Canadian home prices unchanged for first time since 2000
Read this article from CTV. It is based on only new houses and only looks at month over month chages, so it is basically meaningless. However, I think it's interesting in that public perception can be changed by headlines, if the headlines continue over a long period of time.
I have a theory that once prices basically flatten out for a year or so, panic in the market disappears and people are left doing old-fashioned financial analysis when purchasing an investment, whether it be real estate or anything else. During a boom time, people ignore fundamentals because they can always find someone to buy thier investment for more than they paid. During a period of flat or even down prices, one again needs to look at price/rent ratios, price/income and other factors before jumping into a large purchase.
It's like during the dot-com days, who cared about PE ratios when you could buy Nortel for $60 and sell it for $80 in a few weeks? Analysts would invent reasons why the price should go higher. Did you ever hear about the earning to PhDs employed multiple? That was my favorite retarded multiple being banding around by analysts who couldn't value things based on zero earning. Once the market collapsed, all of a sudden investors pay attention to valuation again.
On another note, more bad news about the US sub-prime mortgage market today. Renegade bloggers have been warning about this for about a year, but most simply dismissed them as chicken littles and losers. Turns out they were on to something. Read this article in today's Bloomberg. Turns out that the banks who originated and bought lots of this mortgage paper are starting to show significant losses. HSBC announced that they have lost over $1,000,000,000 in this space. Expect similar annoucments from others in the future.
I have a theory that once prices basically flatten out for a year or so, panic in the market disappears and people are left doing old-fashioned financial analysis when purchasing an investment, whether it be real estate or anything else. During a boom time, people ignore fundamentals because they can always find someone to buy thier investment for more than they paid. During a period of flat or even down prices, one again needs to look at price/rent ratios, price/income and other factors before jumping into a large purchase.
It's like during the dot-com days, who cared about PE ratios when you could buy Nortel for $60 and sell it for $80 in a few weeks? Analysts would invent reasons why the price should go higher. Did you ever hear about the earning to PhDs employed multiple? That was my favorite retarded multiple being banding around by analysts who couldn't value things based on zero earning. Once the market collapsed, all of a sudden investors pay attention to valuation again.
On another note, more bad news about the US sub-prime mortgage market today. Renegade bloggers have been warning about this for about a year, but most simply dismissed them as chicken littles and losers. Turns out they were on to something. Read this article in today's Bloomberg. Turns out that the banks who originated and bought lots of this mortgage paper are starting to show significant losses. HSBC announced that they have lost over $1,000,000,000 in this space. Expect similar annoucments from others in the future.
posted by RJT at 12:18 PM
81 Comments:
I'm going to go out on a limb and call the top today, February 8, 2007. We will all use today as the comparison for how far future house values have fallen. "Since February 8, 2007, houses have fallen 10....20....30...40%!"
Look at what you guys have done. You've turned me into a bear!
Wow check out the houseing reports on page 3 of this PDF from edmonton and calgary, edmonton has now passed toronto's average prices.
http://tinyurl.com/ywczoh
Update of selling of mortgage backed securities:
http://tinyurl.com/2zdbn5
This could start to get ugly...
This doesn't exactly relate to the stories you discussed Rob, but I just listened in on the conference call for Toll Brothers, one of the larger US new home builders.
High/lowlights:
- They commented on slippage on the lower end houses, which moved their average sales price higher than they had projected.
- cancellations: They estimated 20% had been ordered by "investors", 50% by people who couldn't sell their current home, and the rest were due to health and family problems. The CEO (I think) made a sarcastic comment about how people are sick a lot more when house prices aren't rising.
- Some analyst asked about if they're buying up property at firesale prices. Their comment was that they'd expect to see opportunities with bank foreclosures and despondent sellers about 3 years after the beginning of the downturn, which they're calling hurricane Katrina (16months).
- Everyone seemed to be most interested in which way Florida is going. They said they're getting good deposits, bad closings in that market. That means the builder keeps the $25-30k deposit and is left with the homes to try to re-sell. Then the CEO mumbled something about a lot of these houses are being rented(?). I couldn't figure out if he meant that Toll Bros was renting them or the buyers...
Anyway, I know Calgary is a different market, but it's not a bad thing to pay attention to the neighbours. Audio is on their website (warning: mostly boring financials with a few nuggets of info).
Could losses by banks like HSBC lead them to tighten up in Canada?
Credit overall is tightening a lot.....I lease 6 figure sports cars......you need a 20% + deposit, and if you're even slightly off the norm you get declined now......used to be they'd look sideways at slow/bad credeit if you had a good cash downstroke....not anymore.
...marketwatch.com/quotes/new..
Re: squidly's link
WOW. Dollars to donuts you could make 15% if you bought that tommorrow morning and sold in the afternoon.
How sure am I? Sure enough to say it, not sure enough to put my money on the table.
I thought this sort of thing was posted at least a month or two ago here...
There was an item on CBC Radio a while ago interviewing some guy who'd written a book on US mortgages. He said that 20% of US mortgages are expected to fail. Unlike Canada, the mortgage companies wrap up the debt and resell it with the risk figured in. (Also described "exploding ARM" mortgages).
Sounds like either some banks were too optimistic or not paying attention.
Of course, in all this, I fail to see why interest rates would go UP. More likely, they'll go down. Interest rates go up when too many people want to borrow and buy; down when there's not enough market activity.
Rates go UP for BAD RISKS. For normal activity, they'll still go down if the market starts to drop. Lots of loose money chasing a shortage or reliable borrowers...
Remember Dogbert's commentary on Dot-Com business plans? "Neener, neener, profits are for losers!"
Today I met TD bank so called Financial Consultant and he said from next month TD bringing 100% mortgage means you don’t need to pay any down payment.
There are lots of smart people in blogg just wondering how you guys take this TD bank move?
0 down mortgages have been available in canada for at least 18 months
the big banks at this point require 5% down
ill bet there are quite a few people with arms in calgary with 0 down mortgage
right now
google...canada 0 down mortgage
I'm going to go out on a limb and call the top today, We will all use today as the comparison for how far future house values have fallen. "Since February 8, 2007, houses have fallen 10....20....30...40%!"
Will you give us hourly or daily updates, as is the tradition on this blog?
Wow check out the houseing reports on page 3 of this PDF from edmonton and calgary, edmonton has now passed toronto's average prices.
fast forward to 2008:
"Wow check out the houseing reports on page 3 of this PDF from edmonton and calgary, both have lost 80% more than toronto's average prices."
or: For every action, there is an equal but opposite reaction.
or: Prices always revert to the mean ... always!
Interest rates go up when too many people want to borrow and buy; down when there's not enough market activity.
I thought interest rates went up when the central bank decided inflation was a problem and wanted to control spending (consumer, business, etc.), and that they went down when the central bank thought they should stimulate spending (and thus the economy).
So in the U.S., rates are holding (vs. going down) because of concerns regarding inflation.
Right now Calgary/Vancouver market is looking like same when I was in Bay Area, California in 1999-2001.
When all hi-tech companies were doing well and everybody saying internet will never go down in next 10 yrs. All malls will get close and everybody will do shopping on net. Lot of people left their house, BMWs at airport and flied to their home country as much as money they can take away from US.
I am expecting same in next 2-3 yrs here in Calgary too. Too much growth at fast speed is not good for long time (housing price).
What the hell is up with these oil fires ? Oil sits in the mid $57s all day. With 5 minutes left to trade OXY announces they have a fire that takes 120,000 barrels a day off the market and oil goes over $60.
Is anyone besides me noticing an unusual number of fires and terrorist acts ? I'd say we have another Enron going here and they are grasping at straws to keep it going ! How many fires can we have in a year ?
Crude, gasoline and heating oil were all down significantly at one point today.
Fear, fear, fear. Thats what drives trading right now.
What the hell is up with these oil fires ? Oil sits in the mid $57s all day. With 5 minutes left to trade OXY announces they have a fire that takes 120,000 barrels a day off the market and oil goes over $60.
Is anyone besides me noticing an unusual number of fires and terrorist acts ? I'd say we have another Enron going here and they are grasping at straws to keep it going ! How many fires can we have in a year ?
Crude, gasoline and heating oil were all down significantly at one point today.
Fear, fear, fear. Thats what drives trading right now.
"Turns out they were on to something."
Thank you for that acknowledgment !
Here is another prediction: you ain't seen nothing yet in the US housing market. As defaults climb and mortgage lending tightens up, this is going to get way worse.
me2200
you should like the reading here
this is a very good site
i have used myself for reference
he tells his reasons as to why and how oil is being manipulated
....philstockworld.com....
he thinks that there is 400 million barrels about to be dumped onto the USA market
Calgary economic development has revised calgary's 07 out look
GDP was to be 7% revised to 1.9%
net migration was to be 20,000 revised to 10,000
new house starts was to be 17,500
revised to 15,000
Good evening.
Me2200
Oil is your passion, I just consume, you tell me why the fires, I rely on your investigation
I think you missed a zero in the HSBC figure. It's 10 billion, so 10,000,000,000 USD. Actually only 20% more than expected.
Good evening 2
Before attributing Malapropism to US banks consider default loan loss is a cost therefore tax deductible, thus the tax load is transferred to the lunch bucket’s tax load.
Internal up to the minute accounting methods practiced by the banks will provide the maximum point of default cost yielding the highest return to the net profit.
Losses can be good thing.
If there is economic meltdowns remember the savings and loan scandal, it is all survivable, if you live in the US.
Canada is different, the risks of long term economic dysfunction are much higher as the banking /political experience of judicious application of graft and other nefarious rescue measures are absent.
Is Stormy giving us a preview of the new RE-tarded mantra: "losses are agood thing", "hey, we planned on losing money"
I don't know whats up with the fires. I'd almost say its deliberate sabotage, but I know that sounds alarmist. But how else do you explain the frequent fires ? Coincidence ?
I wonder how long until Suncor et al can't get fire insurance or the premiums are through the roof ? I know the first Suncore fire was machinery failure. But what about the second one ?
Everytime one of these small incidents stops production, oil spikes up $2 a barrel. A guy could make a lot of money in a hurry if he just knew when they were going to happen...
I don't mean to be alarmist, but the oil market today reminds me of the electricity market back when Enron was manipulating it. Remember the cries from California about not having enough electricity and the prices shot through the roof ? Generation was going down that never went down, that sort of thing ? Well, that's what today reminds me of.
It seems all it takes is a few well placed words from someone to make oil go up. And it doesn't seem to go back down when the situation is rectified.
me2200
the first fire at suncor was because a stainless steel insert was not installed in a pipe
the second fire unknown
although i do no but cant say
your skepticism is well warranted
many would call you paranoid
i would not
i remember back in 1998-99 when power was intentionally cut off to fake a power shortage
those people are now jailed
the real estate industry in America from the appraisers to the mortgage brokers to the Realtors is corrupted to the core
the people that accused them as being corrupt 2-3 years ago were ridiculed and called paranoid
damn it hit the wrong link...
people would not believe what is happening here in Calgary
they call us nuts
mentals for even suggesting its happening here
people are getting $400,000 + mortgages with 0 down with no doc loans right here in Calgary
driving prices higher hoping enough suckers buy in
before they even make a payment
some legal people have to get there heads outta the sand
there were 1,500 more new listings than sales in January
4100 new listings
2600 sales
but available listings fell to 3,500 from 3,600
do they think we are stupid
go figure
crime and slime is not limited to america
they are every where
It is asked that >> Is Stormy giving us a preview of the new RE-tarded mantra: "losses are agood thing", "hey, we planned on losing money" <<
To answer properly, it is plain that "losses are a good thing" is all together many kinds of foolishness. This is like covering one's ears while stealing a bell. But perhaps you want to teach that not only water can float boat, but also it can make it sink. This is wisdom but first consider that if you have money you can make even the devil push your grind stone (in English transalte for "when money talks, bullshit walks"). But how to decide? Cannot say losses are good. Best remember before play, decide three things: rules, stakes, when you going to quit. Must decide before. By telling you I take risk whether you can hear, since I know that you cannot push cow's head down unless it already drinking water by its own will.
Mr. Squidly#66, you say that "crime and slime is not limited to america
they are every where"
Please know that talk does not cook rice.
Also that to climb a tree to catch a fish is talking much and doing nothing. Better not talk, better do nothing. Make peace, enjoy quiet.
You have much wisdom, not need so many words. Choose few words to say much that every one can hear.
net migration was to be 20,000 revised to 10,000
new house starts was to be 17,500
revised to 15,000
If that's true, then should there be at least 5000 of the 15000 coming to the current residents? It's like 5000 new listings.
Saty,
You're really Confucius undercover aren't you?
:)
squidly66 said...
me2200
the first fire at suncor was because a stainless steel insert was not installed in a pipe
the second fire unknown
although i do no but cant say
your skepticism is well warranted
many would call you paranoid
i would not
I hate to encourage the squid, but... My experience in heavy industry suggests something less. "Never ascribe to Malice what can best be explained by Incompetence" (Napoleon?).
You have a huge industrial installation that cannot find and hire enough people to properly man the equipment, even at ridiculous wages. It seems that capability and long-term experience with the equipment are also lacking. Eventually this adds up to spectacular failures.
Turn some bozo loose on a giant machine when he can barely drive a pick-up truck, or some mechanic who's never repaired anything bigger than a V8... When the production machinery is being pushed to 110% and they skip routine maintenance to keep production up (or to catch up from previous mishaps) then it's an invitaton to more disasters.
I heard of a small airline that fired one of their avionic repair guys after they found that (a) he was useless and (b) his alleged "aircraft repair experience" in the air force consisted of taking the card out of the box and handing it to the qualified repair tech for insertion. Fortunately, he never managed to get anyone killed.
Hello Rob et al. I was wondering if you think it might (or might not) be appropriate to dedicate a thread to exchanging investment ideas on how to profit from what some bears may perceive as an opportunity.
It’s great to share and learn different points of view, and get better educated on how things might develop. However, many here may be able to offer each other practical value in discussing investment opportunities in what might be the deflation of the biggest bubble in history.
To throw an initial comment out, I am actively loading up on put options on several select US financial institutions with large exposure to sub-prime mortgages and sketchy balance sheets. I have many other targeted sectors that I intend to pursue in phases, as a possible correction unfolds.
I would be very interested in sharing and reading any opportunistic ideas that others may be eyeing in an effort to profit from such a possible decline. Furthemore, I am personally more interested in “unorthodox” or creative ideas, no matter how strange, rather than the usual oil and gas futures options things that most of us are already aware of.
ron s: I was also in the Bay area from during that period. I can’t say that I witnessed the phenomenon that you were talking about, but that’s not to say that some of that wasn’t happening. As for the more recent….when our secretary, who may have had trouble spelling her own name, was spending most of her time picking up investment properties, I would occasionally glance back to reality……and get vertigo. What I was seeing of the creativity of many of my friends who were getting newly involved in real estate into 2005 scared me a lot more than the tech bubble.
This morning the Herald has an article that new house starts are way off.....single family housing starts dropped 27.8% from last year......
I've been watching the same model new house in the same neighborhood for a while (mentioned here back in Oct 2006):
I tried comparing the base price of a "starter" model on the outskirts of the SE (McKenzietown/New Brighton) and the price per square foot - the Trentino II by Heartland; 3BR 1379 sq. ft., no garage, unfinished bmnt.
2002 - build $ 165 K - 120
2004 - spec $ 179 K - 130
2005 - build $ 193 K - 140
2006 - build $ 328 K (May) - 238
2006 - build $ 325 K (Oct) - 236
2006 - listing $ 360 K (listing C3229737) - 261
2007 - build $ 335 K (Feb) - 242
There are currently no active pre-owned listings for this model.
It will be interesting to see where we go from here. I haven't seen any price drops in starter SFHs from builders... yet.
rob ask "You're really Confucius undercover aren't you?"
Saty does not know this man from neighbourhood. But I like you so I tell you about real estate. Is bad investment! Better to seek prosperity.
man if dosnt point out a bubble
what would
what a dramatic increase 05-06 and a pullback early 07
somebody said here
if they can go up that fast
they can come down just as quick
I've been watching the same model new house in the same neighborhood for a while (mentioned here back in Oct 2006)...
I've often lamented that the CREB doesn't track a benchmark home. It turns out you've been doing it somewhat, which is great! As squidly66 was quick to point out, one can draw some interesting conclusions.
Hello Rob et al. I was wondering if you think it might (or might not) be appropriate to dedicate a thread to exchanging investment ideas on how to profit from what some bears may perceive as an opportunity.
I would definitely be interested in this. Let me know if a separate thread develops.
Housing prices not keeping workers away.
See article.
http://www.businessedge.ca/article.cfm/newsID/14519.cfm
Nice try Jimmy.
An Ontario, online business "magazine" filled with quotes from Ron Stanners, Myron Boyce and Adam Legge: what did you think it was going to say?
I don't know what world Stanners lives in, but if he thinks a family living on $60k/yr should be able to afford $2125/month on a mortgage payment - he should try it himself for a little while.
Jimmy, what do you think of the story? ... particularly the line where the "new CREB president Ron Stanners says it's actually cheaper to buy a house today in Calgary than it was in the past."
Is this a fair comment? He recognizes that he's referring to 1981 when prices were unusually high and mortgage rates were 18.125 per cent. Were people rolling in dough in those days? Did prices not completely tank after that?
Would you buy a used car from the CREB president?
Oh, oh, oh, it gets better. The article Jimmy referred to quotes the CREB guy further, and I can't believe he said this with a straight face (but maybe he didn't):
Apparently, "the mortgage costs only eat up 42.5 per cent of that person's income now, says Stanners."
"I really don't believe affordability is an issue. It's affordability in the mind that is an issue. I guess you could say it's perception."
Why we are fighting what "CREB president Ron Stanners" said? I told you all these CREB/realtors/Mortgage agents/housing experts all bastards. They are surviving only if there is transaction in market as much as possible and as much as higher cost (more commission). There are more than 5200 realtors/agents in Calgary, it’s too much and all want to make grab our money at any cost.
Remember we are fighters against these guys so we can not become escapes goat for their commissions.
Analyst/experts who are in any business never give advice which in favor of public/masses but he always try to give advice which is his favor (means negative advice to public). All people can not become rich. There is limited money that goes from public/masses to top.
Rob Stanners is doing his job as manipulating the facts (playing with people). If I am his place I will be same. That is demand of his job.
Why we are fighting what "CREB president Ron Stanners" said?
Not fighting. More like despair, laughing but it's too serious to laugh, just ask squidly66 who describes effect of market hype on people's lives.
Rob Stanners is doing his job as manipulating the facts (playing with people).
Never did buy that line. Let your yes mean yes and your no mean no. No, I don't live that way, but at least I'm embarrassed when I fail.
i stumbled across this article by accident about a year ago
just when the prices started going through the stratosphere
it really is a good read
....patrick.net/housing/crash.html
you must put all the address in
hit wrong button
it gives you a counter argument to all the questions and scenarios that the real estate industry throws your way
if you like reading this kind of stuff
you wont put this one down half way through
..
as in any industry there are good and not so good people
if you make a bad choice
you can only blame yourself
it is the real estates industrys job to promote there industry
and they have done a good job
get informed
One says "Rob Stanners is doing his job as manipulating the facts (playing with people)."
Another says "it is the real estates industrys job to promote there industry"
Everyone should understand:
Plant melon seeds to harvest melons.
Plant bean seeds to harvest beans.
Some have said "what goes around comes around". This is clumsy expression of same idea.
What can be said? Do they know the seeds they plant? Do they know their harvest? If they know then they know. If they don't know then they don't know.
the article made me laugh...but I have to post those things to rattle the cages and keep you boys on your toes!
I think this runaway freight train wreck is along way from derailing, but when, or if, it does, I'll be celebrating more than any of you!
jimmy varga
have to give you credit
it was easy to rattle jc and
Moe_real estate
rej ran away
you are much more confident
i would bet you have been selling re for a long time
it is a game of con-fidence as you know
building con-fidence is getting tougher
about 9% of calgarians can afford the average price of a home
average price is what the average person/family can afford
i can hear that train
and so can you
its a done deal
come march shes done
you jimmy will always survive
i look forward to sharing our conflicting views on this blog
you supply the private stats
i will keep saying that they are bogus
as you know
fools are easily parted with there money
Good evening
Mr. Saty hello.
May I point to one of I am sure you will agree, faux pas, bullshit is a not acceptable word in polite society such as here. May I suggest, please consider I am a city slicker ---When money talks the defecations of moo moos walks.
Mr. Saty you may be surprised I have also coined one of these cute phrases;
Earning has 2 legs spending has 4.
Let me explain.
Early 1980 the north American RE market is in shambles the interest rate is a gift from heaven , the bank account has such a largess of Canadian buckaroos my accountant,always concerned for my well being suggested I spend to build up tax losses for income tax time [object, have fun at the expense of the other Canadian taxpayer].
China over-coming to a small extent its xenophobia and has opened the door a crack to foreign tourists.
Peking for a month, to mosey around.
Chinese Government assigns a mandatory interpreter.
This wonderfully youthful female creature from Buda’s heaven depleted my travel account within 2 weeks.
Hence
2feet earn, 4[cute] feet spend.
Mr. Stormy Petrel wrote to me that "When money talks the defecations of moo moos walk"
This made me laught so much that tea spilled on everything. Good story. Fish which nibbles at every bait will be caught? You were lucky to be caught?
want to plant mushroom
cant find seed
spores ?
venus fly trap
very good
meat grinder
yes very good
This is from an email, I received from a friend in Calgary:
...New condo prices in DT Calgary are approaching Vancouver levels. New 1bdrm is almost $400,000 and 2bdrms average $500,000. All new projects are 60%-70% sold out! ...prices are expected to be 10% higher by june 2007.
Insane...
Sold out to investors and friends of the developer perhaps......not to owners.
Average prices are now at 381,169. Sales are averaging at 129 per day.
That cat corpse is bursting through the stratosphere.
jc
if you expect anyone to believe that 3,000 plus people have relocated to Calgary since January 1
that qualify for a $400,000 mortgage
well
what are you smoking man
you refuse to make your claims and stats available to the public
what u scared of
....tinyurl.com/yfw62g
jc
if you have looked here in the past you would know that i have mentioned that my family acquired many homes in the past 3 years
they are all bleeding
and they are all selling
they want out
you want in jc
go out and buy man
buy as much as you can
keep it quiet
you'll make millions
buy jc buy
squidly66 said...
jc
if you expect anyone to believe that 3,000 plus people have relocated to Calgary since January 1
that qualify for a $400,000 mortgage
well
what are you smoking man
-----------------------------------
From Royal Bank mortgage calculator
2 people earning $50k each
-$20k debt
-$400 motnhly car payment
$0 downpayment
$325k max mortgage
$20k downpayment
$343k max mortgage
$36k downpayment
$365 max mortgage
$111k / 25% downpayment
$447k max mortgage
Reasonably nice homes in the $300 to $350k
-----------------------------
How about a twenty something calgary couple?
entry level engineer + accountant = 2 * $70k incomes
anual bonus in $20k range
yeah guy your right
theres lots of people leaving there home cities and familys
that are in there 20,s
that have saved $111,000
what was i thinking
in fact theres so many coming here
theyre plugging the highway
what is it about 120 couples a day
i actually heard thet they are phoning ahead of time
to insure that a house will be available
Squidly, why are you nasty right away?
I didn't say calgary real estate is going to go up at 10% for the next 10 years
I'm simply answering your question as to WHO can afford a house in Calgary.
I'm not a bull - get it in your head. Anyways, I would never clasify myself as a bull or bear, this isn't high school.
You and a lot of people on this blog seem more interested in belonging to a social group (bears) than you are with objective analysis.
guy
i wasnt trying to be nasty
but that scenario kinda sucks
a young couple going in debt for hundreds of thousands of dollars
will no doubt fail
sorry if i sounded rude
I remember doing the tourist thing in England in 1991. I did some looking around and absorbed some numbers, since I'm curious.
My impression was that everything cost twice as much as Canada, and everyone got paid half as much.
The only exceptional thing was the cost of houses. Even outside the big city (and this was 1991, before the current boom got going) houses were in the $400,00 plus range (200,000 pounds and up...).
My other impression was that a lot of people lived in multigenerational households, since youngsters could in no way afford the cost of their own place (and presumably, even the parents might still be living in grandma's house for the same reason...). They also had fewer toys - I assume they were saving for big ticket items like a house.
I went back in 2000, and one impression was that the quality of car had improved. I saw far fewer beat-up old vehicles, almost no 3-wheelers, and a lot of middle and high-end vehicles. The place had gotten richer.
Maybe that's where the bigger Canadian cities are headed - more room-mates, more living with parents, more "failure to launch". Owning a house will become a multigenerational endeavour.
md2k,
While that scenarios is unlikely, some parts of it could play out.
A lot of those type of cities have individualy owned rental units, not company owned. They have far less "boardwalk type" apparment rentals.
Back in the 80s, north american cities had lots of those type of apparment rentals.
When companis built rental units, thy built them to be profitable at historical rents.
Post boom, companies could lower their rents and still be profitable.
Individual investors forgot to take that into account.
Today, the number of company owned apparment rentals has significantly eroded and many units have converted to individual ownership.
If future marginal rental units have above historical rents, they may provide additional support to these prices.
If long term rent changes, the rent/own ratio changes, the fundamentals change.
Average prices are now at 381,169. Sales are averaging at 129 per day.
jc, i'll ask you the same question that i ask myself and everyone else. what's selling? has the mix changed? the averages and medians don't mean spit if the product mix has changed. calgary doesn't have a benchmark home or condo price. in both an up market and a down market, both sides (sellers/buyers) run the risk of being screwed if they rely on averages/medians on a variable mix.
so is this just a game that people play, bantering back and forth, or can we hope to find a real trend? how is an investor (whether professional or homeowner) supposed to make a decision?
That cat corpse is bursting through the stratosphere.
just to keep the clever banter going, i'll reply with "then it will die of asphyxiation and explode into bits because of the vacuum ... if there was any hope for it, it's now gone."
jc, in all sincerity the market both puzzles and surprises me. it's not my nature to accept easy, glib answers from the RE board. and i like to read between the lines. the CREB are being cautious, bobtruman is saying things that are hard to interpret. in short, i don't believe the RE industry are all that confident about the market, and i think the superficial averages are misleading. i think the underlying data has some tasty morsels that would tell us what's happening, but we just don't get to see it. i'm not saying that anyone's hiding it from us, merely that it has never been something the CREB has published or possibly even looked at themselves; after all Calgary's RE market has gone from "challenged" to "explosive" in a short time and there's never been a need to look at such numbers.
heading for calgary said...
Average prices are now at 381,169. Sales are averaging at 129 per day.
jc, i'll ask you the same question that i ask myself and everyone else. what's selling? has the mix changed? the averages and medians don't mean spit if the product mix has changed. calgary doesn't have a benchmark home or condo price. in both an up market and a down market, both sides (sellers/buyers) run the risk of being screwed if they rely on averages/medians on a variable mix.
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This is completely true.
However, the same principle applies for bear's arguments (me2200 especially).
Comparing returns on the DOW or S&P with average house price returns is COMPLETELY useless and irrelevant.
Guy,
The scenario you paint (professional couple in their early 20's) takes care of one small portion of the market. What about a single earner family with kids? Are they supposed to move into a 2 bedroom, 1100 sq ft home and wait for it to appreciate so they can find something more livable?
I'd also like to see some of these "reasonably nice homes" you've seen in the $300-$350k range. I've only seen something that would be comfortable for 2 people max, or POS's.
2 people each earning $50k is what I used for those numbers. And I think thats low for Calgary.
Regarding the couple, I'm not sure they are so insignificant.
That is exactly who every corporation downtown is trying to lure to the city.
Also, isn't Calgary supposed to have one of the younger demographics out there?
Regardless, with 2 x 70k incomes, the young couple can afford a lot more than $350k.
Back to the MLS...
Just checked - about a 150 homes for sale between $300 and $350k. Are they mansions? No.
But whoever is earning only $50k in Calgary isn't exactly upper middle class.
Lower middle class, as usual, lives in crappy SFH and upper middle class lives in "niiiice" SFH.
Upper middle class in Calgary easily earns 2 x $100k incomes.
They, with a 10% downpayment can mortgage up to $800k (with same debt scenario)
anecdotaly speaking, it seems more joint and partial interest in homes to assist in the affordability issue.
I was speaking with a girl (about 24) who bought a condo way way out in Rocky Ridge. She bought a 1/4 ownership, with her best friend and roomate buying a 1/4 ownership and the parents of both gals getting 1/4 ownership. The parents use it as an investment and help there children out.
that should be interesting
sooner or later one of them will meet someone and want to move out
then what
parents that buy or assist there kids with a mortgage is a terrible thing to do
the kids will always be treated as kids
and they will resent there parents for it
as it will still be mommy and daddy that pay the bills when they fall behind
i know of 2 friends who have done that and it didnt turn out well
in my opinion if you cant save a 25% down payment
you most certainly cant pay a large mortgage
squibly...your not only a real estate expert but also an expert on rearing children.
Next time I have a problem, I know who I'll come talk to.
it is preferable to live on your feet
not your knees
they get it all in the end
Last I heard, the average family income in Calgary was in the neighbourhood of $72k.
Any household earning >$100k does not, by any means represent the norm here.
Also, parents "helping" their kids out is going to much more common, especially with the boomer-echo set. Ultimately though, it can't end well. These 20-something kids will think their salaries are just replacing their allowances. Mom and dad will pick up everything else - until they can't.
I just looked outside my apartment downtown.......75% of the suites in the VANTAGE POINT condo tower are out......the owner occupants must all be out partying.....ROTFLMAO !!!!
The cat is heading to mars baby!
Quote:
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However, the same principle applies for bear's arguments (me2200 especially).
Comparing returns on the DOW or S&P with average house price returns is COMPLETELY useless and irrelevant.
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*shakes head*
I'm not comparing returns on the stock market with house prices !
I watch the oil market intently, because Calgary lives on oil company profitability. When oil companies become less profitable, Calgary will be a ghost town compared to what it is now.
Get it ? Calgary = oil. Oil = Calgary.
Now, as far as RETURNS go as a potential investment, yes, I do compare Calgary houses to stocks. I DO NOT compare averages, I look at specific cases.
I know that YOU don't understand this, but that doesn't mean it isn't a good thing to do.
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