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View Poll Results: Where will housing prices finish at the end of 2015?
I work in O&G - At worst, down 5% 23 19.66%
I work in O&G - Down more than 5% 25 21.37%
I don't work in O&G - At worst, down 5% 24 20.51%
I don't work in O&G - Down more than 5% 31 26.50%
Only time will tell - I have no prediction 14 11.97%
Voters: 117. You may not vote on this poll

 
 
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Old 01-20-2015, 08:46 PM   #21
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Quote:
Originally Posted by Realtor 1 View Post
those much more in tune with the situation, how do you argue this?



http://calgaryherald.com/opinion/col...by-this-summer
As others said, the article is just a "I feel like..." piece.

This is how I argue:
http://business.financialpost.com/20..._lsa=a7e6-f8ab

An article with a little more analysis behind it. Of course, nobody knows for sure. But I think this time, due to all the new supply in the market (and possibly geopolitical factors like trying to fu*** with Putin), it will take a little more time for the supply and demand sides to balance out than last time (2008/2009)

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Old 01-20-2015, 08:51 PM   #22
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Thinking you quoted the wrong person.
Sorry. Misunderstood your post.
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Old 01-21-2015, 12:23 AM   #23
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Appreciate all the comments and the poll answers -
With 54 answers, roughly 54% believe 5% decline is worst case scenario and 41% believe it will be worse that 5%

In the coming days I will update the foreclosure thread and stay on top of it like the old days. Foreclosures became so rare that it wasn't worth my time. We can now track and see if & when the increase starts.
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Old 01-21-2015, 07:36 AM   #24
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Way too soon to see foreclosures. It takes banks a better part of a year to foreclose and that's after the mortgage holder is in default for a few months.

The one thing to watch is the inventory and sales. Both are headed in opposite directions and not in a good way. The gap grows daily as sales are not keeping pace.

http://www.creb.com/Seller_Resources...ng_Statistics/

Prices are next.
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Old 01-21-2015, 09:11 AM   #25
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I wonder if an 'evident downturn' means stable prices . . .

http://www.theglobeandmail.com/repor...ticle22548417/

Quote:
The bank also hinted at a possible spread to other parts of the country of a real estate slump already under way in Alberta. “The extent to which the downturn already evident in Alberta will spill over into other regions remains to be seen,” the bank pointed out in its monetary policy report.
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Old 01-21-2015, 10:40 AM   #26
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Quote:
Originally Posted by Red View Post
Way too soon to see foreclosures. It takes banks a better part of a year to foreclose and that's after the mortgage holder is in default for a few months.

The one thing to watch is the inventory and sales. Both are headed in opposite directions and not in a good way. The gap grows daily as sales are not keeping pace.

http://www.creb.com/Seller_Resources...ng_Statistics/

Prices are next.
It is not too early to be watching foreclosures. Anyone who carrys a high debt load and just lost their job could be extremely quick to be foreclosed on. Not to mention, the last recession had banks showing foreclosures with homeowners still living on site. If there is equity in the property, the homeowner may cooperate with the bank as much as possible. Others may just say to hell with it and move out and notify their bank. These 2 situations drastically speed up te whole process.

With current foreclosures as low and consistent as they have been, it won't take much to see if activity is increasing.
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Old 01-21-2015, 11:18 AM   #27
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Originally Posted by burn_this_city View Post
I agree with those sentiments, but I think it will take longer than 12 months to drop that much.
Options and Bonus Payout is typically Feb in this town. Add the fact that buyer sentiment is now "Hey, I should get a deal", supply is increasing, and I think we'll start to see price declines significantly in Fall of 2015 (after a lack luster spring sales season)
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Old 01-23-2015, 08:53 AM   #28
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Is this an opportune time for someone looking to upgrade? You probably pay less for the more expensive house but your house will take longer to sell and thus increase the carrying costs.
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Old 01-23-2015, 12:16 PM   #29
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I hate to be happy about this but I really am. As a not married 25 year old that is ready to buy a home, this drop couldn't come at a better time. A correction was desperately needed for people looking to enter the market. 280,000-300 for a basic 2 bedroom condo in the suburbs was ridiculous. I can't wait to scoop up one of those for 200-250.

I know this would be a complete dick move and I wouldn't do it but what would a sellers reaction be if I tried undercutting their sale price significantly right now with all of the doom and gloom in the media? Are sellers starting to get nervous?
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Old 01-23-2015, 12:57 PM   #30
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I don't think saving yourself some money is a dick move.
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Old 01-23-2015, 01:28 PM   #31
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I don't think saving yourself some money is a dick move.
I was saying if I seriously lowballed some nervous buyers. To me it's a dick move taking advantage of people in dire straits.

I think it's unavoidable and that I shouldn't feel bad for the actions of the market, but I still do.
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Old 01-23-2015, 02:18 PM   #32
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I was saying if I seriously lowballed some nervous buyers. To me it's a dick move taking advantage of people in dire straits.

I think it's unavoidable and that I shouldn't feel bad for the actions of the market, but I still do.
a lot of people are dicks for overpricing so making a lowball offer is not necessarily a dick move. If someone bought their home for 600k a year ago and is asking 800k for it today, then you offer $650k, who's the dick? If anything, homes should be cheaper because the economy at the present time is far worse than it was a year ago.

I don't feel bad for anybody selling a home now and getting lowballed because most people are asking way more than their homes are worth today. That's why sales are so low this year because buyers are not stupid and sellers are insane.

If Calgary home prices drop even %30 I wouldn't consider that a crash. %30 is needed to bring prices back to "normal". %50 would be a deal, %60-%70 would be a crash. If you look at a chart going back 40 years and draw an average line, average house price in Calgary should be no more than $275-$300k.
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Old 01-23-2015, 02:19 PM   #33
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Honestly, an offer to me is never an insult. It's an opening of of dialogue. If someone offered me $50,000 or $75,000 less i'd respond 100% of the time with a counter offer. There's no room for being offended, and I appreciate someone playing lets make a deal.
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Old 01-23-2015, 02:26 PM   #34
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I see homes reduced by 50-80K and still sitting. Have seen some sold for 50K under list just days after it was listed. And these are the 600-700K homes so fairly large reductions percentage wise. No offer is an insult.

As for Polak.Why try and catch a falling knife? I'd be patient.
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Old 01-23-2015, 02:34 PM   #35
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Oh I'm patient. I have my 3 month prob. to get through at this new job anyway. I want to buy in late spring but I might wait even longer if prices are dropping dramatically.
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Old 01-23-2015, 02:40 PM   #36
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I see homes reduced by 50-80K and still sitting. Have seen some sold for 50K under list just days after it was listed. And these are the 600-700K homes so fairly large reductions percentage wise. No offer is an insult.
Price will always be sticky downwards. Just because the homeowner got layoff from their job doesn't mean they'll start selling at bottom prices. I expect volume to be low this year because people don't buy houses when they are fearful.
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Old 01-23-2015, 02:57 PM   #37
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As someone currently with no equity in the housing market, next year should be a fun ride of research, driving around neighbourhoods and data crunching. So I'm biasedly hoping for a >5% decline (sorry guys).

As someone in O&G, I'm bearish. Yes, things will be ok, but we're not seeing $100 oil for a while in my opinion. I belive medium term prices will stabilize around $75 which is the supply cost for the 90-95 millionth barrel (global demand). The only thing getting us to $100 is a war or a major disruption.

The biggest losers in this price war are not the shale guys...they can ramp drilling up and down relatively quickly to respond to price. It is the major projects. The events of the last few months bring volatility and risk to their future cash flows, so any capital is going to command a higher risk premium to invest. Translation - higher breakeven oil prices...oil prices that as I said above I don't think we'll see for a while. Its the deep offshore, and most important for us, greenfield oil sands projects that will get hurt.

Thankfully there are lots of aspects to the O&G industry in this city not related to the large projects, but it is sizeable enough that I fear for the well being of the overall O&G labor pool in this province over the next few years.
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Old 01-23-2015, 03:08 PM   #38
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The biggest losers in this price war are not the shale guys...they can ramp drilling up and down relatively quickly to respond to price. It is the major projects.
This is pretty much completely backwards from everything I've been told/read, maybe you have some different insight to share??
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Old 01-23-2015, 03:24 PM   #39
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This is pretty much completely backwards from everything I've been told/read, maybe you have some different insight to share??
Its really just my opinion formed after reading all sorts of material on the subject, the most influential being a commentary by Peter Tertzakian at ARC earlier in the week where he discussed the topic. I think it makes a lot of sense.

The shale guys production costs are around $75-$85 dollars. They can cancel investment fairly quickly (just stop drilling), so when the price drops to $50 they're the first out. Meanwhile, the massive O&G projects in flight (Suncor/Total/Teck's Fort Hills) are too far along to cancel...so they look good on a go forward basis, but not on a full cycle basis.

That's what we're seeing right now. The shale guys are cutting back so they look like they are hurting the most. But if the price returns to that $75-$85 area, they can ramp drilling back up fairly quickly. And most importantly, there's much less risk to investing in those future cash flows because most the wells play out in only a couple years.

Now look at the major projects. If I'm a capital dollar and am looking at them as a home, I'm relying on decades of cash flow to pay off the tens of billions in up front costs. I value those future cash flows by discounting them at my required rate of return. But after the events of the past few months where we've seen massive volatility and a price war that can be started as easily as Saudi Arabia turning on the tap, as a capital dollar I'm a lot more scared to plunk my money down on a major oil sands project. Basically, I'm going to command a higher rate of return. Since the number of barrels in a project can't be changed, that can only come from one thing...higher prices.
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Old 01-23-2015, 04:25 PM   #40
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Quote:
Originally Posted by polak View Post
I hate to be happy about this but I really am. As a not married 25 year old that is ready to buy a home, this drop couldn't come at a better time. A correction was desperately needed for people looking to enter the market. 280,000-300 for a basic 2 bedroom condo in the suburbs was ridiculous. I can't wait to scoop up one of those for 200-250.

I know this would be a complete dick move and I wouldn't do it but what would a sellers reaction be if I tried undercutting their sale price significantly right now with all of the doom and gloom in the media? Are sellers starting to get nervous?

You need to understand the situation (or have your Realtor understand the situation) before writing an offer.
Despite what many said after you posted this, it really doesn't work that way. Unless someone was in a absolute need to sell this week position, they would be a fool to accept 20% less than their asking price.
If I am selling a home for 500k and market value is also 500k - why would I let my seller look at anything less than 450? A offer of 450 would be a low ball and I would advise to counter back at full price until the buyer showed they were serious.
Instead, if my seller was motivated - I would advise them to drop the price to $470k. This is now a 30k discount and most likely 30k cheaper than the comps selling in the area. We now set ourselves up for a potential multiple offer situation or someone who recognizes the deal and comes in with a offer very close to 470k.
I also tend to find that those in dire needs to sell are the toughest to negotiate with. They look at a offer 10k less than asking and instead of viewing it as a reasonable offer, they view it from the point that they are giving up 10k which is a large chunk of money in their position.
Also keep in mind, most sellers I am dealing with right now are looking to upgrade. When prices flatten or drop it is always a great time to look at upgrading. You lose 5% on your sale but save 5% on a larger purchase. The other group I am working with are people who have planned on selling for a while. I have yet to come across anyone who is in a desperate situation due to a layoff.
There is no doubt that those sellers will hit the market over the next several months however, I go back to asking why they would accept a lowball. Hypothetically, you find someone willing to accept an offer 10-20% less than their asking price (wouldnt happen but lets pretend). Why not stall the negotiating process and reduce their asking price to the price they are going to accept with you in a matter of 48 hours. All of a sudden you have people flocking in for this amazing deal and you are competing against others.

A lot of money is made in this city from people who find sellers pre foreclosure and offer to buy the house for what they owe. Saves the sellers credit and they can go rent and get back on their feet in a years time (vs the years involved in repairing credit through foreclosure) and the buyer has now bought a house for 80% of its true value. These are extremely hard to find and typically the seller who is in denial about going into the foreclosure process, refuses to try and sell and ends up striking a deal at the last minute.
Keep in mind, you could easily spend tens of thousands trying to find a seller who is about to go into foreclosure. Once you find them, you still need to check their equity position. If you thought the odds were slim finding them, odds will be even slimmer that they have not taken the equity out of the property already.

I believe the easiest money to be made / best deals are from foreclosures that have been trashed. The person going into foreclosure no longer cares about the property and I have seen some disturbing places. The majority of buyers are scared away by holes in the wall or damaged flooring. A smart real estate investor will see a opportunity and better yet, it is easier to negotiate with the banks on damaged places as they would rather take a hit on the selling price than have to bring in trades people and spend money to fix it up.

Sorry for the long read - any clients of mine on CP know I am all for getting a great deal. Quite often the buyer wants to accept a agreed on price and I convince them to let me try for a little more off.... I just felt the need to explain to anyone who feels a downturn = easy lowball offers.
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