Calgary Housing market on it's way up

[benyl]

http://www.calgaryherald.com/business/Calgary+housing+market+full+recovery+mode/1951731/story.html

What do you think?

Is this the peak before the next drop?

[7thgenvic]

I still have no faith in this market...Natural Gas is tanking in our province and I really can't see consumer confidence rising with the our economy still on the brink of disaster. This in itself will most likely be key in developing our housing market.

[snoop101]

What peak? It wont go up until the Oil companies start projects up again, which then gets other companies going like Fluor who the hire like crazy and people need to buy houses when they come here. I know it sounds small, but you would be suprised how much a company like fluor and other engineering companies impact the housing market.

[JAYMEZ]

I think its true. I just bought my house this week. Alot of the show homes are busy as hell , and its hard to even book an appointment because so many people are building!

Not everyone works in O&G

Great time to buy IMO.

[masoncgy]

Good news... hopefully the prices continue on an upward trend, ideally hitting a peak in late spring/early summer 2010 so I can sell and get out of here! :)

[snoop101]

Originally posted by 7thgenvic
I still have no faith in this market...Natural Gas is tanking in our province and I really can't see consumer confidence rising with the our economy still on the brink of disaster. This in itself will most likely be key in developing our housing market.

You neet to look at the stock market a little more. We are definetly on the way up. Its slow, but were on the way up and i mean that on the whole, not just Alberta.

[7thgenvic]

Originally posted by snoop101


You neet to look at the stock market a little more. We are definetly on the way up. Its slow, but were on the way up and i mean that on the whole, not just Alberta.

Don't worry...I'm looking at the market 12+ daily....If you follow Production reports across alberta for NG you'll know why I would say that.

The only buyers feeding the market right now are younger families and couples who have tended to save money in the last 10 years. Once these buyers leave the market I can't see these price levels retaining their current level.

I still feel that condo units are going to tank. Perfect example is Castello building DT. This unit was catered high income earners and look at the number of price reductions they have done in the last 6 months....4? 5?

Good indicator of where buyers heads are at vs. what sellers should ideally expect.

[benyl]

Originally posted by snoop101


You neet to look at the stock market a little more. We are definetly on the way up. Its slow, but were on the way up and i mean that on the whole, not just Alberta.

I guess you haven't see the data on how Canada is in a trade deficit for the first time in nearly 40 years.

I also heard a rumour that spot prices on NG went as low a $1 earlier this week (could be wrong).

[snoop101]

Originally posted by 7thgenvic


Don't worry...I'm looking at the market 12+ daily....If you follow Production reports across alberta for NG you'll know why I would say that.

The only buyers feeding the market right now are younger families and couples who have tended to save money in the last 10 years. Once these buyers leave the market I can't see these price levels retaining their current level.

I still feel that condo units are going to tank. Perfect example is Castello building DT. This unit was catered high income earners and look at the number of price reductions they have done in the last 6 months....4? 5?

Good indicator of where buyers heads are at vs. what sellers should ideally expect.

Well To me its all based on the O & G companies. Once one big one starts up a new big project then others follow and it goes from there. It's happened in the past like that and it will most likely be the same this time. Once those projects start then they need more people and other companies like engineering companies need to hire a lot of new people, since they laid off most of there people from before.

The retail market in general is being hit now because more and more people are getting the effects of what happened last year, but once people are gettting hired back and more people are coming into Calgary for work then the retail market will be back to normal.

As for real estate I think condo's are going to be ok because the people that are moving here from other places are going to be buying the condo's first (imo) and at these prices who wouldent.

On a side note when I worked at fluor they laid off floors of people that were in projects and I mean everyone in that project and there were a couple that had condos where I live who had to sell. Once Fluor starts up the projects again then they will be hiring a lot of people.

[cmyden]

It's been interesting to watch. I think it's safe to say the slide in prices was curbed by one very important factor: money is practically free right now.

Some indicators I like to watch...

Natural Gas futures:
http://www.wtrg.com/daily/gasprice.html

How low will it go?


Rig counts:
http://www.caodc.ca/rigcounts.htm#wkwestdrill

Down 50% from last year.


Foreclosure rate:
http://www.cba.ca/index.php?option=com_content&view=publication&id=69&Itemid=56&lang=en

Mortgages in Arrears in Alberta:
http://dynamic-evolution.com/ehb/090819-1.jpg

Rapidly rising.


Unemployment Rate:

http://www40.statcan.gc.ca/l01/cst01/indi02j-eng.htm

Still rising. I don't know about you, but I know a lot more people looking for work this year than last year.

Case Shiller Index

http://www.housepriceindex.ca/Default.aspx

Still falling for Calgary.


Median Price of Rent:

http://tinyurl.com/dccdb4

It was holding steady at $1650 (SFH) for a long time (since April) but recently it dropped by 3% to $1600.

Something I thought was unusual was that I actually noticed an increase in listings during August. I would have thought with school starting up that listings would decrease. Definitely something to watch.


Now despite all this, prices did indeed show a gain year over year. As I mentioned, I think only the drastic drop in interest rates combined with some pent up demand from first time buyers can be the cause of this. It sure didn't come from an increase in buyer wealth.



The media always seems to be a little behind on reporting the actual story. Recently, sales have slowed down (30% for SFH).

Sales: June July August
SFH: 1837 1585 1277
Condo: 738 702 632

and the median price for condos has actually declined the last two months. However there's no denying that the median for SFH has remained strong.


I think the question is now, what happens next now that everyone has gorged on the free money?

Do interest rates remain low, screwing over boomers/retirees/savers looking for a return on their money?

Or do they go back up, destroying the wealth of younger people and those who acquired a heavy debt load ?

Our economy is kind of between a rock and a hard place, and something's gotta give.

If sales are as weak this year in the fall as they were last year, the government doesn't really have any bullets left in the chamber to get those houses moving again. (Unless of course they paid people to borrow money with negative interest rates).

[Sugarphreak]

....

[kenny]

Lots of people I know seem to be upgrading from condos to houses. Not sure if this is the trend throughout the city but if it is, that'll support SFH prices but will put pressure on condo prices to remain flat, or drop as more condo inventory comes on board.

[JAYMEZ]

^^ Thats what I did.. Condo sold in less than 10days.. now im building .. its a great time to build IMO.

[quazimoto]

You will not be seeing drastic growth in housing prices for a long long long long time. My guess would be to bet the traditional 1-3% appreciation for the next decade. The only reason we saw the huge skyrocketing prices was because we had a huge influx of people moving into our province which created a crazy housing shortage. I'm pretty darn certain we don't have that same influx happening now nor in the future.

[bspot]

Originally posted by cmyden
Blah blah blah

Well don't I feel better about things now

:(


One thing I'm not really understanding, is NG and oil are commodities. Storage will eventually get used up. People need to heat their houses in the winter, fertilizer needs to be made for people to grow crops so we can eat.

How is the demand for NG so depressed?

Is it because of the Oil Sands practically shutting down? Not as NG needed for steam generation etc?

Oil demand will obviously have to pick up eventually too. Aren't we sitting in a situation where it's merely a matter of time and in the not too distant future before things pick up?

Here's hoping for a giant supply shock so we can do it all over ;)

[cdnsir]

Ever since the spring of this year, there's a major disconnect between Single House vs Condos prices. House prices keep climbling slightly month-over-month, condos has been moving steadily the opposite way. I personally see this as a result from first home buyers looking for that dream house with the white picket fence giving house prices an artificial boost.

Overall though, prices seem to have stabilized so I doubt there willl be a major correction coming up soon. But that's overall that I'm talking about, I'm actually quite concern about the condo situation. It's not looking good now, yet there're still 6-7 DT projects in construction as we speak. It can only get worst IMO...

Month-over-Month Avg Price Changes from creb.com

Month House Condo
Jan -1.04% -1.45%
Feb 0.61% -0.73%
Mar 1.15% 5.61%
Apr 1.42% -2.15%
May 2.37% -0.99%
Jun 2.46% 3.77%
Jul -2.32% -0.20%
Aug 3.97% -0.60%

[JordanLotoski]

Its true...i have sold condos to a few members on here..they bough in Febuary and are up at least 30k

I personally have never been busier!;)

[snoop101]

Originally posted by quazimoto
The only reason we saw the huge skyrocketing prices was because we had a huge influx of people moving into our province which created a crazy housing shortage. I'm pretty darn certain we don't have that same influx happening now nor in the future.

I think you'll be suprised. Like i said before a lot of Engineers got laid off and soon they will need them again. Companies like Fluor and O & G companies will need to hire all those people back. Those people need to live somewhere and most likely will buy, if not they will rent which will put that into demand (again).

[masoncgy]

Originally posted by quazimoto
You will not be seeing drastic growth in housing prices for a long long long long time. My guess would be to bet the traditional 1-3% appreciation for the next decade. The only reason we saw the huge skyrocketing prices was because we had a huge influx of people moving into our province which created a crazy housing shortage. I'm pretty darn certain we don't have that same influx happening now nor in the future.

It's not the same level of influx, but there is still positive growth from migration to Alberta... people are still moving here.

When you are living in SW Ontario in cities with 12-18% unemployment, our relatively low unemployment rate gives a glimmer of hope to people who live where things look truly hopeless.

Once the global recession fully comes out of the red, Alberta will be one of the quickest provinces to rebound into the black... that's how a boom & bust O&G based economy functions...

I will agree on the modest price increases... there won't be any sort of sharp increases any time soon.

[whodiman]

As mentioned on here before you can see there is a divergence between SFH and Condos although momentum in sales has definitely begun to slow down for both.

As some realtors may be able to point up too, there is a big disconnect between certain areas. Many areas right now are pretty hot while many of the NE areas have noticably cooled off and listings in those areas are starting to pile up. it seems to be more of a reallocation of hot and cold in this city rather than being able to generalize the city as a whole.

NG, rig counts are down compared to last year but actually up recently. That's a very bad thing as that's tiliting the supply even more against demand. Why aren't producers cutting production? It's because many of the big names are still hedged so they must continue to produce for those sales. It won't be until those hedges come off that they will start to curb production. Meanwhile aeco spot prices have fallen below $2 several times in the last few weeks. Storage is way higher than last year and the cheap storage is already all used up. Only the expensive transport stuff is left. We could see spot prices temporarily touch zero on occasion when people need to dump their gas so that they are not in an imbalance position on the pipeline (which they get penalized for).

[benyl]

Originally posted by bspot


How is the demand for NG so depressed?


It isn't demand.

There is too much supply.

[cmyden]

How is the demand for NG so depressed?

Is it because of the Oil Sands practically shutting down? Not as NG needed for steam generation etc?

From what I've read, new technology developed in the last few years is making it economically viable for the U.S. to tap into reserves that used to be too expensive. They basically have a *lot* more NG available to them now than they did in 2007.

http://www.nytimes.com/2009/06/18/business/energy-environment/18gas.html


Kevin has a great article written about revenue for Alberta and where it comes from:

http://edmontonhousingbust.blogspot.com/2009/08/fueling-alberta.html

chart:
http://dynamic-evolution.com/ehb/090828-2.jpg

[civic_rida]

I bought a condo in March.
Thanks Jordan

[JordanLotoski]

Originally posted by civic_rida
I bought a condo in March.
Thanks Jordan

and your up at least 30...;)

[snoop101]

I bought a condo 2 years ago and im probably down 30.. :(

[bspot]

Originally posted by benyl


It isn't demand.

There is too much supply.

Just because of all the shale gas available now?

Why won't some god damn terrorists finally use their powers for good and blow up all our storage?

[Xtrema]

Originally posted by bspot


Just because of all the shale gas available now?

Why won't some god damn terrorists finally use their powers for good and blow up all our storage?

Hahahaha

I heard that even a record cold winter won't bring the price back.

The prices had been up and people ARE buying because of low interest rate. But at the same time, there are a lot of people not working or getting laid off.

I don't understand this market at all. I can understand wealth left over from the boom but how can consumer confidence be back so quick? Seems like we are building another bubble.

[Hakkola]

The market seems good, my brother had his house in Tuscany on the market for around 4 days and it sold for about 5g under asking.

[max_boost]

No more drops, crashes, corrections, meltdowns, busts, bubbles please. Good to see everything on its way back up.

Things sure change fast around here. Even my parents who were scared a few months ago and said they were done with buying houses just picked up another one last week.

[masoncgy]

Originally posted by Xtrema
I don't understand this market at all. I can understand wealth left over from the boom but how can consumer confidence be back so quick? Seems like we are building another bubble.

People grow tired of old news. When the 'shit hit the fan' last fall, everyone started buckling down and consumer spending ceased, thus contributing to the downturn in an even larger manner.

There are signs that the recession is easing up... and now that some time has passed, those who are still employed are spending again, and as such, the great economic 'circle of life' begins it's process once more.

When people spend more, demands for goods & materials (including natural resources) rise, more jobs are created, and everything begins it's upward movement...

That's what is starting to occur out there... coupled with low interest rates, people are encouraged to spend...

Things can only go up from here...

[barmanjay]

I like where the market is now

I sure hope prices don't start to climb like a raped monkey ; then we will be in trouble again.

I've noticed in some areas they have gone up, some haven't moved.

Worth it to look in any case.

It seems the first-time buyer houses have increased as they are in higher demand.

[corsvette]

I could not belive the amount of showings our house had,we had at least 4 per week or more,it was on the market for about a month and sold for 11k under our asking price,but that was still 2k over the average for the area.no lack of interest at all for new buyers.When i had this house up for sale in 2003 we would go weeks without one request for a showing.
Our house was in the low 300's so thats a hot market right now i think.i thought now was a good time to upgrade into a larger home.

[Celica TVS3]

Originally posted by benyl


It isn't demand.

There is too much supply.

It's a combination of both supply and demand, a perfect storm. Almost 1/2 of the glut can be attributed to higher supply and the other ½ to demand weakness. When natural gas prices rallied last summer producers accelerated their capital programs, drilling rig counts sky rocketed and the wells that were being drilled were higher productivity horizontal shale gas wells. On the demand side of the equation, we've primarily seen weakness in U.S. industrial demand as a result of the broader economic weakness. The concern now is that as we approach the end of summer (injection season), North American storage capacity will be reached and producers will be forced to accept nothing for their gas or shut it in.

[bamboo403]

Originally posted by snoop101
I bought a condo 2 years ago and im probably down 30.. :(


I feel you. I bought 2 years ago in a rush because me and my wife were expecting and needed a place to live together. Now townhouses in my same complex are ASKING $20k less than what I payed.

I dont even know what to do anymore because Im trying to save for a down payment for a new place. I want to move so bad but the value of my place keeps going down while the value of the types of areas I want to move to keeps going up.
All while Im trying to save up for the down payment in the mean time. :banghead:

[bamboo403]

double post

[jjjheimer]

I'm concerned about the NG market in the province. My brother trades NG for a living and he figures with ability to pull gas from shale by "frac'ing the shit out of it" there's likely a 100 year supply in North America. He's extremely bearish on the commodity price although it doesn't matter to him because they make bank either way. He claims $14 gas (or anything close to that) won't be back for a very long time.

[JWL]

What do you guys think will happen to the housing market in the new year?

[barmanjay]

I'd prefer to see it exactly where it is now.

[masoncgy]

I'm fine with it holding steady or posting a slight gain, since I plan on selling out in the late spring/early summer... ;)

[Redlyne_mr2]

Watching CTV today and they are asking if the housing market will be affordable once things start to go up again because although prices dropped things never really tanked like the US. This has been the summer to buy.

[sputnik]

Originally posted by Redlyne_mr2
This has been the summer to buy.

I think this pretty much sums it up. However I still think there are still lots of good buys available on the current market.

Very often buying opportunities are really only in short windows with both low prices and low interest rates, if you can afford the monthly payments it makes sense to get something now and lock in for 5 years. That way you know you are buying at a decent price and your monthly payments remain fixed.

The people who will be complaining in a couple of years will be the ones who still think that the Calgary real estate market is going to return to pre-2005 prices.

[projekz]

I just hope the market goes up 5% before spring so I can sell without losing too much!

I guess time will tell!

[Crymson]

Originally posted by MIWYFSHOT


and your up at least 30...;)

Jordan, think i'm up? You should see the place with the bar done and painted.

I've noticed alot of sold signs around my neighbourhood lately (mission), i'm thinkin things are definately on the uptick.

[JordanLotoski]

Post a pic of your new bar and ill post the before pic from the listing.

[Chandler_Racing]

I do not think the market is "on the way up." For those who bought in March - May of this year, they might be up a little, but my guess is everything will stay flat for the next 2 years.

[mazdavirgin]

The market has no where to go except down... Rising interest rates and rising unemployment. It doesn't take a genius to figure that one out. Real estate takes a long time to correct but you can expect a long correction over many months if not years. The economics are just not there to sustain the current prices.

[Crymson]

Originally posted by MIWYFSHOT
Post a pic of your new bar and ill post the before pic from the listing.

Tiles came today, the last piece in the puzzle. Will post pics once it's done. Looks slick dude. Built in beer taps.

[benyl]

Originally posted by mazdavirgin
The market has no where to go except down... Rising interest rates and rising unemployment. It doesn't take a genius to figure that one out. Real estate takes a long time to correct but you can expect a long correction over many months if not years. The economics are just not there to sustain the current prices.

Last time I checked, interest rates are not rising. WTF are you talking about?

Money is CHEAP right now.

[ckangarloo]

Originally posted by benyl


Money is CHEAP right now.

The key to that equation is right now, money is cheap. What happens when interest rates start to climb? They can't exactly go down very much anymore. When everyone is rushing into houses with 5% down and 35 year mortgages, payments increase significantly with interest rate increases. I hope everyone has a buffer ready in case...

But don't listen to me. I'm just a RE bear waiting patiently while everyone around me is renting money from the bank to "own" a home.

[Pahnda]

Originally posted by ckangarloo
The key to that equation is right now, money is cheap. What happens when interest rates start to climb? They can't exactly go down very much anymore. When everyone is rushing into houses with 5% down and 35 year mortgages, payments increase significantly with interest rate increases. I hope everyone has a buffer ready in case...

But don't listen to me. I'm just a RE bear waiting patiently while everyone around me is renting money from the bank to "own" a home.

Agreed. Foreclosures and other problems like that don't come about because of interest rates, it comes about because the vast majority of people are idiots and can't plan for anything further than next weekend. I'm not suggesting anyone here is though. If you are looking to buy and realize that interest rates will climb in the coming years so that you don't push your payments to the limit now, you're in the small minority with some common sense. :thumbsup:

Financial problems are generally not caused by the systems, they're caused by idiots.

[Aleks]

Originally posted by sputnik


I think this pretty much sums it up. However I still think there are still lots of good buys available on the current market.

Very often buying opportunities are really only in short windows with both low prices and low interest rates, if you can afford the monthly payments it makes sense to get something now and lock in for 5 years. That way you know you are buying at a decent price and your monthly payments remain fixed.

The people who will be complaining in a couple of years will be the ones who still think that the Calgary real estate market is going to return to pre-2005 prices.

This is what we just did. Upgraded to a much bigger place in Woodbine. Locked in at 3.65% for 5 yrs. We sold the little starter home I bought in 2005 for 60% more than what I bought it for :burnout:

[ckangarloo]

Originally posted by Aleks


We sold the little starter home I bought in 2005 for 60% more than what I bought it for :burnout:

Whoohoo! Nice work Aleks! Starting off the family on the right foot it see.

[Aleks]

Originally posted by ckangarloo


Whoohoo! Nice work Aleks! Starting off the family on the right foot it see.

Thanks man. The other option would have been to take the $$ proceeds from the sale and move back to the old country and never have to work again.

[Criticull]

I'm bearish, but it could be because I'm short a house lol.

[sputnik]

Originally posted by Criticull
I'm bearish, but it could be because I'm short a house lol.

The vast majority of real estate bears are as well.

[Criticull]

Confirmation bias.

[sputnik]

Calgary real estate UP 300% since 1980

... but still a slower pace compared to many other Canadian cities

http://www.calgaryherald.com/business/Calgary+home+value+since+pace+slower+than+other+cities/2027974/story.html

So while some might think that Calgary is far too high. It appears that in reality it is still much lower compared to other cities in Canada and has some space to catch up.

[Criticull]

GDP deflator in 1980 (base year 2000) was 51. The deflator for 2008 was around 120.

So in nominal terms, prices have gone up 300%, but in real terms, it's only increased 70%. Not bad, but not great for a 30 year investment. Your interest is also front-loaded on your mortgage, so shit, you're not making a whole lot.

The author should have mentioned that 1980 dollars were really worth a great deal more, cuz he probably misled some people in his efforts to be sensational.

[sputnik]

Originally posted by Criticull
GDP deflator in 1980 (base year 2000) was 51. The deflator for 2008 was around 120.

So in nominal terms, prices have gone up 300%, but in real terms, it's only increased 70%. Not bad, but not great for a 30 year investment. Your interest is also front-loaded on your mortgage, so shit, you're not making a whole lot.

The house that you live in is NEVER an "investment".

When you buy a house you are only hedging your bets of mortgage and maintenance costs and owning a building that appreciates against the cost of of renting and owning nothing.

A primary residence is not an investment. It is a place to live.

[Criticull]

This is true, provided you stay in the same market. There are also changes in basis between neighborhoods with a region over time. There are also changes in the house-condo spreads over time.

So yes, I agree, the first house you buy is the most important from a speculative point of view, especially if you are staying in the same market. But a house is an investment as your net worth is tied to the equity you have accrued/lost from owning it.

[bspot]

Originally posted by ckangarloo


The key to that equation is right now, money is cheap. What happens when interest rates start to climb? They can't exactly go down very much anymore. When everyone is rushing into houses with 5% down and 35 year mortgages, payments increase significantly with interest rate increases. I hope everyone has a buffer ready in case...

But don't listen to me. I'm just a RE bear waiting patiently while everyone around me is renting money from the bank to "own" a home.

If you buy now and fix for 5 years you should be able to eat the increased interest when your term is up.

I mean... if I'm not making any more money in 5 years compared to what I make now, the world is still an economic mess so hopefully interest is still low. If things recover, more coin to pay the bank more interest.

[broken_legs]

Originally posted by sputnik


The vast majority of real estate bears are as well.

I'm a bear and I own a house.
:)


Economy down = less money for houses
Dollar up = economy down = less money for houses
Interest rates rise (eventually) = less money for houses
Layoffs, paycuts, etc.. = less money for houses
Oil is UP = more money on energy, so less money for houses

More people moving to calgary = more people with not very much money for houses subject to the same situation as above

You can't have an increase in demand for 500k houses when people can only afford a 250k house.


Just my .02