 years ago you didn't see ANYONE advertising like that.
- traffic is getting worse, which makes me think more people are on the road coming and going from work
- my company is tied into infrastructure spending worldwide, and our sales are up 20% over last year (still down from 2006 though)

Stuff like that is hard not to take note of. I really can't see housing prices staying low if we start seeing migration out here again, because it seems like everyone I talk says they are getting busier and need people.

[Cowboy89]

Originally Posted by kevman

Speaking of economy… Someone else mentioned earlier in this thread that Calgary has something that Phoenix or Vegas do not and that’s jobs.

The following is a chart of home prices in Houston over the last 5 years. Prices have been pretty flat when the rest of the US has plunged…


Houston, like Calgary, has a strong economy driven by oil where as Phoenix had an economy driven by house sales…

However Houston probably avoided a bust because it also looks like they never boomed…

I've been a consistant bear on housing for quite some time in the Calgary market. The price history since 2007 would suggest I was correct, but I'm in agreement with other posters in this thread that would suggest that Calgary's floor for prices is probably much higher than in other places in the country because we do have a functioning economy that isn't real estate driven. Places like Phoenix saw declines of 80%, I can see us being flat as Vancouver and Toronto crater, where prices have skyrocketed over the past two years while incomes and unemployment have remained static.

That all said, I would be quick to criticize those that would point to the pricing malaise of the past few years here and start up the 'buy now or get priced out in the next boom' mantra. Real Estate can only go up sustainably with incomes, and if you make an income that fluctuates with Calgary's aggregate incomes then there's no reason to overleverage and buy now. Draft up a spreadsheet and see how much principle you retire over 5 years on a 5% down 30 year amort. It's piddly, meaning that for you to be ahead vs. renting over 5 years you would be requiring the price of the property to increase subtantially to build equity in excess of what you could save and generate investing with the savings. When looking at the small principal retired over 5 years the concept of 'you're just paying someone else's mortgage' goes out the window. You're just debating on which vehicle to pay interest to the bank, either directly or indirectly through a landlord. Overall it's just safer and more responsible to wait until you have 20% or over for a down payment and not have to pay CMHC insurance, and not be dependent on real estate increasing in value to be ahead, because let's face it, the past 4 years have proven it doesn't always go up.

[chemgear]

^Interesting thoughts.

Inventory is indeed relatively low while sales numbers continue to be brutal. From personal experience I've noticed that homes we are looking at are still on mls for 6+ months (some more than a full year already) with 50-100K price cuts still with little movement. Those that do come off the listings are generally people giving up rather than actual sales.

Just for s&g's we even looked at the West 17th development (I think that is the name) - there were being listed at 1.2-1.3 million each last summer. They are all sub one million now.

[chemgear]

http://www.calgaryherald.com/busines...228/story.html


Calgary region housing starts plunge
Nearly 39% off last year’s pace in April

[Old Yeller]

Speaking from actual experience, we just sold our starter home in Mckenzie relatively quickly. I believe it was on the market for 20 days, we had a lot of traffic through it and got close enough to our asking price to satisfy us.

However since we were upgrading to a larger more expensive home we had a tonne of choice and not much competition and most of the places we were looking at were on the market for at least a month, more likely 2.

It actually seemed quite advantageous as it seemed like we were selling into a sellers market at the lower housing price range, but buying in a buyers market at the higher housing price range.

I did pay attention to the market in the surrounding area for quite a while and the general trend seemed to dictate that if we had sold last year at the exact same time we probably could have sold for about 5-10% more.

[Table 5]

Completely unscientific, but from a relatively fresh pair of eyes driving around Calgary today, it seems like there are way more for-sale signs out there then there were a year ago when I was last in town.

[Jedi Ninja]

I'm not generally bearish on the real estate market, but I always find the Houston numbers a bit unsettling. The median price in Calgary (US$445,000) is almost 3x the median price in Houston ($150,900). A little hard to explain...

[Slava]

Originally Posted by chemgear

http://www.calgaryherald.com/busines...228/story.html


Calgary region housing starts plunge
Nearly 39% off last year’s pace in April

So reduced housing starts would mean prices should be increasing, right?

[burn_this_city]

Originally Posted by Jedi Ninja

I'm not generally bearish on the real estate market, but I always find the Houston numbers a bit unsettling. The median price in Calgary (US$445,000) is almost 3x the median price in Houston ($150,900). A little hard to explain...

Looking at median household incomes...

Houston - $36,616
Calgary - $122,459

[chemgear]

Originally Posted by Slava

So reduced housing starts would mean prices should be increasing, right?

A little of both - in theory it's less supply down the road.

But I think people often see it as not as good as less starts is an indication of less current demand (and anticipation of near term demand) from the segment of people in the market for brand new housing.

As always, I'm no expert - perhaps somebody more knowledgeable can clear it up?