Real estate in Calgary - another bubble?

[Regular_John]

Originally Posted by Table 5

Well, not unlike with a condo or apartment, when you're part of a duplex you're tied at the hip because you physically share the property, so everything one side does has the potential to affect the other. It's not necessarily a problem, but it has the potential to be if you (or they) ever want to make changes to the property and there is disagreement.

You also roll the dice with who your neighbours are as people in terms of lifestyle/habits. Case in point, last spring our duplex neighbours decided to go to Victoria for a few months, and AirBNB'd out their place during the time. So every Friday/Saturday for a month their unit became a party pad for 20-30 kids (because they couldn't go to clubs due to Covid restrictions, they decided to illegally party in AirBnBs). These parties got so out of control (broken bottles and pissing on our lawn, fights amongst different groups etc) that the cops had to be called several times. That was probably what sealed the deal in us wanting a detached home.

You can't pick your neighbours with a detached house either. But I do find having a physical (and financial) buffer does offer peace of mind.

It’s definitely a fair point, I know our unit was a rental for about a year before we moved in and our next door neighbours were a bit reserved when we moved in when it came to stuff like yard work and garbage bins.

They’ve since warmed up and relaxed since all four units are owner occupied and we’ve made it through a summer/fall of yard work with everyone doing there share. Turns out their initial “these bins are reserved!” had more to do with the number of weeks recycling wasn’t picked up due to trash in the blue bins from the two rental units than anything else.

[Winsor_Pilates]

Originally Posted by you&me

It's not exactly an apples to apples comparison though.

For one, inner city Vancouver has far more vibrant, walkable communities than inner city Calgary and on top of that, the climate is more conducive to walking, so obviously it has more appeal.

Secondly (and probably more importantly), detached single family homes in Vancouver are so stratospherically priced that the average person has had to resign themselves to multi-family living, lest they endure a 90 minute commute. If the decision becomes to live in a single family home 100km from DT, or live in a smaller multi family home closer in, I could become more of a walkable community enthusiast as well.

Calgary pricing isn't to the point where that decision is basically made for people.

100%, all good points.
They are different cities with different factors for sure, weather and pricing being 2 big ones.

[VladtheImpaler]

Sold our house on the day it was listed for over the list price. Had an offer the night before and the second buyer came in on the listing day well over list (I assume from Vancouver, but definitely out of town). Higher end of the market. For what it's worth, anecdotally speaking...

[Mazrim]

I had a chat with my realtor today and what he said lines up with what you said, Vlad. They're dealing with lots of people from other markets looking for investment properties and a few looking to move to Calgary.

On a somewhat related note, my parents place in Kelowna went up 37% in value in 2021. It's now worth 4.5x what they paid for it in 1990. Easy to see why people would look elsewhere for properties.

[Hemi-Cuda]

Originally Posted by Mazrim

I had a chat with my realtor today and what he said lines up with what you said, Vlad. They're dealing with lots of people from other markets looking for investment properties and a few looking to move to Calgary.

On a somewhat related note, my parents place in Kelowna went up 37% in value in 2021. It's now worth 4.5x what they paid for it in 1990. Easy to see why people would look elsewhere for properties.

I think this is the only reason our condo finally sold, realtor told me they're buying it as an investment property. I'm not complaining though, giving us our asking price with no conditions is something I could have only dreamed of a couple years ago

[blankall]

Originally Posted by Hemi-Cuda

I think this is the only reason our condo finally sold, realtor told me they're buying it as an investment property. I'm not complaining though, giving us our asking price with no conditions is something I could have only dreamed of a couple years ago

I know a few people in Vancouver, who are now looking to Calgary for investment condos. All of BC is ridiculously priced at this point.

[Fuzz]

Originally Posted by blankall

I know a few people in Vancouver, who are now looking to Calgary for investment condos. All of BC is ridiculously priced at this point.

You should probably tell them to look at investment houses instead. The real value is in land in Calgary, particularity anything considered inner city. They are endlessly building new condos, which eats the market for used ones. And by the time you want to sell, well, yours is old and used, and buyers look at the new ones. This has been happening for at least 15 years here, and it's rare to hear of someone making any significant profit on a condo in Calgary.

[Winsor_Pilates]

Helped clients write an offer on a house in Richmond yesterday listed at $2,088,000.
My clients went in a little over $2.2 and there were 13 offers.

The winning offer....

None.
Seller, who is a realtor, rejected them all. Today he said he wanted $2.7M and now isn't selling.
What a waste of everyone's time with some shady, shady garbage.
Be thankful Calgary, you're not this bad!

[Hemi-Cuda]

Originally Posted by fuzz

you should probably tell them to look at investment houses instead. The real value is in land in calgary, particularity anything considered inner city. They are endlessly building new condos, which eats the market for used ones. And by the time you want to sell, well, yours is old and used, and buyers look at the new ones. This has been happening for at least 15 years hear, and it's rare to hear of someone making any significant profit on a condo in calgary.

shhhh

[Hemi-Cuda]

One of my neighbors listed their house for sale last week, $585k 1800sqft. The listing lasted for 7 days, things are definitely getting crazy in Calgary

[stampsx2]

Originally Posted by Fuzz

You should probably tell them to look at investment houses instead. The real value is in land in Calgary, particularity anything considered inner city. They are endlessly building new condos, which eats the market for used ones. And by the time you want to sell, well, yours is old and used, and buyers look at the new ones. This has been happening for at least 15 years here, and it's rare to hear of someone making any significant profit on a condo in Calgary.

Makes for an ever increasing gap between starter home and move up home. Not sure how someone can afford to go from a $200,000 starter home to a $500,000 move up home.

[Johnny199r]

Originally Posted by Winsor_Pilates

Helped clients write an offer on a house in Richmond yesterday listed at $2,088,000.
My clients went in a little over $2.2 and there were 13 offers.

The winning offer....

None.
Seller, who is a realtor, rejected them all. Today he said he wanted $2.7M and now isn't selling.
What a waste of everyone's time with some shady, shady garbage.
Be thankful Calgary, you're not this bad!

Where do at least 13 people get $2.2 million dollars? What kind of job gets you that sort of money? or am I missing the point when I look at what job they might have?

[you&me]

Originally Posted by Johnny199r

Where do at least 13 people get $2.2 million dollars? What kind of job gets you that sort of money? or am I missing the point when I look at what job they might have?

Those 13 people likely struggled to afford a million dollar house 10 years ago and are now cashing in some equity...

[Muta]

Where is all this investment money coming from? With an increasing amount of Canadians being priced out of home ownership, is it rich foreign nationals / very wealthy Canadians? How is there so much money out there / the ability to just casually drop six or seven figures each on multiple properties?

Real estate seems to be a game for the 1% in this world, and moreso everyday.

[Winsor_Pilates]

Originally Posted by Johnny199r

Where do at least 13 people get $2.2 million dollars? What kind of job gets you that sort of money? or am I missing the point when I look at what job they might have?

Most will be move up buyers who have owned smaller properties and are trading up.
They're mostly not buying their first place at $2M+. Very few buyers in Vancouver get a detached house as their first property.

[Jason14h]

Originally Posted by Muta

Where is all this investment money coming from? With an increasing amount of Canadians being priced out of home ownership, is it rich foreign nationals / very wealthy Canadians? How is there so much money out there / the ability to just casually drop six or seven figures each on multiple properties?

Real estate seems to be a game for the 1% in this world, and moreso everyday.

Here's the short answer: To buy a million-dollar home in Canada, you'll need a yearly income of at least $175,230, as well as a cash down payment of at least $200,000. That's the minimum you'll need in order to qualify for a large enough mortgage.

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

Now when you get into 2.2 million dollar homes you probably have a lot of home equity from a boom

[DoubleF]

Originally Posted by Johnny199r

Where do at least 13 people get $2.2 million dollars? What kind of job gets you that sort of money? or am I missing the point when I look at what job they might have?

Based on anecdotal stories from friends, I think it's 2 things.

People trading up using equity in a property they have. Condos and townhouses in Vancouver aren't stagnating in price like they are here in Calgary.

The second is that it seems that even with similar household income, banks are more often more willing to lend almost double on occasion to those in BC than those in Alberta. At its peak, Calgary families with household income of approx $150-200K could seemingly borrow to purchase a home up to $800-900K. Friends in Vancouver were basically saying that with around $150-200K household income, they could borrow around $1.2-1.4MM.

Property value wise though, this congruency doesn't continue past the lending as far as I know. A $500K budget can get you into a brand new inner city town house in Calgary (Approx 1300 sq ft). I think you're looking at around $1.5 million for something similar in Vancouver. I don't know if the price drops below $1million for that type of unit when you start going outwards past Burnaby.

[blankall]

Originally Posted by Muta

Where is all this investment money coming from? With an increasing amount of Canadians being priced out of home ownership, is it rich foreign nationals / very wealthy Canadians? How is there so much money out there / the ability to just casually drop six or seven figures each on multiple properties?

Real estate seems to be a game for the 1% in this world, and moreso everyday.

For most people the biggest issue is the down payment. As Jason14H stated, the actual mortgage qualification isn't that difficult. Then you can find a place with a rental suite in the basement to help you with monthly payments.

As far as the down payment goes, a lot of people are getting help from their parents who own their own homes, now worth $2+million. The parents simply take out an easily attainable mortgage and gift (or "loan") ​the kids $200-500k. Many people are even getting their parents to co-sign on mortgages for them. These are "children" in their late 30s and early 40s.

Help from parents is common enough that the bank found it very unusual that when I purchased my house my parents weren't somehow involved.

There definitely was a time when foreign investment was a very significant contributor to real estate prices in Canada. Now, the main driving force is local buyers taking advantage of ultra low interest rates and transfer of generational wealth.

The system really is different in places like Vancouver/Toronto over Calgary. In Vancouver you can rent a basement suite for $2,000/month fairly easily. Over time, that rent goes up and your mortgage goes down. If you can get through the first 5-10 years, you are generally coming out way ahead. There are so few remaining detached homes in Vancouver that there will never be a huge crash, and over time the property will go up in value. The only time people get stung is if their economic circumstances change to the point they can no longer afford the property, or they were planning to flip and got caught in a 20-30% adjustment and don't have the cash flow to hold the property for a few years while it climbs in value again.

[Monahammer]

Originally Posted by Jason14h

Here's the short answer: To buy a million-dollar home in Canada, you'll need a yearly income of at least $175,230, as well as a cash down payment of at least $200,000. That's the minimum you'll need in order to qualify for a large enough mortgage.

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

Now when you get into 2.2 million dollar homes you probably have a lot of home equity from a boom

You're conveniently neglecting that the million dollar home couple would still also need to come up with 200k for a downpayment.

I am glad we got into the housing market when we did, though I should have gone with a variable rate mortgage instead of being stuck at 2.75 for the last 5 years :P.

I am not worried about the Alberta housing market. It has been so stagnant for the last decade some heat is extremely welcome.

[chedder]

Originally Posted by Jason14h

Here's the short answer: To buy a million-dollar home in Canada, you'll need a yearly income of at least $175,230, as well as a cash down payment of at least $200,000. That's the minimum you'll need in order to qualify for a large enough mortgage.

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

Now when you get into 2.2 million dollar homes you probably have a lot of home equity from a boom

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).