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Thread: Anyone worried about real estate declining in Calgary?

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    Default Anyone worried about real estate declining in Calgary?

    Last edited by urban.one; 01-08-2008 at 07:33 PM.

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    Default Re: Anyone worried about real estate declining in Calgary?

    Originally posted by urban.one


    I cant see Calgary maintaining price levels that rival Vancouver and Toronto.
    why not?

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    so what happens when you get a mortgage for 470k and then the market for that house drops back to 350 and you're backwards in your house... that would be my worry.
    Originally posted by TomcoPDR


    Wait. Tom, THE Tom?
    Originally posted by Rusted Bumper
    As far as I can tell, tom_9109 has the most detailed and correct answer

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    Default Re: Anyone worried about real estate declining in Calgary?

    Originally posted by urban.one


    Take a look at this housing report for March from RBC Economics:

    http://www.rbc.com/economics/market/pdf/house.pdf

    ...

    Anyone else on here not crazily optimistic about Calgary real estate?
    While a certain degree of speculation has plagued the market during the last year, the affordability numbers, which measure current conditions relative to household
    income, are not frightening. On average, Calgary still offers more affordable housing than both Toronto and Montreal a reflection of its very strong household income growth.
    This report on affordablility just means our average income is very slowly catching up to the housing costs. It doesn't mean the housing market will stop altogether of course.
    Quote Originally Posted by killramos View Post
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    The AHS system is quite good.

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    The guy on the cover of the business section for real estate today (Ed Jensen) is my father in law, and president elect of CREB

    I agree with him that things will slow considerably but I doubt it will ever drop. Also once construction on a lot of these projects finishes up, there COULD be an excess of property for the first time in a while as developers have been pumping out the houses and condo's without really looking
    Cos...

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    Originally posted by brendankharris
    as developers have been pumping out the houses and condo's without really looking
    I thought housing start has dropped?

    Real Estate developer will control the market. Last thing they want is a slow down. Housing start will scale back to keep prices up.

    The only way for it to drop is if someone declare they invented nuclear fusion or some unlimited energy.
    Last edited by Xtrema; 04-03-2007 at 07:41 PM.

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    As long as people are making money and the economy is good, everything will continue to rise. It's not like the cost of new construction is going down so the existing home market will catch up to new construction.

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    Summer is traditionally the slower season for the real estate market...

    Traditionally....

    Winter into spring usually being the busiest... I think it comes from the fact that people in Calgary don't want to spend the best months of the year moving and looking at houses; they want to be settled and relaxed for summer.

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    I'm worried about a steading or even a small correction. For a while there I was thinking it was a start of a real-estate bubble near the tail-end of last year. But all these buyers came out of the woodwork and kept prices high even though there was a ton of inventory (6K+ listings). If a low supply can cause a huge run-up, why can't excessive supply cause a run-down?

    When the price to rent ratios are this out of whack and when the average housing prices starts to be a big multipler of your annual income, and there is over 30% vacant homes for sale......these are not good signs. Not to mention that Calgary is not really land-locked in any sort of fashion.

    Ah well. If the more exotic risky loans come over to Canada, I could see the prices still rise, but it can only rise for so long as you will pricing too many people out which I am surprised it didn't happen yet.

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    I think all the massive gains are done with, ie. 2003-2006. Once there is enough product on the market--which is inevitable--and there's no longer profit in flipping, the market will cool substantially. No reversal in the next couple years, but you won't see huge gains across the board either.

    Right now there's a prevalent attitude that if one buys 3 houses or condos at once, before they're built, they can flip the two to pay for the third once construction is complete. And while that's still possible, it's increasingly difficult to do when condos are preselling at $600 sq/ft. The more product on the market, the less demand there is, the smaller the margin. Once that margin drops low enough your average-joe-turned-RE-speculator, will drop out of the game.

    Add to that what's going on in the states right now MAY have a spillover effect that will cause banks to tighten lending standards, which means less qualified buyers.

    And on top of that, despite what the papers say, it's expensive to live here. That will slow down the migration of people. Once there's no advantage to being here, people will simply stop coming.

    That's a lot of variables and given that the economy is so strong, unless something drastic happens, the RE market should be in pretty good shape for the next couple years. But I think the days of "any idiot with half decent credit" making tens of thousands of dollars flipping are just about over. Smart investors can still make cash, but smart investors generally can regardless.
    Originally posted by syeve


    Oh man, you must be some type of genious...

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    I doubt the market will ever crash - although history does have a funny way of repeating itself. If you are a smart real estate investor, you will know that RE investing has 4 seasons - similar to Spring, Summer, Fall, Winter. The market will inevitably slow down (fall) and then I am sure that the market will go no were for a while (winter) but then the wave will hit again (spring) and the market will go wild. People with then have sold made profits again and will be enjoying the good life (summer). The thing of it is that these seasons may last a lot longer then 4 months (for example look the 80's (winter) lasted for a good decade).

    Like I said earlier history has a funny way of repeating itself. as long as you play the market right, then you will win. It is just like when your grandfather decided not to buy his first house for $20,000 - and then all the sudden prices went up to $30,000, he thought that he would never be able to afford a house. Well if only he bought 50 of them...

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    Well guys my views are that I'm 18 and I'm starting to save money for a house because look! If the housing prices keep going up like this soon enough it'll be $500K avg. single family home. I can't afford the dp for that guys... I would need to atleast put close to %40 dp, so that I don't have like a 50 year mortgage or something.

    The housing prices in Calgary are ridiculous, same with Vancouver when I travelled there last year. I didn't see a house that went on sale for less than like $700k well I guess the strategy is to save money and invest it.

    Steve

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    Originally posted by ken-gsr
    I doubt the market will ever crash - although history does have a funny way of repeating itself. If you are a smart real estate investor, you will know that RE investing has 4 seasons - similar to Spring, Summer, Fall, Winter. The market will inevitably slow down (fall) and then I am sure that the market will go no were for a while (winter) but then the wave will hit again (spring) and the market will go wild. People with then have sold made profits again and will be enjoying the good life (summer). The thing of it is that these seasons may last a lot longer then 4 months (for example look the 80's (winter) lasted for a good decade).

    Like I said earlier history has a funny way of repeating itself. as long as you play the market right, then you will win. It is just like when your grandfather decided not to buy his first house for $20,000 - and then all the sudden prices went up to $30,000, he thought that he would never be able to afford a house. Well if only he bought 50 of them...
    yeah, but your grandfather was probably making $50 a month. Try buying 50 houses @ $500K in todays market, somewhat comparable.

    You say history has a funny way of repeating itself yet you believe the market will never crash. It is not a question of if it will crash, it is a question of when it will crash. 5yrs, 10yrs, 20??? time will tell but the market will crash again.

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    Originally posted by beyondmike
    You say history has a funny way of repeating itself yet you believe the market will never crash. It is not a question of if it will crash, it is a question of when it will crash. 5yrs, 10yrs, 20??? time will tell but the market will crash again.
    I really dont think it is a matter of the market crashing "again". The real estate market didnt crash in the 80s because of real estate. It crashed because of a serious decline in oil prices (unlikely to happen again soon), double digit interest rates (also quite unlikely) and the economic recession that followed (recessions dont happen for no reason).

    So to say that it is "just a matter of time" or "what goes up must come down" are pretty hollow statement and really not worth listening too.

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    Originally posted by tom_9109
    so what happens when you get a mortgage for 470k and then the market for that house drops back to 350 and you're backwards in your house... that would be my worry.
    If you were intially prepared to make the payments on a $470k mortgage what difference does it make how much your house is worth when you live in it?

    The value of your house is only an issue if you are looking to sell.

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    Originally posted by Xtrema
    I thought housing start has dropped?

    Real Estate developer will control the market. Last thing they want is a slow down. Housing start will scale back to keep prices up.
    Housing starts have gone back to normal after the insanity that we had over the past couple of years.

    I think the builders will keep prices up by just offering more standard features.

    My wife and I were looking at Jayman homes the other day and we noticed that there are TONS of things now included in the base price of their houses.

    - hardwood/tile floors
    - high efficiency furnaces
    - low E windows
    - fireplaces
    - higher end cabinets/countertops

    I dont think you will see the move up market drop below $450k. However I think you will start to see better houses being built.

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    ^ not better built. Just more standard options. The quality still isn't at levels where it was ~5 years ago.
    "Science without religion is lame, religion without science is blind." - Albert Einstein

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    i know i am happy with the market right now.... we bought a condo 2 years ago it was finished two months ago... paid 254,xxx now selling for 425,xxx and buying a house and paying off all our debts ie:student loans, car, furniture etc. heck i dont mind being debt free at 23 with my only monthly payment as my mortgage (not a debt in my eyes) housing market has done me well we are going from a condo to a house and gaining all those benefits like having a garage and a yard with the same size mortgage! woot!!

    we moved from vancouver to here because we were a young married couple who could not afford to buy a house/condo there... bought here instead just so we could get in the market...

    once calgary gets too high people will do the same thing with cities like regina and winnipeg becuase housing there is in the mid 200's now

    just my thinking

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    Originally posted by Rav4Guy
    ^ not better built. Just more standard options. The quality still isn't at levels where it was ~5 years ago.
    Agreed. Poor choice of adjective on my part.

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    Originally posted by sputnik


    I really dont think it is a matter of the market crashing "again". The real estate market didnt crash in the 80s because of real estate. It crashed because of a serious decline in oil prices (unlikely to happen again soon), double digit interest rates (also quite unlikely) and the economic recession that followed (recessions dont happen for no reason).

    So to say that it is "just a matter of time" or "what goes up must come down" are pretty hollow statement and really not worth listening too.
    "not worth listening too".....i'm sure your parents were saying the same thing back then.

    i didn't say the market crashed because of the real estate. i said it will happen again in the future, 5yrs? 10yrs? 20yrs? calgary's market is based on oil and gas, don't tell me it'll be rosey here forever and ever. if there is no oil and gas work in calgary, there will be a big decline in everything, and yes, it will happen one day. most of the people who came here for work, will go back to where they came from and you'll see a flood of houses on the market. maybe not a major crash but a decline in housing prices will happen. when? who knows...

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