Calgary Real Estate predictions?

[troutman]

CREB statistics confirm what I am hearing anecdotaly - the market is heating-up:

http://www.creb.com/public/seller-re...statistics.php

April sales up 26% from the prior year. Year-to-date up 7.4%. Average price up 1.1%. New listings down.

[username]

Originally Posted by troutman

CREB statistics confirm what I am hearing anecdotaly - the market is heating-up:

http://www.creb.com/public/seller-re...statistics.php

April sales up 26% from the prior year. Year-to-date up 7.4%. Average price up 1.1%. New listings down.

It's hot now but the question is will it remain hot once all these 2.99% rate holds are gone? I'm quite certain that the reason the sales numbers are up is because of the all time low rates.

It's interesting that with demand up and supply down that the average price isn't moving much.......at least not yet.

[troutman]

Originally Posted by username

It's hot now but the question is will it remain hot once all these 2.99% rate holds are gone? I'm quite certain that the reason the sales numbers are up is because of the all time low rates.

It's interesting that with demand up and supply down that the average price isn't moving much.......at least not yet.

I think low rates might be part of the surge, but rates were low the last two years too.

[chemgear]

Originally Posted by username

It's hot now but the question is will it remain hot once all these 2.99% rate holds are gone? I'm quite certain that the reason the sales numbers are up is because of the all time low rates.

Originally Posted by troutman

I think low rates might be part of the surge, but rates were low the last two years too.

Indeed, interest rates in 2010 & 2011 were pretty much the lowest ever over the last decade. And the home sales for those two years ended up being the poorest for roughly the last ten years. (That still surprises me given cheap money being handed out and the massive growth in the city since a decade ago.)

I recall joking that comparing sales numbers against 2010 sales numbers last year (2011) was like saying you can outrun a sprinter at the special olympics.

Who knows, maybe they'll knock rates down to 1.99% and get a bump again when you compare against those poor years. Mathematically easy to be percentage points higher against a small number.

[kevman]

Originally Posted by troutman

I think low rates might be part of the surge, but rates were low the last two years too.

I think wages might be catching up to house prices?

I'm waiting for the 2011 census results but as of 2009 the average Calgary "Couple" family was taking home $95,630/year. link I used "Couple" vs. "Lone" because they're more likely to be in the market for a single family home instead of a condo? Anyway, factoring in a few years of inflation it's probably not out of the question that the average family in the market for a house in Calgary is earning more than $100k/year today. (ie, 2 earners @ $24/hour each) $100k/year will qualify you for an average home in Calgary so homes are rather affordable today.

Is it that simple? Nope. I also reckon prices will continue to "fall" when you factor in inflation but maybe not in terms of absolute value??

[darklord700]

Seems like everyone you ask they are making $100K or close to nowadays. $100K is not something one could brag about anymore. A couple could easily pull in $200K. So the current house prices of $400k-$500k look entirely reasonable.

Last week, I saw a great open house for $550K and it was sold in one or two days. Seems like we are back into a mini 2006/2007 again. Interest rate remains the deal breaker but I really don't think BOC can afford to hike the rate by any substantial amount .

[yads]

Originally Posted by darklord700

Seems like everyone you ask they are making $100K or close to nowadays. $100K is not something one could brag about anymore. A couple could easily pull in $200K. So the current house prices of $400k-$500k look entirely reasonable.

Last week, I saw a great open house for $550K and it was sold in one or two days. Seems like we are back into a mini 2006/2007 again. Interest rate remains the deal breaker but I really don't think BOC can afford to hike the rate by any substantial amount .

You're comparing significantly above average salaries with average house prices.

[bizaro86]

Originally Posted by kevman

I think wages might be catching up to house prices?

I'm waiting for the 2011 census results but as of 2009 the average Calgary "Couple" family was taking home $95,630/year. link I used "Couple" vs. "Lone" because they're more likely to be in the market for a single family home instead of a condo? Anyway, factoring in a few years of inflation it's probably not out of the question that the average family in the market for a house in Calgary is earning more than $100k/year today. (ie, 2 earners @ $24/hour each) $100k/year will qualify you for an average home in Calgary so homes are rather affordable today.

Is it that simple? Nope. I also reckon prices will continue to "fall" when you factor in inflation but maybe not in terms of absolute value??

Using that income for a couple, (work out to 7969/month gross), $450 per month in other debt payments, $200 property tax, $100 heat, and 3.5% interest rate and 30 year amortization, CMHC's affordability calculator indicates that a mortgage of $502,658 would be fine. So if the average calgary couple can more than afford the average Calgary house prices are probably not too bad.

Obviously the other numbers are just estimates, but I tried to make them reasonable ($450/mo in other debts, etc).

[rd_aaron]

Originally Posted by bizaro86

Using that income for a couple, (work out to 7969/month gross), $450 per month in other debt payments, $200 property tax, $100 heat, and 3.5% interest rate and 30 year amortization, CMHC's affordability calculator indicates that a mortgage of $502,658 would be fine. So if the average calgary couple can more than afford the average Calgary house prices are probably not too bad.

Obviously the other numbers are just estimates, but I tried to make them reasonable ($450/mo in other debts, etc).

What you can be approved for, and what you can actually afford are not the same.

My fiancée and I are 24 years old. Using your same numbers for heating, property taxes, debt payments, interest rate, and amortization, but using our gross income, CHMC says I can afford a $780,000 house if I bring $40,000 as a down payment. There is NO way we could afford anything close to that.

[bizaro86]

Originally Posted by rd_aaron

What you can be approved for, and what you can actually afford are not the same.

My fiancée and I are 24 years old. Using your same numbers for heating, property taxes, debt payments, interest rate, and amortization, but using our gross income, CHMC says I can afford a $780,000 house if I bring $40,000 as a down payment. There is NO way we could afford anything close to that.

Which is a great point. I put my income into it and figured I'd have to eat plain rice and get a second job to make the payments if I took their max. But maybe then instead of fussing with amortizations and HELOCs they should change the amount of mortgage they'll insure for a person.

If that "average" couple could only get a 400k mortgage instead of a 500k mortgage they'd be better able to afford it and it would definitely have a moderating effect on the housing market.

[tenyardrambo]

what is the down payment minimum when you have great credit and already are paying into a mortgage? 5%?

[ranchlandsselling]

Originally Posted by tenyardrambo

what is the down payment minimum when you have great credit and already are paying into a mortgage? 5%?

Yup. But oddly you can get these interesting cash back mortgages that will give you your money back. Higher interest rate though.

[bomba]

Originally Posted by tenyardrambo

what is the down payment minimum when you have great credit and already are paying into a mortgage? 5%?

Depends if new property is your principal residence or rental property (5% min vs. 20% min)

[ranchlandsselling]

Originally Posted by bomba

Depends if new property is your principal residence or rental property (5% min vs. 20% min)

Ah, misread the post, the "already paying into a mortgage" threw me off. You can buy a second home I believe with 5.0% down.

[troutman]

Canada Condo Boom Could End With Ghettos, Ghost Towns, Some Analysts Fear


http://www.huffingtonpost.ca/2012/05...tml?ref=canada

While single family home construction grew a modest 0.6 per cent, condo construction exploded by more than 27 per cent over the course of the month, when adjusted for seasonal patterns.

The prospect of a housing bubble creating “ghost cities” is not just hysteria. It’s been on the minds of housing market analysts recently because of the bursting of the massive housing bubble in China in the past year, a market swoon so bad it exposed entire empty cities, waiting for occupants who will never arrive.

Obviously, the scale of the problem in Canada is much smaller. But the idea of empty condo buildings has many people worried about the ghettoization of Canada’s largest cities.

Toronto Star columnist Christopher Hume expressed those concerns in a recent article, in which he suggested the city’s condo complexes could end up being enormous new ghettos.

Hume argued that because condos tend be small, they rely on strength in the low-end housing market to keep their prices up. If a correction happens -- such as the one many predict Canada’s largest cities are in for -- those condos will lose value, will be turned into rental units, and will soon sink into poverty.

Foreign investors are crowding the real estate market, and forcing prices upwards. That has prompted some politicians and policymakers to call for a ban on foreign investment in residential real estate, as Australia recently did.

[Bill Bumface]

So it will only take the East Village 10 years to go full circle?

[Cowboy89]

Originally Posted by hulkrogan

So it will only take the East Village 10 years to go full circle?

It appears so . . . You Bridgeland folk need to start building trenches and setting up machine gun towers on your side of the river to keep the East Villagers at bay every night!

[burn_this_city]

If the government banned foreign real estate investment I wonder if it would deflate the bubble in Vancouver.

[Bill Bumface]

Originally Posted by Cowboy89

It appears so . . . You Bridgeland folk need to start building trenches and setting up machine gun towers on your side of the river to keep the East Villagers at bay every night!

Bridgeland is where people go when they can't afford the East Village, the gun towers need to point the other way.

And I also don't get the green text and rolly-eyes. I think the East Village is going to be awesome, and as someone who lives nearby I can't wait until it starts to build up. I thought the vision of having brand new condos full of vagrants after we just knocked down houses full of vagrants was sort of funny. Apparently you find vagrants serious business...

[Bill Bumface]

Originally Posted by burn_this_city

If the government banned foreign real estate investment I wonder if it would deflate the bubble in Vancouver.

Don't ban it, tax the crap out of it. We have no reason to stop letting people empty their foreign pocket books in our country.