Calgary Real Estate predictions?

[Deegee]

Originally Posted by Winsor_Pilates

In an indirect way, couldn't you get a secured LOC against your gold, than just use that $ to put your downpayment over 20%?

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.

[Winsor_Pilates]

Originally Posted by chemgear

"Buy Now – Frenzied Seller’s Market Coming"

http://calgaryrealestatereview.com/2...bell-forecast/

When the statistics are not looking good according to your point of view, it’s time to jettison them. It seems that an investor on his blog agrees, posting:

Great analysis Don. I shy away from a the statistical tools. Properties values are extremely local. The municipal, regional and provincial stats are great for data-junkies, realtors who need to justify their existance and news media looking for something to do

You can be sure that if the stats were looking favorably at the moment, they would be touting them.

A lot of what Campbell says is to build his network and sellout more seminars, but I disagree with Mike's analysis a bit in regards to the main quote:

Campbell said people who try to guess what the real estate market is doing by looking at housing statistics are “doing the equivalent of driving across the city staring at their rear-view mirror.”

I think there's some truth to that, in that predicting next years market likely has more to do with external economic factors like jobs, immigration, oil prices etc. than it does with the latest monthly stats.

[Rutuu]

Originally Posted by Cowboy89

My point was that the CMHC insures mortgages that FI's wouldn't underwrite naked. That's additional credit risk that's pooling up and is ultimately the risk of the tax payers. It also does the perverse effect of making homes less affordable, unless of course affordability is only measured by one's means of obtaining a 5% down mortgage.

Also vis-a-vis bubble, I think the comment applies more to places like Vancouver and Toronto where prices for homes are 9-14 times average income. That isn't sustainable, and there's nothing economically that can bring real incomes up to support those price levels in those cities.

In Calgary we hit our peak in 2007 and haven't seen it since. The boom itself was a bubble that corrected but got glossed over by the fact that things were worse in the US and everyone took a similar hit on their equity holdings. Meaning if you bought a home at a highly leveraged amount and did not make any extra payments all you accomplished is negative equity and lining the banks pockets with interest payments. Hardly a great move with your money. Houses don't always go up and in real terms do not always outperform every other asset class.

It seems that housing prices are like wages and EXTREMELY sticky; no one is willing to take a hit on thier house unless something drastic changes in thier life (i.e: moving to another city). I believe firmly in the sustainability of the 3-4times income ratio for mortgage affordability, however, most people in Calgary tend to stay in this ratio, not by making more money themselves, but by having more incomes in the house (aka two people working or having a roommate).

Moving to Brisbane I see the same thing here that you guys chat about in this thread except it's too the extreme. Wages are lower on average here and housing prices are 2-2.5 times as expensive, but people make due by having more incomes in the house. A two bedroom in my building goes for $600k+ and it will have 4 people living and earning in it, so total house hold income is $200k/yr.

Maybe that's what will happen in Cowtown...you'll be 40yrs old living with a wife and a roommate college style.

[Jedi Ninja]

An interesting article on home ownership rates, and a graph on the same subject from elsewhere. Interesting in that, even without subprime mortgages, we've still managed to eclipse the U.S.'s bubble era peak.

http://www.canadianbusiness.com/mana...25_10021_10021

[WilsonFourTwo]

Originally Posted by Rutuu

Moving to Brisbane I see the same thing here that you guys chat about in this thread except it's too the extreme. Wages are lower on average here and housing prices are 2-2.5 times as expensive, but people make due by having more incomes in the house. A two bedroom in my building goes for $600k+ and it will have 4 people living and earning in it, so total house hold income is $200k/yr.

Maybe that's what will happen in Cowtown...you'll be 40yrs old living with a wife and a roommate college style.

It's already happening Vancouver. If affordability continues to erode (almost a certainty.....rates MUST go up at some point), you can be sure that this will become more common in Calgary as well.

I also foresee a lot more "Generational Homes", where kids (married, etc) remain living with parents and essentially Rent-To-Own the home. I had never considered such an idea before, and now know of two unrelated families doing so.

[Shazam]

Originally Posted by Rutuu

It seems that housing prices are like wages and EXTREMELY sticky; no one is willing to take a hit on thier house unless something drastic changes in thier life (i.e: moving to another city). I believe firmly in the sustainability of the 3-4times income ratio for mortgage affordability, however, most people in Calgary tend to stay in this ratio, not by making more money themselves, but by having more incomes in the house (aka two people working or having a roommate).

Isn't average median wage here around > $70K?

Lots of people have jobs here that pay $100K before bonuses.

Sounds like a $400K house isn't unreasonable.

[Jedi Ninja]

^ Median family income in Calgary was $91,570 in 2008. That, and the low interest rates, actually makes affordability not too bad. I think the city was spoiled, to a certain degree, from 2001 to 2005.

RBC Affordability Study

[pepper24]

^ the % of household income (mostly dual incomes) has dropped since the peak but it's still near 40% which is high. Isn't 32% the benchmark ratio for banks?

Factor in record low interest rates and that number is going to get ugly when they go back up to the historcial averages of 6-7%. The only way to correct this will be a drop in home prices.

[pepper24]

Originally Posted by Shazam

Isn't average median wage here around > $70K?

Lots of people have jobs here that pay $100K before bonuses.

Sounds like a $400K house isn't unreasonable.

$400K isn't unreasonable but to find this kind of house you're either in the deep suburbs in a starter home or a downtown condo. $300 for gas to commute or $300 for condo fees.

Otherwise you're well beyond $400K. Suddenly things aren't as affordable.

[Shazam]

Originally Posted by pepper24

$400K isn't unreasonable but to find this kind of house you're either in the deep suburbs in a starter home or a downtown condo. $300 for gas to commute or $300 for condo fees.

Otherwise you're well beyond $400K. Suddenly things aren't as affordable.

Could just transit if money's tight...

What's wrong with a $400K house or condo?

[Shazam]

Originally Posted by pepper24

^ the % of household income (mostly dual incomes) has dropped since the peak but it's still near 40% which is high. Isn't 32% the benchmark ratio for banks?

Factor in record low interest rates and that number is going to get ugly when they go back up to the historcial averages of 6-7%. The only way to correct this will be a drop in home prices.

Can you tell me when that's going to happen? I want to get some fixed investments with those rates.

[pepper24]

Originally Posted by Shazam

Could just transit if money's tight...

What's wrong with a $400K house or condo?

Nothing, unless you don't want to live in the deep suburbs or in a condo.

[Shazam]

Originally Posted by pepper24

Nothing, unless you don't want to live in the deep suburbs or in a condo.

I don't understand why you think it's important then?

[pepper24]

Originally Posted by Shazam

Can you tell me when that's going to happen? I want to get some fixed investments with those rates.

No idea. The one known is rates can't go any lower and that historical rates are 6-7%.

[Shazam]

Originally Posted by pepper24

No idea. The one known is rates can't go any lower and that historical rates are 6-7%.

Sure, of course they can go lower.

It's irrelevant that you state what the historical rates are unless you can provide some guidance on when they're going back up.

[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.

[pepper24]

Originally Posted by Shazam

I don't understand why you think it's important then?

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.

[Shazam]

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.

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?

[chemgear]

Thanks for Mike F as always: First week of April is in - sales numbers seem relatively poor. Again, considering SFH were the worst in a decade+ last year. Relatively speaking, first time buyers are lower and the average/median prices are shifting up slightly as a result.



Even more interesting is the pending sales - indicative of how sales will finalize in the near future:





Materially worse than last year already - March/April sales were the peak for 2010. Who knows, maybe it'll pick up light gang busters later when we're all due to get our massive oil price bonus!

EDIT: Oh and condos as well:

[Jedi Ninja]

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.

Calgary has grown tremendously in the past 10 years, longer commutes and cookie cutter homes are a simple reality. There is no scenario in which most "older, larger" families can live close-in, there just isn't room, and you will always have to pay a premium to do so.