Real estate in Calgary - another bubble?

[_Q_]

Originally Posted by chedder

Kind of off topic but that 120,000 average individual income seems way out of whack with what literally every other site says. The alberta government says the median family income is $105,000. CMHC says around the same.

Most sites put the average individual salary around $60,000 which matches what national surveys say. (54,000 for canadians) So your average household is not buying million dollar houses right of the bat (which seems obvious).

I think the average buyer makes way more than $105k though. The median income includes the 19 year old college student, the 23 year old new grad, the single dad working at the post office that ìs only looking to rent, etc.

[blankall]

Originally Posted by Monahammer

You're conveniently neglecting that the million dollar home couple would still also need to come up with 200k for a downpayment.

Increasingly, parents.

Which IMO is a tragedy, as we're witnessing further decay of social mobility, which is pretty fundamental to any functioning free market or democratic state.

[Table 5]

Originally Posted by Muta

Real estate seems to be a game for the 1% in this world, and moreso everyday.

Happy yet?

I know this can easily veer into conspiracy theory territory, but in general non-ownership is basically the type of living our global leaders are pushing the masses towards already. We are told about the wonders of sharing, renting, co-habiting etc. across everything we do...often under the guise of environmental stewardship or social equity. Meanwhile those with actual money and power are busy buying up land, properties, and tangible physical assets like it's going out of style.

[Torture]

Originally Posted by chedder

Kind of off topic but that 120,000 average individual income seems way out of whack with what literally every other site says. The alberta government says the median family income is $105,000. CMHC says around the same.

Most sites put the average individual salary around $60,000 which matches what national surveys say. (54,000 for canadians) So your average household is not buying million dollar houses right off the bat (which seems obvious).

That number is way out to lunch. I regularly look at compensation data and there's no way the average salary in Calgary is anywhere close to $120k.

[DoubleF]

$200K on a $1MM home is 20%. When I bought a place in 2015, the lender I went with literally demanded that we max out at 15% down payment and they'd pay the CMHC insurance on our behalf. My understanding was that they were expecting to glean significantly more than the CMHC insurance in extra interest over the life of the loan.

I don't know if lenders are back to being conservative and wanting 20% down. I am just saying there might be no specific requirement for a 20% down payment. Some people might be getting away with 10-19% down. My understanding is that you just have to either pay higher interest rates and/or a CMHC insurance thing IIRC.

Most people I know usually save up 3-5 years for a down payment before buying a house. Most of these same people are not the types of people that buy a house immediately after entering the work force. Some of these comments comparing a raw wages + empty bank account to property prices are kinda odd.


And there was a good point made. Almost everyone I know in Vancouver who bought a big place, rents out the extra space in the house they live in. It's quite common and my buddy kept laughing and calling it the Vancouver special. He lives in a 2500 sq foot usable space property (about 1600 sq ft above grade ish?) that's segregated into 3 separate entrances. Another I know bought a 4 million dollar property and rents out half the home to someone else. It's the complete opposite of everyone I know in Calgary. I can count on one hand the people I know who collect rents from the same roof they live under. Multiple properties, many. But very few for those who are under the same roof. Anyone spending over $700K in Calgary seemingly expects privacy and does not expect to have to rent out extra space. Many in Vancouver don't necessarily have this expectation.

[_Q_]

So going back to the title of this thread, is this a bubble, or is this just the way of the future?

I've talked to a few realtors who have candidly told me not to buy a home right now as they can see the bubble bursting in the next 2 years.

[opendoor]

Originally Posted by Table 5

I know this can easily veer into conspiracy theory territory, but in general non-ownership is basically the type of living our global leaders are pushing the masses towards already. We are told about the wonders of sharing, renting, co-habiting etc. across everything we do...often under the guise of environmental stewardship or social equity. Meanwhile those with actual money and power are busy buying up land, properties, and tangible physical assets like it's going out of style.

I'd argue it's the opposite. Governments have bent over backwards to benefit people who own properties and to facilitate more people buying properties rather than creating a healthy rental market. The number of newly built social housing and purpose-built rental housing units has massively cratered and is a fraction of what it was in prior decades. As a result Canada has one of the highest home ownership rates among advanced economies, with nearly 70% of residences being owner occupied and it's still increasing.

[DoubleF]

Originally Posted by _Q_

So going back to the title of this thread, is this a bubble, or is this just the way of the future?

I've talked to a few realtors who have candidly told me not to buy a home right now as they can see the bubble bursting in the next 2 years.

Vancouver and Toronto feel like obvious bubbles to me. But Calgary I am uncertain. This on top of the fact that single detached are going in completely opposite directions from things like duplexes/multiplexes and townhouses/condos with monthly maintenance fees.

I can't help but think that even if single detached cools off or "pops", that somehow townhouses/condos/X-plexes will rise to off set it. Townhouses/condos/X-plexes are pretty great to live in as a starter place. Honestly speaking in a Vancouver/Toronto market for some, it's the end goal. In Calgary, lots of people view it as a low end "starter" home. Crazy difference in perspective.

[Hemi-Cuda]

Originally Posted by _Q_

So going back to the title of this thread, is this a bubble, or is this just the way of the future?

I've talked to a few realtors who have candidly told me not to buy a home right now as they can see the bubble bursting in the next 2 years.

They've been saying that for the last 10 years. Vancouver/Toronto show no signs of slowing down, and as more people are priced out of those markets more will start looking towards Alberta. IMO I think the era of finding a detached house of any size for under $500k is gone for good in Calgary

[DoubleF]

Originally Posted by Hemi-Cuda

They've been saying that for the last 10 years. Vancouver/Toronto show no signs of slowing down, and as more people are priced out of those markets more will start looking towards Alberta. IMO I think the era of finding a detached house of any size for under $500k is gone for good in Calgary

Caveat... in a specific age bracket or condition... AND we assume Chestermere/Okotoks/Cochrace/Airdrie/Bragg Creek etc. are not going to be under the Calgary banner any time soon going forward.

This also assuming that demand doesn't go away and we don't innovate sub $500K single detached homes (ie: Modern micro detached homes to replace the multi-plex concept). I actually have a buddy in Vancouver who is working on a concept like this where you can build a home, load it on a trailer and deliver it to a land plot.

This and the weird crazy trend of building mini homes on excess land in Vancouver that has starting to pop up. It was described to me as basically you replace the garage with a micro home that you sell, but the land is still owned by the original house and essentially "leased" to the mini home buyer or something weird like that.

[opendoor]

Originally Posted by Hemi-Cuda

They've been saying that for the last 10 years. Vancouver/Toronto show no signs of slowing down, and as more people are priced out of those markets more will start looking towards Alberta. IMO I think the era of finding a detached house of any size for under $500k is gone for good in Calgary

Interest rates have also been at historical lows for the last 14 years. If they go up (which they basically have to at this point), housing prices are most likely going to respond. A 1M mortgage at 2.5% is the same payment as a $770K mortgage at 5%. And even 5% is low historically. At 6-6.5% (basically where were were pre-2008), that payment gets you about $650-700K.

I imagine governments will do everything they can to not raise the rates that much (if only for their own debt obligations), but then we'll likely just see higher inflation which also devalues the asset.

[you&me]

The idea of a bubble "popping" in Calgary seems a little silly at this point.

We're a few months into the first signs of life in the market, and some people are already forgetting the fact that the entire Calgary market has essentially been flat for a decade...

That said, Calgary is the most affordable big market in Canada relative to incomes. Regardless of factors that would contribute to a bubble popping in other markets, Calgary should fare relatively well.

[DoubleF]

Originally Posted by you&me

The idea of a bubble "popping" in Calgary seems a little silly at this point.

We're a few months into the first signs of life in the market, and some people are already forgetting the fact that the entire Calgary market has essentially been flat for a decade...

That said, Calgary is the most affordable big market in Canada relative to incomes. Regardless of factors that would contribute to a bubble popping in other markets, Calgary should fare relatively well.

True, I didn't think of it that way. Calgary's bubble popped quite a few years back and we aren't even back to those levels of insanity yet. The odds of it being a full on popping vs a bunch of small temporary corrections is seemingly quite low.

[_Q_]

Originally Posted by you&me

The idea of a bubble "popping" in Calgary seems a little silly at this point.

We're a few months into the first signs of life in the market, and some people are already forgetting the fact that the entire Calgary market has essentially been flat for a decade...

That said, Calgary is the most affordable big market in Canada relative to incomes. Regardless of factors that would contribute to a bubble popping in other markets, Calgary should fare relatively well.

Is there a reason for the housing market to be this hot though other than FOMO? Unemployment rates are still in in the dumpster, and downtown vacancy is hovering around 30%. Are we doing that much better economically than we were pre-covid?

We still have an incredible amount of land on the outskirts of the city. Once construction catches up with or surpasses demand, what happens?

[Locke]

Originally Posted by Table 5

Happy yet?

I know this can easily veer into conspiracy theory territory, but in general non-ownership is basically the type of living our global leaders are pushing the masses towards already. We are told about the wonders of sharing, renting, co-habiting etc. across everything we do...often under the guise of environmental stewardship or social equity. Meanwhile those with actual money and power are busy buying up land, properties, and tangible physical assets like it's going out of style.

Yes, you see the problem with that is I can barely tolerate living with my family. I dont want to add other people to the mix.

Everyday society and 'other people?' Okay fine. But I dont necessarily want them there when I come home.

[you&me]

Originally Posted by _Q_

Is there a reason for the housing market to be this hot though other than FOMO? Unemployment rates are still in in the dumpster, and downtown vacancy is hovering around 30%. Are we doing that much better economically than we were pre-covid?

We still have an incredible amount of land on the outskirts of the city. Once construction catches up with or surpasses demand, what happens?

I'm still not really bullish on the Calgary market. The homes around me are still on the market for many months / relisted repeatedly; the homes I watch as a next move are the same, so from where I'm at some parts of the Calgary market are hot, but not the part I'm (interested) in.

Generally speaking, I think it comes down to bazillions of new dollars in the economy, looking for a place to be spent, combined with still-historically low interest rates... Eventually some of that excess is bound to spill over into a 1mm+ person city in a G7 country (even if it's shocking that it took this long)... Anecdotally, it seems a lot of that spill over is coming from other markets where homeowners can take out a small portion of their home equity and pay cash for a home in said 1mm+ person city in a G7 country... I would not want to be a landlord in Calgary, certainly not if I'm planning on positive cashflow in the near-term.

And if you think Calgary real estate is "hot", you should take a look at literally any other asset class...

[looooob]

Originally Posted by blankall

Increasingly, parents.

Which IMO is a tragedy, as we're witnessing further decay of social mobility, which is pretty fundamental to any functioning free market or democratic state.

am I the only (GenX) one who is soon to be in the life stage where I'm supposed to be the mythical donor parent, who is wondering where the 200k per child is going to come from?

[blankall]

Originally Posted by _Q_

So going back to the title of this thread, is this a bubble, or is this just the way of the future?

I've talked to a few realtors who have candidly told me not to buy a home right now as they can see the bubble bursting in the next 2 years.

Inflation is a major thing right now, and will be for the next couple of years. So you can pretty much ad 20-30% onto the price of any home and have it hold the same "value".

Demographics are playing a role too. The Millennials and Gen Yers are hitting the market in a big way, and baby boomers aren't moving out. Calgary's population continues to grow at a fast past, even through non-booming economic times.

Some of the buying trends exposed in the pandemic are likely to be permanent too. For example, we will see more people working from home. Townhouses will remain popular. There will be less demand on physical office space.

I don't see the bubble bursting in Calgary, as things were already extremely low relative to buying power. In other areas there is always the threat of an adjustment of up to 30%, but if detached houses in Toronto and Vancouver dropped below a million again, they'd be snatched up in an instant. So they can only go so low.

I don't see an 80s style massive slashing of prices happening anytime soon.

[blankall]

Originally Posted by looooob

am I the only (GenX) one who is soon to be in the life stage where I'm supposed to be the mythical donor parent, who is wondering where the 200k per child is going to come from?

It's more babyboomers donating than Gen Xers. Gen Xers didn't have nearly the same economic opportunities that Babyboomers did. The dividing wealth gap has been a slow process. The Gen Xers are somewhere between Babyboomers and Millennials, in terms of their wealth.

But yes, the unfortunate reality is that if you want your children to do well, you will likely have to pay more for it than previous generations did. And people who don't have the luxury of having parents to support them more financially, are simply going to have a much tougher time.

[Jason14h]

Originally Posted by looooob

am I the only (GenX) one who is soon to be in the life stage where I'm supposed to be the mythical donor parent, who is wondering where the 200k per child is going to come from?

If you live in Calgary you had a lost decade for housing equity.

Anywhere else you are up 50-100%, so you just take a equity loan, let them buy a house and watch it appreciate 100% in the next decade

(Most people have only lived in places where housing only goes one direction)