Why is the market going crazy?

[darklord700]

Originally Posted by Wormius

Is it too unpredictable to expect prices to come down to 2006 levels?

No way prices will come back down to the pre-boom level ($250K median single family house prices).

It might stay flat or even go down slightly. The way I see it is that a lot of people can afford $400K houses and even more with the salary level the way it is in Calgary.

[something]

Originally Posted by Wormius

What would you think a major profit would have to be to make it worth it? I am not certain, but I think we would be somewhere around $200k since we bought. Maybe that's not enough to make the jump. It's depressing to have the equity there now, and thinking it could diminish before we decide to move anyway.

If you are thinking of remaining in this market when you buy again, any market depreciation that affect you negatively as a seller will also affect you positively as a buyer. Your "profit" will generally be in proportion to the cost of your next purchase, ignoring short term volatility and your changing preferences.

The only way I can see this benefiting you is if you felt confident our current market is inflated and anticipate purchasing in a year or two, if/when it settles a bit lower. My opinion is that it may not be worth the hassle and the risk associated. Barring any sort of market collapse, you'll hold the value in your home for some time to come. You may want to consider keeping it as an investment property and purchasing your new place as a second home. Choosing to rent it out will not only cover most, if not all, of the mortgage. Plus, depending on your situation, you can use the equity towards your new down payment.

Just some food for thought.

[Wormius]

I t foresee us staying in Calgary for another 20-25 years and then settling down in BC, pending any outside influences that would cause us to move.

Upgrading within the city is a near-term goal. The thing seems to be inner-city home prices continuing to climb while the suburbs aren't really following at the same rate.

We are tempted to purchase an inner city home and renting it out but they do seem to come and go quite quickly.

[darklord700]

[QUOTE=Wormius;4640521The thing seems to be inner-city home prices continuing to climb while the suburbs aren't really following at the same rate.
[/QUOTE]

People who are buying the inner city infills are mostly professional with two good incomes, hence, the prices are higher.

[Johnny199r]

Why did housing prices suddenly go nuts from preboom levels (ie 250k for a sfh)? Was it low interest rates? Oil prices? What suddenly made people throw caution to the wind?

I think Calgary prices will resemble Toronto prices in 5-10 years.

I currently live in Edmonton with my spouse (both professionals) and like the fact that that inner city living here is cheaper (undesirable to many, but changing quickly with downtown developments). I'd like to live in Calgary someday but think we'd be way off in suburb land by then if we're not willing to pony up 600k (we're not).

[darklord700]

Originally Posted by Johnny199r

Why did housing prices suddenly go nuts from preboom levels (ie 250k for a sfh)? Was it low interest rates? Oil prices? What suddenly made people throw caution to the wind?

I bought my SFH in 2004 and interest rate was about 5% then. Then oil prices went up the roof to the current level and a lot of the oilsand projects were green lighted. I think low interest rate and big in-migration number caused the Calgary market to boom. But that doesn't explain why nationally in Canada housing prices went up the roof after 2005.

[Johnny199r]

Originally Posted by darklord700

I bought my SFH in 2004 and interest rate was about 5% then. Then oil prices went up the roof to the current level and a lot of the oilsand projects were green lighted. I think low interest rate and big in-migration number caused the Calgary market to boom. But that doesn't explain why nationally in Canada housing prices went up the roof after 2005.

Exactly. However, congrats to you on your timing.

[Wormius]

Originally Posted by Johnny199r

Exactly. However, congrats to you on your timing.

Unless you had some clairvoyance, the timing is all luck.

We bought because we wanted to start a family at that exact time. Just thankful that we were lucky with prices being relatively low at the time and salaries increasing steadily.

[darklord700]

Then we bought a rental condo in 2006. Even today we still couldn't sell it for what we paid for in 2006. But the rent covers condo fee and mortgage and helps paying done the mortgage every month. Lessons learned.

[TheGrimm]

My wife and I bought our first home in early 2005 as we were planning on getting married that summer and didn't want to rent. I remember arguing with my parents at the time as they thought we should rent for a couple of years while we put together more of a down payment... Fast forward a year after we bought and our house had doubled in price. Needless to say there is definitely some luck involved.

[Johnny199r]

Luck indeed! I wonder if prices will ever come down ever again...

[photon]

In Calgary people are moving here, and affordability is still low compared to a lot of the country.

http://www.rbc.com/economics/economi...bruary2014.pdf

Average price and affordability measure for major cities and the Canadian average:

Vancouver   $845,600   86.0
Toronto     $662,500   63.7
Montreal    $399,300   50.8
Ottawa      $403,900   38.4
Edmonton    $375,200   36.5
Calgary     $461,100   34.2
Canada      $425,800   48.7

[gladaki]

Originally Posted by darklord700

Then we bought a rental condo in 2006. Even today we still couldn't sell it for what we paid for in 2006. But the rent covers condo fee and mortgage and helps paying done the mortgage every month. Lessons learned.

Not sure but if we do calculation on assumption that you paid 5 % downpayment. How much of the rent till now went to pay off principal amount ?

[Titan]

Originally Posted by Realtor 1

^ sent pm re that property

What a sickening feeling to see a realtor send you a pm on a house you already bought!

Drug den, grow op, brothel, crack house? Come on, we all want to know!!

[gladaki]

Originally Posted by photon

In Calgary people are moving here, and affordability is still low compared to a lot of the country.

http://www.rbc.com/economics/economi...bruary2014.pdf

Average price and affordability measure for major cities and the Canadian average:

Vancouver   $845,600   86.0
Toronto     $662,500   63.7
Montreal    $399,300   50.8
Ottawa      $403,900   38.4
Edmonton    $375,200   36.5
Calgary     $461,100   34.2
Canada      $425,800   48.7

Is that means 35 % of pretax income is needed to buy $461,100 house ? qualifying income for this kind of house is 95k$ ? so whoever owns a house with this price has this income ?

[darklord700]

Originally Posted by gladaki

Not sure but if we do calculation on assumption that you paid 5 % downpayment. How much of the rent till now went to pay off principal amount ?

We paid 20% down to avoid paying CMHC. I think we paid off about $45k of the mortgage so far. However, the property is definitely under the water by about $20k-$30k. Add in realtor's commission if we were to sell, we just did this whole deal for no much gain, if at all. But thanks for the robust rental market, we didn't lose our shirts either and gained the insight that we didn't want to be a landlord.

[Travis Munroe]

Originally Posted by Titan

What a sickening feeling to see a realtor send you a pm on a house you already bought!

Drug den, grow op, brothel, crack house? Come on, we all want to know!!

Just discussed condo fees and how long it was on the market.
Ill let him add any more if he feels like sharing my message... not really for me to make public.

[photon]

Originally Posted by gladaki

Is that means 35 % of pretax income is needed to buy $461,100 house ? qualifying income for this kind of house is 95k$ ? so whoever owns a house with this price has this income ?

The report has details on how they get those numbers.

The RBC Housing Affordability Measures show the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes, and utilities on a detached bungalow, a standard twostorey home and a standard condo (excluding maintenance fees) at the going market prices.

...

The measures are based on a 25% down payment, a 25-year mortgage loan at a five-year fixed rate

...

The measures use household income rather than family income to account for the growing number of unattached individuals in the housing market.

...

Qualifying income is the minimum annual income used by lenders to measure the ability of a borrower to make mortgage payments. Typically, no more
than 32% of a borrower’s gross annual income should go to ‘mortgage expenses’—principal, interest, property taxes, and heating costs (plus maintenance fees for condos).

[Wormius]

Originally Posted by gladaki

Is that means 35 % of pretax income is needed to buy $461,100 house ? qualifying income for this kind of house is 95k$ ? so whoever owns a house with this price has this income ?

The way I interpreted that was families are only spending 34% (in the case of Alberta) on their mortgages each year. Whereas people in Vancouver are spending a lot more of their salaries just on that. So on average, somebody making $100k here would be spending (simplified) $34k / year on their house.

[Super-Rye]

The girlfriend and I just purchased a place.

I had heard stories from friends and co-workers who recently went through the whole process and they were telling me that they lost out on some places they liked because they waited a day to think about it. The girlfriend and I went in prepared to put an offer on a house that we liked right away.

Day 1 we saw 3 houses, 1 of which we fell in love with. Went to write up an offer right away only to be informed that the house was sold hours before.

For the next few days we looked at some nice houses that weren't for us, and some beat up houses that didn't look like anyone would want.

Eventually we got an email about a house that has just been put on the market. We set up a viewing for the next morning and put in an offer just after lunch. The house was conditionally sold to us later that night which is very fortunate because since then only a few houses in our price range (in the area's we are looking at) have been released and they're not nearly as nice as the one we purchased.

It's a crazy market out there.