Calgary Real Estate predictions?

[Claeren]

I think concern for Calgary home prices comes when you combine the total ownership percentage (70%) with the housing costs v income (40%-60%).

When you are at an extreme high in ownership rates the amount of people earning anywhere remotely close to the median income who do not own a home (or two or three of them) is smaller and smaller.

In Calgary this effect is exaggerated further because the entire average is brought up by a lot of very high incomes, not necessarily higher incomes for the bottom 50% which are more in line with national wage rates.

Then remove a large amount of the leverage (35 and 40 year, no downpayment, etc) those remaining future home buyers were using to buy more home than their income dictated and you are taking more and more future steam out of the market.

Then you start talking demographics shift, rates at historic lows, etc and I still do not see why prices have any reason to go up in the medium term.


Putting it another way, if only 60% of Calgarians owned a home, and most only owned one home, then the amount of high income earners who could buy a home is high. -- If you sell yachts and every rich person already owns a yacht at home, and a yacht in their favorite vacation spot, who the hell are you going to sell yachts to?


Virtually every person I know over 24 years old already owns at least one home. That is crazy.


Claeren.

[kevman]

Originally Posted by Sylvanfan

When I hear talk of 6-7% historical averages....it's like people thing that's the historical goverment prime rate and that borrowing rates will go up 7%. Really thats maybe a historical mortgage rate which would be about 2.5 to 3% higher than the current rates. It will squeeze people but it won't ruin 95% of the population which is the impression I get from the nay sayers in this thread.

I'm personally more concerned with food prices going up.

For what it's worth you can lock into a 10 year fixed mortgage at 4.84% right now. If there are banks offering those kinds of terms they're not expecting a substantial rate increase any time soon.

[kevman]

Originally Posted by Deegee

Yes, you can get a loan against an asset of tangible value to cover your 20% down.

If you had 15% saved, the lending institution might give you a loan unsecured for the 5% extra it takes.

EDIT: To add to this post, I don't remember doing this for people unless we also held their Mortgage. In other words, don't expect to walk into a place and ask to be lent money for a down payment so you can finance the house elsewhere.

I thought about using it to secure a LOC but I was hoping it was possible to lump it in your mortgage to take advantage of the lower variable rates found in a mortgage.

[Deegee]

Originally Posted by kevman

I thought about using it to secure a LOC but I was hoping it was possible to lump it in your mortgage to take advantage of the lower variable rates found in a mortgage.

I would be very surprised if a lending institution would be willing to lend on an asset other then real estate for a 25-35 year amortization.

And depending on the asset in question, I'd also be surprised if the financial institution didn't want some form of structured repayment.

[Cowboy89]

Globe and Mail article about sustainability of prices in Canada. I would imagine that these figures would be heavily influenced by the frenzy in Vancouver and Toronto, but still an interesting article non the less.

Home prices are simply way out of line, especially when viewed in relation to household income. The ratio of house prices to income has historically averaged about 3.5 in Canada. It now stands at about 5.5. It is difficult to see how income growth in the future can bring this ratio close to the historical average within any reasonable period – so it follows that house prices will have to decline.

http://www.theglobeandmail.com/globe...rticle1979229/

[chemgear]

Looking at the pending sales numbers again today, I can totally see the CREB spin for April/May already:

"OMG, look at prices - they're going up, up, up!"

"Nevermind that sales numbers are down 25% from our worst year in a decade, and who cares about first time home buyers really? Prices up, up, up. Buy now, now, now!"


Seriously though, it's neat to see how sales have really slid since March 18. And interesting to statistically see the average/median prices go up with the marginal end of the price spectrum get cutoff with the amortization change.

It usually takes a month or so for pending to close and show as actual sales on average?

[The Yen Man]

Originally Posted by pepper24

It's important because if you want a house you can afford at the median family income ($91.5K as above) you're forced into a particular lifestyle.

A small house with small yard in the deep suburbs. Long commutes, cookie cutter homes. Ok for a young, small family. Not as feasible for an older, larger family. If that's what you can afford, you make due but it's not your dream scenario. Use the same points for a condo.

I know people like to use this phrase to look down on us suburbanites, but aren't all homes cookie cutter? Inner city homes are pretty 60's to 80's style cookie cutter. Condos downtown are about as cookie cutter condos as they come. What makes your home so special compared to others? Unless you have yours custom built with a bat cave, I don't see yours being all that unique either.

[Cowboy89]

Originally Posted by The Yen Man

I know people like to use this phrase to look down on us suburbanites, but aren't all homes cookie cutter? Inner city homes are pretty 60's to 80's style cookie cutter. Condos downtown are about as cookie cutter condos as they come. What makes your home so special compared to others? Unless you have yours custom built with a bat cave, I don't see yours being all that unique either.

That's running gag for me, because in Calgary if you live in a house in the inner city you typically live in either wartime, shoddy built, modular bungalow housing, 1950s and 60s era modular cookie cutter bungalow housing, or a rebuild/reno that has styling inspired by what you will find a 30 minute drive from downtown.

[TurnedTheCorner]

I predict there will continue to be real estate changing hands in Calgary for the foreseeable future.

[Jedi Ninja]

Originally Posted by fotze

But they may actually be a different colour. Cookie cutter, but slightly less cookie cutter. People renovate their inner city home to have a garage as the most prominent feature of their home? I don't think I have seen that in all the renos around my area. There are some real abortion homes though that give "character", white trash character.

After driving the kid back and forth to hockey at South Fish Creek arena this past week, I do not understand why people with free will choose to live that far away from work. Also the probability of driving behind someone doing 10-15 kph below the speed limit seems to increase the further you get away from the core. People who live in Okotoks deserve the Nobel peace prize for patience.

If you can do that commute for a couple years then you can get through anything.

OT, but you mean like this (on both counts)?

http://maps.google.ca/maps?f=q&sourc...11.35,,0,-0.18


I think this sort of reno is illegal now. And rightfully so.

[The Yen Man]

Originally Posted by fotze

But they may actually be a different colour. Cookie cutter, but slightly less cookie cutter. People renovate their inner city home to have a garage as the most prominent feature of their home? I don't think I have seen that in all the renos around my area. There are some real abortion homes though that give "character", white trash character.

After driving the kid back and forth to hockey at South Fish Creek arena this past week, I do not understand why people with free will choose to live that far away from work. Also the probability of driving behind someone doing 10-15 kph below the speed limit seems to increase the further you get away from the core. People who live in Okotoks deserve the Nobel peace prize for patience.

If you can do that commute for a couple years then you can get through anything.

I dunno, all the interior reno's look the same to me. Every reno of an old home I've seen have a similar theme: hardwood throughout, new kitchen cabinets, granite, and stainless steel appliances, so basically the same cookie cutter type themes as the houses in the new communities.

I'll grant you, it's the commute that puts suburban homes in a disadvantage though. But because I don't work downtown, to me it's not that big a deal.

[Cowboy89]

Originally Posted by fotze

After driving the kid back and forth to hockey at South Fish Creek arena this past week, I do not understand why people with free will choose to live that far away from work. Also the probability of driving behind someone doing 10-15 kph below the speed limit seems to increase the further you get away from the core. People who live in Okotoks deserve the Nobel peace prize for patience.

If you can do that commute for a couple years then you can get through anything.

Oh I'm totally with you here. My dig was that a lot of inner city dwellers are deluding themselves into thinking that their decision is superior in every way when in fact in many cases quality and size of house was traded off for superior location.

[pepper24]

Originally Posted by Shazam

People need shelter. Without shelter, you die.

Therefore, there will always be demand for shelter. People buy what they can afford.

My dream is to have three hot blondes sucking my #### all day, but there you go.

You do realize you're looking down at people because they can't make as much as you or they can't afford a house as nice as yours, right?

Where do I say that I make more or have a nicer house than anyone?

What I am getting is that you say that $400K is affordable. I disagree as the median household income (91.5K) should get you a median priced home. Condos and suburban houses are great but they target 1st time home buyers, young families etc. Oddly, my demographic. The thing is that with the median household income a lot of 1st time buyers/young familes are making less. Suddenly, not that affordable. Owners with median household incomes are forced to settle for condos/starter homes due to prices outpacing income. There is more to the story such as built up home equity, savings etc. but with such a large debt/income level in Canada it's not a huge factor. Nothing wrong living in these type of places but in a normal market that isn't overpriced it's a different scenario.

[I-Hate-Hulse]

Originally Posted by fotze

Oil at this price just changes everything. Jobs are everywhere, not enough people for them, salaries go up. Job prospects are going back to boom levels. You buy a house you can barely afford, within the year you can quite easily afford it. At this price its economic to kidnap teenagers and harvest their oily faces, you'll see teenagers duct taped to the side of cars with their face jammed into the gas inlet.

Amen to this. Both my company (oilfield services) and the wife's company (transportation) have job boards bulging with openings. We can't get enough crews for the field either.

Bonuses and options vesting should have been decent for downtown Calgary this year, especially with the runup in share prices. Throw in a round of competitive salary increases and headhunters doing their thing and I think the all so critical confidence index should bounce nicely for Calgary.

Nothing burns a hole in your pocket in this town like a combination of cash in your jeans...and no fears about making more in the future.

[Winsor_Pilates]

Originally Posted by chemgear

It usually takes a month or so for pending to close and show as actual sales on average?

No, not that long, usually a week or so. The most common conditions are inspection, financing & condo docs if a condo. All can usually be sorted out pretty fast.
An offer with 1 month for conditions would be pretty unattractive for sellers.

[chemgear]

Originally Posted by fotze

There are some real abortion homes though that give "character", white trash character.

Originally Posted by fotze

For sure you get less house, and probably older house and closer neighbors and more likely to have "colourful" neighbors.

Wait, what are you trying to say? (I kid!)

I gotta agree, relatively speaking money isn't the limiting factor in the grand scheme of things. Time commuting for hours and hours - day after day on the other hand . . . I'd lose my marbles.

[chemgear]

Originally Posted by fotze

Ohh fata, I didn't mean neighbors of colour, I meant with colourful personalities, like parking cars on the lawn or rental places, basically where 4X4 is a slumlord.

Hehe, I know and I'm just kidding!

Speaking of which, that "garage" google-linked above was pretty epically god awful.

[Bunk]

Originally Posted by Cowboy89

That's running gag for me, because in Calgary if you live in a house in the inner city you typically live in either wartime, shoddy built, modular bungalow housing, 1950s and 60s era modular cookie cutter bungalow housing, or a rebuild/reno that has styling inspired by what you will find a 30 minute drive from downtown.

It's interesting what people define as "inner city" here in Calgary. I wouldn't count many areas built primarily post war as inner city.

Most pre-1950s neighbourhoods are pretty eclectic in terms of their housing stock - Beltline, Sunnyside, Hillhurst, Bridgeland, Rosedale, Crescent Heights, Inglewood, Ramsay, Cliff Bungalow, Mission, Erlton, Park Hill, Lower Mount Royal, Upper Mount Royal, Bankview, Roxboro, Rideau, Elbow Park, Sunalta, Scarboro, South Calgary etc.

[flamesfever]

I believe the quality of workmanship in many of the older homes in the inner city justifies the extravagant renovations. And from what I have observed, is changing the look of many inner city communities.

I guess if it was me, choosing between buying a new house on the outskirts of the city, vs buying an older one close in and renovating it, my choice woud be for the latter... unless you have the resources to purchase an acreage and live out of town which would be my first choice.

[chemgear]

Halfway through April!

http://calgaryrealestatereview.com/2...market-update/

Again, interesting how the sales have gone down through a reduction in the first time home buyer segment and the resulting bump in averages prices as a result. The increase seems to be due to a change in the spectrum of (pricing distrubtion) of houses that are actually selling as opposed to any price appreciation per se (clearly with sales prices still consistently below list prices for the last 12ish months.)

Perhaps in 12 months there will be only left sales in the million-dollar price category - which of course means ALL houses will be worth at least a million dollars. (I kid.)

Will things pick up later in 2011? 10-15% lower than the worst year in a decade is facing off versus "omgomgomg oil prices." I continue to look forward to my massive salary bump later this year - not sure I'm gonna spend it on housing though.