Calgary Real Estate predictions?

[Red]

House prices rise in Montreal, Toronto and Vancouver according to stats from MLS HPI


In other news:

MLS HPI invented by realtors.

[chemgear]

Anybody follow the Vancouver stats? I've heard that inventory was piled high for the start of the year but haven't had a chance to track down those stats all that much.

Do you have a good pulse on it as usual, WP?



http://www.calgaryherald.com/busines...495/story.html



"Since October, it was like someone turned off the tap. It became absolutely dead," said long-time realtor Pam Allen.

[Winsor_Pilates]

Yup, January stats showed increased inventory and softened buying. I'll try and add a link.

Having said that, everyone in my office (busy DT office with focus on condos) is very busy and all of my listings that I had in the Fall have come back on in January with way more attention and some quick sales.

I think the detached housing market which was insane last Spring due to Chinese buyers has slowed down. The early Chinese new year this year hasn't brought a buying frenzy and that will show slowed down numbers for the next few months IMO.

Condos on the other hand feel really busy to me. I had a listing that sat since last Spring suddenly get tons of attention (and sold) in January and just had first time buyers go into multiple bids against 2 other groups on their first condo last week.
Having trouble finding good stuff for some other buyers as the good listings are going almost as soon as listed.

Some big name new developments opening in the next 2 months which will be interested to see absorption on (Marine Gateway, Telus Garden, Lido, Meccanica, 999 Seymour). Lots of condo inventory.

On personal experience without looking at the numbers, I'm way busier then I was in the Fall. Too busy to look at the numbers...

[Skyceman]

It's most likely picking up now due to the historic low 2.99 rate from BMO and a few other banks that were opened up in Jan. Since those have been pulled now (before they were supposed to) it will be interesting to see what happens in the next few months without those enticing buyers. Mark Carney is likely to put more drags on the market (removing 30 year terms) to slow things down further.

I know condos in my area have listings sitting on the market 6+ months with no interest (according to our realtor). Our condo also sat for months until recently finally getting an offer on it.

[ranchlandsselling]

http://www.bloomberg.com/news/2012-0...vere-drop.html

Canada may be on the cusp of a“severe” housing correction as real estate investment surges above a tipping point relative to economic output, according to George Athanassakos, professor of finance at the Richard Ivey School of Business.

I think the "sever correction people" might be looking at Toronto / Vancouver more than Calgary. As long as oil prices remain where they are and no spike in interest rates I don't see Calgary doing much more than small changes up or down.

[Red]

Trouble in the beautiful Kelowna...

http://ca.finance.yahoo.com/video/ca...-28325942.html

[Skyceman]

Calgary renters rebel against ‘cult of home ownership’

CALGARY — Carla and Garry Knipe moved back to Canada three years ago after living in England. They were attracted to Calgary by its reputation as a thriving city with plenty of work opportunities, and Garry soon found work in IT for an oil and gas company. So far, however, they haven’t done what so many other Canadian families strive for by buying a house.

“We looked at the house prices and wondered how anyone could afford a house on the wages,” Carla Knipe says. “For us, it was simple economics. We looked at how much we’d have to put into a mortgage versus renting and thought renting makes a whole lot of sense right now.”

http://www.calgaryherald.com/touch/b...tml?id=6100596

[stacey]

Originally Posted by Skyceman

Calgary renters rebel against ‘cult of home ownership’

CALGARY — Carla and Garry Knipe moved back to Canada three years ago after living in England. They were attracted to Calgary by its reputation as a thriving city with plenty of work opportunities, and Garry soon found work in IT for an oil and gas company. So far, however, they haven’t done what so many other Canadian families strive for by buying a house.

“We looked at the house prices and wondered how anyone could afford a house on the wages,” Carla Knipe says. “For us, it was simple economics. We looked at how much we’d have to put into a mortgage versus renting and thought renting makes a whole lot of sense right now.”

http://www.calgaryherald.com/touch/b...tml?id=6100596

I think most people with "zero" equity share Carla's thoughts. I doubt things were cheaper in England...

[Skyceman]

Originally Posted by stacey

I think most people with "zero" equity share Carla's thoughts. I doubt things were cheaper in England...

How would you know whether they have "zero" equity? The article mentions they prefer to rent because they value the flexibility to move for work or changes to their children’s schooling.

I personally know people who are renting and could easily afford to buy but refuse to in this market. Renting doesn't always equate to not having equity.

[Mike Vernon]

England is far far far more expensive than Calgary, it also makes Vancouver look cheap by comparison. Not sure where that article is coming from. North America is a steal compared to Europe in general.

Housing prices in Calgary are very Oil and Gas connected. The scary thing right now is that Gas is at an extreme low, so if you think Nat Gas will eventually go up, where do you think house prices are going? The people that are sitting on their hands are in for big surprise come 2015 onward.

[stacey]

Originally Posted by Skyceman

How would you know whether they have "zero" equity? The article mentions they prefer to rent because they value the flexibility to move for work or changes to their children’s schooling.

I personally know people who are renting and could easily afford to buy but refuse to in this market. Renting doesn't always equate to not having equity.

Do the math, the place they are staying in would be valued around $400,000.00

If they say their mortgage payments would be around $2500.00/month before property tax's, I doubt there is much equity there...

"They pay $1,700 per month for a 1,600-square-foot, three-bedroom home in Rocky Ridge in the city’s northwest. To buy the equivalent home, they figure they would need to spend about $2,500 per month on a mortgage plus property taxes"

[freedogger]

Originally Posted by Mike Vernon

England is far far far more expensive than Calgary, it also makes Vancouver look cheap by comparison. Not sure where that article is coming from. North America is a steal compared to Europe in general.

Housing prices in Calgary are very Oil and Gas connected. The scary thing right now is that Gas is at an extreme low, so if you think Nat Gas will eventually go up, where do you think house prices are going? The people that are sitting on their hands are in for big surprise come 2015 onward.

Even with a massive amount of baby boomers retiring and dying off in the next two decades? If it wasn't for our oil economy I would think we would see a large decline. But I don't really know if it will be enough to overcome the demographic changes.
http://blogs.wsj.com/developments/20...ousing-market/

[Mike Vernon]

Originally Posted by freedogger

Even with a massive amount of baby boomers retiring and dying off in the next two decades? If it wasn't for our oil economy I would think we would see a large decline. But I don't really know if it will be enough to overcome the demographic changes.
http://blogs.wsj.com/developments/20...ousing-market/

People are moving here (Calgary) for work. Last time I checked the population of Calgary is growing, even with old people dying.

[Red]

Originally Posted by stacey

Do the math, the place they are staying in would be valued around $400,000.00

If they say their mortgage payments would be around $2500.00/month before property tax's, I doubt there is much equity there...

"They pay $1,700 per month for a 1,600-square-foot, three-bedroom home in Rocky Ridge in the city’s northwest. To buy the equivalent home, they figure they would need to spend about $2,500 per month on a mortgage plus property taxes"

Not sure what you are trying to say here.

They are renting because they figure that buying the same house would cost them $800 + $200 tax + insurance/maintenance etc. more every month.

The article illustrates how bad of an investment this house if for their owners.
In a normal market renting is more expensive than ownership or at least close to break even.
Here, the owner of the house gets 5% return on their $400K house. Negative cash flow and they get taxed for income at highest rate. They are left with 12K after tax and that's when they have no vacancy.

Getting 12K a year on a 400K investment is not a good return.

At the same time, the renters here are saving the 15K extra they'd be spending as owners. They are the winners here.

[Sylvanfan]

Originally Posted by Red

Trouble in the beautiful Kelowna...

http://ca.finance.yahoo.com/video/ca...-28325942.html

No surprise, Kelowna's economy is tourism, and healthcare for seniors. When the people buying vacation property turn their attention elsewhere, there's no money left in that city.

The places hit hardest in a real estate crash, are places like Kelowna where a lot of the houses are owned by people who don't live there. When those folks leave....there's not much left in the local economy.

[Slava]

Originally Posted by stacey

Do the math, the place they are staying in would be valued around $400,000.00

If they say their mortgage payments would be around $2500.00/month before property tax's, I doubt there is much equity there...

"They pay $1,700 per month for a 1,600-square-foot, three-bedroom home in Rocky Ridge in the city’s northwest. To buy the equivalent home, they figure they would need to spend about $2,500 per month on a mortgage plus property taxes"

I might be missing something and I don't rent or rent out a property, but why would I rent out a place flr $1700/mo if its costing me $2500+/mo ? I don't think the rental market is that bad in Calgary.

There's another factor here as well though. Lets say you can save $500 a month by renting instead of buying. (I'm not convinced that is the case, but just bear with me). If you're like most people that money is wasted and not actually saved anywhere. I know that there are exceptions, but seriously it can't be a huge number percentage wise who are that disciplined. So when/if the market rises this is where the renter's are caught. The guy who has been putting money into a property now has a smaller debt against a rising asset, whereas the renter had a few years of hookers and blow. Sure, if the market tanks then the renter comes out ahead, but that doesn't appear imminent either.

[stacey]

Originally Posted by Red

Not sure what you are trying to say here.

They are renting because they figure that buying the same house would cost them $800 + $200 tax + insurance/maintenance etc. more every month.

The article illustrates how bad of an investment this house if for their owners.
In a normal market renting is more expensive than ownership or at least close to break even.
Here, the owner of the house gets 5% return on their $400K house. Negative cash flow and they get taxed for income at highest rate. They are left with 12K after tax and that's when they have no vacancy.

Getting 12K a year on a 400K investment is not a good return.

At the same time, the renters here are saving the 15K extra they'd be spending as owners. They are the winners here.

Not sure which normal market you are in...

[Red]

Originally Posted by stacey

Not sure which normal market you are in...

My observation is made on life the includes pre 2005 house craze. Anyone under 30 hasn't seen normal. Unless they were in to it as teens. They have only seen a rising housing orgy fueled by cheap credit.

When things are normal, real estate investors operate with positive cash flow. Try doing that right now. Even with 20% down payment you are most likely to have negative cash flow.

In this article you have someone who is getting equivalent of a 3% return and a negative cash flow on a house. If that's the norm then why is RE considered a good investment?

[Red]

Originally Posted by Slava

I might be missing something and I don't rent or rent out a property, but why would I rent out a place flr $1700/mo if its costing me $2500+/mo ? I don't think the rental market is that bad in Calgary.

There's another factor here as well though. Lets say you can save $500 a month by renting instead of buying. (I'm not convinced that is the case, but just bear with me). If you're like most people that money is wasted and not actually saved anywhere. I know that there are exceptions, but seriously it can't be a huge number percentage wise who are that disciplined. So when/if the market rises this is where the renter's are caught. The guy who has been putting money into a property now has a smaller debt against a rising asset, whereas the renter had a few years of hookers and blow. Sure, if the market tanks then the renter comes out ahead, but that doesn't appear imminent either.

Maybe they bought in 2008 for 500k? Selling sets them back 100k immediately. Renting out with negative cash flow eases the pain and there is a chance of a turnaround.

There are tons of people in that situation. Got caught with their pants down when realized that RE doesn't always go up.

[Knut]

As someone that rents out a Condo at a rate that pays for his mortgage I approve this message.