Calgary Real Estate predictions?

[Jedi Ninja]

Originally Posted by burn_this_city

Looking at median household incomes...

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

Do you have a link for these numbers? A quick scan of Google comes up with $51,000 and $91,000 or thereabouts for me.

[burn_this_city]

Originally Posted by Jedi Ninja

Do you have a link for these numbers? A quick scan of Google comes up with $51,000 and $91,000 or thereabouts for me.

No idea how reputable these are...

http://www.omaccanada.ca/en/market/calgary/default.omac

http://en.wikipedia.org/wiki/Houston

[chemgear]

Originally Posted by Jedi Ninja

Do you have a link for these numbers? A quick scan of Google comes up with $51,000 and $91,000 or thereabouts for me.

Who-hooo! I'm gonna get ANOTHER 30% "oil price bonus" on top of my normal bonus! Score!

[Jedi Ninja]

The Calgary link is an average, not a median. The Houston number looks to be the number from 2000:

http://www.houstontx.gov/planning/De...ncome_avgs.htm

Point taken though that there is at least a significant difference in median incomes, though.

[chemgear]

Originally Posted by kevman

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.

You piqued my interest about this component and I had a more detailed look. On Mike F's website you can see the recent sales and what they were originally purchased for in the last seven years.

The most recent sample of ~100 SFH sales (in the last few days) show that almost exactly half of them lost money when they sold, net after standard realtor fees. That does not even include any kind of mortgage interest, property taxes, moving costs, repairs, etc. over time. Heck, that doesn't even include properties that had sunk costs for renovations over the last 7 years for a potential uptick in value.

Average loss was more than $50,000 - a bit painful for just a few years.

[Cowboy89]

Originally Posted by chemgear

You piqued my interest about this component and I had a more detailed look. On Mike F's website you can see the recent sales and what they were originally purchased for in the last seven years.

The most recent sample of ~100 SFH sales (in the last few days) show that almost exactly half of them lost money when they sold, net after standard realtor fees. That does not even include any kind of mortgage interest, property taxes, moving costs, repairs, etc. over time. Heck, that doesn't even include properties that had sunk costs for renovations over the last 7 years for a potential uptick in value.

Average loss was more than $50,000 - a bit painful for just a few years.

Very interesting. Another take on this is how many people are in situations where they cannot afford to sell and walk away, but can still afford to make payments? That takes them right out of the market until they pay down principal, make more money, or prices rise sufficiently (Which will take a long time because the principal you pay down on high ratio loans is very small). This could explain the low inventory and the lower sales figures.

[chemgear]

First half of May is done -Mike F with the nice summary:

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

As I was looking over May’s figures to date, I found a glimmer of hope that we’re about to start seeing the groundwork for a busier market. That hope slightly deflated as I remembered I was trying to find an improvement over a 2010 market that was already the slowest in a decade. But I’ll take the positives wherever I can find them, however small they may be

. . .

Despite forecasts of a busier market in the second half of the year, it seems some agents are packing it in. The latest count as of May 13, 2011 had 4,961 associates in CREB. Back in January there were 5,141. Last May there were 5,225. Summer of 2007 had 5,495. (These figures do not include brokers)

[kevman]

Revisiting demographics: Another reason why the next decade will be nothing like the last

An article about the affect of an ageing population on housing demand...

From the charts it's interesting to note that while Canada's population is largely between 35 and 60 years of age, Alberta has a second age "bubble" of those that are 20 to 35 years of age. The largest demographic group in Alberta is between the ages of 25 and 29 (it's the only province that the largest demographic isn't in the 45-49 range). Perhaps this puts Alberta, and by extension Calgary, in a position to better weather the boomer's retirement financing sell off?

[bizaro86]

Originally Posted by chemgear

Despite forecasts of a busier market in the second half of the year, it seems some agents are packing it in. The latest count as of May 13, 2011 had 4,961 associates in CREB. Back in January there were 5,141. Last May there were 5,225. Summer of 2007 had 5,495. (These figures do not include brokers)

I bet some of those are people who were working as agents, and now have got their brokers license and gone on their own to save the fees. I know a couple of realtors who have done that recently.

[chemgear]

"It's okay, HAM (Hot Asian Money) will save us all!"

http://www.financialpost.com/persona...203/story.html

Take a 750 square unit. If you are going to buy the unit for $550 per square foot, that’s $413,000. You put 25% down and you have a mortgage of $310,000. Based on variable rate mortgage at 3% with a 25-year amortization, your monthly payment is $1,475. Add monthly fees of $345 for condo maintenance and $345 for property taxes and you are up to $2,200 in costs.

Newer buildings in Toronto are generating $2.26 per square foot but even at that rate, it only generates about $1,700 per month.

http://www.financialpost.com/persona...251/story.html

Homeowners put 72.1% of their pre-tax income toward homeownership costs, including mortgage payments, utilities and property taxes on a typical detached bungalow in Vancouver during the three months ended March 31, 2011. That was up 3.4 percentage points from the last quarter. Toronto’s affordability index came in at 47.5% (up 0.8 of a percentage point), Ottawa stood at 39.0% (up 0.4 of a percentage point), Calgary was at 35.9% (up 0.9 of a percentage point), and Edmonton at 31.5% (up 0.5 of a percentage point). Montreal is now also losing its affordability status, with home ownership costs up 2.0 percentage points to 43.1% in the quarter, the report said.

[Winsor_Pilates]

Originally Posted by chemgear

[I]Homeowners put 72.1% of their pre-tax income toward homeownership costs, including mortgage payments, utilities and property taxes on a typical detached bungalow in Vancouver during the three months ended March 31, 2011.

shows how difficult Vancouver is to afford for your typical local, but also is a bit misleading as they're not the ones buying those bungalows & those bungalows aren't typical homes on Vancouver.

I would like to see the percentage for the actual people buying those homes who are typically very wealthy both local or foreigners.
Or compare the typical wages to home costs including condos and attached houses which they actually typically live in.
Still would likely be the highest in Canada, but not 72%

[Cowboy89]

Originally Posted by Winsor_Pilates

shows how difficult Vancouver is to afford for your typical local, but also is a bit misleading as they're not the ones buying those bungalows & those bungalows aren't typical homes on Vancouver.

I would like to see the percentage for the actual people buying those homes who are typically very wealthy both local or foreigners.
Or compare the typical wages to home costs including condos and attached houses which they actually typically live in.
Still would likely be the highest in Canada, but not 72%

True, considering that that's a percentage of pre-tax income. When it comes out in the wash those numbers would point to less than $500 to live on a month for everything else, which obviously isn't a 'real life' number. However it does point to the fact that a median income family simply cannot buy an average place. If Vancouver Real Estate were a stock traded on an exchange, you wouldn't want to buy and hold that stock for the long term with fundamental warnings like that.

[chemgear]

May is nearly done - still doing about the same as 2010 (worst in a decade.) Sales prices continue to be almost always below list prices as per the last year+. Oil prices are still nice and high, interest rates hikes still a few month away in the grand scheme of things.

[chemgear]

So I had a bit more of a closer look at the price bands to see the breakdown of why the CREB stats show housing prices are going up/flat.

It all comes down to the fact that the distribution of the homes that manage to sell has changed/shifted. Overall, it looks like the price of individual homes are going down (sales vs. list continues to be less than 100%, almost no bidding wars, price cuts updates, etc.) It's an interesting stat and how it can mask actual values.

Pulling April numbers from the CREB for 2011 and 2009:

http://www.creb.com/public/buyer-res...statistics.php

(You also have to love how they have this picture on their website for archived statistics. )



Here are the sales for the various pricing bands (in thousands of $, April 2011, and April 2009 sales.)

0-199 1.5% 1.0%
200-299 10.9% 13.5%
300-349 14.7% 21.6%
350-399 17.4% 20.6%
400-449 14.1% 15.0%
450-499 10.5% 7.7%
500+ 30.9% 20.6%

Hopefully, I didn't mess up the quickie summary. But as you can see, it looks like the first time home buyer market is getting cut off fairly well. The value of an individual home isn't going up on average, it's the fact that bottom half of the entire market has slowed down in a big way to make average "sales price" relatively stable. It is also why the number of sales is so low (and continues to be so poor) versus historicals.

I wonder how that pans out in the longer term with the mid market/higher market needing to sell off their starter home in order to complete their transaction for the more expensive home. As always, interesting times.

[chemgear]

May summary - pretty much bang on the same with 2010 (so either on track for 1st or 2nd worst in a decade again?)

http://calgaryrealestatereview.com/2...te-statistics/


Some other sidebar articles:

http://www.theglobeandmail.com/globe...rticle2042922/

A TransUnion study suggests Canadian debt loads grew at an average 4.5 per cent in the first quarter compared to a year-earlier, signalling appetite for debt is undiminished.

The credit bureau's analysis found that total debt per consumer, excluding mortgages, grew to $25,597 in the first quarter of 2011, up from $24,497 in the same quarter of 2010.


http://www.mortgagebrokernews.ca/new...istings/106797

“Among our team of six brokers, we’re seeing about three to four clients a month who we would identify as habitual refinancers – meaning they typically have refinanced their credit card debt back into their mortgages every two years,” Bob Smith, broker/owner for Verico K-W Mortgage, told MortgageBrokerNews.ca. “But what we’re seeing now is that those clients are now finding that they can no longer do that.”

For that group, frustration is setting in as they watch their disposable income shrink and are forced to use more of their income to service debt. Compounding that discomfort, said Smith, is “each transaction has added to their principal with an increased insurance premium, which has whittled away at their equity. It means that with a forced listing, they will have little or no equity available to downsize after legal and selling expenses.”

[billybob123]

FWIW, in my neighbourhood (R1 NW inner city with mix of 1950s bungalows and newer infills), not much movement over the past few months (1-2 sales per month) but in the last few days three or four houses sold in <5 DOM at higher than list (most 103-106%). I bought there last September at what would be considered a bargain (and at 93% of list after a price reduction). What thrills me to no end, is that the dumps that have been overpriced and on the market since then, are still for sale, even though the since-listed-and-sold houses are selling for close to their asking price. Suck it.

Still, massively overpriced. I think I overpaid for my house, but now am starting to feel slightly better about what we paid and what we got.

[troutman]

Anecdotally, we have opened many new files in the last two weeks, and are getting many calls for quotes. June looks to be a busy month (relative to the first few months of 2011).

[chemgear]

LOL, shelter porn!

http://www.theglobeandmail.com/life/...rticle2042242/

Jim Norton, 42, says few ladies can resist shelter porn. When this Casanova cum comedian gets lucky, the credit goes to his Upper West Side apartment in a Trump building that has floor-to-ceiling windows.
“Women see windows – and skirts come off,” he says, adding that bleak economic times make seduction a cinch.

[chemgear]

Originally Posted by fotze

Its weird that Realtor1's foreclosure lists show a vast majority of the homes/condos at the way below average price mark. I would have thought there would be many more higher price places on there.

I'd guess it's marginal end of the spectrum that gets squeezed the most and the earliest. I'd imagine the mid/higher end of the market has more resources to stretch finances longer and to continue to make purchases for a longer period even if they are not sustainable (or maybe they are indeed sustainable - who knows for now.)

It's also probably why the first time home buyer/bottom half of the market sales numbers continue to be down so much.

[chemgear]

Looks like the mainstream media continues to gather more notice on the topic. I guess time will tell one way or another.

http://www2.macleans.ca/2011/06/01/t...-house-prices/

http://www.bloomberg.com/news/2011-0...-than-nyc.html

http://online.wsj.com/article/SB1000...LEFTTopStories