CFCN: Calgary Home Prices are Over Valued,

[demosticgarbage]

A study by Merrill Lynch says Calgary houses are over valued and that is creating a dangerous situation...


http://calgary.ctv.ca/servlet/an/local/CTVNews/20080808/CGY_housing_price_080808/20080808/?hub=CalgaryHome

[liquid1010]

Misleading title much?

" The prices in some of the areas out west, not so much in Alberta but in neighbouring B.C. and Saskatchewan are more overvalued and therefore at more of a risk of a decline," says Carolyn Kwan an economist with Merrill Lynch.

[demosticgarbage]

oh

[ws_on99]

Originally posted by liquid1010
Misleading title much?

" The prices in some of the areas out west, not so much in Alberta but in neighbouring B.C. and Saskatchewan are more overvalued and therefore at more of a risk of a decline," says Carolyn Kwan an economist with Merrill Lynch.

"The study by Merrill Lynch says Calgary houses are overvalued by up to 25 per cent. "

let's see...today we r at 400k median so I guess another 100K(25%) drop is not considered "so much".....

[Crymson]

I love how the CREB always comes out, with both fingers stuffed in their ears screaming "I CANT HEAR YOU, EVERYTHING IS FINE!" begging people to listen to them, everytime one of the analyst reports come out.

[rage2]

Originally posted by ws_on99
"The study by Merrill Lynch says Calgary houses are overvalued by up to 25 per cent. "

let's see...today we r at 400k median so I guess another 100K(25%) drop is not considered "so much".....
"up to" 25%, which is the high end of the spectrum. We are definately not that overvalued in Calgary. Vancouver? Now that's a different story.

[Doozer]

This is news? Isn't 'news' supposed to be something that isn't common knowledge?

The market has already been in decline for quite awhile; I bet the over-valuation now is half of what it was in 2007 or late '06. I would guess that back then, housing prices were 50% over what they should be.

Of course, some people who bought high are going to be in real trouble, but there's nothing in that article that hasn't been known for quite awhile.

[Heff]

Originally posted by Doozer

That doesn't mean that some people who bought high aren't going to be in real trouble, but there's nothing in that article that hasn't been general knowledge for months.

Only if they discover a pressing need to sell before the market re-adjusts and then inflation re-re-adjusts to close to what they paid in the first place.

Or if their mortgage payments are too heavy for their actual budget.

If you plan to stay in a house long-term, the fluctuating values don't matter as much.

[01RedDX]

.

[Doozer]

Originally posted by Heff


Only if they discover a pressing need to sell before the market re-adjusts and then inflation re-re-adjusts to close to what they paid in the first place.

Or if their mortgage payments are too heavy for their actual budget.

If you plan to stay in a house long-term, the fluctuating values don't matter as much. I totally agree, although you covered several situations which are pretty common; including unexpected selling. A lot of people moved here for jobs and will leave when the jobs dry up. However, the main one I was referring to was with the mortgage payments ... they might be fine now, but if as rates go up (which they will) some people might be in a lot of trouble when their current rate expires.

It will be extremely sad for some who have dutifully paid their mortgage for 5 years, only to discover that their mortgage is going up, and they still owe more than the house is worth.

[G-Suede]

Calgary to CFCN: Thanks

[2.0turbo]

i saw on msn that some expert in the oil and gas industry said that prices will be $65/barrel with in three years.

Unfortunately, that doesn't make it true either.

[D. Dub]

Economist predictions are about as useful as a crystal ball and a smelly gypsy.

The may get occasionally lucky and predict a trend -- but to actually predict an amount of market rise or fall -- good luck.

[whodiman]

Originally posted by D. Dub
Economist predictions are about as useful as a crystal ball and a smelly gypsy.

The may get occasionally lucky and predict a trend -- but to actually predict an amount of market rise or fall -- good luck.

If economists were that accurate they wouldn't be economists very long because they'd put everything they had into the stock or commodity markets and be millionares within a couple of months if not weeks.

[jadeboy]

People have to understand that economic predictions over the short term is usually always wrong... but longterm economic predictions are far more accurate.

[Hakkola]

Originally posted by D. Dub
Economist predictions are about as useful as a crystal ball and a smelly gypsy.


You've underestimated what can be done with a crystal ball and a smelly gypsy.

The possibilities are pretty much endless.

[jadeboy]

Been... going to see more open houses (probably 70+ houses now) and watching mls.ca.. the one thing that is obvious - housing prices are still dropping. The houses I want to buy are in the 500-650K range.. and there are only 2 houses that interested me in the West Hill area and they both just dropped 20K (595-> 575, 649->629) each in the last few days... the question is when should I buy...

I have also been talking to people and it seems that the job market is Calgary is also cooling... a lot less than 6 months ago.. all I know is this... prices are not going to raise any time soon... the question is how low will these houses goes...

[barmanjay]

Good question

I had my eye on a place,.. visited it 3 times between tues-Thurs, thought it would stay on the market at least 2 more weeks,.. was getting the mortgage pre-approval over the weekend - was subsequently verbally approved today,.. little did I know it sold on friday :(

Thats what happens when you find a house that is priced low. (50k lower than the average in the area)

The wife and I are pretty upset about it :(

back-yard overlooking all the mountains and DT :(

[Crymson]

Originally posted by barmanjay
Good question

I had my eye on a place,.. visited it 3 times between tues-Thurs, thought it would stay on the market at least 2 more weeks,.. was getting the mortgage pre-approval over the weekend,.. little did I know it sold on friday :(

Thats what happens when you find a house that is priced low. (50k lower than the average in the area)

Yah, but the thing of it is, that drove the avg price down by 50K, it's exactly like what skyrocketed prices in the first place, when multiple people would bid over list in desperation to get into the housing game.

[jadeboy]

Originally posted by barmanjay
Good question

I had my eye on a place,.. visited it 3 times between tues-Thurs, thought it would stay on the market at least 2 more weeks,.. was getting the mortgage pre-approval over the weekend - was subsequently verbally approved today,.. little did I know it sold on friday :(

Thats what happens when you find a house that is priced low. (50k lower than the average in the area)

The wife and I are pretty upset about it :(

back-yard overlooking all the mountains and DT :(

But those 2 houses are not 50K below the average price in that area... one of them is probably still 50K above the average price in the area...

[dezmarez]

Originally posted by rage2

"up to" 25%, which is the high end of the spectrum. We are definately not that overvalued in Calgary. Vancouver? Now that's a different story.


I still think they are grossly overvalued. I can't really see how prices can almost double in a span of a few years without any retracting. I guess that is what's happening right now, and hopefully, for those of us who haven't purchased a home yet will keep coming down.

Another article shows that prices may continue to drop...

http://calsun.canoe.ca/Business/2008/08/16/6469831-sun.html

[PHX]

I agree that the Canadian housing market won't drop like the US market, due to Canada's much tighter lending practices.

[ws_on99]

Originally posted by rage2

"up to" 25%, which is the high end of the spectrum. We are definately not that overvalued in Calgary. Vancouver? Now that's a different story.

the avg house price has gone up ~68% from 2004-2008, suppose we have 25% correction (which is another 15% as we already had 10% since 07), and then again suppose the price of the house grow at the same pace as inflation ~4% x 4yrs = 16%..(which is being too optimstic)

we r still ~27% overvalued (unless the household income can catch up), I think Merrill's being conversative on their report....

and ya Vancouver is a diff story, so does Saskatoon, Winnipeg, Toronto etc.......

[accordboi_02]

What? Overvalued?
I thought $500K for a home in DOVER was a steal of a deal! LMAO

[rage2]

Originally posted by dezmarez
I still think they are grossly overvalued. I can't really see how prices can almost double in a span of a few years without any retracting. I guess that is what's happening right now, and hopefully, for those of us who haven't purchased a home yet will keep coming down.
That's because housing was very undervalued up to 2002. A lot has to do with the dot-com bubble, when it was at it's peak, nobody was looking at Calgary, investments, high paying jobs were all down in Silicon Valley. When the bubble burst, investors started looking elsewhere.

Then 9/11 hit. Then oil prices spiked. People realized Alberta is where it's at, investments poured in. Tons of new jobs, many very high paying. Housing demand, prices goes up. Speculators of course play a small role too, but it's not a huge role (thus our overvaluation isn't THAT much). Look at our local economy, you really can't expect so much more money in this city and have a FLAT growth on housing prices do you?

[accordboi_02]

Falling gas prices chip at ‘Alberta Advantage'

William Nichols is a third-generation oilman and, these days, a devout pessimist. Yes, unemployment is low, and money continues to pour into Alberta's north. But look a little closer, he says.

Home prices are sliding (nearly 8 per cent in Calgary during July, according to the latest data). New-home construction has slowed down so much in Alberta's largest city that some of Mr. Nichols' friends in the trades have moved back to Regina and Saskatoon for better-paying work. For someone who makes his living in oil and gas, the more depressing statistics are those on drilling activity: They show the number of active rigs in Alberta still far below where it was a couple of years ago.

“Everybody says oil sands drives our economy, and to some extent it's true,” says Mr. Nichols, a consultant in Calgary to oil and gas companies and to people who invest in them. “The problem is most of us don't want to go to Fort McMurray. Most of us have gone once, and we don't want to go back. There is nothing nice about that place.”

Is Alberta in the early stages of a bust? Well some cracks are beginning to show, especially in parts of the province far from the Athabasca boom. The stress comes from several places, though Mr. Nichols – and many others – wouldn't mind putting the blame in a bow-wrapped package and laying it at the feet of one man: Premier Ed Stelmach.

Perhaps the biggest misconception about Alberta, other than the Toronto conceit that it's a homogenous province of pickup-driving yahoos, is that it's an oil economy. It's not (at least, not yet). It's still about natural gas. The oil sands hog the headlines, and the amount of money being spent to develop them – $14.3-billion in 2006 – is enormous. But the Alberta energy industry spent almost twice as much on conventional wells, and the vast majority of that $27-billion went to finding and exploiting gas deposits. In a typical year, Alberta drills three to four times as many new gas wells as oil wells.

This reliance on gas extends to government finance. In fiscal 2007, the province's take from gas royalties was $6-billion, versus $1.4-billion for conventional oil and $2.4-billion from the oil sands. The numbers will shift as the big oil sands projects increase their production, but it will be years before royalties from oil sands become the most important source of energy revenue. Gas is still the golden goose.

When oil and gas prices both spiked earlier this year, Mr. Stelmach's government seemed to have won the hydrocarbon lottery yet again. An economist from CIBC World Markets predicted in June the province's surplus would grow to nearly $12-billion. What on earth could they spend it on? The debt is repaid and Alberta's government, though painted in Conservative colours, plans to spend 41 per cent more this year, per capita, than Ontario's does. The Stelmach government's most recent budget jacked up spending by 10 per cent.

So what reason is there to be pessimistic? Forget the slow drift of oil prices. The bottom has fallen out of natural gas. U.S.-dollar-based gas futures are down 40 per cent since the first week of July. The AECO spot price, a key measure of Alberta gas prices, is around $7.50 per 1,000 cubic feet. If it stays in that range, billions will melt away from that projected fat surplus.

That's not a disaster, but there's another thing. Mr. Stelmach, controversially, announced last fall he'll increase royalties. Virtually everyone, including top industry executives, knew that the oil sands were getting a sweet deal from the province and had to pay more. That made sense. But the government messed with royalties on conventional production, too. When gas jumped to $12 per 1,000 cubic feet soon thereafter, it made the industry look like whiners for opposing the move. But at $7.50, it's a different story; it simply won't make economic sense to drill many higher-risk deep wells in Alberta.

Royalties aren't the only reason that Saskatchewan and British Columbia are now raking in more money for exploration rights than Alberta. “The money was going to go there, irrespective of this royalty change,” says Menal Patel, an oil and gas analyst at National Bank Financial, because of the resource potential of the Montney and Horn River plays in B.C., and Saskatchewan's Bakken oil play. Still, it doesn't help. Mr. Stelmach continues to tinker with his royalty plans in advance of 2009, when they're due to come into effect. But having been elected on being tough on Big Oil, he can't back off too far. And he's got a bloated budget to pay for. It could be a long time before any politician will be able to brag about “the Alberta Advantage” again.

[civic_rida]

Shouldnt calgary be comparable to edmonton?

[E-MARK]

Originally posted by accordboi_02
What? Overvalued?
I thought $500K for a home in DOVER was a steal of a deal! LMAO
Yeah, right. Like that ever happened! I think that was for BOTH sides of the duplex!


Originally posted by civic_rida
Shouldnt calgary be comparable to edmonton?
NEVER!

[barmanjay]

Originally posted by accordboi_02
What? Overvalued?
I thought $500K for a home in DOVER was a steal of a deal! LMAO

Or a We-List listing on 26th st facing DT

[The Cosworth]

Originally posted by accordboi_02
:snip:

I think that anyone who believed that growth would keep on going at that rate is an idiot. Obviously that was a boom and we should have expected a slow down.

Unfortunately we blew past the median and are now correcting to it, but saying we are crashing because we are becoming more sustainable is a load of baloney

[dezmarez]

Originally posted by rage2

That's because housing was very undervalued up to 2002. A lot has to do with the dot-com bubble, when it was at it's peak, nobody was looking at Calgary, investments, high paying jobs were all down in Silicon Valley. When the bubble burst, investors started looking elsewhere.


Ya, I was going to say that in my original post that if you believe they aren't overvalued then you had to have believed that they were undervalued before then, and you make a good point. I think I'm just bias becasue I'm looking to purchase a house in the next year or two and I was born and raised here so it sucks that I missed out on affording a decent house by a few years.

[autosm]

http://www.greaterfool.ca/

"" QUOTE ""

To me, it’s simple. After seven years of non-stop real estate gains, our residential market reached an unsustainable crest in the last days of 2007. It was clear 2008 would bring falling sales, falling prices, idle construction sites and abandoned condo developments. This was even before the feds pulled the plug on those 40/0 mortgages which had helped turn a boom into a bubble. And while our own subprimes had to be eliminated, doing so at this time (October 15 is the midnight hour), will simply turn a correction into a freefall.



Seems to be a bit biased but if his predictions come true its going to be ugly.

[sputnik]

People are throwing their opinion into the ring everywhere these days. Some are pretty extreme and some are pretty conservative.

However they are only doing it for one reason. To be able to say "I told you so" should it come true. No one is going to care if the negative prediction turned out to be wrong because people will be happy about the market. So to make doom and gloom claims now is safe and garners attention towards you for the time being.

Personally I think the real estate market will be much ado about nothing.

As long as employment stays strong, people will still be able to make their mortgage payments. Sure they might have to sell the BMW, but people will generally try to hang onto their house at all costs in times of economic uncertainty. Sure houses will drop. People gasp at the 8% drop (or whatever) without looking at the fact that houses jumped over 100% just a couple of years ago. What did you guys expect? Another 100% this year? Of course things will adjust afterwards. Prices will eventually settle and things will get back to normal even if that means it may be a bit flat for a while.

Also another thing to remember is that the majority of houses in Calgary were bought pre-boom or were financed with a house sold after the boom allowing for a large downpayment. I personally have 40% equity in my house so it will be a while before I owe more than the house is worth. Many are like me in the same boat. Only a small few bought at the peak with zero down. Those are the people that will be hurting should they lose their jobs or something else impacts their current income levels.

Use some common sense. Chicken Littles are usually wrong and get worried about nothing.

[Crymson]

People are focussing on the wrong stats. The only thing that will honestly curb any sort of pricing, is to go back to a 25 yr max amortization period, with required downpayment.

The actuall COST of the house is completely irrelevant, we are a society that thinks purely in cash flow. It does not MATTER (to the consumer, generally) how much they "paid" for the house, as long as their mortgage is 1800$/mo. The reason prices skyrocketed is because people, didn't necessarily get greedy but they got dazzled by the house prospects that they could suddently afford. The banks came along and said "hey, btw, we have these new 40 year mortages --- so your 1800 can get you into a 450,000$ house".

Now, at the time, when average houses were 250,000$, this put stars in peoples eyes, when they should have known better. So they went out and bought what their maxed their mortgage ammount and period would buy and got the biggest and best because thing s were booming. So after a brief period of EVERYONE doing this, the 25 year mortgage no longer got you shit at 1800 a month, so you were forced into the 40 year's.

This is as crazy as canada ever got. In the states, it was simply a matter of banks being even MORE outrageous as to what they'd give you for that same 1800 a month. Like "how about you only pay interest!" or "we'll start you off at 2.9%". etc.. etc..

When canada finally scraps the 40 y mortgage in october, and goes to a 35 year max with a required downpayment of 5%, that will in it self knock 10% off the value of homes, simply to keep monthly payments in line with those who did 40 year 0 down mortages on the same home.

[TomK]

Originally posted by sputnik
So to make doom and gloom claims now is safe and garners attention towards you for the time being.


Actually, its the exact opposite. Because bubbles are as much a social phenomenon as an economic one, a "bear" is always the social outsider who expresses doubt about what is making everyone rich. If everyone in the city made $100K on their house last year, where does someone get the nerve to tell them that this is all an illusion?

Bears, (real estate or other) are considered "idiots who missed out" if they turn out wrong, but if they turn out right they get blamed for causing the disaster. This happened in the US where Realtors blame the media for making their own "doom and gloom" predictions come true by scaring people. Of course front page stories on how wrong the bears were in 2005 were not considered to be a problem by the same Realtors.

Bulls like Jim Cramer and David Lereah seem to walk away clean no matter how wrong their predictions turn out to be. Bears like Peter Schiff are now treated like blind squirrels who *finally* stumbled over a nut by accident.

[broken_legs]

Originally posted by TomK



Actually, its the exact opposite. Because bubbles are as much a social phenomenon as an economic one, a "bear" is always the social outsider who expresses doubt about what is making everyone rich. If everyone in the city made $100K on their house last year, where does someone get the nerve to tell them that this is all an illusion?

Bears, (real estate or other) are considered "idiots who missed out" if they turn out wrong, but if they turn out right they get blamed for causing the disaster. This happened in the US where Realtors blame the media for making their own "doom and gloom" predictions come true by scaring people. Of course front page stories on how wrong the bears were in 2005 were not considered to be a problem by the same Realtors.

Bulls like Jim Cramer and David Lereah seem to walk away clean no matter how wrong their predictions turn out to be. Bears like Peter Schiff are now treated like blind squirrels who *finally* stumbled over a nut by accident.


I believe that some people look at trends, facts and numbers.

See social and economic trends over many years and make educated guesses on where things are probably going to go.

Sometimes that will make that person a bear, sometimes it will make them a Bull.


The problem I have with everyone who says the market is going to be fine in Calgary is that they don't have much evidence other than anecdotes and comments like "If you bought for the long term it doesn't matter" type things, that really don't mean much. Or you have the 230 billion dollars are going to be spent in the oilsands over the next XX years argument. Well thats nice but they are already spending way more money per years on drilling conventional oil and gas well. Oilsands is still a small part of the economy here compared to conventional O&G. Then you hear "people will move out here from Ontario". People already moved out here during the boom, no they stopped because shit is too expensive and everything is much cheaper out there. But again I haven't seem any convincing or even mildly moving statistics or numbers or charts or graphs that would turn me into a bull.

On top of that you have the CREB president saying things that are vague and seem to fly in the face of the CREBs own published statistics.


Meanwhile you have the bear case, that may in some cases be over done, but for the most part seems to have some logical base to the argument. ie per capita income GDP, disposable income, "correction", "supply and demand", etc.. etc.. All of which are supported by a few charts or graphs or historical precedent.

None of those ideas are really wacky or outlandish, they all seem to make perfect sense to me and have actual figures and numbers to back them up.


I own a house, it's financed to the 9 and it cash flows for me. Next year I'm 100% positive I will be underwater on it, but im holding for the long term.

Meanwhile, i will wait for the housing here in Calgary to come back down to a realistic level where i can get back in and buy something affordable for myself. Meanwhile Im going to keep paying 450/mth rent :)

[rage2]

Originally posted by broken_legs
Oilsands is still a small part of the economy here compared to conventional O&G. Then you hear "people will move out here from Ontario". People already moved out here during the boom, no they stopped because shit is too expensive and everything is much cheaper out there. But again I haven't seem any convincing or even mildly moving statistics or numbers or charts or graphs that would turn me into a bull.
Actually, oil sands makes up 65%, the majority, of Alberta's total oil production. This number will continue to grow as US look towards us as a primary source of their energy needs. Bill Gates and Warren Buffet flew in to Ft. Mac this week to look at investment opportunities.

As for an economic slowdown, the primary reason is that the royalty review did it's job and slowed down our growth, not because "it's too expensive" to live out here lol. We're about 10-15% down in the O&G sector in terms of employment, so there's no huge demand like there was the last few years. We'll still see growth even as the higher royalties kick in starting next year, but it won't be retarded growth like we've seen the last few years.

The only wild card is oil prices. If we see oil prices drop to under 70 or 80 bucks for a LONG period of time, then expect to see our economy crumble. The O&G industry is based on investments into the future, they can sustain short stints of low oil prices, but not extended periods. With the recent energy demands of developing countries (China and India primarily), I don't think we have anything to worry about.

[broken_legs]

Originally posted by rage2

Actually, oil sands makes up 65%, the majority, of Alberta's total oil production. This number will continue to grow as US look towards us as a primary source of their energy needs. Bill Gates and Warren Buffet flew in to Ft. Mac this week to look at investment opportunities.

As for an economic slowdown, the primary reason is that the royalty review did it's job and slowed down our growth, not because "it's too expensive" to live out here lol. We're about 10-15% down in the O&G sector in terms of employment, so there's no huge demand like there was the last few years. We'll still see growth even as the higher royalties kick in starting next year, but it won't be retarded growth like we've seen the last few years.

The only wild card is oil prices. If we see oil prices drop to under 70 or 80 bucks for a LONG period of time, then expect to see our economy crumble. The O&G industry is based on investments into the future, they can sustain short stints of low oil prices, but not extended periods. With the recent energy demands of developing countries (China and India primarily), I don't think we have anything to worry about.

I'm not sure on exactly how much the oilsands production accounts for the actual crude output from the province but I can tell you for sure that the amount of money being spent on oilsands is not that much in relation to all of the conventional Oil and most notable Gas in the province.

To illustrate my point:
http://i274.photobucket.com/albums/jj259/broken_legs/GDP_oilGas.jpg


Anyhoo, the main point im trying to drive through right now is that yes oilsands is going to be huge in the future, but it doesn't happen overnight. Albertas economy is linked more to conventional drilling (which is at a multiyear low right now, preceding the royalties which will only make it much worse) - So to say that real estate will be fine because of oilsands investment is a little foolish me thinks.

If anything Oilsands might doa decent job of making up for the massive reduction in spending on conventional oil and gas, but I just don't see how its going to cause everything to boom again.

:)


EDIT:

Heres some more interesting links on Albertas economy that I stumbled upon:

http://www.albertacanada.com/documents/SP-EH_highlightsABEconomyPres.pdf

http://www.albertacanada.com/documents/SP_weh_150808.pdf

http://www.albertacanada.com/documents/SP-EO_economic_outlook.pdf
Over the past 2 to 3 years the economy has
grown at rates well beyond its capacity.
• There are signs that economic growth
moderated in ’07 to more sustainable levels.
• Housing starts: down 1.3% in ’07.
• Conventional drilling activity about 1/3 lower.
• Net inter-provincial migration was negative in
Q3 (first time in 14 years): in-migration
remains strong but number of people leaving
the province is rising sharply.
• More moderate growth will help ease pressures
on housing/infrastructure and reduce inflation.
• Consumer spending remained strong in ’07;
some moderation expected for ’08.
• ATB’s Business Sentiments Index at its lowest
level in 2 years: suggests more moderate
growth in Q1 ’08.
• Strong C$ poses challenge for manufacturing
exports, but new oil sands production will cause
sharp increases for oil exports in ’08-’09.
• Residential investment: weak in ’07 because of
falling housing starts; this may continue in ’08.

[sputnik]

Originally posted by broken_legs
Meanwhile, i will wait for the housing here in Calgary to come back down to a realistic level where i can get back in and buy something affordable for myself.

Why is it that everyone on Beyond that says the market will crash (or is crashing) always says this?

Do they really have insight in the market or are they upset that they didn't buy before the boom?

[max_boost]

Originally posted by sputnik


Why is it that everyone on Beyond that says the market will crash (or is crashing) always says this?

Do they really have insight in the market or are they upset that they didn't buy before the boom?

YES.

And they want to buy at the bottom so prices have nowhere to go but up.

[broken_legs]

Originally posted by sputnik


Why is it that everyone on Beyond that says the market will crash (or is crashing) always says this?

Do they really have insight in the market or are they upset that they didn't buy before the boom?

Actually, I bought during the boom and made out like a bandit.

What I find really interesting is that there isn't really much of an argument to support housing prices at their current levels. Instead of knocking people who don't share your opinion, maybe you can support your own opinion with something intelligent.

I just don't see anything that really convinces me the market will hold these bubble like gains. All of this while Europe and US are on the verge of recession, and the rest of world faces crippling inflation and an economic slowdown...

I would like to hear some argument from someone that uses things like GDP, Supply and Demand, Economics, disposable income, affordability etc. to explain why housing prices will hold their current levels.

[sputnik]

Originally posted by broken_legs
I just don't see anything that really convinces me the market will hold these bubble like gains. All of this while Europe and US are on the verge of recession, and the rest of world faces crippling inflation and an economic slowdown...


Supporting bubble like gains and crashing are two opposite ends of the spectrum.

I am not expecting real estate to skyrocket. Nor am I expecting it to crash.

I think it will probably drop 10-15% off the peak and settle for a year and then return to more modest gains (5-8%/year) in a year or two from now.

[kenny]

Originally posted by broken_legs
What I find really interesting is that there isn't really much of an argument to support housing prices at their current levels. Instead of knocking people who don't share your opinion, maybe you can support your own opinion with something intelligent.


No, nobody is saying that the inflated prices are here to stay but all the people that are expecting a housing crash so they can get in the market are all dreaming. House prices are NOT going to return to the pre-boom days.

Prices will correct back to market levels but every segment of the market will be affected differently.

[broken_legs]

sputnik says:

Supporting bubble like gains and crashing are two opposite ends of the spectrum.

I am not expecting real estate to skyrocket. Nor am I expecting it to crash.

I think it will probably drop 10-15% off the peak and settle for a year and then return to more modest gains (5-8%/year) in a year or two from now.


Ohhhhhhhhhhh I get it now!

So when I say something like:


Meanwhile, i will wait for the housing here in Calgary to come back down to a realistic level where i can get back in and buy something affordable for myself.


you automatically label me as the guy who thinks a 2000 sq foot house in kilarney should be selling for 200 grand because the real estate market is going to CRASH!!!

I totally get it now.

I guess I have to stop posting online on Beyond that I think house prices are going to drop to below pre-boom prices (cause I do that all the time!)

:rofl:

It's like all of you home owners are on a witch hunt ready to burn the first person who says your castle might not be worth as much as you think.


And since we're on the topic, what exactly constitutes a crash in your mind? 100% gain followed by 50% correction? That would leave homes at the same price they were pre-boom.

What about a 15-25% haircut? Would that be a crash? I think all of you real estate wizards need to define your terms before you start assuming what people mean.



kenny says:No, nobody is saying that the inflated prices are here to stay but all the people that are expecting a housing crash so they can get in the market are all dreaming. House prices are NOT going to return to the pre-boom days.

Prices will correct back to market levels but every segment of the market will be affected differently.


Great so you agree home prices are going to continue to drop and maintain the current downtrend until they become more affordable too. Thats exactly what I have been saying too! glad to have some more support :)

[Supa Dexta]

BNN was just saying euro recession is 9mo away in some bit last night.. I am really surprised Canada has stayed as strong as it can, with how much they feed us on how we "rely on the states for the most part in evry part of our life".. But we can't stay on top when the rest of the world starts to go down as well.

[barmanjay]

Originally posted by Supa Dexta
....... But we can't stay on top when the rest of the world starts to go down as well.

why not

with china growing like crazy in all aspects,.. and we are a 2nd home to them aswell :D:thumbsup:

I swear 1/4 of the asian population is moving to canada - my family included

[Revhard]

Everybody is moving to Canada. It is because the society here is spineless, and allows freedom of everything.
Canada is the perfect example of the "sqeaky wheel gets the grease" syndrome.
It's a great place to live, but offers alot the USA does not in terms of personal freedoms. That and the whole government is under the impression that immigration will solve everything wrong with this country, and the business sector is right behind them.

Calgary prices are high, but that's the way it is right now. They have already come down some, and will likely settle even lower as stated. There is alot of money around here though, and that doesn't look to change anytime soon.
I have my house for sale right now, and I'm patiently waiting for it to sell. I priced it lower than comparable competition because I'm not greedy. I've made alot of money, and it's now time to move on. This slow time is the best time to upgrade in my opinion, as the more expensive houses are taking the biggest hit.
It's quite obvious to me that there are alot of houses still out there that will just not sell for what they are asking, not even close.