Your thoughts on the current real estate market

[Pacman]

Originally posted by Xtrema

If you are paying rent right now and plan to stay in city for 5+ years just buy it. Instead making landlord rich, may as well own something.

I always wonder about this. Is it better to pay rent, or buy a house and pay 6% interest on a $400k mortgage each year.

[Thaco]

Originally posted by Pacman


I always wonder about this. Is it better to pay rent, or buy a house and pay 6% interest on a $400k mortgage each year.

it might cost you 6% a year on whatever is left owing, but you're gaining 7-9% a year on the full value of the house, you do the math.

[max_boost]

Originally posted by Pacman


I always wonder about this. Is it better to pay rent, or buy a house and pay 6% interest on a $400k mortgage each year.

It all comes down to numbers and whether you can comfortably afford a $400k home.

I have some tenants that want to stay in their place for a long long time. If they didn't buy a house when it was $200K then they sure as hell aren't going to buy when it's $400k! haha

You can probably get away with renting a place for $1500/month including utilities and that's it! Mortgage, property taxes and insurance on a $400K home on a 30 year amortization will cost you over $3000/month!

Big difference.

[Redlyne_mr2]

Its all the fault of the baby boomers, if youre struggling to buy a place and you still live at home then punch your parents in the face when you get home tonight.

[finboy]

Originally posted by Redlyne_mr2
Its all the fault of the baby boomers, if youre struggling to buy a place and you still live at home then punch your parents in the face when you get home tonight.

looking forward to it

[TrevorK]

Originally posted by Pacman


I always wonder about this. Is it better to pay rent, or buy a house and pay 6% interest on a $400k mortgage each year.

It would depend on what you plan on renting.

If you rent out a room for $400-500/month, then you're probably much better off renting rather than buying.

If you rent out a house for $1800-$2000/month then you're probably better off buying than renting.

[01RedDX]

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[pinoyhero]

Originally posted by 01RedDX


Sorry I didn't think anyone would take that personally. I have a very strict definition of a speculator, for example one who buys a block of 10+ condos from their developer friends at insider prices before they are even up for sale. This creates an unfair situation, especially since condos are usually the entry point for low income/first time buyers.

But I do own a primary and a rental, so that swipe at my social status was unnecessary.

Insider prices ... unfiar ... hmm, do you really think that the guys selling and building the condos are building them for the poor? This is an insane comment, if a seller wants to sell a large lot at a quantity discount (not new concpet by any means) then they should go right ahead. If you dont like it, the tax payers of the city have built a nice 4 star hotel you can stay at free of charge. Its crazy that people who dont have money have this sense of entitlemnt over and above those who have worked/invested hard/smart.

[turbotrip]

Originally posted by 01RedDX


Sorry I didn't think anyone would take that personally. I have a very strict definition of a speculator, for example one who buys a block of 10+ condos from their developer friends at insider prices before they are even up for sale. This creates an unfair situation,

lol life is unfair buddy, the people you described are smart investors

[01RedDX]

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[01RedDX]

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[Mangina]

Originally posted by 01RedDX


I think it's crazy how you like to make assumptions in every thread.
I will always stand up for the poor, if you don't like it, tough shit.

Poor people are dumb and/or lazy. Stick with what you know fella.

[pinoyhero]

Originally posted by 01RedDX


I think it's crazy how you like to make assumptions in every thread.
I will always stand up for the poor, if you don't like it, tough shit.

I make no more or less assumptions than anyone else. Rather than stand up for the poor on beyond, why dont you quit your job and become a full time volunteer at the 4 start hotel the tax payer built for them. Or better yet why not continu to work and donate the money over and above what you "need" to live to the poor?

[483hp]

A few observations I have made since I am in the market to trade up. You can make your own conclusions:

- There are about 6000-9000 active homes and condos for sale in Calgary depending on who you believe. Regardless of the actual number, it is a lot more compared to last year.
- Nobody will disagree that sales activity is going to cool from now to the end of the year (even CREB). It always does every year. Therefore we should see prices backtrack a little bit in the next few months.
- Stats indicate that homes selling over asking price are about 4% of the total volume.
- Premiums paid over asking price lately are nominal amounts.
- Discounts agreed under asking price lately are very significant with many around 10-15%. The numbers are big in some cases with discounts reaching 20-30% in the past few weeks of sales. And we aren't talking about slums or undesirable areas either.
- Prices in outlying areas and surrounding towns are starting to moderate, but have not "crashed". A postive indicator.
- There are a lot of people listing homes to "see what they can get". There doesn't seem to be a real sense of urgency or a reason to sell with many listings. This will slow any negative momentum in the median selling prices reported in Calgary. However, this may also reflect general public sentiment that we are "at the top".
- There are a lot of re-lists with lower prices (with significant decreases). There are some re-lists with higher prices as well, but not many.
- There is speculation in the market. That is obvious. A news article recently stated that in Calgary over 30% of listed single family homes and over 40% of listed condos are unoccupied. Obviously these aren't all speculative, but it can't be all due to people trading up without the need for a conditional sale either.
- There is a clear disconnection to fundamentals if you intend to be a landlord at current prices. Monthly cash flow to carry a property is well above the recovery from rent. Historically, prices stabilize when rent covers your costs for the property. However, a market can stay irrational for a very long time.
- Any speculation, therefore, must be betting that the appreciation > the cash flow to carry + liquidation costs over a short period of time. Therefore, speculation will be sensitive to market momentum. As resistance to higher prices increases with additional month over month increases reported by the realtors, we should see a shift towards sites like welist and comfree. In fact, it appears to have happened already.
- It appears (atleast to me anyways), that the sweet spot for real estate in Calgary is somewhere between 250K to 375K in Calgary. When homes were in and around this range, activity was high until they clearly exceeded it. Then condos got more popular. Condos are now in the upper part of that range and we now start to see media coverage of unaffordability concerns and rent gouging.
- The attitude in the media is neutral today (but not negative). Unaffordability seems to be a popular topic in the media. Last year it was "the sky is the limit".
- Home builders are now listing unfinished homes and yet to be constructed homes for sale with greater frequency (especially in the high end). This didn't happen as much last year.
- Historically, the value of homes have never outperformed inflation or wage growth by a significant factor. If it did, it wouldn't take long before prices were permanently out of reach for everyone.
- Affordability relative to the consumer's expectation is a concern.
- The average price for a home is around $500K now. Prices exceeded the average household's ability to pay long ago. The introduction of mortgages with longer amortization periods, etc. deals with this issue, but only temporarily.
- Credit should tighten due to what is happening in the US. This can be both positive and negative.
- It is more difficult to hire now in the age group that is typical of this forum. There is no question about that in my personal experience. Many younger people are frustrated and move elsewhere after they get their education and/or enough experience. The percentage choosing arbitrage is high right now.


The big test of this market will be what happens in the spring when activity traditionally ramps up again. It may continue upward, it may not. If price momentum is negative in this cycle, watch out! Real Estate is not what I would call a liquid investment in this scenario. The average days on the market is increasing and is over 30 days right now.

[whodiman]

Originally posted by Redlyne_mr2
Its all the fault of the baby boomers, if youre struggling to buy a place and you still live at home then punch your parents in the face when you get home tonight.

This is class. I love it!!!

[kaput]

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[Kartelli]

^ when somebody lists their house for 80k over retail market, and sells it to you for 60k "under listed value" ... one would think the owner still made 20k profit in todays current market.

I wouldn't get too keen on saying you got a "deal" unless you bought a propery listed at 120G and you got it for 60, or something alone those lines.

[sputnik]

Originally posted by kaput
My family just picked up a place for $60k less than their original asking price. It was dropped by $50,000 by the time we saw it and settled for another $10k below that. Hopefully thats an indication of whats to come because I still can't even afford the reduced prices.

That depends on what the other houses in the neighbourhood with comparable features are selling for.

Just because the price was knocked down by $60k doesn't necessarily guarantee that you paid under market value for the house. Anyone can inflate the listing price of a house.

[483hp]

Here's a selection from the past week and a half. $60K is not outrageous.

$ Amount
Under
Orig. List | % Under | Sale Date | Community
48,900 10% Aug 5 Scenic Acres
164,900 21% Aug 3 Bankview
229,900 27% Aug 3 Bayview
99,000 12% Aug 3 Willow Park Estates
45,900 12% Aug 2 WestGate
59,900 12% Aug 2 Royal Oak
157,900 24% Aug 2 Signal Hill
530,000 32% Aug 1 Winston Heights
84,000 13% Aug 1 South Calgary
51,900 14% Aug 1 Country Hills
41,900 14% Aug 1 Point McKay
48,900 12% July 31 MacEwan Glen
75,900 16% July 31 Canyon Meadows
89,900 14% July 31 West Hillhurst
74,900 18% July 28 Crescent Heights
695,000 32% July 28 Mount Royal
419,000 32% July 27 Edgemont
245,000 19% July 27 Britannia

[Thaco]

Originally posted by 483hp
Here's a selection from the past week and a half. $60K is not outrageous.

$ Amount
Under
Orig. List | % Under | Sale Date | Community
48,900 10% Aug 5 Scenic Acres
164,900 21% Aug 3 Bankview
229,900 27% Aug 3 Bayview
99,000 12% Aug 3 Willow Park Estates
45,900 12% Aug 2 WestGate
59,900 12% Aug 2 Royal Oak
157,900 24% Aug 2 Signal Hill
530,000 32% Aug 1 Winston Heights
84,000 13% Aug 1 South Calgary
51,900 14% Aug 1 Country Hills
41,900 14% Aug 1 Point McKay
48,900 12% July 31 MacEwan Glen
75,900 16% July 31 Canyon Meadows
89,900 14% July 31 West Hillhurst
74,900 18% July 28 Crescent Heights
695,000 32% July 28 Mount Royal
419,000 32% July 27 Edgemont
245,000 19% July 27 Britannia

So a $2 million house sold for 1.4, WOW someone's a smooth negotiator