Bob Truman, First Place Realty

What does Squidly win for being the biggest loser? A darwin award?

Interesting... the three biggest losers are the three biggest loudmouths and scaremongers.

Funny thing is...Squidly will be calling you the dunce!  

I would like to say the price will have another 5-10% up in the first half year then have another 5% down for the next half year. The lowest rate will keep still for the whole year until the unemployment rate goes down. Inventory plays the key. Unfortunately, the inventory continues to contract. Demand will not change but supply is made short on purpose.

I think Daniel is spot on in his assessment.  Supply and new listings really is the wild card.  If supply does not increase and there currently are no indications that will change, prices will probably rise, even if demand is less than historical averages.  I anticipate demand will soften towards the end of the year.  I don't expect prices to move more than or less than +/-10% for December 2010.  Like Daniel mentions, I am anticipating stronger year over year growth in early 2010, but slower year over year growth and possible declines by late 2010.

My contention with why some of those forecasts were wrong is that they didn't understand the supply picture.  In late 2008, people were painted a picture that new listings and defaults were going to swamp supply, and that we were headed for a US style housing meltdown.  Sales dropped well below demographic demand, but new listings also went down.  When sales rose back to average levels, but new listings remained down, that is what has provided price support to the Calgary real estate market.  The reason that prices have stayed the same or gone up during the winter when usually they fall, is because the supply picture has changed.

Real estate really does have a number of headwinds that lead me to believe we won't see much price movement in the next year including:

-  Low capitalization rates will not spur investor demand

-  No price momentum causing speculators to not be interested in participating in the market

-  Home ownership premium remains relatively high from a historical standpoint despite mortgage rates near a bottom

-  Price to income levels remain high from a historical standpoint

-  Rental availability rates rising, little growth potential for rents in the short to medium term

On the flip side:

-  Limited risk of new supply coming from bankruptcies

-  Housing starts like below demographic demand, indicating more investment will be needed in the long term

-  Falling to flat house prices are hard for developers to increase supply because land costs are sunk

-  Investors may choose not to list when prices are down, price elasticity of resale supply indicates Calgary resale market are sensitive to drops in prices

-  Affordability in Calgary is only second to Edmonton in the country, and less than long term averages

- New single family home construction inventory looks to be dropping quickly

I expect that house prices in Calgary will underperform historical average appreciation rates for a number of years (perhaps 5 years).

That being said, there are equal risks that prices fall next year as rise, so one has to bear in mind that costs of servicing mortgage debt in 5 years will likely be higher when interest rates are 3% higher than they are today.  If you can't afford the incremental cost due to increase in interest rates, it's likely best to rent for a couple years.

I think that proper budgeting and including things like investing a percentage of disposal income for retirement, plans for kids or life changes, risk of unemployment, forecast for wages, and interest rates are important things to consider now, as it relates to budgeting more than ever.

I don't think one can count on house prices rising next year more than they can count on them falling.  That is why it is important to have a budget that you are content with, because then no matter what happens, you can ride out the storm, or ride the wave, depending on what happens.  The plan really is that in 25 years, when one retires that they should totally own the property, and therefore not have to worry about escalating rent through retirement.

Anyways, sorry this is a long post, but I thought some of these observations might help people make a more informed decision.  

I think I would qualify as NOT the biggest loser:

My post on December 22, 2008 ( http://calgaryrealestatemarketblog.wordpress.com/2008/12/22/the-price-is-not-right-but-not-by-much/ ) was for a medium term target of $375,000.  I made this post when old criteria house prices were $366,000.  As of November 2009, prices were at $403,000.  e.g. My guess was 7.5% too low.  In turned out I was too pessimistic on supply, and about right on demand.

A lot of great points.  I don't think that anyone expected the supply to be so low due to the demand being so high.  Is it a good thing?  Even CBC is starting to warn of a housing bubble right here in...  Wait for it... the once immune, it will never happen here in Canada. The same Canada that was also immune to a recession and job losses. http://www.cbc.ca/money/story/2009/12/09/consumer-howe-interest-rates.html

I assume that you meant that there is a large risk of  new supply coming from bankruptcies, Radley. There has already been a large uptick in this.  I think that there is a large correction that is about to begin as rates go up.  BUT, it may not be the instant crash that people think of when they hear correction.  Instead, it could be a long and drawn out period of nothingness - this will allow salaries and inflation to catch up to home prices.  It would be an incredible thing for the government to pull this off as most wouldn't care if home prices were flat for 10 years, as long as they don’t drop.  

I have noticed a steady drop in small town BC home prices and expect that continue with the battered forest industry.  Wait a year and watch what the prices will be like in Invermere.  Combine higher interest rates with many of the higher paid locals out of work... any opinion on this?  Will the tough luck that small towns in BC seem to be having spread over into Alberta, or will it only drive prices higher with people immigrated looking to earn a buck?

Newt

This relates more to an earlier discussion, but I found this nifty graphical rent vs. buy calculator. It shows a graph with the break-even point for rent vs. buy. For those on either side of the buy vs. rent debate I think it would be interesting to share which values you'd plug into this calculator. I think it's really cool to see how changing assumptions about various things affects the graph.

http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html

Haven't been here in awhile and fell quite behind on the blogs.  Very surprised to see CREB take this title.  I do have to admit i was quite wrong.  while this was said "I can hear the excuses now: blame low interest rates. Everyone had the same information available to them when these predictions were made. The lesson I take from all this is that no one really knows where prices or sales are headed."  I have to say interest rates was a valid reason for error.  Nobody could predict the direction of it but when it is a vital factor (probably the most important one this year) it had huge influence.  It would be like predicting the price of a small gold producer stock and suddenly they find out they tripplied their gold reserves.  Well that 's a pretty big influence nobody saw coming.  If it was something like a small company went bankrupt we all know that nobody can predict that either but that would not have any effect.

this year has been certainly strange in every category, interest rates, nat gas, oil prices, housing, you name it.  what blows me away though is if you look at housing in other places how Calgary can be this pricy.  I had a realtor forward me listing in Phoenix. He sent me about 90 listings of houses between 50-100k.  for 50k you can get a 1100ft bungalow, attached double garage and that's the ask price. (no basement). WOW.  Wish i could find a good job there.  Initially that's why i moved from Vancouver, higher income AND half the housing costs.  Too bad this strategy doesn't work as well for different countries since you need a work visa.

Not sure where i was going with this.  I just found this info out so i thought it was quite amazing.

Vladimir

That link is pretty awsome and with some tweeking you can almost make it work for canada. (you can not tweak the capital gains exemptions to higher then 500000, since in the USA you have to pay capital gains on sale of your primary residence) Also the default take bracket is 20% (yah i wish)

This tool also assumes you are investing the money your saving by not paying the mortgage so if you are useing the money for vacations this tool will not work for you as it assumes you are getting 5% on the difference.

However it's a very nice tool.

Hey Bob, thought you'd like this...I sent a comment to Garth Turner's blog with a link to your site. He wouldn't post it. I guess that guy does have some shame after all.

I would argue that predicting the decline in mortgage rates was somewhat intuitive.  I have noted that during the mortgage crisis that risk spreads were elevated.  Historically, the period of heightened risk spreads last between 6 months and a year and a half.  This can be one indicator of a Canadian recession.  Considering this period started in mid 2007, by late 2008, one could realize that the period of risk aversion has a strong possibility of ending within the next 1 year.

One of the major reasons mortgage rates went down was not due to drop in 5 year bond yields, but the return to "normal" risk spreads.

Could risk aversion happen again, yeah, but the last time this happened was in 1982 and 1991.  My guess is we won't see that sort of dysfunction in the mortgage market until we reach affordability problems that matched those of 1991 and 2007.

Right now affordability in Calgary, is a fair bit below long term average affordability for Calgary.

With this in mind, I think we could see some mild appreciation (but below historical average apprecation).  The reason appreciation will be subdued, is that when the economic recovery is in full swing mortgage rates will be about 3% higher possibly, and that will crimp affordability as we start into economic recovery mode.

Lastly, why compare house prices to Phoenix?  Why not Botswana, or Abu Dhabi?  Since the supply of new real estate depends on local costs of labour, local costs of material and transportation, why would you compare to Phoenix?  People seem to continue to compare Calgary real estate to Phoenix, which was the poster child of the subprime market... It would make more sense to compare to cities like Boston, which had a large escalation in price, but did not have the same correction.

The following graph shows the Boston market with future prices:

http://www.bostonbubble.com/sup/csi_boxr_futures.20091124.gif

This graph shows the Phoenix market:

http://3.bp.blogspot.com/_uM9PrU7_5OY/StkF4wHk9YI/AAAAAAAAIVQ/nsihw19SkFA/s400/2009_08_26_case_shiller_phoenix.png

Note how both markets had significant price appreciation, but only ONE of them had a sharp decline in prices.

In Phoenix Arizona, a whopping 22% of loans were subprime in 2005.  This ranks it in the upper quartile in the US for subprime originations.  It shares in the top cities with names like Detroit 29%, Miami 29%, Fresno and Stockton California at 31% and 26%.  THis is the list of who's who of US cities with foreclosure problems.

Less mentioned are cities like Boston which ranks in the bottom quartile with only 13% of loans were subprime in 2005.

This compares against Canada where only 5.4% of mortgages in Canada were non-conforming loans at the peak.  So literally, the cities in the US with the BEST mortgage origination practices would not even qualify as the WORST cities in Canada for subprime mortgage originations.

I think this makes a clear argument, that Calgary is more like a Boston on steroids.  Not only that, but Calgary is not struck with a contagion effect.  In the US, it started off in cities like Phoenix, but it became such that even cities like Boston fell into recession.

You can read the report that details which cities had subprime and which didn't here:

http://www.federalreserve.gov/pubs/feds/2008/200829/200829pap.pdf

Anyways, I hope this information is useful.

Vinny:

If you thought last December that interest rates (central bank rates that is) were going to be anything but .25% all year, then that would make you an optimist to say the least. Interest rates have been low because the economic outlook has been so poor. As such it's not a valid reason for error in my book. I guess you can't have your cake (a deep recession) and eat it too (with high interest rates)

Anyway I completely agree with Radley's great comments above. Who would have thought in 2008 when unemployment was 3%, wages were rising, oil was 140ish, that house prices would start falling and that the opposite would happen this year? Calgary's RE story is one of oversupply from building mania, followed by economic panic, followed by interest-rate sensitive growth. For those who say "but the bankruptcy rate doubled" : if you double a tiny number, you still have a tiny number. Off the top my head, foreclosures are around 10-15% in the US but still less than 1% in Alberta.

My Calgary RE crystal ball has had a bad record this year but I'll try and dust it off:

The first 3-4 months of 2010 will see continued increases in mean and median prices with very low inventory. Inventory will rise as it always does through the spring.

By the summer  May/June, I would expect a modest increase Year on Year of 10%ish in prices.

By next fall, interest rates will have increased, at which time sales:new listings will have started to decline and inventory will not fall as much as it usually would in the fall(or it will stay flat).

The result will be by next December, prices will still be about 6% higher than they are now but flat or trending down. Total year to-date prices by next December will be about 8% higher than YTD 2009. Sales volume will be less overall in 2010 than 2009 but more than 2008.

The known unknowns are:

Oil Price - if it goes up beyond 100 and projects start up at an increasing pace, Alberta may be seen as the only "safe" haven in North America. That could cause a speculative spike in the Calgary market and also the canuck dollar which will therefore keep interest rates lower for longer. We'll be back to the silliness of 2006/2007. On the other hand if OPEC cooperation breaks down badly we could be back to $30-40 again.

Royalties and taxes - If SK and BC hike their Nat Gas royalties, or the American states do, we might see the reverse of what the Tories have achieved over the last couple of years in Alberta. Likewise when provinces, states and countries need to raise taxes, we could see a movement of the very rich and mobile to the places where taxes are still low. I don't think that will happen in 2010.

Cap and Trade - Who knows what form this will take. The opening position from China and the "Climategate" issue make any significant changes unlikely at this point. One conceivable scenario is a punitive enough measure such that the entire oilsands industry becomes uneconomical. This will achieve a spike in the oil price which will reduce carbon use. Global warming will then be solved (I'm being sarcastic)

Rapid global debt destruction - This was on the table in early 2009. It's been almost replaced with widespread competitive currency devaluation and volatility going forward. If someone tells me about a financial shoe to drop, I tell them about the big money-printing hands waiting beneath it. Dubai and Greece are honestly very small potatoes compared to Lehman etc.

CMHC - I don't know what will happen to this, but I think it's enabled the froth, especially in other Canadian markets. My best guess is it will keep on doing it's thing through 2010 but if it gets into trouble, it will effectively shut out a large number of buyers. The most likely thing is that it will be pulled back gradually as unemployment improves which may be late next year. There is no political will to limit the growth of CMHC to unsustainable levels right now.

China - China is vital to commodity growth. They are tomorrow's global consumers and will start a transition into that when their currency starts revaluing upwards. It's hard to know the truth about China and if it fails badly we won't know until the last possible moment. I don't see them running into trouble in 2010.

Apart from that, plagues, giant meteors, nuclear terrorism etc.

I would consider those to be unfair factors Vinny.

All very excellent comments here.  It's important to look back on what people said in order to hold them accountable for their words.

Awhile back I must admit that I was thinking along the lines of TD Economics forecast.  The wildcard low interest rates with record amounts of money being created made me change my mind after first quarter 2009.  So, in that respect I was just as wrong initially.

Jimmy, I will say that I agree with most of your comments above.  The only thing I would add is the question about Plan IT Calgary plans.  We've yet to see the newer requirements for density per area show its face in developments around Calgary.  There will be considerably less DETACHED SFH's being built, simply because of this density requirement.  So who knows?  Maybe condo pricing will go in the opposite direction of the detached SFH?

worldclass:

I was only commenting on SFH in my post above. I'm bearish on condos going into 2010 and frankly expect they will be 5% or more cheaper by next year for these reasons:

Condos are more speculator-driven and I think more susceptible to competition from the rental market.

There is a lot of condo supply in a buffer right now that could be released for sale soon (half-finished projects that are idling)

Inventory for condos has not been declining at the pace of SFH this fall, in fact it's moved in the opposite direction at times.

The land premium (particularly in inner city Calgary) of a SFH will continue to gain as more people move here.

Inner city Calgary has definitely been insulated from any sort of correction.  If you look at stats of inner city locales you'll see that a detached SFH is definitely priced high due to land premium.  These are usually old shacks on huge lots that can be subdivided.  A good investment that you could live in and enjoy would be an old bungalow in an inner city area on big land that is seeing a lot of redevelopment.  Those areas are desirable, especially with the weather we've been having.  Unfortunately, those shacks on large parcels are already pricey.

What an ironic thing...the Captcha i had to type into post this post is "right houses".  Funny.

I would argue that some of the 2008 MFH starts was speculative driven, however, in 2009 virtually no starts have happened.  To me this is indicative that not only have speculators tamed investment in new supply, so have investors.

You can see what is going on with supply here:

http://cuer.sauder.ubc.ca/cma/data/ResidentialRealEstate/HousingStarts-Multiples/starts-multiple-calgary.pdf

This cannot continue indefinitely without new investment in supply.

So I think that much of the stuff that is nearing completion, will be absorbed.  Meanwhile, it can take 4 years lead time to build a condo.  So, it may take awhile before new product comes online.

My guess is that SFH will slightly outperform MFH over the next year, but it's unlikely the two markets diverge too far from each other in the long term.

I also think it's interesting how people think what will outperform which.

To realize some incremental value in real estate besides buying and holding, you have to buy based not on what is *hot*.  But what is actually maybe a *sleeper* area, which is cold but has the potential to be hot.  Some inner city areas, I think already have a lot of value priced in to the market.  People already recognize that you can put in a basement suite, or that if you have a large lot you can tear down one unit and build two.

I think Sunalta and Ramsey are two communities in particular that I have in mind that have a lot of potential.  With Sunalta, and new West LRT station, plus the potential of turning some of those car lots into inner city residential village then, the West Village residential area has a lot of potential.  Areas like the Beltline are already built up to a fair density, so it is a bit more expensive to teardown a lowrise building and build a highrise.  Also, I think Ramsey is an area that is walkable to downtown and has a lot of potential.  I guess I think that these are areas that will outperform other inner city areas over the next 25 years.

Sunalta and Ramsey are actually very good areas.  I think Ramsey already has a lot of land premium priced in however, since anything priced "cheap" is essentially a teardown and being sold basically at land price.  With Sunalta, the LRT can either be a blessing or a curse.  Some would rather not live near an LRT station or line, because with LRT stations comes more traffic through the community (to "park n ride") or increased crime (usually youth based).  Sound is also an issue.  The upside of an LRT is of course the transportation convenience.

The established inner city gems like Mount Royal and Elboya have obviously arrived in terms of land values.  However, I'd mention that there are some inner city areas that are still unsaturated with new infills or renovations.  They are still under active redevelopment and one can "insulate" themselves from a potential crash if they buy in these areas vs. far out in a suburb.  Killarney, Inglewood, Altadore, Lakeview, etc. come to mind.  A 600k home in Auburn Bay (for instance) may look all shiny and new, but a 600k home (detached on big land) in inner city areas will hold value far more if a crash were to occur.

Crime is basically only a concern for the tinfoil hat wearing people.  In 2008, there were 2.02 crimes against persons per one million riders.  So, if you are assaulted, you better go out and buy a lottery ticket the next day, because there is just as good a chance of winning the jackpot.  The risk of being victimized by crime while using Calgary Transit is extremely low.

There are much more deaths due to auto accidents, however many people may "fear" the perceived risk of crime more than the risk of auto injuries.

There were 458 deaths in Alberta last year due to auto injuries, this compares against essentially nil for Calgary LRT.

I have yet to see a fight or drug dealing on any of the station platforms, I think this may be because so many people use the system (6.7 million trips in April 2009) and that there are security cameras and police that patrol many of the stations and lots.

How many vehichle accidents happened during only a couple centimetres of snow?  Were there any news reports about the C-train skidding off the tracks and killing everyone?  The C-trains are usually on time, (don't have to worry about the C-train starting in the morning or about traffic congestion due to snow) and now with Iphones, you can schedule trips a lot easier than before using the public transit system.

Bottom line, I think that the C-train system is actually SAFER than the alternative (automobiles), and furthermore there is an added benefit of convenience.

I believe it is mostly media that ends up distorting people's perception of crime on the system.  I would argue that your chance of just dying as a result of a drunk driver in an automobile accident are probably higher than your chance of dying on the LRT system in any manner.

Radley, I agree with your analysis (straight numbers!) of the risks of living near and using the LRT system.  However, you hit the nail right on the head when you said "perceived risk".  This is the problem... no matter how logical it may seem to have an LRT system nearby, the market will do what the market will do.  People think vaccinations are risky and so they don't get them, even though it is widely accepted that the risk of dying from the sicknesses is far worse.  

The sound of an LRT system is inarguable, because there is sound every 10-20 mins or so.  I know this is actually a burden because I have a cousin who lives near an LRT.  I am not speaking for myself, but we all know that some people see things that go unreported as "crime".  For instance, rude lewd behavior, spitting over the ped-way overpass onto cars below, littering, etc.  Things get worse the darker it gets and the further NE you move on the LRT line.  The increased traffic of people through your neighborhood may also be a concern to some people who enjoy walking on quieter safer roads.

Different strokes for different folks.  Personally I think an LRT system nearby is more a 'plus' than a 'minus' for value.

How many sign do buyers need to understand??

Canada Real Estate And BNN Interview

http://market-ticker.denninger.net/archives/1737-Canada-Real-Estate-And-BNN-Interview.html

Canadian family income as a whole (families of 2 persons or more) is allegedly $70,000 (approximately.) The average house price? $325,000.

That's a multiple of 4.64, or dramatically into bubble territory (the maximum for affordable housing is roughly 3x, so this is 154% of the maximum!)

It's worse in places like Vancouver - there the ratio is over 10 (!) for single-family homes and about 8x for all residences.

Let me be clear, strictly on the numbers:

Canada is in for a housing bust WORSE THAN OURS.

------------------------------------------------------------

Be ‘vigilant,' Carney warns on debt

http://www.theglobeandmail.com/report-on-business/be-vigilant-carney-warns-on-debt/article1402361/

In the speech, Mr. Carney pointed to the U.S. subprime mortgage collapse and the subsequent meltdown of that country's financial system to remind Canadians that growing debt burdens, even if confined to a small slice of the population, can cause problems for the whole economy.

I asked Garth Turner THREE times what is his predictions for 2010 in the past week with respect to resale prices in biggest cities but he never posted me...

For anyone that wants to see if an LRT station does/doesn't attract crime, this tool might be of use:

http://crimemap.calgarypolice.ca

Just checkmark the violations, and change the date range to the last 6 months.

Of course there can be other factors as well, such as the fact that LRT stations are often near commercial centers which tend to attract more crime.

I've always felt that living about 800-1000m from a station is a good distance.

"Over the past six months, sales of SFH are up 29% compared to last year. For homes over $1 million, sales are up 38%."

Bob- Why do the RE sale so high in a given period?-- Affordable houses or affordable monthly payment?

How do you see 2010 when mortgage rates going to hit high?

What are your recommendations for first time buyers?

What is your recommendation for the people who are living paycheck to paycheck with such a low interest and 30/40 yrs signed contract?

I pulled the data for crime stats in Calgary.  There are definitely some patterns that emerge.  I would say the vast majority of crime stems from socioeconomic issues particular to that community (Falconridge, Forest Lawn, Whitehorn).  Then there is also the factor that busy places like the downtown core have a lot of crime, yet it also has a ton of people living there (so it's hard to compare on a per capita basis).  I think there is also a factor that communities that are poorly connected to neighbouring communities also tend to have higher crime rates (Ogden, Bowness, East Village).

COMMUNITY LRT Area

BELTLINE Yes Downtown

COMMERCIAL CORE Yes Downtown

FALCONRIDGE No NE

WHITEHORN Yes NE

FOREST LAWN No NE

ALBERT PARK Yes SE

FOREST HEIGHTS Yes SE

TEMPLE No NE

MARTINDALE Yes NE

DOVER No SE

MARLBOROUGH Yes NE

PINERIDGE No NE

EAST VILLAGE Yes SE

BOWNESS No NW

TARADALE No NE

MARLBOROUGH Yes NE

ACADIA Yes SE

ROSSCARROCK No SW

OGDEN No SE

RUNDLE Yes NE

Note:  Most of those communities listed SE have an address in the SE but lie above Foothills Industrial Park (Acadia is the exception).  This is also ranked by severity, so I think it is noteworthy that a community like Falconridge and Whitehorn, which are sister communities, however it is the one without LRT access (Falconridge) that had a higher level of assaults compared to Whitehorn.  Again we see with Forest Lawn and Albert Park which are sister communities, both along 17 Ave in the NE, that it is Forest Lawn which does not have LRT access and has the higher assault rate compared to Albert Park.  I wrote "Yes" if there is access to LRT within 800 m and "No" if access to LRT was greater than 800 m.

In fact, none of the stations on the northwest line were identified as having a high crime rate, and only one station on the south line.  This indicates to me that crime is much more dependent on socioeconomic makeup of the community than nearby LRT access.

My guess is that for an area like Sunalta, getting an LRT is likely going to do very little to change the crime rate because the LRT is unlikely to make it change the socioeconomic status of the community.  It is only going to help improve the work and education opportunities available by having different mobility options.  Say you are raising a couple children in Sunalta, as they grow up they could use the LRT system at a low cost and attend classes at the U of C or SAIT.  This may give them a better quality job.

In my opinion, the relative lack of postsecondary instutions in the northeast is likely a bigger contributing factor for having a higher crime rate.

I agree that the noise issue can definitely be a concern with the LRT.

In most cases nowadays when people who have jobs downtown do a cost\benefit analysis of using the LRT, usually using the LRT system is preferred.  During peak periods, it's likely that the LRT system can get them to a place with less traffic congestion, more reliably, and with less cost (parking).  As an example, it now costs $400 in my building per month to park.  This is relatively expensive compared to the cost of using public transit.  So, I think there are some people compare the cost of renting parking space against the cost of C-train and a lot of people end up using the C-train.  The C-train is also fairly reliable.

Anyways, for me connectivity to places of work, education and recreation was a big factor in choosing where to live.  Over long periods of time, I would actually think that the LRT would reduce crime, as it also would provide better connectivity to places of education and work.  

Over the long term there are even bigger questions about costs of energy.  We are just exiting a recession, and the real price of oil is $70.  This is fairly high by historical standards.  If we continue to live in a world with high prices of oil, then I think there will be a general preference to use alternative forms of transportation including the LRT which is 100% powered by wind.  I think it's likely that in my lifetime, we will see a slow meandering rise to $150/bbl oil.  It may take several decades, but I think this effect is something to consider over the long term.  Living closer to LRT access or central places of work is a hedge against rising costs of energy.  If this happens, gentrification, or a tendency to push out crime will accelerate.

I again say prices will rise , don't know how much but will continue to rise. Soon Iran will be attacked and oil will go to 200 $ a barrel.

I'm convinced the best valued neighbourhoods are in the Northeast because the stigma attached to them is overexaggerated.

If you buy into a more "middle" class area (and there are some) in the Northeast you'll probably save 100-200k just because its got NE in the address. You won't find that in many other cities. The Northeast neighbourhoods are closer to downtown generally and road and LRT access isn't bad, with Barlow, the Deerfoot and now Stoney trail.

You might not sell your home for a whole lot more or have a great local school but the house you get will be good value for the money.

For the same reason a lot of neighbourhoods with higher crime rates in the other zones are probably too expensive because they have NW or SW or SE in the address.

It's an interesting phenomenon within the Calgary market that a lot of folks overlook when they talk about affordability.

Prices will be down 20%.  Interest rates do not have to move.  Prices have peaked in most markets.

We are in a bubble, no question about it.  Low interest rates can only have the effect of increasing ownership, and drawing forward demand, to a point.  That point is now.

Happy Holidays.

ALE

The darn quadrant system we have seems to put an invalid stigma on things.  It's as if sticking a SW on the address all of a sudden means you are paying 100K more.  There are bad SW hoods too that are worse than SE or NE hoods, but you will still pay that premium.  I guess the other reason the SW is worth so much is due to the Native Reserve that pretty much blocks any easy expansion out.  Hence Calgary is shaped like an upside down "L".  A lot of the SW is still very close to being central.

Coventry Hills is an example of a NE locale that is better value simply due to the NE label.  It's pretty much like it's close by NW hoods, but then you get more house for the money just for being a little bit more East.

All across Canada home prices have decoupled from reality because of the historical near zero interest rates. Our almost 100% reliance on the US markets is going to cause a whole lot of pain in the coming years.

In the short term prices will keep on moving higher. In the long run it's not going to end well. All bubbles eventually collapse. Inflating the currency will not help because wages will be stagnant and energy/food prices are going to take more out of the paycheck.

With stagnant wages and higher living costs, what happens when all these variable rates reset higher?  

I would argue that the "biggest losers" will be realized in future as the people who bought during this bubble.  There is a reason why so many people predicted a drop in home prices.  I agree with the above comments.  The price will rise until interest rates come up.  No matter how much Jim warns consumers not to spend, this low interest rate is leading us in the same direction of our southern neighbors.  

truman, you act exactly like the 3 you patronize. What makes you any different? maybe your blog is more appealing, that's it.

Word of advice; grow up if you want to be taken seriously in your so called 'professional' profession.

Thanks for the advice. As for being taken seriously, here's what a recent client said about me: "We have already recommended Bob to several friends for his expertise, common sense and easy-going demeanor.  We will continue to do so." 

Here's some more:

The usual anonymous loud-mouthed internet blowhards made a lot of noise about a price crash in 2010 which

The Calgary Real Estate Board predicts single family home prices will increase 4.1% in 2011 to $480,000,