Calgary Real Estate predictions?

[Regular_John]

Personally I'm quite leery of anything built around the 2004-06 housing boom. With the stories around that time of bidding wars & housing going up $100k in value before the roof was complete you know some corners were being cut to keep up with demand.

A few of our friends have properties from around that time and the "cardboard box with duct work" label definitely rings true for some of the homes I've been in.

But we also bought a 70s townhome and now we're staring down a hefty special assessment as the building envelopes around our complex need major replacement work.

[Kavvy]

Originally Posted by jaydorn

Personally I'm quite leery of anything built around the 2004-06 housing boom. With the stories around that time of bidding wars & housing going up $100k in value before the roof was complete you know some corners were being cut to keep up with demand.

A few of our friends have properties from around that time and the "cardboard box with duct work" label definitely rings true for some of the homes I've been in.

But we also bought a 70s townhome and now we're staring down a hefty special assessment as the building envelopes around our complex need major replacement work.

Why is it assumed that people cut more corners when companies are profiting and making lots of money?


Wouldn't the counter argument be that in downturn companies are struggling, people buying the homes are struggling and corners get cut?

[Canehdianman]

Originally Posted by Kavvy

Why is it assumed that people cut more corners when companies are profiting and making lots of money?


Wouldn't the counter argument be that in downturn companies are struggling, people buying the homes are struggling and corners get cut?

Because they are hiring a bunch of new people and paying them lower wages than other, more lucrative jobs pay. So the subs have enormous turn-over and end up giving a guy with 3 days experience the nail gun to frame your house.

[Kavvy]

Originally Posted by Canehdianman

Because they are hiring a bunch of new people and paying them lower wages than other, more lucrative jobs pay. So the subs have enormous turn-over and end up giving a guy with 3 days experience the nail gun to frame your house.

Fair enough. Top labor high quality is strained in a upturn.

[afc wimbledon]

Originally Posted by Kavvy

Why is it assumed that people cut more corners when companies are profiting and making lots of money?


Wouldn't the counter argument be that in downturn companies are struggling, people buying the homes are struggling and corners get cut?

The cutting of corners has less to do with money and everything to do with the time taken to build and the availability of skilled trades.
On top of that the assumption that building standards and codes have improved construction isn't always true, codes developed in the east for cold but dry regions were wholesale adopted in BC in the eighties and were lousy for the regions warm wet conditions, virtually all buildings constructed here in the late eighties and early nineties have moisture problems due to oversealing, it's cost billions to fix them, many have had to be demolished.

[Regular_John]

Originally Posted by Kavvy

Fair enough. Top labor high quality is strained in a upturn.

Yes that was exactly the point I was trying to make, as the demand spiked the attention to detail/quality was likely lost as builders & developers were pressured to build more houses in less time.

Basically the front line resources (the guys swinging hammers) were likely stretched pretty thin during the boom times, and quality took a hit in my opinion.

[OMG!WTF!]

Well, here's a prediction...

http://www.huffingtonpost.ca/2017/10...ng_a_23249035/

I'm surprised the new mortgage rules haven't been mentioned much yet. This seems like a big big change to me. Even if you have over 20% down, you still have to qualify at 2% higher than BOC rates. I can't see this being helpful for anyone but the banks. If you have a renewal coming up you're basically stuck with the bank you're at. I see this as being bad for consumers and good for banks. Also of course it's going to bring sales and prices down in markets that are arguably struggling already. It's awesome for loan sharks though. Wish I had more money to lend. There are already more deals than usual from the last round of rule changes.

[Weitz]

Originally Posted by OMG!WTF!

Well, here's a prediction...

http://www.huffingtonpost.ca/2017/10...ng_a_23249035/

I'm surprised the new mortgage rules haven't been mentioned much yet. This seems like a big big change to me. Even if you have over 20% down, you still have to qualify at 2% higher than BOC rates. I can't see this being helpful for anyone but the banks. If you have a renewal coming up you're basically stuck with the bank you're at. I see this as being bad for consumers and good for banks. Also of course it's going to bring sales and prices down in markets that are arguably struggling already. It's awesome for loan sharks though. Wish I had more money to lend. There are already more deals than usual from the last round of rule changes.

I think it's great rule change. Protects stupid people from hurting them selves. If anything it will hurt the banks because people won't be getting as large mortgages. And anything that brings down the ridiculous prices, especially here in Calgary, is a good thing.

[OMG!WTF!]

Originally Posted by Weitz

I think it's great rule change. Protects stupid people from hurting them selves. If anything it will hurt the banks because people won't be getting as large mortgages. And anything that brings down the ridiculous prices, especially here in Calgary, is a good thing.

Interesting take. Historically a lot of "stupid people", have made a pile of money owning real estate. I might argue that the stupid are not those with 20% down and more. I'm not sure we need to start excluding those people now. They are not at the extreme of the markets and ultimately they pose no risk to CMHC and little risk to banks. I'd argue restricting refinancing if anything and keeping the LTV you started with might make some sense.

And banks are still able to grow business simply by keeping their existing clients. They won't have to fight for the lowest rate anymore because those who can qualify must do so at a higher rate. Those business creating artificial low rates will no longer be necessary because they have no bearing on qualifying for new money.

I think it harms people who already own as well as people who are looking to get into the market. I like the changes to date but not this one.

[snootchiebootchies]

Originally Posted by OMG!WTF!

I think it harms people who already own as well as people who are looking to get into the market. I like the changes to date but not this one.

Why would this harm people who are looking to get into the market? Millennials likely are not going to have uninsured mortgages. Wouldn't it harm the foreign buyer who typically likes to put down a large down payment?

[Flamenspiel]

Originally Posted by Weitz

I think it's great rule change. Protects stupid people from hurting them selves. If anything it will hurt the banks because people won't be getting as large mortgages. And anything that brings down the ridiculous prices, especially here in Calgary, is a good thing.

Sounds like you are renter looking for a bargain....

[burn_this_city]

The prices aren't really ridiculous here when you factor incomes into the equation.

[OMG!WTF!]

Originally Posted by snootchiebootchies

Why would this harm people who are looking to get into the market? Millennials likely are not going to have uninsured mortgages. Wouldn't it harm the foreign buyer who typically likes to put down a large down payment?

I don't know actually. I think there are way better ways to address foreign buyers...like a 15% foreign ownership tax or a vacancy tax. But the real hit will be with renewals I think. You'll be yanked out of the market for no reason at all and essentially trapped at your bank. Owning your credit is the dream for banks. Not really so good for mortgagors though.

[spuzzum]

Government should absolutely not be involved in the free market. The foreign buyers tax in Vancouver killed the market instantly. While prices didn't retract, it killed investment.

For all the whiners that talk about affordability, move where you can afford to live and create your own market.

[Weitz]

Originally Posted by Flamenspiel

Sounds like you are renter looking for a bargain....

Haha ok. Or I'm just someone who bought within my means and not trying to maximize my mortgage.

[AltaGuy]

Originally Posted by spuzzum

Government should absolutely not be involved in the free market. The foreign buyers tax in Vancouver killed the market instantly. While prices didn't retract, it killed investment.

For all the whiners that talk about affordability, move where you can afford to live and create your own market.

Yeah, financial regulations suck.

- signed, 2008

[Bill Bumface]

Yeah, lets go back to 40 year mortgages, because those didn't just pump way more money to the banks or anything...

[blankall]

Originally Posted by spuzzum

Government should absolutely not be involved in the free market. The foreign buyers tax in Vancouver killed the market instantly. While prices didn't retract, it killed investment.

For all the whiners that talk about affordability, move where you can afford to live and create your own market.

Foreign taxes are regulations between separate markets, not within one competitive market. Free markets generally don't really work across countries. China has an entirely different set of laws and regulations, particularly as they pertain to labour and the environment. Pooled Chinese investors buying Canadian real estate is anything but free market. In fact, it constrains the local market by making real estate, store fronts, capital, etc...artificially more expensive. It prevents new people from entering the market. Real estate also isn't a typical good, that you can just produce more of or relocate to satisfy demand.

I'd be all for outlawing any kind of foreign investment in Canadian real estate. This would have a much more positive affect on the free market, as real estate prices, which the rest of the economy depends on, would be in step with the rest of the economy, as opposed to a massive barrier to entry.

However, what the government is obviously trying to do is deflate the balloon, without a giant pop. Good luck with that.

[Bonded]

Originally Posted by OMG!WTF!

Well, here's a prediction...

http://www.huffingtonpost.ca/2017/10...ng_a_23249035/

I'm surprised the new mortgage rules haven't been mentioned much yet. This seems like a big big change to me. Even if you have over 20% down, you still have to qualify at 2% higher than BOC rates.

Does that push up the low end and push down the high end?

[MillerTime GFG]

Originally Posted by OMG!WTF!

Well, here's a prediction...

http://www.huffingtonpost.ca/2017/10...ng_a_23249035/

I'm surprised the new mortgage rules haven't been mentioned much yet. This seems like a big big change to me. Even if you have over 20% down, you still have to qualify at 2% higher than BOC rates.

Just to clarify - it’s either the BoC benchmark rate (currently 4.89%) or the contract rate + 2%; whichever is higher. With most uninsured rates being around 3.39% right now, putting 20% down will actually force you to qualify at a higher rate than if you were to put less than 20%. It’s a puzzling implementation.