Calgary Real Estate predictions?

[Dion]

Originally Posted by Red

Not exactly true because a smaller mortgage allows you to shorten the term to pay it down. There's no rule that says that everyone has to have a 25 year mortgage.

And if you go to bi weekly as opposed to monthly payments you can also reduce the amount interest one has to pay off.

[Red]

Originally Posted by DementedReality

so lets say i am leaning to agree that the market is going down right now. i have a house that i bought in 1997 and want to upgrade to a nicer house.

my own house is worth less, but if it is going down each quarter (as some are suggesting) why shouldnt I flip now?

If houses do go down then yes, but can you sell now? Moving to a temp place etc is not what most people want to do either. Plus there is a risk that houses will not go down, but up instead. It's quite the dillema.

I want to upgrade to something in a more mature neighbourhood, but I'd have to double my mortgage to do it. Just not worth it. Just 5 years ago similar upgrade would've cost 30-40K. Mistake I made was that I didn't buy bigger then, but then again, who knew houses would more than double.

[MacDougalbry]

Originally Posted by Claeren

[...]

As for Calgary being cheaper then comparable markets, that is a joke. No comparable city Calgary's size has pricing from the core to the far perifery like we do. Toronto and Vancouver are both MUCH bigger cities, that are on the water (less developable land), and yet BOTH have cheaper pricing in the far flung suburbs. Most American cities with ~1M people have pricing a fraction of current Calgary pricing, usually at or below $250,000 (or even <$200,000) for a mid-size suburban home (v. $500,000).


Claeren.

I am the last person to defend current price levels. However, this is a factual error in so far as Vancouver is concerned. The median prices for a single family home for all of Calgary is $415000. By compairson, the benchmark price for Maple Ridge (a very far flung suburb of Vancouver) is $457,522.

http://www.realtylink.org/hpi/rebgvh...08&TYPE=buyers

[Red]

Originally Posted by Wookie

A prairie village? C'mon that's a bit harsh! Lethbridge is a prairie village! Vancouver has a longer spring and shorter winter, Toronto backs onto a filthy lake!

I don't know... I've got two story views of the mountains. It's in a nice green or brown or snowy (depending on season) parky kind of area. decent neighborhood, double car garage, 20 minutes from downtown.

People compare the prices to Toronto and Vancouver. I know someone selling a place in TO, attached row housing, that's 10 minutes from downtown, has no view, backs onto an alley, the detached garage is permanently graffiti'd, is about 100 years old, and can only legally park on one side of the road. This house is $500 - $600k.

You say that's in line with what people are paying in Calgary? Yeah it is. But in Calgary you can get a house that's twice the size, a back yard, double car garage (may or may not have view), large streets to park on, retail strips close by that you can drive to, park at, and drive home from. There is often a C-train within 10 minutes drive, no smog, less crime, less filth, and better all around services. (gym, ymca, pool, rink).

I think things may have gotten ahead of themselves pricing wise - but I don't think it's obscene.

There is a reason Calgary does so well in all these "Best places to live in the world" surveys.

You're right, little harsh, but the point still stands. Calgary has bad climate and doesn't have a filthy lake to put your boat on. Toronto and Vancouver are both very mature cities with the climate, lakes and ocean to attract deep pocket people. Calgary is a very clean city with a nice, friendly feel to it and I love it, but a major city it is not.

[Wookie]

Originally Posted by Red

You're right, little harsh, but the point still stands. Calgary has bad climate and doesn't have a filthy lake to put your boat on. Toronto and Vancouver are both very mature cities with the climate, lakes and ocean to attract deep pocket people. Calgary is a very clean city with a nice, friendly feel to it and I love it, but a major city it is not.

Climate? I know plenty of people that have moved here because the constant rain and grey in Vancouver is awful! I know athletes living in Toronto that can't run some days because of the smog - add that to the humidity and they complain an awful lot!

I agree Calgary climate can suck! It can also be really nice! When it's nice in the summer we have LONG gorgeous days!

The grass is always greener on the other side!

I want to move one day, partially to live in a different city, partially because I'm sick of short summer's, eating outside in July and having to put on a sweater when the sun goes behind a tree! But - it's really not SOO much better elsewhere. Everywhere has their issues.

[photon]

Raw prices don't tell the whole story, affordability takes salaries into account.. who cares if a house is twice as much in place B if the salaries there are three times higher?

I don't really care much about the actual value of the real-estate in value terms, I just care if the prices are going to go up or down based on demand.

Affordability in Calgary and Alberta has gone down over the past few years of course, but it's comparable to Toronto and of course way higher than Vancouver. Heck even Saskabush has seen the affordability go down to Alberta levels.

Of course there's places where it's much more affordable to live, but I can also take a look at other cities and find places globally where affordability is far worse.

EDIT: Oh and I totally agree with the renting vs owning, there are situations where it is better to rent for sure. But many people own because of other considerations (want to do their own thing with the place etc).

And RBC's stuff on affordability across Canada: http://www.rbc.com/economics/market/pdf/house.pdf

If you look at housing prices as a multiple of annual income, Calgary is well below the national average in Australia and New Zealand, below the UK, and there are many cities in the US that have far worse affordability.

http://www.normfisher.ca/pdfreports/dihas2008.pdf

All I'm saying is that big picture it's not like things are so far out of wack that it's going to crash to a halt, at least not on the basis of the cost of housing itself (as shown that there are places that are far less affordable).

[photon]

Oh and I agree with you on the rent vs own thing, there are times when it is clearly better to rent. Owning your own house though is usually done for more than that one reason though, things like stability and the ability to make changes etc...

And here's RBC's stuff on affordability in Canada: http://www.rbc.com/economics/market/pdf/house.pdf

[Dion]

Originally Posted by Wookie

I agree Calgary climate can suck! It can also be really nice! When it's nice in the summer we have LONG gorgeous days!

I'll take Calgary over anywhere else in Canada. Winters aren't always that cold and we get a lot less snow that Eastern Canada does. Lots of sun in the winter as opposed to Vancouver

Our summers are dry and less humid than out east. Not too hot on average.

Add to it we are close to the mountains.

What else could a person ask for?

[Wookie]

Originally Posted by Dion

I'll take Calgary over anywhere else in Canada. Winters aren't always that cold and we get a lot less snow that Eastern Canada does. Lots of sun in the winter as opposed to Vancouver

Our summers are dry and less humid than out east. Not too hot on average.

Add to it we are close to the mountains.

What else could a person ask for?

I walked between office buildings today (middle of the winter) the street was deep with snow, I didn't wear a jacket and it was sunny! What a great thing!

[Radley77]

A CMHC timeline of new mortgage products:

February 2006: CMHC to insure 30 year mortgages on a pilot basis
http://www.cmhc-schl.gc.ca/en/corp/n...02-25-1400.cfm

June 2006: CMHC introduces 35 year mortgage and interest-only mortgages
http://www.cmhc-schl.gc.ca/en/corp/n...06-28-1400.cfm

December 2006: CMHC introduces 40 year mortgage
http://www.cmhc.ca/en/hoficlincl/mol...ortization.pdf

September 2007: CMHC offers 100% financing for investment properties
http://www.cmhc.ca/en/hoficlincl/mol...Properties.pdf

[Bend it like Bourgeois]

Originally Posted by Dan02

If you're talking the far flung suburbs of Toronto then you should be comparing more to the bedroom communities like Cochrane. None of the suburbs in Calgary are anywhere near as far away as some of the Toronto suburbs.

No kidding. People here have no idea what suburbs are (or traffic for tha matter).

[flamey_mcflame]

Originally Posted by Radley77

A CMHC timeline of new mortgage products:

February 2006: CMHC to insure 30 year mortgages on a pilot basis
http://www.cmhc-schl.gc.ca/en/corp/n...02-25-1400.cfm

June 2006: CMHC introduces 35 year mortgage and interest-only mortgages
http://www.cmhc-schl.gc.ca/en/corp/n...06-28-1400.cfm

December 2006: CMHC introduces 40 year mortgage
http://www.cmhc.ca/en/hoficlincl/mol...ortization.pdf

September 2007: CMHC offers 100% financing for investment properties
http://www.cmhc.ca/en/hoficlincl/mol...Properties.pdf

Once in awhile, I like to check out Ben Jone's housing bubble website. You go to all these links and you see case study after case study of the same thing. People buying very expensive houses with very little money and then
hearing them sob about, "We never thought the housing market could go down". Treat the real estate market like stocks. The market can go down and fast. You should see some of the mansions you can get in Denver,Orlando and southern California for under 300,000. Just amazing monster houses. Prices in many markets there have dipped below 1996 levels. And the preceding skyrocketing rise was very similar to Calgary's. I'm not saying its happening here, but the price escalation between 2005 and the first half of 2007 in Calgary was too fast. Quite a correction in the second half of 2007. Who knows what happens next, I didn't see one real estate expert say prices were gonna nosedive 40,000-50,000 in q3-q4 2007. There is still an abundance of resale and new homes on the market. And if the market further drops another 20,000-30,000, Its very likely that people will just foreclose on their house because it just makes economic sense. I'm happy I have a house in a fairly desirable part of the city. But houses that are averaging 400k to 500k in the outskirts of the city seem insane. I know we all love this city, but on aggregate level, people move to Calgary because of the economy. Places like Vancouver and Toronto are much more destination cities. Heck, when the B.C. economy was slumping in the late 80's and early 90's, housing prices still continued to escalate. It's just a beautiful city in a beautiful part of the world. We just need to look back 25 years ago to see if the same holds true for this city. It's clean and safe here, but with the exception of the stampede, how often do you run across tourists here. You'll see more in Banff and Canmore on a weekday than you'll see here on a warm weekend. My own personal opinion, if you buy in Calgary, focus primarily on location and then location and more location.
Of course, if you're happy with the house you bought and have no intention on moving, then don't bother with real estate fluctuations. If you're happy, you're happy.

[nik-]

Why even bring up tourism when it comes to housing? Tourists don't by houses.

[flamey_mcflame]

Originally Posted by nik-

Why even bring up tourism when it comes to housing? Tourists don't by houses.

I'm not gonna explain that one to you. Think of that question as a homework project.

[nik-]

Don't be condescending, tourism hasn't been fueling the increase in housing here so you bringing it up is pointless.

[Red]

Originally Posted by nik-

Don't be condescending, tourism hasn't been fueling the increase in housing here so you bringing it up is pointless.

I think you missed the point of his post. Vancouver and Toronto are destination cities where Calgary is a work city. If it weren't for the economy few people would move here.

[GreenTeaFrapp]

Originally Posted by Red

I think you missed the point of his post. Vancouver and Toronto are destination cities where Calgary is a work city. If it weren't for the economy few people would move here.

Toronto is just as a much a city people move to for work. I know lots of people who have moved to Toronto, not because they want to, but because it was the best thing for their career. You either go to Toronto because you got a great job or because you want to live a lifestyle that might not be acceptable in your home town.

If it weren't for the weed and the weather few people would move to Vancouver. The point is that the work is there in Calgary. It's an attractive city for people looking to get a better job. I know I'd rather move to Calgary then Toronto if I was looking to move.

[Sylvanfan]

Originally Posted by nik-

Why even bring up tourism when it comes to housing? Tourists don't by houses.

Actually he has a point because if a place is a destination than people will look to buy property there. Right now there are a lot of baby boomers in this country who are very wealthy. They own their own homes that they paid peanuts for now, their kids have left home, they're making more money than ever and they're coming into their parents money, and thats the wealthiest passing generation to date. In the Okanagan as an example, the economy is luke warm, the wages are crap, the job numbers look terrible. But you can't buy a shack in Penticton or Kelowna, or anywhere in that region for less than 400k. The people who live and work in that area can not afford those house prices....but....people who have inheritance, or who live in other area's and want to retire there or own vacation property there can.

[Red]

Originally Posted by GreenTeaFrapp

Toronto is just as a much a city people move to for work. I know lots of people who have moved to Toronto, not because they want to, but because it was the best thing for their career. You either go to Toronto because you got a great job or because you want to live a lifestyle that might not be acceptable in your home town.

If it weren't for the weed and the weather few people would move to Vancouver. The point is that the work is there in Calgary. It's an attractive city for people looking to get a better job. I know I'd rather move to Calgary then Toronto if I was looking for work.

Corrected your last sentence.

Vancouver is one of the most beautiful cities in the world. That's why people move there. Toronto is nice, has nice weather and has jobs, that's why people move there.
Cities like that attract more people, it has alway been like that. People in the long past chose these locations because of the water and weather. These big cities will always be attracting people. You may choose Calgary, but you represent the proverbial drop in the bucket.

[Claeren]

Originally Posted by Dan02

If you're talking the far flung suburbs of Toronto then you should be comparing more to the bedroom communities like Cochrane. None of the suburbs in Calgary are anywhere near as far away as some of the Toronto suburbs.

I am talking about all of the suburbs. I am talking about the housing supply, both realized and potential, in both cities.

Calgary could easily build as many homes around itself as Toronto has (3 Million homes?) and still have those homes closer on average to the core then Toronto. YET Calgary's perifery pricing is much more then Toronto's pricing relative to the core pricing in each city. It just does not add up in the long term.

Putting it another way, Toronto's suburban pricing should be much higher than Calgary's because the ability to build comparable homes is quickly diminishing. There is only a realized housing supply, with a limited potential supply. Calgary has a small realized supply with a virtually unlimited potential supply. With that kind of future surplus how can prices be supported? Home builders will simply build until they cannot build anymore - which means pricing WILL come down (in absolute terms over the short term or after inflation/price stagnation in the long term - one way or the other).


(Calgary pricing DOES add up in the short term, but anyone who buys now at the height of short term pressure will lose on long term reality of abundent land, increased home building capacity, lower material costs, slowing migration, moderating labour costs, etc.)


Claeren.