My Brother-in-law is an idiot

[Alex_FORD]

My Brother-in-law is an idiot. when he thinks about the increases in value to his house, all he sees is $$$ signs.

So he has found a job in a slower economy in BC, just so he can sell his house in Calgary and make a 100 grand( after paying off debt).

My point is: His house is increasing in value by approximately $800(?) per day. And when things cool down, the values probably won't slide backwards very much. I personally dont think they will go backwards even the slightest amount.

What kind of idiot sells in this kind of market, if he ever wants to come back to Calgary, it'll cost him a small fortune.

[adamc]

life's better in bc

[01RedDX]

.

[Weapon_R]

How is he an idiot? Anyone who can live as well with a good job in another area and pocket 100k+ should do it asap. He'd be an idiot if he were selling his house to buy another one in Calgary, since you'd be breaking even pretty much. The only people who make money in a market like this are those who own more than 1 home or are moving out of Calgary.

[_wrx_]

right now is the best time to sell houses. our family is selling one of our houses and profet margin is at its high right now. the market is cooling down just a bit, but still inclining at a slow rate.

[shakalaka]

Word..my dad's plannin on doing this. Just moving to BC, since its an awesome place to live. We won't sell our property here or anything, cauz we already have property in main Vancouver area. Plus my parents got lucky, they just bought a property for investment purposes sorta like a professional building for around 800K, just before the prices went up and it's already at 1.3Mil or something like that.

But even the prices stop going up in Calgary, they are prolly going to be more stable than anything. Won't really go down, not that I think of anyways.

[benyl]

I don't think he is an idiot. He can go to BC and enjoy his money instead of having it locked up in a house. Besides, He doesn't have $100K until he sells it. If he waits too long and nobody wants to buy his house, he won't have that $100K.

Properties in BC should also increase and he will also be making money while he is there. He will likely be able to afford to return.

Funny, are you not the same guy that didn't understand how mortgages worked for a property you were buying in BC?


What some people don't realize is that history has a habit of repeating itself. Back in the 70s-80s, we saw interest rates in the double digits. Many people (including my parents) sold their houses for $1 or declared bankruptcy. Don't kid yourself into believing it can't happen again.

There is talk of stagflation in the US. There is nothing the central bank can do in a situation like that where the situation doesn't become worse before it gets better. Canada's economy is stronger, but heavily tied to the US. stagflation can happen here too.

[turbotrip]

I think he made a good decision, because as the new batch of houses hit the market in August, and the mortgage rates increase again I believe house prices are definitely going to drop a bit very soon. I think in the next 3 months the real estate market is going to level out (as soon as the mortgage rate jumps again).

[sputnik]

I dont think hes an idiot. The idiots are the people who think that Calgary has an invincible job and housing market.

Calgary is actually VERY shaky right now. Inflation is going through the roof, housing costs have doubled and we are probably going to experience an even worse staffing shortage as people are going to stop coming here because they cant afford to live anywhere.

I have considered selling and moving to Winnipeg myself. Then I will at least be mortgage free and could probably live off of a $15/hr job. Or my wife and I could both work for just over minimum wage. At the end of the day at least I have a house to come home to. In your brothers situation if he invests the $100k... if the job market tanks he can probably live for 3-4 years on savings while the market comes back to normal.

In Calgary if the job market tanks and I cant make enough to pay my mortgage I will have to sell my house. I can only hope that my house will still be worth more than what I owe and that it would actually sell.

[heavyD]

BC is beautiful but there's a reason is called Bring Cash and high paying jobs are not easy to find. My inlaws moved there from Alberta and had to sell one of their vehicles as they couldn't afford to operate them in BC. Everything is more expensive there and some things considerably.

[Crymson]

Your brother is SMART!

Everytime i hear people talk about house prices in Calgary, all i can think of is the episode of "The Simpsons" where homer bought pumpkin futures 3 weeks before Halloweed and he says something to the tune of "At this rate, by christmas we'll be millionaires"

Right now is the BEST possible time to sell and get the hell out of Calgary. Interest rates are climbing steadily back up again, but house prices have not yet started correcting to that (picture a graph with a sine curve and cosine curve on it, pick one line and call it "intereste rates" and the other "housing costs") and you'll see what I mean.

If i could move back to S'toon and still work, i'd do it in a heartbeat.

If you bought 200,000$ in stocks and it's now 300,000$ people would call you an idiot for not selling. Moving isn't that hard.

If you were mortgaged to the 9's and took just the profit on something like that, you could buy a place somewhere else for CASH (you realize, not paying mortage or rent, you could practically support yourself working part time at 7-11 and keep the same lifestyle).

I'm not financial advisor, but i feel that we'll see 10% interest again, and bankrupcies galore, in the next 5-10yrs.

[lint]

Originally posted by Crymson
... and bankrupcies galore, in the next 5-10yrs.

That's what I'm waiting for :thumbsup:

[sputnik]

Originally posted by Crymson
Your brother is SMART!

Everytime i hear people talk about house prices in Calgary, all i can think of is the episode of "The Simpsons" where homer bought pumpkin futures 3 weeks before Halloweed and he says something to the tune of "At this rate, by christmas we'll be millionaires"

:werd: ^ infinity

Like my dad always told me. Nobody ever lost money selling to early.

[Altezza]

Like many have already stated, he's not dumb. I know quite a few people who have made it big in real estate over the past 30+ years. They are all slowly SELLING their Alberta real estate holdings.

[max_boost]

haha yah even my parents are planning to sell two of their properties and just letting it sit in the bank in anticipation of the meltdown. LOL

For me, give me 5 more years before the markets crash so I can pay off my house and car first. hehe

[snade831]

real estate is the best investment you can have. your brother made a good decision.

[/////AMG]

It's a sellers market and a buyers nightmare.
He did the right thing, even if he was going to move to BC anyway, whats the harm in selling it?

[heavyD]

He's only pocketing $100K to go to BC which won't go far at all down there. He'll be back in Alberta in less than 5 years looking for work with less money than he when he started. Selling in Calgary & moving to Saskatchewan or Manitoba would make him smart but moving sideways doesn't.

[max_boost]

At least your brother in law is planning to move to BC. My buddy wanted to sell his New Brighton house and move back with his GF's parents. WTF was that kind of reasoning. LOL:rofl: :rofl: At least someone talked some sense into him and he changed his mind. :nut:

There will be a lot of fucked up people if things crash. I don't think I even want to think about it.

[heavyD]

Originally posted by max_boost
There will be a lot of fucked up people if things crash. I don't think I even want to think about it.

Not me. I'll be one of the vultures picking up cheap real estate and/or vehicles.:D There's far too many people in this city living beyond their means.

[benyl]

Yup... I have minimized my expenses to save cash... waiting to pick up some good deals on the correction!

[turab16]

Originally posted by heavyD


Not me. I'll be one of the vultures picking up cheap real estate and/or vehicles.:D There's far too many people in this city living beyond their means.

Amen

[USED1]

That's what I'm waiting for too. I can't wait to buy a nice cheap house when this "boom" goes to shit.

[Alex_FORD]

The reason I think he is an idiot is:

You take his advice and sell now. And your neighbor takes my advice and waits another 30 days.............your neighbor makes more money than you.

If he wanted to move to BC for a better lifestyle, then I would support that idea, but he has clearly stated that its only about the money. I hope he likes his new job, because this could be a very expensive learning lesson if he decides to move back to Calgary in a year or so.

[Alex_FORD]

Originally posted by USED1
That's what I'm waiting for too. I can't wait to buy a nice cheap house when this "boom" goes to shit.

I have a second brother-in-law that made that same decision to wait in the mid 80s when the average house was worth 120k, so we waited 10 years and it costed him an extra 100 grand because the prices never did go to "shit"

[Tik-Tok]

Originally posted by Alex_FORD


I have a second brother-in-law that made that same decision to wait in the mid 80s when the average house was worth 120k, so we waited 10 years and it costed him an extra 100 grand because the prices never did go to "shit"

People are deluding themselves if they think prices will ever be "cheap" again. I'd bet my house that it will never be worth less than 300G again (you know, assuming it doesn't fall down or something)

[Alex_FORD]

Originally posted by benyl
Yup... I have minimized my expenses to save cash... waiting to pick up some good deals on the correction!

You must have some really big expenses.
______________
Most people trying to save money on a down payment are falling backwards. How do they save when they are maybe earning $100 per day(after cost of living), but realestate values are climbing $1000 per day.
___________________
I know a lady at work that placed a +10K bid on a house, and was beaten by another bid that was $85k higher.

[Alex_FORD]

Originally posted by Tik-Tok


People are deluding themselves if they think prices will ever be "cheap" again. I'd bet my house that it will never be worth less than 300G again (you know, assuming it doesn't fall down or something)

I agree. I think that all houses will never be less than they are today.

Some people are panicing, and paying above market value....this kind of stupidity will slow down when the market cools down. But, I don't expect discount prices or a backslide on housing values.

[Crymson]

House prices don't change.

Cost of borrowing changes, and so the "sticker price" on a house changes.

A 1 milllion dollar house will always be a one million dollar house, but at low interest rates that house lists 650K because borrowing only costs 350K, but at high intereste rates that house lists at 450K because borrowing costs 550K. I'm sure these numbers are completely off, but you get the point.

What people are saying is -- pocket cash now, wait for intereste rates to climb back up, re buy houses with your cash -- so you don't get dinged by the high interest rates.

Cash is KING when interest rates start to climb.

The "correction comes" 5 years from when you bought your 1 million dollar home, at low interest rates, and paid 650K to buy it and 350K to borrow the money. So your 5 years lock in, is up, and wait... holy crap .. prime is 9.5%! Now your cost of borrowing has jumped to 550K and you've just paid 1.2 million for a 1 million dollar home. This my friend has happened before in calgary, and it is going to happen again. Lots of people went bankrupt, and those with cash on hand at the time are the guys in the AMG's, and the paid off mansions today.

[benyl]

I just told you when prices when down in the 80s. There were 100s if not 1000s of homes sold for $1. If that is not a slide, I don't know what is.

My mom handed over the keys to our house in Killarney for $1. I believe interest was 18% or something insane like that. She couldn't afford the payments. 6 Years later, when rates dropped again, we started over in Killarney and paid $100K for a similar house.

Had she sold a year or two before, she would have at least recovered the down payment.

A bird in the hand is worth two in the bush.

[tapout]

Originally posted by Alex_FORD
The reason I think he is an idiot is:

You take his advice and sell now. And your neighbor takes my advice and waits another 30 days.............your neighbor makes more money than you.

If he wanted to move to BC for a better lifestyle, then I would support that idea, but he has clearly stated that its only about the money. I hope he likes his new job, because this could be a very expensive learning lesson if he decides to move back to Calgary in a year or so. so save 30 days & list it for 30 000 $$ more

[5hift]

Originally posted by heavyD


Not me. I'll be one of the vultures picking up cheap real estate and/or vehicles.:D There's far too many people in this city living beyond their means.



Its funny how quickly everyone forgot how bad the market was in the early 90's. When I was younger I remember our neighbour across the street selling his house for $300 K when it cost him $500 K to build it, and he still had a hard time selling it. Nowadays you have bidding wars over trashed ex grow-op houses as soon as they hit the market.

[Moonracer]

:banghead: damn now you guys got me thinking....My g/f and I, could sell our condo and make around 100k and move to Kelowna and stay in her parents basement suite, for as long or short as we want for free. And both work for her dad making about the same money as we are here as well. :nut: :dunno:

[sputnik]

Originally posted by heavyD
He's only pocketing $100K to go to BC which won't go far at all down there. He'll be back in Alberta in less than 5 years looking for work with less money than he when he started. Selling in Calgary & moving to Saskatchewan or Manitoba would make him smart but moving sideways doesn't.

You have no idea what he does for a living, nor do you know how much he will make in BC. You dont even know which city/town he is even moving to.

Can you not see the ecomony in Calgary on a potentially weak foundation. We are a city plagued with high inflation, high cost of living, labour shortages and companies that are starting to feel the squeeze as they are unable to staff their operations without paying people a small fortune to do menial tasks. Alberta may have tons of oil, but unless the housing market drops considerably, Calgary is destined for potential collapse. With the market the way it is there are tons of jobs but most are forced to live with roommates. If today I was offered the same job that brought me to Calgary in 2001 I would probably turn down the job.

If Fort Mac cant even keep a Tim Hortons open due to lack of staff imagine what will happen when all of the trucking and warehouse companies leave because they cant find anyone willing to work for under $14/hr. Think of any other manufacturing job or even retail and service industry jobs. Without those jobs the bigger white collar businesses suffer as well. Calgary is potentially on the verge of collapse. I feel sorry for people who just bought their house at the top of the market.

Dont worry. His brother-in-law will be back in 5 years picking up houses for a dollar and renting them back to the original owners.

[G]

I don't feel that housing prices will go to shit but the premium people pay for a house (anything above the asking price) will be eliminated. Look at Vancouver and Toronto they both experienced housing booms like Calgary. Their real estate never did come down. I think once real estate goes up it will never come back down significant levels.

Let's say rates and other factors do make home owners walk away from their mortgages. All things considered the market has probably affected 99% of the posters on Beyond. Unless you have cash to pick up these deals you are not going to be in the position to even qualify for a mortgage. Thus the rich get richer during down times in the economy. So people who sell now and think they can pocket the gains and buy back when the market corrects itself is living in a fantasy world, unless you really don't touch the money (honestly a lot of people will blow it on a car) and have decent income when the correction hits you will be no better off.

I have x amount (edited so it doesn't sound like bragging) in liquid capital ready to buy properties if and when the times does come.

[lint]

Originally posted by sputnik
Calgary is potentially on the verge of collapse. I feel sorry for people who just bought their house at the top of the market.

Dont worry. His brother-in-law will be back in 5 years picking up houses for a dollar and renting them back to the original owners.

Acutally, nothing points to a collapse in Calgarys near future. Lessons have been learned from the collapse of the 80's. This economy has a much stronger foundation than the bubble back then. Pretty much every analyst predicts a slowing, but not a bursting because this isn't bubble behavior. Sure there is lots of speculation going on, people are out to make a quick buck. But top of the market? That's what people said last Oct. Then in Jan, then in March and again in May. The top of the market continues to move.

I highly doubt we'll see houses for a dollar. We will see some forclosures when interest rates rise again. People who were maxed out at 5% are going to be hurting at 8%.

People need to keep in mind, that the pace we're seeing now in Calgary is unheard of. If you sell now, you KNOW how much money you'll have. If you wait 30 days, 3 months, 6 months, a year, you don't KNOW what will happen to the market. As with stocks, you don't have to sell at the absolute top to win. Waiting too long and being too greedy have been the downfall off too many speculative investors to count.

[lint]

Originally posted by G
I don't feel that housing prices will go to shit but the premium people pay for a house (anything above the asking price) will be eliminated. Look at Vancouver and Toronto they both experienced housing booms like Calgary. Their real estate never did come down. I think once real estate goes up it will never come back down significant levels.

Vancouver is much closer to a bubble than calgary is. I have a sneaking suspicion that things will change drastically after the olympics.


Originally posted by G
I have $500K in liquid capital ready to buy properties if and when the times does come.

brag much?

[heavyD]

Originally posted by sputnik
Calgary is potentially on the verge of collapse. I feel sorry for people who just bought their house at the top of the market.

You are out to lunch big time. There will not be a collapse like in the 80's. There will be a lean time but not an all out collapse. We are probably never going to see > $200K housing in this city again but the houses selling now for $400K-500 will drop making for some desperate sellers & bargain prices.

No need to defend BC as I'm not slighting it (it's the most beautiful province in Canada) but facts are facts and if you know people like I do in BC you will know that it's much more expensive than any place in Alberta. A guy from our company in GP retired a couple of years ago and moved to BC. He's now working for us again part time to subsidize his BC retirement. $100K is will not take you far in BC and the fact is that many Albertans that move there end up coming back for financial reasons.

[sputnik]

Originally posted by lint


Acutally, nothing points to a collapse in Calgarys near future. Lessons have been learned from the collapse of the 80's. This economy has a much stronger foundation than the bubble back then. Pretty much every analyst predicts a slowing, but not a bursting because this isn't bubble behavior. Sure there is lots of speculation going on, people are out to make a quick buck. But top of the market? That's what people said last Oct. Then in Jan, then in March and again in May. The top of the market continues to move.

I highly doubt we'll see houses for a dollar. We will see some forclosures when interest rates rise again. People who were maxed out at 5% are going to be hurting at 8%.

People need to keep in mind, that the pace we're seeing now in Calgary is unheard of. If you sell now, you KNOW how much money you'll have. If you wait 30 days, 3 months, 6 months, a year, you don't KNOW what will happen to the market. As with stocks, you don't have to sell at the absolute top to win. Waiting too long and being too greedy have been the downfall off too many speculative investors to count.

I agree. Its not going to be as dramatic as I said. However there is potential for some serious downturn. I look at Toronto (along with Mississauga, Oakville and Brampton) where every 3rd house is forsale and highrise condo buildings are full of vacant units. The prices are still up there, but houses are sitting on the market for months and slowly slipping down. I also dont really think we will see $1 houses, but houses that are currently selling in the $400s could be selling in the high $200s with nothing more than an interest rate hike of a percent or 2. Imagine being in a house worth $250k with a mortgage of $300k?

I still worry about the wages to cost-of-living ratio and worry that Calgary will be struggling for workers as they wont want to work even for $50k/yr because they still cant afford a decent place to live. There might be a bit of a ripple effect into the economy as a result of a potential workforce shortage.

[sputnik]

If anything. This thread will kickass to read in 5-10 years. Sorta like flipping through a Consumers Distributing catalog from the 80s.

[G]

Originally posted by lint


Acutally, nothing points to a collapse in Calgarys near future. Lessons have been learned from the collapse of the 80's. This economy has a much stronger foundation than the bubble back then. Pretty much every analyst predicts a slowing, but not a bursting because this isn't bubble behavior. Sure there is lots of speculation going on, people are out to make a quick buck. But top of the market? That's what people said last Oct. Then in Jan, then in March and again in May. The top of the market continues to move.

I highly doubt we'll see houses for a dollar. We will see some forclosures when interest rates rise again. People who were maxed out at 5% are going to be hurting at 8%.

People need to keep in mind, that the pace we're seeing now in Calgary is unheard of. If you sell now, you KNOW how much money you'll have. If you wait 30 days, 3 months, 6 months, a year, you don't KNOW what will happen to the market. As with stocks, you don't have to sell at the absolute top to win. Waiting too long and being too greedy have been the downfall off too many speculative investors to count.


What happened in the 80's was also a result of Pierre Elliott Trudeau's National Energy Plan.
The results were devastating. The number of oil wells drilled throughout Canada dropped from 9,188 in 1980 to 7,186 in 1981, and the number of drilling rigs in service across Canada fell from 650 to 450 fairly soon after the NEP was introduced. Thousands of jobs in Western Canada were lost, primarily in the drilling and service sectors of the energy industry. Proposed mega-projects such as the Alsands plant at Fort McMurray were cancelled. Numerous western businesses went into bankruptcy. Many careers and families were broken; home mortgages were foreclosed in large numbers. The respected Economist magazine of Britain during the summer of 1982 summed up the NEP in politely brutal language: "The NEP has come close to wrecking an industry that until October, 1980 was drilling like fury finding enormous volumes of gas and much new oil, creating jobs and investment all over Canada and increasingly using Canadian-owned capacity in exploration and management.... The NEP drove Canadian exploration and service companies into the United States until only 150 drilling rigs were left, the lowest number since the 1960’s deCanadianization, in effect. Owners of capped-in gas wells had big debts and no cash flow. Oil serving companies in Alberta withered into bankruptcy."

http://www.david-kilgour.com/uneasy/chap05.htm

[lint]

Originally posted by sputnik


I agree. Its not going to be as dramatic as I said. However there is potential for some serious downturn. I look at Toronto (along with Mississauga, Oakville and Brampton) where every 3rd house is forsale and highrise condo buildings are full of vacant units. The prices are still up there, but houses are sitting on the market for months and slowly slipping down. I also dont really think we will see $1 houses, but houses that are currently selling in the $400s could be selling in the high $200s with nothing more than an interest rate hike of a percent or 2. Imagine being in a house worth $250k with a mortgage of $300k?

I still worry about the wages to cost-of-living ratio and worry that Calgary will be struggling for workers as they wont want to work even for $50k/yr because they still cant afford a decent place to live. There might be a bit of a ripple effect into the economy as a result of a potential workforce shortage.

Check out the latest Housing Bubble Watch article at TD
http://www.td.com/economics/special/housing_0406.pdf

Calgary is still one of the most affordable places to live (highest average income in the country). Strong economic fundamentals (although there is still quite a bit of speculation). All signs point to sustainability.

I hope to see some bargains in 5 years time, but by no means am I expecting a fire sale.

[lint]

Originally posted by G


I wasn't really bragging just simply stating my position plus it's peanuts but if you see this as bragging then sorry if I hurt your feelings.

Good for you. Whatever floats your boat. There are plenty of people who have problems scraping together $50K for a down payment, nevermind $100K for a traditional mortgage with housing prices averaging close to $400K.

[b18c1]

prices are always going to keep going up, and then settle down but they will never got back to the price that they were before. when my parents first moved here about 25 years ago they bought a house for $40,000 and now its up to $250,000 and hasnt dropped since.

[bigboom]

all its gonna take is one oil and gas head office to move to edmonton and then watch what may happen to calgary...i say if you can pocket $100K in cash and find somewhere else you want to live that is ideal. pocket the 100k invest it and you'll have a nice little retirement fund started...people that think calgary is not going to drop just wait and see, we are based on oil and gas and with the WCSB drying up how much more opportunity do you think is available here?

[G]

Originally posted by bigboom
all its gonna take is one oil and gas head office to move to edmonton and then watch what may happen to calgary...i say if you can pocket $100K in cash and find somewhere else you want to live that is ideal. pocket the 100k invest it and you'll have a nice little retirement fund started...people that think calgary is not going to drop just wait and see, we are based on oil and gas and with the WCSB drying up how much more opportunity do you think is available here?

If a head office was to move out of Calgary they would move out of Alberta not Edmonton. Alberta on a whole is experiencing the same growing pains.

[gkAeris]

i thought the ENCANA towers were being built and that PETRO CANADA (i think) is moving it's head quarters from Toronto to here?

i think i read it somewhere.

[benyl]

Originally posted by G


If a head office was to move out of Calgary they would move out of Alberta not Edmonton. Alberta on a whole is experiencing the same growing pains.

Yeah, they would likely move South of the border. Less taxes...

[bigboom]

Originally posted by G


If a head office was to move out of Calgary they would move out of Alberta not Edmonton. Alberta on a whole is experiencing the same growing pains.

wait till the oil sands are fully operational...edmonton is much closer to ft mac and with all the capital being spent in and around edmonton i could see it happening.

[sputnik]

Originally posted by bigboom


wait till the oil sands are fully operational...edmonton is much closer to ft mac and with all the capital being spent in and around edmonton i could see it happening.

I cant think of any larger company that would relocate their corporate offices from Calgary to Edmonton so that they can be 3 hours closer to the oil sands.

The costs would far outweigh the benefits.

[lint]

Originally posted by G
So someones a braggar if they do not have the same economical stature as you? So do you scream "BRAGGAR" at every car owner that has a car you can't afford?

Nope. Has nothing to do with affordability. It's about the "arrogant or boastful speech or manner." (http://dictionary.reference.com/browse/bragging)

[benyl]

In this day and age of virtual offices, there is no need to move. Some managers may move, but the majority of the company doesn't need to. The savings of moving 300 km closer to the oil sands has to significantly outweigh the cost and hassle of moving.

[sputnik]

Originally posted by lint


Nope. Has nothing to do with affordability. It's about the "arrogant or boastful speech or manner." (http://dictionary.reference.com/browse/bragging)

Can you please start a new thread or take this to PM?

[gran turismo]

Originally posted by sputnik


I cant think of any larger company that would relocate their corporate offices from Calgary to Edmonton so that they can be 3 hours closer to the oil sands.

The costs would far outweigh the benefits.

Benefits of Edmonton:

1. Cheaper office space leasing than Calgary
2. Space available to rent/lease (Calgary has almost 0%
vacancy)
3. Cheaper housing market=can pay employees less

I wouldn't rule out new businesses setting up shop in Edmonton nor existing businesses moving to Edmonton from Calgary.

[blitz]

I don't think you realize how much it would cost to relocate a major company. I'd be amazed if it was a 5-10 year payout on the benefits you've mentioned.

Plus, in this job market it's hard enough to get good office staff in calgary, where they're concentrated, let alone Edmonton. If my company picked up and moved to Edmonton, there's no way in hell I'd move and I bet 90% of the staff would feel the same way. Why move to Edmonton for LESS money, when I could just walk across the street and have another job in Calgary?

[frostyda9]

Originally posted by Moonracer
:banghead: damn now you guys got me thinking....My g/f and I, could sell our condo and make around 100k and move to Kelowna and stay in her parents basement suite, for as long or short as we want for free. And both work for her dad making about the same money as we are here as well. :nut: :dunno:

Oh yeah, for sure. I'll sell my place and move into my parents place in Peachland and we can go cruising to Timmies in our AMG's while living off the 'rents :rofl:

[Maxt]

I dont think to many people have learnt their lessons from the 80's.. Remember those bumper stickers that said" I promise not to piss it all away next time"..
Well people are doing just that...Lots of people are rolling in money, some guys are swimming in cash, making 20-30 k per month in revenues with the high price of oil, the smart thing would be of course to invest this into safe real estate that you could afford the payments on still should interest rates skyrocket, or at least bank it in various investments. Break up the money into safe/medium/high risk and put it away for those lean days. But that does not happen..
Companies are buying toys, doing extreme renovations, owners and staff are buying exotics, I have seen 2 Ford Gt's in the same building parkade in one day, and more Italian look at me hardware than I could possible imagine in the downtown core..I have done some projects for customers that are just completly stunned wastes of money, and I couldnt talk them out of it no matter how hard I tried..
Times are good, and history is repeating itself...
Add into this if any kind of Carbon tax comes along in the future, coupled with what kind of pressure is being put on the federal government on provincial equalization formulas...
Spend yourself out, and when it turns bad, people start jumping off the roofs of buildings, and I have seen it happen first hand, it aint pretty...
People have no self control it seems...
Calgary is full of mortgage poor right now, these people are right on the edge at current interest rates. when you make 50 k a year, buy a 325,000 with practically nothing down, your monthly payment is so huge you have no wiggle room for any changes in economic conditions. Its that bunch that will be the first casualties, second will be the high rollers who had to buy everything they possibly could on payments while they could make the payments, the tidal rich...

[RiCE-DaDDy]

Originally posted by bigboom
all its gonna take is one oil and gas head office to move to edmonton and then watch what may happen to calgary...i say if you can pocket $100K in cash and find somewhere else you want to live that is ideal. pocket the 100k invest it and you'll have a nice little retirement fund started...people that think calgary is not going to drop just wait and see, we are based on oil and gas and with the WCSB drying up how much more opportunity do you think is available here?

exactly, people forget that calgary isnt a nice place. plains, dry weather, etc. A chance of crash is higher for calgary than van were it can attract money. FYI, vancouver has slowed down. With a lower median income and almost double the avg house price than calgary, im suprised it took so long for it to slow down. You have to remember too calgary can expand whereas vancouver cannot. Densification is expensive.

[Moonracer]

Originally posted by frostyda9


Oh yeah, for sure. I'll sell my place and move into my parents place in Peachland and we can go cruising to Timmies in our AMG's while living off the 'rents :rofl:

:werd: :rofl: Only problem is there will be no more yelling :goflames: at the dome. :(

[Proboscis]

didn't the first house that sold over a mill was the one on broadcast hill over the Hart house. it had that lighthouse tower thingy. I hope they leave the Hart house alone

[googe]

Man, people that think we are due for a crash are annoying :) Anyone that thinks the 80s can possibly repeat itself does not understand market factors whatsoever. The only thing that can take out this city is if an energy replacement emerges overnight, which im more than comfortable betting wont happen. Interest rates cant hit double digits, and there is no reason to believe we are due for a crash. Analysts predicted that interest rates would top out around 6% and then start coming back down. And yes, they know all about the 80s...there are actually many articles debunking the differences between now and then and why that absolutely could not happen short of something retarded like a global nuclear war.

So with interest rates due for a drop, and dont forget, the major A lenders just introduced 35 year mortgages into canada this year...suddenly expensive houses are not so expensive anymore when people realize this, and you KNOW the general public is going to eat that up to get a place they otherwise couldnt afford.

And dont forget we are the largest producer of oil in North America, and have eight times the reserves that Saudi Arabia has. We are supposed to produce the last drop of oil that this world will see.

Calgary isnt even expensive, people just arent used to it being a world city. Go to dublin, buying a place there is unheard of. Most people born and raised over there now will never own property in their lives.

Keep in mind that this multibillion dollar oil industry is run by people that were also around in the 80s, and they know ALL ABOUT the oil crisis, and Id wager that they know what theyre doing slightly more than the average beyonder, and they seem to be of the opinion that you are crazy not to be in Calgary :)

Its true, the average earners will never be able to afford inner city places at this rate, but that wont drive the price down. All that will happen is the mid earners will slowly be forced out of downtown and surrounding areas, and it will be cost prohibitive for anyone but those with the cash to live there. It will be accepted that all but the top earners have a commute to work every day just like any other expensive major city. You think the administrative assistants at companies in Vancouver, London, etc, actually own a brand new fancy condo right downtown? Not a chance...and I cant see any reason to believe even Vancouver is destined to be higher priced than Calgary. We arent even landlocked, and we are already on our way past them in pricing. If you guys look outside the box youre in, Calgary is CHEAP.

But there will always be naysayers. I can stand on the street corner and hand out $100 bills, and you'll still have guys telling people to run away. I like to call those people, "renters" ;)

(LOL @ the companies are going to pack up and move to edmonton or the states btw...only on beyond... :rofl: )

[mroseneder]

I sold my house, made well over 150k and bought almost the same house in Saskatoon for half the price. My transfer agreement ended up with me making an extra 15k a year and I just bought a new truck.

Thanks Calgary's stupid housing market...

[benyl]

Originally posted by googe

(LOL @ the companies are going to pack up and move to edmonton or the states btw...only on beyond... :rofl: )

Edmonton is a joke. The states is a reality. A couple of years ago, Gwynn Morgan, the CEO of EnCana, basically said that he would move the company south of the border if Kyoto was enacted in its original form. The idea isn't that far fetched. There is a large percentage of companies in the oil sands today that are not Canadian.

[sputnik]

Originally posted by googe
So with interest rates due for a drop, and dont forget, the major A lenders just introduced 35 year mortgages into canada this year...suddenly expensive houses are not so expensive anymore when people realize this, and you KNOW the general public is going to eat that up to get a place they otherwise couldnt afford.

And dont forget we are the largest producer of oil in North America, and have eight times the reserves that Saudi Arabia has. We are supposed to produce the last drop of oil that this world will see.

What makes you think that interest rates are "due for a drop"? Interest rates will continue to go up as the rate of inflation increases. The Bank of Canada uses rate increases to slow spending (i.e. inflation) and keep the rate of inflation around 2.1%. To assume that the BoC will reduce interest rates "because they went up" isnt exactly valid.


Originally posted by googe
Its true, the average earners will never be able to afford inner city places at this rate, but that wont drive the price down. All that will happen is the mid earners will slowly be forced out of downtown and surrounding areas, and it will be cost prohibitive for anyone but those with the cash to live there. It will be accepted that all but the top earners have a commute to work every day just like any other expensive major city. You think the administrative assistants at companies in Vancouver, London, etc, actually own a brand new fancy condo right downtown? Not a chance...and I cant see any reason to believe even Vancouver is destined to be higher priced than Calgary. We arent even landlocked, and we are already on our way past them in pricing. If you guys look outside the box youre in, Calgary is CHEAP.

But there will always be naysayers. I can stand on the street corner and hand out $100 bills, and you'll still have guys telling people to run away. I like to call those people, "renters" ;)

(LOL @ the companies are going to pack up and move to edmonton or the states btw...only on beyond... :rofl: )

The average earner cant afford a house in the suburbs never mind inner city. Most smaller homes are hovering around the $300k-350k range making it impossible for anyone to own unless the household is pulling in $100k/yr.

[RiCE-DaDDy]

A crash can definitely happen. The market is fundamentally driven (oil, duh) so if you think a crash or a complete reversal of the market can't happen then you are dreaming. You honestly think the price of oil is gonna keep going up like no tommorow? I'm not saying that it will drop significantly, but like any resource, they are subjected to the boom-bust cycle

I def think this is a bubble, if not, calgary's got land to expand for 1000 years.

[koopkoop2]

Originally posted by gran turismo


Benefits of Edmonton:

1. Cheaper office space leasing than Calgary
2. Space available to rent/lease (Calgary has almost 0%
vacancy)
3. Cheaper housing market=can pay employees less

I wouldn't rule out new businesses setting up shop in Edmonton nor existing businesses moving to Edmonton from Calgary.

I just spent the long weekend in Edmonton looking for an investment property. Your #3 is no longer the case. The housing market out there is the exact same as Calgary now. I think people keep getting their info from the websites - which are very outdated. I was under the same impression that it was still cheaper out there. However, after seeing it first hand, I'm going to buy something in Calgary. It'll be the same price, but I won't have to drive to Edmonton to manage it.

[turbotrip]

Edmonton's real estate market is only about a month behind Calgary's

[khtm]

Originally posted by gran turismo


Benefits of Edmonton:

1. Cheaper office space leasing than Calgary
2. Space available to rent/lease (Calgary has almost 0%
vacancy)
3. Cheaper housing market=can pay employees less

I wouldn't rule out new businesses setting up shop in Edmonton nor existing businesses moving to Edmonton from Calgary.
You forgot to account for the productivity decreases since Edmontonians are dumber than Calgarians. :D

[googe]

Originally posted by sputnik


What makes you think that interest rates are "due for a drop"? Interest rates will continue to go up as the rate of inflation increases. The Bank of Canada uses rate increases to slow spending (i.e. inflation) and keep the rate of inflation around 2.1%. To assume that the BoC will reduce interest rates "because they went up" isnt exactly valid.


Heh if youd read the whole post...dunno why you think im "assuming" anything.

1) Fixed mortgages have nothing to do with prime rate (common misconception). They are determined by the bond market.

2) Prime rate is only partially determined by inflation. Going up curbs inflation, but going down encourages foreign investments. Its an elaborate balancing act. Our dollar is high right now, that means it costs more for foreign investors because their money doesnt go as far as it used to. A high dollar also contributes to countering increasing interest rates. If we have an expensive currency and it costs a lot to borrow, there isnt as much incentive.

Also, I am not speculating anything. I am not an economist. Neither is anyone posting in this thread or probably anyone on beyond :) I read reports published by people that are. If anyone would know what they are talking about, it would be them. Every report I have read has said that the rates are topping out and coming back down. We are not hitting double digits. The last increase might be seen on July 11, or we might already be at the top.

http://www.cbc.ca/story/business/national/2006/05/24/bankrate.html


The Bank of Canada raised a key interest rate once again by one-quarter of a percentage point to 4.25 per cent, but signalled that its recent string of rate hikes may be at an end.



Economists see rates hikes at an end

"In our opinion, there is a good chance that we have seen the last tightening in the current cycle," said TD Bank deputy chief economist Craig Alexander.

TD Bank deputy chief economist > Beyond, imho :)



Originally posted by sputnik

The average earner cant afford a house in the suburbs never mind inner city. Most smaller homes are hovering around the $300k-350k range making it impossible for anyone to own unless the household is pulling in $100k/yr.

1) people are earning more, 2) banks are eager to help:

CMHC to insure interest-only mortgages in a bid to make ownership easier
http://www.cbc.ca/story/business/national/2006/06/29/cmhc-thurs.html

CMHC OK's interest-only and 35-year mortgages
http://www.canada.com/theprovince/news/story.html?id=224dcc0b-04bb-41e1-a4c2-26466e950139&k=65582

Suddenly the entire city just got more affordable. Sure most people dont think its a great idea, but at least it gets your foot in the door and you can take the first step towards being a homeowner. Im quite sure its going to be fully taken advantage of by the masses.

[sputnik]

Originally posted by googe

1) people are earning more.

Which economist told you that?

My house has doubled in the past 3 years. My salary has not. Nor has anyone elses.

[RiCE-DaDDy]

^ just cause you and a few of your friends aren't seeing more money doesn't mean its not happening. And it's retarded to deny that it is happening. Wages increased 4% just this past year.

[benyl]

Originally posted by sputnik


Which economist told you that?

My house has doubled in the past 3 years. My salary has not. Nor has anyone elses.

You might not have gotten a raise, but businesses are closing cause people refuse to work for less money.

[sputnik]

Originally posted by benyl


You might not have gotten a raise, but businesses are closing cause people refuse to work for less money.

Read that in the herald this morning too. Did you catch the article about the teachers moving back to New Brunswick?

I question the economic stability when business who are used to paying $10-12/hr for labourers start shutting down because they cant keep people around anymore. What happens when Safeway moves their warehouses to Medicine Hat or Ponoka. Food then needs to be trucked in and the consumer pays the difference.

Hopefully big businesses that use trucking companies, warehouses, manufacturing companies etc are willing to pay a premium.

What if several hundred homeowners that make $10/hr currently sell and move to a city where they can be mortgage free and easily find another $10/hr job? Do we really want to see 500-1000 houses flood the market all around the same time?

[benyl]

yeah, something is going to happen.

The real estate market here in Calgary is already showing signs of slowing. Houses aren't going up in value as quickly and there are more houses on the market.

In the next 3 months there will be 3-500 new condo units that people will be taking posession on... 60% were for investment.

The builders are gouging too. The base cost of the house I am building is $237K. If you were to go into the same sales center today and build the same house, the base cost would be $407K. $163K increase in 4 months??!?! I don't think that wood, concrete and the rest of it has increase that much. Maybe labour costs have, but I don't think framers are making $100/hour yet... and if they are... I am quitting my job tomorrow.

[sputnik]

Originally posted by benyl
yeah, something is going to happen.

The real estate market here in Calgary is already showing signs of slowing. Houses aren't going up in value as quickly and there are more houses on the market.

In the next 3 months there will be 3-500 new condo units that people will be taking posession on... 60% were for investment.

The builders are gouging too. The base cost of the house I am building is $237K. If you were to go into the same sales center today and build the same house, the base cost would be $407K. $163K increase in 4 months??!?! I don't think that wood, concrete and the rest of it has increase that much. Maybe labour costs have, but I don't think framers are making $100/hour yet... and if they are... I am quitting my job tomorrow.

The speculative condo market is going to hurt prices. Once completed buildings have 30% vacancy rates you will see the condo prices start to come down hard.People may even forfeit their deposits and just give the condo back to the developer. It will be good news for the people waiting to pick up "a deal" and it may even spark the market again.

Unfortunately one thing that some Calgarians neglect to realize is that we exist in a global economy and the influx of people coming to Calgary is dependant on the cost of living. Calgary business dont have the ability to just arbitrarily increase wages just because they are in boom-town they all still have margins (some tighter than others) that need to be met. Also, if houses remain unaffordable people will stop coming. If people stop coming the economy cools and so do house prices. I know that if I was offered the job I am doing now and was asked to move to Calgary from Winnipeg I would probably decline based on the housing prices alone.

Its cyclical. IMO I can see the $350k houses hitting $300k before they hit $400k. I am not saying that they wont hit $400k. It's just that they will suffer a profit taking correction first and they wont be going to $400k before Christmas like some would have you believe.

[gkAeris]

isn't some major energy giants moving there main offices from Toronto to Calgary? won't that equal more inner city jobs and more inner city living for the condos?

but i do agree there is way too many condo projects in inner city i think i counted ~20 new condos. that's way too many.....

but is it not a trend that most pp prefer to live in a condo rather than houses? i mean look at vancouvers condo's downtown there is way more there than here and still very few vacanies.....

[sputnik]

Originally posted by gkAeris
isn't some major energy giants moving there main offices from Toronto to Calgary? won't that equal more inner city jobs and more inner city living for the condos?

but i do agree there is way too many condo projects in inner city i think i counted ~20 new condos. that's way too many.....

but is it not a trend that most pp prefer to live in a condo rather than houses? i mean look at vancouvers condo's downtown there is way more there than here and still very few vacanies.....

Even if big companies move their head offices, it doesnt mean that everyone is willing to relocate. If houses are more expensive in Calgary than Toronto you may have less people relocating. Its hard enough to convince a majority to move in the first place. The inflated housing market will just hinder these processes. Whats worse is that it may just create more employment vacancies.

Its not really a trend in Vancouver. Its more of just a way of life. More people live in condos in Vancouver not because its trendy... its because its the only thing they can afford.

The condo vacancies are limited right now because most of the condos in Calgary are still under construction. A building typically takes about 2 years to build and the housing boom here started about a year ago. So in a year when most of the projects are done the market will have 2000+ new units available. If 60% of the units were purchased for flipping you will start to see people desperately trying to sell them or rent them so that they dont lose too much money.

[syeve]

Whatever happens, being "in" the housing market is important.

Those who do not own a house today, I feel sorry for, you will pay more tomorrow than today.

Housing prices will make corrections, but the trend is up and for the most part will always go up as land is finite and the trend of moving to major centers will continue.

Interest rates will not go to double digets, I believe the governement learned their lesson in the 80's.

Calgary does not posses some magical housing market, it will fall in line with similar cities/economies. Look at Houston, Dallas, SanAntonio...all cities that have seen the oil booms, amassed huge amount of capital within the city and continued to be some of the weatlthiest and most beautiful cities in the world, and of course, high house prices.

[sputnik]

Originally posted by syeve
Whatever happens, being "in" the housing market is important.

Those who do not own a house today, I feel sorry for, you will pay more tomorrow than today.

Housing prices will make corrections, but the trend is up and for the most part will always go up as land is finite and the trend of moving to major centers will continue.

Interest rates will not go to double digets, I believe the governement learned their lesson in the 80's.

Calgary does not posses some magical housing market, it will fall in line with similar cities/economies. Look at Houston, Dallas, SanAntonio...all cities that have seen the oil booms, amassed huge amount of capital within the city and continued to be some of the weatlthiest and most beautiful cities in the world, and of course, high house prices.

Mark my words, at some point houses will be cheaper "tomorrow" than they are today.

Houston is a DIRT CHEAP place to buy a house in comparison to Calgary. The entire US is going through a recession and the real estate market is sufferring as a result. Even California has experienced a drop in the price of houses.

Take a look at some homebuilders that build in Houston and you will be AMAZED at what $350-400k will buy you. Someone I work with just relocated to Houston to work for BP. His new house is 4200 sq ft on a 1/3 of an acre. The community is gated and he has a view of a ravine. Everything in his house is hardwood, marble or granite and he paid $389,000 USD. He told us that he is thinking about putting in an inground pool this winter.

http://www.meritagehomestexas.com/houston/qmi/
http://houston.roycebuilders.com/
http://www.perryhomes.com/
http://www.plantationhomes.com/
http://www.lovetthomes.com/

[USED1]

^ I was looking at places as well in Houston. If my company decides to open an office there I will definetly be moving as it is more affordable there than it is in Calgary.

[max_boost]

Texas does not have a state property or personal income tax. :thumbsup:

I have a buddy who has been talking about moving to Arizona. Your $40k down there goes a lot farther than it does up here :D

[turbotrip]

Originally posted by sputnik


Mark my words, at some point houses will be cheaper "tomorrow" than they are today.


its going to happen sooner than u think too, the real estate market has already slowed down a lot in the last few weeks. However its not going to drop substantially, it will just go back to how it was 2-3 years ago.

[Aleks]

Damn it. I was sure set on upgrading to a nicer house with my GF. I bought in October and with the two of us we can afford a much nicer house now.

Debating whether to go for it and get a nicer place and not have as many toys or stick with our place now and see what happens to the market.

[turbotrip]

^it would be a very stupid move for you to sell your house right now and buy a bigger house, wait 2-3 months and then think about it. We have a couple of houses for sale right now and I can tell you that the market is definitely slowing down and prices are going to have to drop because many houses arent selling

[max_boost]

^^^
WERD

This market has made some people crazy and greedy. My neighbour wants $679k for his 90 year old 1100 sq.ft bungalow. Sure it sits on a 50X120 lot but not like anyone is going to buy it and tear it down. His double detached garage is probably 90 years old too. :rofl: If he did sell, it only tempts me but there's nothing like having a house right in the heart of the city.:bigpimp:

[Lex350]

Originally posted by Alex_FORD


I have a second brother-in-law that made that same decision to wait in the mid 80s when the average house was worth 120k, so we waited 10 years and it costed him an extra 100 grand because the prices never did go to "shit"

have you ever heard of BreX?

there is something to be said about getting out when things are good. Greed, hurts many people. So you leave 20k on the table by selling early. It's better than what may happen if you hold on to things to long.

With all investing, you need to set a target and stick with it. Pushing for those last few bucks has a way of blowing up in your face.

[gran turismo]

Originally posted by googe


1) Fixed mortgages have nothing to do with prime rate (common misconception). They are determined by the bond market.



I'm curious as to what drives the Bond market. I thought it was interest rates. You know, the whole inverse relationship "theory".

[01RedDX]

.

[googe]

haha, "greed hurts many people" might be true, but comparing the real estate market to bre-x is nothing short of retarded :nut: the two have nothing in common

[Lex350]

ITS A METAPHOR YOU PUTZ!!!!


Used to make a point.



sorry if it was over your head.:dunno:

[Alex_FORD]

Originally posted by rotten42


have you ever heard of BreX?

there is something to be said about getting out when things are good. Greed, hurts many people. So you leave 20k on the table by selling early. It's better than what may happen if you hold on to things to long.

With all investing, you need to set a target and stick with it. Pushing for those last few bucks has a way of blowing up in your face.

I lost on Bre-X but I didn't lose lots because my ownership was indirect through mutual funds,

However, you comment is in reply to my second brother-in-law who waited for housing to come down, but it never did. I don't see how it applies to him, because he wasn't a seller - he was a buyer.

I like your comment about selling early, and leaving 20k on the table. I think playing the timing game well is an ideal way to do 'business' but I also think its risky to play games with your home.
I bought my house primarily as a home - not an investment. In fact, I'm not too excited about investments that require continual payments yet no revenue - as is the case with my home.

Yikes, just like Robert Kiyosaki, I shiver everytime someone says that their house is a great asset. :rofl:

[Maxt]

One more thing that will put an economic bite into people, that will push selling prices down somewhat, is reassesment under "market value" property tax assesment.. Once reality hits on the tax bill for a house that was once worth 175k and now is assessed at 350k, Thats going to force more people to give up home ownership , especially fixed income and retirees..While the city tax collectors look like geniuses for coming up with that, sadly it forces many to give up there own homes and puts older people quality of life at stake..
The other variable is what happens to insurance rates, on top of being mortgage poor.. Can you afford to insure your house anymore when the replacement price is double that of 2 years ago?..
Even if the purchase price freezes, there will be deals to be had in the assumables when the economy cannot bare so many increases at once..
Someone made the comment about wages versus costs, yes wages have gone up for some "menial Task" type jobs, but even 14/hour up from 9.50 isnt going to buy you house, a car and energy...To keep pace with alot of the increases, wages need to go from 9.50 to 19.00, which they are not... Even in the trades sectors , where there is a supposed shortage, wages havent risen by any measurable amount.. There are bonus's being paid for shit Jobs, in Crapville Alberta, but for Air conditioning mechanics, plumbers, electricians, mill wrights what ever in the major centres, the hourly rates has gone up by maybe .80/hour overly the last year or so... As a tradesmen myself,, my trade is one of the highest paid trade in Alberta, yet even I find the rising costs taking bites out of other parts of my life.. There is alot of media hype about working in Alberta, and wages, that really isnt true...

[lint]

Originally posted by googe
haha, "greed hurts many people" might be true, but comparing the real estate market to bre-x is nothing short of retarded :nut: the two have nothing in common

Both have a problem with speculation driving up the prices. Unless you truly believe that the increase in housing costs (50% in the past year) are entirely attributed to population growth/immigration. There are supply and demand factors, but not to justify the insane price jumps.

[grandmasterE]

Originally posted by max_boost
Texas does not have a state property or personal income tax. :thumbsup:

I have a buddy who has been talking about moving to Arizona. Your $40k down there goes a lot farther than it does up here :D

The Texas cities have more than enough property tax (~3% of house value per year! That's $12,000 per year on that $400,000 house). Add the cost of house insurance (another ~$8-10,000 per year in Houston) and it's not going to help your lifestyle.

I think one of the facts that people seem to forget about is the fact that many people that are buying houses already own houses and may be selling them to upgrade. The 5000-10000 new households (just a guess) that are migrating here or buying a first home can complain all they want, but the larger market force is the 300,000 (also just a guess) existing households that have no problem paying $500K or more for a house. Another force that will control any decline in the market is the market perspective. Not many people will be willing to reduce the asking price of a house that is 'worth' $400K today below $400K (a few panic sellers aside). Most will simply let the house sit on the market for 90-120 days (which is more reasonable anyways). If no one is willing to reduce their price unfortunately you have to pay it. This is exactly what is going on in many expensive markets in Canada. A prime example would be Montreal where some $800K condos will sit on the market for a year or two, but you'll never be able to buy it for $700K.

Housing isn't completely a market economy; few present owners 'need' to sell their houses, so they are free to sell for whatever price they set. Unfortunately in this case the demand for houses is at the mercy of the supply.

One final thing to think about is this: after the recent skyrocketting prices in Calgary, my guess is that very few people would be in trouble if the interest rates went up. If the interest rates went up, almost everyone could simply refinance over a longer term, keep the same payments, and keep all the equity they have in their houses. Here is an example with a home purchased at the median value 1 year ago, with a 5-year mortgage renewal:

house value then: $280,000
house value now: $370,000
house value 5 years from purchase (assume 4% growth which is very conservative): $432,000

assume you put 5% down (ignore CMHC for now) use 4.5% interest:

$14,000 down, $1478 per month. End of term (5 years) owe: $233, 702.

If rates go up to 8% (almost double):

refinance your mortgage over 25 years: $1727 per month.

So your payment goes up $249/month, but you have $152,000 in equity. Hopefully in five years, you're making $250 per month more (quite realistic I would think). That's only $1556 inflation adjusted (assuming 2.1% annual inflation) to the beginning of the mortgage. That is if the lending rate doubles (which is very pessimistic). Does this sound like the kind of situation that will have the ~300,000 existing households (again, that number is just a guess) that owned houses before June 2005 selling their houses for $1? I wouldn't think so!

Sorry to the people who aren't already in the market, but I wouldn't expect even a doubling of interest rates over five years to cause any 'fire sales'.

[Alex_FORD]

The asking value of the house across the street from me is on MLS.ca......it's twice the price that I paid in 2001.

Sweet for me:thumbsup:

Not so sweet for the naysayers that were hoping for the prices to drop. It sucks to play games with your home :rofl:

[googe]

Announcement was today...



July 11 (Bloomberg) -- The Bank of Canada kept its benchmark interest rate unchanged after seven prior increases and repeated a May statement that those moves are enough to return inflation to its 2 percent goal.

The target rate for overnight loans between commercial banks remains 4.25 percent, the highest since August 2001, and 1 percentage point less than the U.S. federal funds rate. Seventeen of 24 economists polled by Bloomberg News predicted today's decision, with the rest forecasting a quarter-point increase.

once again, economists > beyond speculators. no double digit interest rates for us. :thumbsup:



A drop in employment and a narrower trade surplus reported since the bank's May 24 meeting suggest the world's eighth- largest economy is cooling. Canada's seven quarter-point increases beginning in September represented the biggest cumulative rise since 1997-98, and the country's dollar reached the highest since 1978 after the last move, hurting exports.

^^similar to what I was saying about increasing it to curb inflation having a negative effect on foreign investment.

[syeve]

Originally posted by turbotrip


its going to happen sooner than u think too, the real estate market has already slowed down a lot in the last few weeks. However its not going to drop substantially, it will just go back to how it was 2-3 years ago.

No substantial drop and 2003 house prices in the same sentence? House prices were half what they are today. :dunno:

[turbotrip]

^ i dont mean prices, i mean price trends

[k98303]

i love bc, at least it does not snow as much as here....

[syeve]

Originally posted by turbotrip
^ i dont mean prices, i mean price trends

Ahhhh :thumbsup: