Entry level home prices....decreasing much?

[Canucks3322]

So I live in Evansridge/Evanston and back before the oil price started to crash, I figured our house was worth about $420,000 based on what others in my neighborhood were asking....I took a look this week and noticed that people are still asking the same if not more in my neighbourhood?

Is anyone else seeing the same thing? Ours is a typical cookie cutter giant rectangular box, 1366 sq ft upstairs and downstairs, 3 bedroom 2 washrooms upstairs, 1 washroom downstairs, undeveloped basement with a detached double garage, 30 foot wide lot, basically the smallest house on the block.

I've only looked at my next target houses on mls and they've SEEMED to have gone down as I've seen quite a few more ads for houses in the $450-475,000 range in the older NW neighbourhoods like McEwan all the way to Harvest Hills....

I guess what Im asking is...is it true an entry level house like mine in a pretty desirable new neighborhood is less likely to fall in price as much in this downturn OR are my neighbors all delusional if they're still expecting to sell their houses for pre-downturn prices?..

[GQBalla]

I've been looking every day since summer.

From what I have noticed, the used "entry" houses 500 k ish haven't dropped much.
Some have even sold before my realtor could even get us in to look at it.

I don't think the 500 k ish houses will drop too much.

[Cos]

.

[Buster]

Housing corrections are neither smooth in time, nor smooth in market segment.

Often housing corrections start from the top down...which is what appears to be happening here. There's a variety of reasons for this - not least of which you are seeing downward pressure from people downgrading, which is a relatively unique process to a correction.

People think of the market as strictly price, but you have to consider where the flow of equity is going.

For instance: when someone buys a $5 million home, they are probably selling a $2-3 million home, with say 50% equity. Put in some cash, lever-up, and voila. That $2 million home is being bought by someone with a $1 million home, and equity + cash. And on down the line to an entry level condo somewhere for whatever price. The higher end of the market is like a biological food chain: smaller, but built on multiple levels of consumer, not just one. If you think about how people would behave in a deflationary market, and one where there is WAY less cash flowing into the pockets of all participants, you can see why mid-level prices would hold for some time. Just think about where that equity is, and how people will view it.

It's also easier to understand where there might be an information deficit. People who own in the middle ranges are probably not the most risk averse, forward thinkers in the market. They might be the group last able to realize that they are even IN a correction. Denialism is really easy to find in Calgary right now.

Combine that with mortgage brokers and the lending industry saying "buy now because rates are going up", and you get a slight pop in prices as the last of the "dumb money" enters the market, using up all of the economic dry powder.

The people trading those houses in Airdre are going to get a sticker in shock at renewal time in one or more of these ways:

- 5 year renewal, rates are way higher than now (moderate risk of this)
- the market spent the last 5 years adjusting the price, and you now live in a new world, with "sold" prices way lower than you expected when you bought now
- oil has not returned to its value and/or a lot of the population has not returned to the area.

If you have the cash or the ability to buy now and you need to buy now, my suggestion is to estimate the current market value of a house you are looking at, build in a discount based on a significant upcoming correction in the market, and then walk around offering that value on houses. You have to protect yourself against a worst-case-scenario, which given recent macro events is becoming more likely.

Realtors are going to take a hit in this environment, but on the plus side for them, there will be a major culling of the realtor herd.

[89coupe]

Originally posted by Canucks3322
So I live in Evansridge/Evanston and back before the oil price started to crash, I figured our house was worth about $420,000 based on what others in my neighborhood were asking....I took a look this week and noticed that people are still asking the same if not more in my neighbourhood?

Is anyone else seeing the same thing? Ours is a typical cookie cutter giant rectangular box, 1366 sq ft upstairs and downstairs, 3 bedroom 2 washrooms upstairs, 1 washroom downstairs, undeveloped basement with a detached double garage, 30 foot wide lot, basically the smallest house on the block.

I've only looked at my next target houses on mls and they've SEEMED to have gone down as I've seen quite a few more ads for houses in the $450-475,000 range in the older NW neighbourhoods like McEwan all the way to Harvest Hills....

I guess what Im asking is...is it true an entry level house like mine in a pretty desirable new neighborhood is less likely to fall in price as much in this downturn OR are my neighbors all delusional if they're still expecting to sell their houses for pre-downturn prices?..

Look at what is selling and what price it's selling for and that will determine value. Don't look at what people are asking, that is irrelevant.

[Canucks3322]

True... Dumb question though, how do I find how much it sold for.. Or is that one of those things that only realtors have access to...

[rage2]

It's one of those things that only realtors have access to if you want live data.

You can search through your city of Calgary assessment account for historical closing prices too, but it's generally months to years out of date.

[roopi]

Originally posted by Canucks3322
True... Dumb question though, how do I find how much it sold for.. Or is that one of those things that only realtors have access to...

http://forums.beyond.ca/st/246264/wanna-know-what-your-neighbours-house-sold-for/

[jwslam]

Originally posted by roopi
http://forums.beyond.ca/st/246264/wanna-know-what-your-neighbours-house-sold-for/
I'm subscribed to Jordan's reports and shows which houses sold, $, DOM, etc.

[eblend]

I do work for a builder based out of Calgary which specializes in entry level homes, and last I heard, they are hitting 83% of their sales targets in Calgary, and way above their targets in Edmonton (go figure..) so it seems like that segment of the market is still pretty strong. People realize they still want to own a home, but don't want to spend 500k+, so perhaps that's why? No idea.

[FraserB]

The house I ended up getting was only on the market two days and had multiple offers. I missed out on a few just because they were selling so quick and I was out of town. From the ones I saw selling, they were within 5% of list and usually under 14 DOM.

[asp integra]

Im in Cougar Ridge, pretty average first home territory I would say, and some homes sell in days, others weeks, others have for sale signs up for a month or 2. Really hard to say where everything is at, but my neighbor 2 houses down just sold for $50K more than I bought my home for 2 years ago:dunno:

[Xtrema]

According to my realtor friend who is heavily invested in rental properties, the under $500K was doing quite well up until Oct. Now there is sign of softening but he say wait til Jan/Feb. It could be seasonal as we are heading into holidays.

But we are almost 1 year into the down turn. We are able to have 1st wave of layoffs that are getting close to run out of EI. So we should know soon how well this market will be weathering.

May 2014 median price was $435K. Oct 2015 is $419K. Forcasted Nov 2015 is $412K. So the landing is quite soft this time (5% so far from peak) but it is trending down. Average price is down harder but that's a given for $500+ dropping harder.

[RX_EVOLV]

Interesting. I'm waiting on the sideline too but not too sure when to jump in.

There was a house in Tuxedo that I almost got 2.5 years ago. We went back and forth for a few days, and he ended up didn't accept my offer and selling it so someone else for $514K ($525K list). The house was just listed over the weekend for $600K and as far as I can tell no renos were done since then. Even if it sells for $575K, that's still a pretty decent return after 2 years given how hard the O&G market crashed...

[Xtrema]

Originally posted by RX_EVOLV
Interesting. I'm waiting on the sideline too but not too sure when to jump in.

There was a house in Tuxedo that I almost got 2.5 years ago. We went back and forth for a few days, and he ended up didn't accept my offer and selling it so someone else for $514K ($525K list). The house was just listed over the weekend for $600K and as far as I can tell no renos were done since then. Even if it sells for $575K, that's still a pretty decent return after 2 years given how hard the O&G market crashed...

you can ask doesn't mean you are going to get it.

People who insist on that price and can wait it out will continue to do so.

[RX_EVOLV]

Originally posted by Xtrema


you can ask doesn't mean you are going to get it.

People who insist on that price and can wait it out will continue to do so.


Yeah so now I'm really curious to see whether this house will sell and at what price. For the past few months I had assumed that the home I ultimately ended up buying (in Mount Pleasant) had fallen back down in value to roughly what I paid 2.5 yrs ago...but maybe that's not the case.

If the $500K inner city homes are holding their values 'relatively' well compared to say a home that was $850K, then it's pretty tempting to upgrade. Would be nice to get into something that would've cost $850K couple years ago but for < $725K now, without losing money (and potentially making money) from the house I got couple years go...

[Xtrema]

Originally posted by RX_EVOLV
If the $500K inner city homes are holding their values 'relatively' well compared to say a home that was $850K, then it's pretty tempting to upgrade. Would be nice to get into something that would've cost $850K couple years ago but for &lt; $725K now, without losing money (and potentially making money) from the house I got couple years go...

http://www.realtor.ca/Residential/Single-Family/16040719/448-25-AV-NW-Mount-Pleasant-Calgary-Alberta-T2M2A7-Mount-Pleasant

City assessment $745K, asking $675K.

IMO, depends on market, 10% off 2014 assessment is a fair number to start with because the city went retarded on assessment last year.


Same street:

http://www.realtor.ca/Residential/Single-Family/16012068/438-25-AV-NW-Mount-Pleasant-Calgary-Alberta-T2M2A7-Mount-Pleasant

City assessment $966K, asking $750k. Newer build, never worth $966K but $750k is probably almost at developer's cost for in field around there. Cost is around $1.3M to $1.5M per duplex depends on material and size.


Then there is this:

http://www.realtor.ca/Residential/Single-Family/16309593/512-25-AV-NW-Mount-Pleasant-Calgary-Alberta-T2M2A8-Mount-Pleasant

City: $866k, Asking $1M.

Park in front may be a good view but the amenity and floor plan hardly seem to be worth $1M. Being in front of school definitely has some cons as well.


If you see something you like and you know you can hold on until the downturn is over, it's a great time to upgrade. Now remember that US is raising interest rate. This will drag up fixed mortgage rate slightly which may put pressure on house prices too, although not by much.

[ExtraSlow]

If you have the financial ability to upgrade, you will always do better in a down market.
Good luck!

[Kloubek]

I think what I've seen in Kincora is that prices are slightly (10-20k) less, and take around double the time to sell. Shitty, but certainly not the crash some expected. Good point brought up though in regards to people's EI only now starting to run out. The worst may not be over.....

[04Terminator]

Prices seem to be falling almost 1% a month. It will continue for the foreseeable future.

[phreezee]

We've been saying wait until fall for the real crash for all of 2015 and now it's here without any significant declines outside of normal seasonal swings and the already established 5-6%.

The truth will come out in spring 2016.

[msommers]

Honest question - how are people upgrading in a downturn when they only have one property? Renting and hoping things tank in 6 months?

[HiTempguy1]

Originally posted by msommers
Honest question - how are people upgrading in a downturn when they only have one property? Renting and hoping things tank in 6 months?

I've seen a lot of people saying they've moved back in with their parents :nut:

[Xtrema]

Originally posted by msommers
Honest question - how are people upgrading in a downturn when they only have one property? Renting and hoping things tank in 6 months?

Either you cash out and wait (stay at parents and rent a storage) or buy another one and wait for yours to sell (need some cash and bridging mortgage).

Or you put offer into new one with condition of old one is sold and just enjoy the lower upgrade cost than you would have paid a year ago.


Originally posted by phreezee
We've been saying wait until fall for the real crash for all of 2015 and now it's here without any significant declines outside of normal seasonal swings and the already established 5-6%.

The truth will come out in spring 2016.

I believe during 2008/9 crash, we have already seen 10% adjustment by this point. Housing isn't as bad this time around. Banking wasn't screwed and cheap credit keep on rolling this time. When it crashed in 2009, most people were locked into 5-6% fixed mortgages compared to 2.5% today.