Imminent Housing Crash

[89coupe]

Originally posted by kaput


This isn't logical. Regardless of whether a person intends to sell in 1 year or 100 years, why would someone buy something (anything) today when they could buy it for less tomorrow?

Can you predict the future?

If you like an area or a home in an area that has dropped in price by $100,000.00 do you think it will be around for you to buy 6 months from now? LOL

Of course not.

Yeh maybe you might find someting else and maybe you might pay less, maybe not.

You don't know, because its the future.

[kaput]

.

[you&me]

Originally posted by 89coupe


Can you predict the future?

If you like an area or a home in an area that has dropped in price by $100,000.00 do you think it will be around for you to buy 6 months from now? LOL

Of course not.

Yeh maybe you might find someting else and maybe you might pay less, maybe not.

You don't know, because its the future.

There are many homes I've noticed that have dropped their prices by well-over $100k and continued to sit, some for 6+ months now.

So yes, until there's a solid sign of a turn around, I wouldn't worry about jumping on some generic place now just because it's $100k off. If it does sell, big deal... There'll be another one for sale and it might be discounted even more.

[89coupe]

There will always be those who sit on the sidelines and wait and wait for that right moment, and usually those are the ones who end up losing out on a good opportunity.

There is always that option to rent from a home owner

[msommers]

A lot of homes were likely overpriced to begin with and now dropped into normal pricing vs. being a great deal. Unfortunately for most locally, the prospect of losing your job with a newly acquired mortgage is nauseating.

[kaput]

.

[Buster]

I think the hard part is determining what "normal" is.

the P/R ratio seems to be a good one, although rental rates make for a moving denominator.

price/income ratios seems good.

although in this market, the average income of a person is going to be odd, because the unemployed people will bring down the average this coming year....and the very loose labour market will push incomes down even farther.

But when you apply a "normal" P/R ratio to houses in Calgary and offered based on that, the seller would look at you googly-eyed.

For instance, a nice house to rent in the south in a lake community might be $3,500 per month.

At a decent P/R ratio of say 15-20, you would see a lot of nice houses selling for under a million. The houses that are renting for that much would be listed at a number WAY higher.

You can do plenty of reading about a large number of real estate corrections/crashes. They happen all the time. They just haven't happened here in 30 years....so recency bias is hurting us.

[89coupe]

Originally posted by msommers
A lot of homes were likely overpriced to begin with and now dropped into normal pricing vs. being a great deal. Unfortunately for most locally, the prospect of losing your job with a newly acquired mortgage is nauseating.

Did you read my earlier post? My buyers paid less then the original owner did in 2008.

Fortunately there are plenty of people with good job security making very good money who are taking advantage of this market.

[BananaFob]

Originally posted by Buster
I think the hard part is determining what "normal" is.

the P/R ratio seems to be a good one, although rental rates make for a moving denominator.

price/income ratios seems good.

although in this market, the average income of a person is going to be odd, because the unemployed people will bring down the average this coming year....and the very loose labour market will push incomes down even farther.

But when you apply a "normal" P/R ratio to houses in Calgary and offered based on that, the seller would look at you googly-eyed.

For instance, a nice house to rent in the south in a lake community might be $3,500 per month.

At a decent P/R ratio of say 15-20, you would see a lot of nice houses selling for under a million. The houses that are renting for that much would be listed at a number WAY higher.
.

P/R ratio or better yet capitalization rate is how it's done in commercial real estate including multi-family buildings. Trying to explain the significance of a cap rate to a res realtor is frustrating.

[msommers]

Wasn't the market red hot in 08, only to drop in 09? Or are my years off?

If the buyers are genuinely happy, that's all that matters.

[89coupe]

Originally posted by msommers
Wasn't the market red hot in 08, only to drop in 09? Or are my years off?

If the buyers are genuinely happy, that's all that matters.

Yep, correct. And then what happened in 2010?

[Black Gts]

My house was built in 07, it's a duplex my neighbour owned since new, iIbought summer 2012 for 120k more than them, but 10k less than the second owner who bought in 09/10 I can't remember. Not sure if my neighbour bought and spiked right after, but I don't think 08 was screaming either, or maybe just went stale there until 13/14.

[Buster]

Originally posted by BananaFob


P/R ratio or better yet capitalization rate is how it's done in commercial real estate including multi-family buildings. Trying to explain the significance of a cap rate to a res realtor is frustrating.

I'm more familiar with cap rate myself, but that doesn't seem to be how it is done.

They are pretty much inverses, anyway. Cap rate makes it a bit easier to integrate your capital costs into your consideration.

[Buster]

Originally posted by 89coupe


Did you read my earlier post? My buyers paid less then the original owner did in 2008.

Fortunately there are plenty of people with good job security making very good money who are taking advantage of this market.

What they paid in 2008 is irrelevant.

(Also: I wonder what realtors were saying to the people who took that loss, before they purchased the property.)

[89coupe]

Originally posted by Buster


What they paid in 2008 is irrelevant.

(Also: I wonder what realtors were saying to the people who took that loss, before they purchased the property.)

Well like I said, you can always rent from a home owner.

No sense having a conversation with a bearish point of view.

Why so angry?

I can't remember if I asked if you are home owner or not.

When did you buy and where?

[Buster]

Originally posted by 89coupe



Well like I said, you can always rent from a home owner.

No sense having a conversation with a bearish point of view.

Why so angry?

I can't remember if I asked if you are home owner or not.

When did you buy and where?

I'm not angry at the market. Sometimes I call into question the objectivity of the RE industry...because it spends a great deal of time trying to manipulate the market.

Being bearish isn't a choice, it's a conclusion.

I own a house, in Aspen. But my main, and original purpose in this thread was because I want to move to the south to get my wife closer to her new office. I own my own businesses, so I spend most of my time in my home office.

[89coupe]

Originally posted by Buster


I'm not angry at the market. Sometimes I call into question the objectivity of the RE industry...because it spends a great deal of time trying to manipulate the market.

Being bearish isn't a choice, it's a conclusion.

I own a house, in Aspen. But my main, and original purpose in this thread was because I want to move to the south to get my wife closer to her new office. I own my own businesses, so I spend most of my time in my home office.

I live in Aspen as well. My neighbor just sold their place, they are moving to Altadore. Taking advantage of the prices.

The Deep South is really hurting, I'm not seeing a lot of movement.

My neighbors house sold in 25 days.

[muse017]

Originally posted by 89coupe


Did you read my earlier post? My buyers paid less then the original owner did in 2008.

Fortunately there are plenty of people with good job security making very good money who are taking advantage of this market.

In 2008, RE prices in general in Calgary was insane. What your buyer did is only paid little bit less than insanely over priced house.

l still remember some realtors kept visiting my parent's place and asked them to put it on the market for 300k more than they bought it for back in 2005.

[carson blocks]

When prices are going up, realtors say "Now is the time to buy, get in before they rise any further and you're priced out of the market"

When prices are going down, realtors say "Now is the time to buy, prices have dropped dramatically, everything is on sale"

It's almost like they're solely paid from commissions from selling houses or something..

[89coupe]

Originally posted by muse017


In 2008, RE prices in general in Calgary was insane. What your buyer did is only paid little bit less than insanely over priced house.

l still remember some realtors kept visiting my parent's place and asked them to put it on the market for 300k more than they bought it for back in 2005.

So what do you consider is an insane price for a 2300 sq/ft two Storey walk-out with an oversized garage located on a 676sq/m lot backing onto a ravine? Located in an Estate area of Tuscany.