Calgary Real Estate predictions?

[Red]

Originally Posted by oilers_fan

Real estate in general pisses me off, but I've just gotten unlucky. I didn't buy a few years ago before prices went crazy, and then I finally decided to buy a condo last December when I thought prices were at a pretty low level. Now that I've finally moved into my condo, there are still units for sale, and at prices lower than I paid! Argh!

That's unfortunate, but with the message you were getting from local media and RE agents it would have been tough to not buy.

[Robbob]

I really want a house that is out on the market but I have to unload the condo I'm in right now to have any chance at it. My only saving grace is that I bought the condo before the huge boom so I'll have equity regardless, it just has gone down 40k During the boom a one bedroom in my building went for 260k and the 2 bed I have now looks like I'd be lucky to get 220k. Thats life I guess.

[ken0042]

Originally Posted by Robbob

During the boom a one bedroom in my building went for 260k and the 2 bed I have now looks like I'd be lucky to get 220k. Thats life I guess.

And where would you have lived in the mean time? Let's say your rent would have been $500-1000 more than your interest payments on your mortgage. times 18 months that's $9000-18,000 you would have had to pay.

[Burninator]

Originally Posted by Winsor_Pilates

Are you looking at finished product, or pre-sales that will take time to build?
If you're looking at finished product, I'd build up the downpayment for a bit, as I don't think prices will increase anytime soon. If it's presale, and will take a couple of years to build, look for a good deposit structure, and reputable developer.
If you're looking at pre-sale send me a PM if you want info on what we have selling in Calgary or opinions on certain developers.

I am mostly looking at finished products. I've looked at some pre-sale stuff but nothing really interested me or I couldn't afford it.


I agree with most the sentiment here, I have a feel I'll be waiting. For the amount I was hoping to save another six months should bring me close to that ball park. The stuff I am looking right now is to help me gauge the market better when I am seriously looking. When you never looked before it's tough to tell what's good/bad, big/small, good value/bad value etc.

A couple more questions.

-Is it better to use the down payment to buy a more expensive place or have a smaller mortgage? I can see pros and cons to both.

-How much should I expect to spend on lawyer, condo doc review, etc fees? I am figuring to spending 250k-280k on a place.

-How much money should I set aside to buy furnishings for my place? I basically only have what's in my bedroom and am not really interested in getting Grandma style hand me down flower pattern couches.

[ken0042]

Originally Posted by Burninator

-How much should I expect to spend on lawyer, condo doc review, etc fees? I am figuring to spending 250k-280k on a place.

Send Troutman a PM. He was very helpful when I was just browsing.

[Bagor]

Start looking around now for a GOOD home inspector. Worth their weight in gold if you can get a good one. Talk to neighbours, friends, relatives etc that can recommend you one.

Personally, I would recommend against using the one your realtor suggests.

[Burninator]

Originally Posted by Bagor

Start looking around now for a GOOD home inspector. Worth their weight in gold if you can get a good one. Talk to neighbours, friends, relatives etc that can recommend you one.

Personally, I would recommend against using the one your realtor suggests.

Well I am looking at a condo so I don't think it's quite the same...I'm not totally sure on that though.

[Winsor_Pilates]

Originally Posted by Burninator

Well I am looking at a condo so I don't think it's quite the same...I'm not totally sure on that though.

It's not the same. For a condo, it's more important to look at the strata minutes because any major issues or mismanagement will be documented there.
On top of that, do a thorough search of the inside and you should be good. The true benefit of an inspector is looking at stuff like roofing, foundation, siding etc. and that's not as necessary with a condo.

[Winsor_Pilates]

Originally Posted by Burninator

I am mostly looking at finished products. I've looked at some pre-sale stuff but nothing really interested me or I couldn't afford it...

A couple more questions.

-Is it better to use the down payment to buy a more expensive place or have a smaller mortgage? I can see pros and cons to both.
...

-How much money should I set aside to buy furnishings for my place? I basically only have what's in my bedroom and am not really interested in getting Grandma style hand me down flower pattern couches.

If you're going finished product, I think you're in a great spot to wait. Prices shouldn't go up anytime soon, and letting your down payment gain interest and grow while you wait can't hurt.

On your next point, I would vote smaller mortgage, but I guess it's a matter of opinion. I'd prefer to pay less interest and be able to pay off a mortgage off faster.
Ask yourself what you really need a home first, and I don't think you'll regret going either way if that's your main motivation.

Ok furnishings can be had for pretty cheep. When I first got my own place I found a ton of great deals and freebies and still kept the place looking good. I found a free bbq, ironing board, dining chairs, patio furniture and a $200 sofa. I furnished my 2 bed condo for well under $1000 (not including beds), and slowly upgrades parts as I found things I liked/deals in the future.

[SebC]

So... given that now's not the time to buy but that I have my 5% + "startup costs" saved for a downpayment and I'm watching the market, where do I start for getting a month-to-month rental? Or should I just go for a one-year lease and bite the bullet and try subletting it if it comes to that?

Edit: mods, feel free to move to a new thread if you think it's more appropriate to do so.

[Red]

Originally Posted by ken0042

And where would you have lived in the mean time? Let's say your rent would have been $500-1000 more than your interest payments on your mortgage. times 18 months that's $9000-18,000 you would have had to pay.

Renting would've been much cheaper than buying. In 18 months you pay almost nothing on your principal and the interest on a ~250K mortgage is pretty hefty, plus you need to add the condo fees as well.

[pepper24]

Something to remember.........stocks/bonds since something like 1978 have beat inflation by 6-8% while housing has beat inflation by 1-2% points over the same period. In the short term (since early 2000), real estate has been the better investment. Don't have all your eggs in one basket.

Stocks/bonds easily win in costs, effort, diversification and transperency.

Regarding the current state of the real estate market in Calgary, it was bound to correct eventually. You cannot sustain 60% gains in 1 year. This is either a correction which will plateau shortly or a large drop where what goes up quickly can drop just as quickly. I am betting on a correction mainly because interest rates are still low, the job market is still strong and Calgary is still a desirable place to live.

[pepper24]

Originally Posted by fotze

But lets not forget about the horrible oil price of $112 that we are going to hear about today because it has really slashed our surplus. Never thought I'd see the day the oil price was as low as $112.

I am not sure if you meant to have this in green or not The projected drop in our surplus is due to a projection of $145 us/bbl crude which is now around $115. It'll still be a hefty surplus.

Oil/gas has bubble written over it just like real estate. Hype and speculation have driven up both markets beyond what they can realistically sustain.

That being said, anything above $50/bbl for crude still feeds our surplus and keeps jobs/investments in Alberta. Once it gets lower than $50/bbl the oil sands aren't as economical due to the high refining costs.

[Mike Oxlong]

Originally Posted by pepper24

Something to remember.........stocks/bonds since something like 1978 have beat inflation by 6-8% while housing has beat inflation by 1-2% points over the same period. In the short term (since early 2000), real estate has been the better investment. Don't have all your eggs in one basket.

The thing you have to consider though is that when you buy a stock you are paying for it 100% with your own money. When you buy Real Estate your are generally using mainly the banks money. Any appreciation you gain from Real Estate is all yours even though the bank is providing you the money to purchase the home.

I agree it is important to diversify. However there are certain benefits to real estate that can make it more attractive.

[Cowboy89]

Originally Posted by Mike Oxlong

The thing you have to consider though is that when you buy a stock you are paying for it 100% with your own money. When you buy Real Estate your are generally using mainly the banks money. Any appreciation you gain from Real Estate is all yours even though the bank is providing you the money to purchase the home.

I agree it is important to diversify. However there are certain benefits to real estate that can make it more attractive.

Who says you can't buy stock on margin or enter into derivative trading strategies to maximize leverage?

[Mike Oxlong]

Originally Posted by photon

What do I have to say now? It was obvious it couldn't continue the way it was and that there'd be a correction... I thought the landing would be soft and it has been (unless you're stuck with a bunch of properties you can't pay, then it doesn't feel soft).

I won't pretend to predict if the market has bottomed for houses, but I don't think it's going to go down massive amounts.. condos still have a lot of room to go down.

I never took a real-estate never goes down stance and didn't buy my places with that in mind; I made sure the stuff I purchased made sense when the market turned around too, not just for when things were going crazy. So my stuff is quietly sitting there being paid off by my tenants and worth more than what I paid for it, so I can't complain. I have one property where I made a mistake buying it, but it isn't hurting me very much so I'll just be patient with it.

I wish I had more money to buy, there's some really good cash-flowing stuff out there at the moment.

Exactly!!!
There are ups and downs in the Real Estate market and right now we are suffering through a down period. In the meantime all my properties are cash flowing, the tenants are paying down the mortgage and in 20 years from now they will all be free and clear of a mortgage. Then the cash flow will be coming in strong, and I guarantee you those places will be worth a whole lot more then than they are now.

Real Estate is a long term investment and over the long term is does go up. Look at prices throughout history. In the next 20 years I will see a lot of equity gains in these places through price appreciation. There will be years when prices go down and years where they go up and in 20 years I know they are going to be worth a lot more than they are now.

I just don't understand people bashing the Real Estate market and people who invest in it. 90% of the worlds wealth was made through Real Estate.

It's easy to say "I told you so" now that the market has softened after the biggest price increase in Calgary's history. This down period isn't going to last forever. Long term there is still LOTS of money to be made in Real Estate. As long as you buy smartly. You make money when you buy a house, not when you sell it.

I too wish I had some more money to buy properties. You can get some amazing deals out there right now.

[Mike Oxlong]

Originally Posted by Cowboy89

Who says you can't buy stock on margin or enter into derivative trading strategies to maximize leverage?

True. I do know that is an option but I don't know the details on it. I bet you 98% of people don't have a clue how to do that either. Pretty much everyone understands how a mortgage on a property works. Mortgages are far easier to obtain for people than they strategies you are suggesting as well.

I would love an explanation on it........
Say I have $10,000 and I want to buy $100,000 in stocks. How does it work and what type of interest rates am I looking at?

[Slava]

Originally Posted by Mike Oxlong

True. I do know that is an option but I don't know the details on it. I bet you 98% of people don't have a clue how to do that either. Pretty much everyone understands how a mortgage on a property works. Mortgages are far easier to obtain for people than they strategies you are suggesting as well.

I would love an explanation on it........
Say I have $10,000 and I want to buy $100,000 in stocks. How does it work and what type of interest rates am I looking at?

This is actually very simple and in the cases that I deal with its far easier than a mortgage. You can borrow that whole $100k without the $10k if you so desire and invest the whole shot. You do have to pay interest on that $100k.

The interest rate does depend on where you borrow from and how you do that; in general though you are looking at prime (4.75% today) to do this. You can write off the interest though so your break-even is actually about 3.25%....in other words anything above that is profit. With real estate there are a lot of things to be concerned with...such as you can't write-off the interest on land in this fashion, the properties are not as liquid as stocks/bonds, and the list goes on.

If you have other questions fire away!

[Slava]

Originally Posted by Red

"Real Estate never goes down....."

"Buy now before you're priced out forever...."

"We have Oil in Alberta, houses will keep going up...."



Oh, the memories, where's Dominicwasalreadytaken and all the other resident Donald Trumps? I'd really like to hear what they have to say now. Probably the same as Ed Jensen, we are just seeing a "slight market correction".

Anyways, my worthless advise is to wait until the market is on a upward trend. Never buy while things are on the way down. And don't buy the "buyer's market" crap, it's neither buyer or seller market, it's a wait and see market.

This is probably true. The one thing to consider is that when the market does turn your negotiation strength is greatly reduced if not gone. Right now you could offer a lower offer and have a good position to hold that stance, but once the market bottoms out and starts to climb those positions end pretty fast.

[Mike Oxlong]

Originally Posted by Slava

This is actually very simple and in the cases that I deal with its far easier than a mortgage. You can borrow that whole $100k without the $10k if you so desire and invest the whole shot. You do have to pay interest on that $100k.

The interest rate does depend on where you borrow from and how you do that; in general though you are looking at prime (4.75% today) to do this. You can write off the interest though so your break-even is actually about 3.25%....in other words anything above that is profit. With real estate there are a lot of things to be concerned with...such as you can't write-off the interest on land in this fashion, the properties are not as liquid as stocks/bonds, and the list goes on.

If you have other questions fire away!

So a bank will lend you $100,000 just to go play the stock market?

What type of collateral do you have to put up? Where is the banks security if you invest in Enron and lose it all?