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I am one of those "agitated" buyer.  The real estate market is confusing.  While there are layoffs happening right and left (UofC, City etc) all lots were sold in Panorama Hills & people are on waiting list (first come first serve) basis.

Should I join the crowd fighting for a lot or should I wait till summer and buyer a used house.

Any insight?

sorry, I mean wait till "WINTER" (house price usually dip in winter months).

Back in 2008 I made a prediction that condos would be off in price by 25% in 2009.

The peak average price in 2008 was $315K and as of today we're at $280K. That is only an 11% YTD decline (we're only in July after all) so a couple of things need to be pointed out.

Several condo developers have dropped prices between 20-25% to move unsold new units. Witness the humongous price drops at The Castello and the Waterfront, just to name two and there are many more that have been publicly whored in the media as well.

Secondly, there are about 15 holes in the ground in the beltline area of Calgary, as well as a few flat lots where fences have been put up around these other cancelled projects. Those translate to 100% price reductions, because the builders folded up there tents and ran away.

Interesting 'dat.......the year is half over and I am looking like a sage.

Carioca Canuck has said and claimed too many things in the past 2 years.

He is almost as bad as Squidly77...

For sure, as unbelievable & irrelevant!

Carioca Canuck...

This is what you said, quote/unquote:

"Keith in Calgary(aka Carioca Canuck):

Calgary will go down 25% in 2009

Low oil prices the ramifications thereof, plus the economic collapse brought about by the financial system are the triggers…….that, and oh yeah, 12,000 listings and 800 buyers…….

Prediction made Dec 24, 2008 on Garth Turner's blog

A 25% drop in the SFH average price would translate to an avg price of $313,049"

Above, on July 19, 2009 2:05 PM you claim that "condos" will go down 25%... whereas you are a liar.

The year is half over... you look like a liar, not a sage.

Mabel:

I am not sure I understand what the obsession with new homes is. Given the poor quality of construction and materials these days, I'd much prefer buying a used home and getting a known quantity. The news about the toxic Chinese dry-wall certainly scared the daylights out of me. I'm glad I live in a place that was build in 1999 and it's not an issue for me.

My un-educated opinion is to wait 'til the Fall/Winter and see what is available in the resale market at that time. The prices should be down a bit from their current levels and you'll probably feel less rushed. However, the most important thing is to buy the home you a) can afford and b) the home you actually want.

to: Carioca Canuck

Ever heard the Waterfront Condo slashing the price?  I was there.  One amazing thing: most people there "hanging around", sign up a unit, put a downpayment are a certain ethnicity.

To: Vladimir Levin said:  

The NW community is Panorama.  Seems most people are a certain ethnicity too.  

Appreciate your feedback.  Yes, I heard about the Chinese dry-wall.  Sadly, they are producing everything toxi, from drywall to leather sofa to babyfood and petfood.  (sigh)

Hi Bob,

Thanks for the blog. Sales are up but prices are down. From my understanding the pending sales currently have a median of $389 and an average of $436 (a $37,000 divergence between the spread here seems a little out of wack - do you agree?).

I hope that you are right regarding the 7.5% drop as my wife and I are sitting on the sidelines. By the way, is that a drop from the median price or the average price? If it is the median price, do you expect the average to drop more so the spread between the two normalizes?

Regarding the brief run-up we have recenly seen: I personally think that the combination of extremely low interest rates and the current high Calgary rents sent buyers to the markets as soon as the financial system was out of its free-fall. It's really about affordability. Buyers are thinking: I can now buy a $400,000 house with a 3.5% interest rate at 5% down and voila my payments are $1,800 a month. Why, that's way better than the $1,300 I was paying in rent.

This sounds good until interest rates begin to rise (seen this in the back of the curve already). So, what happens if my interest rate goes to:

5% - $2,100

6% - $2,300

7% - $2,500

At 6% my payments have jumped 28%. I don't think my salary (adjusted for the tax increase) is going that high anytime soon.

Bob, could you post an inflation adjusted (2009 dollars) for historical Calgary home prices maybe with an appropriate trend line?  

@Mike,

you forget if these mortgages are 5 year fixed, within the 5 years some equity will build up and value will increase along with rate of inflation.

In the long run, if you have a family with kids, buying is much better than renting. Now, if you are single and are paying reasonable rent in a nice  1 bedroom apt. things are much different, probably renting and minting away into the RRSP is a better choice.

Personally I think Calgary is still over-priced given the long term economic fundamentals. However there does seem to be a tremendous amount of oil-related money sloshing around. I see young 20-something kids buying 400K homes and driving 50K 4x4's, those rig jobs must still be around paying handsomely.

@ Mabel

Is Panorama Hills a big hit in your circle of friends?

Mike:

Waterfrnt or  Panaroma Hills, a degree of a certain ethnicity, what is the problem? Canada is a free world, and an open market, as long as there is people willing to sell and other willing to buy, it is all fine.

I am not shamed being one of the certain ethnicity, in fact, I am very proud of the fact. Most of us were not born here, rather "fresh off the boat" with total personal wealth no more than 2 bucks. We work our ass off to make us home here, while other none-certain-ethnicity people still take a vacation when they are laid off, in the name of "relax", then followed by forclosure.

There ae still homes oavailable in both of the communities you mentioned. If you like the llocation, you can buy. If you don't, there are 50 other communications in Calgary free of your choose.

Bottom line, Calgary is a free world too.

Mabel are you looking for a SFH or condo in Panorama?  My friend says their condo complex have plenty for sale and priced very well too.  New two bedroom condos for 199 (might even have been 189).

And actually Panorama is largely built up of two large ethnicities.  Both the largest Asian countries.  Russell Peters often likes to take these two and poke fun at both.  Chinese and Indian.  In fact, it's almost a 40/40 split between these two with the remaining 20% being every other ethnicity and race including caucasion. I don't there is any problem with this.  One of my friends that live there have a son.  They are Chinese yet their son's friends are almost all Indian but they get along fine.

I like FOB's point.  It shouldn't matter what ethnicity people are as long as there are buyers and sellers.

To FOB & Vinny:

Sorry guys for any misunderstanding.  I guess I should have made my points clear.  I am one of the ethnicities and I have no intention to offend anyone. I am not good at explaining/analysis but I will try.  

When I was at Panorama, the "potential buyers" who is chasing the lots are mostly investors... "flippers" is the best word.  They all trying to build now, $450K (walk-out lot) and expect to sell in couple of years at higher price.  Hmm is the recent sizzingly hot market is due to these investors.  I personally know someone sitting on 8 houses, some are empty, couple are renting out, waiting for the house price to rise and sell.  I think certain enthnicities loves real estate investment (just kidding).

I guess as a working class who tries to buy a SFH is frustrated that the house prices are jacked up by investors.  Yes, I know this is a free country but I am venting/annoyed - people are flipping house making extra dollars whilst people like myself watching helplessly to get a head start.  Yes, I know...Capitalism rules.  

Saynonara and thanks for all feedback.

Alberta currently has the highest rate of population growth in the country, and Edmonton and Calgary share the top place for affordability in the country.

I think that people that come to Alberta, also are excited about the economic growth here.  Despite the downturn, Alberta has some of the lowest unemployment rates in the country, and still has 100+ billion of oil reserves in it's backyard.

Our communities are growing.  For example, Airdrie grew by 11.7% population in the last year.  The biggest population growth still occurs on the periphery of the city, but also the downtown core has moderate growth, and population in the middle suburbs is slightly declining.

The truth is we don't live in our parents world anymore when back in the 1950's world population was 2.5 billion instead of the 6.7 billion today.  The growing world population will need to maintain and grow our energy sources.  Meanwhile, oil and natural gas reserves decline at an exponential rate and are extraordinarily capital intensive to maintain a flat let alone grow our international energy supply.

People that choose to live on the periphery of the city may have a lower house cost, but when you start considering that you will spend hours commuting in traffic and less time with your family, plus the extra burden of owning multiple cars.  The likelyhood that traffic congestion will only increase over your lifetime rather than decrease, and that there are many more accessible amenities in the downtown region, I think living downtown will be the best place to live and have a higher economic growth over the suburbs over the next 50 years.

I think blaming high house prices that are "jacked up by investors" or insinuates certain ethnicities ignores the fact that Calgary has a very high standard of living (26th in the world according to Mercer, and 5th in the world according to The Economist) and is an attractive place to live and work.  That's why our population growth rate is the highest in the country.

Because we live in a free country, people should be free to move to where they can best pursue their dreams and life goals.  I think Calgary is a good place to do that, and many Calgarians share an entrepreneurial spirit.  Moreover, Calgary has very good access to healthy financial markets so that really helps businesses and individuals make innovation and dreams a reality.

Living in Calgary means taking control of your destiny and being responsible for your own decisions and understanding this is a free country and not blaming others.

I agree that ethnicity plays a factor on how much people pursue real estate as an investment. People coming from developing countries where economies are emerging, inflataion is high, and currency value keeps going down have learned to invest in hard assets/real estate to keep their advantage.

In the western world where currencies are more stable and money inflation is lower than 5% most of the time, other forms of investment still beat inflation.

However people should not think that what goes in China and India and other developing countries from RE doubling in value every few years will hold is western countries

That last stat about the unconditional sales is pretty interesting.  Thanks Bob.

Interesting as well is that the price per square foot has barely budged since June (288 in June to 287 in July per sqfoot for SFH and to 275 to 273 per sqfoot for condos). Price per square foot is actually trending up the last few days. Sales:new listings ratio is still very high despite what should be a seasonal slowdown.

I can't believe the RE market in many Canadian cities (not Calgary) is now blowing past the previous peaks of 2007. Predicting tops and bottoms is a fool's game in this market. Bidding wars in Toronto when unemployment is 9.6% and climbing?

I am thinking now that when we see the dumbest "permabears" finally wading into the market, that that will be a time to sell - perhaps not too far off given the activity on the gloom and doom forums recently.

When you say unconditional Bob does that mean without even a property inspection? Because that is just stupid.

Yes. The usual conditions are financing and home inspection. -Bob

The best months for RE price appreciation are now behind us, and the historically worst months for RE price declines are now ahead, lying in wait........as are more O+G layoffs.

I'll post back here in December once the final results are tallied up.......and Bob, it's to hot to hike !!

CC wrote:

"The best months for RE price appreciation are now behind us, and the historically worst months for RE price declines are now ahead, lying in wait........as are more O+G layoffs."

You have been posting this type of message for well over two years now...

You'd figure that one day, (inevitably?) you'd be right?

BTW, very basis, simplistic assessment in my opinion.

You gotta be a bubble type, no?

RE and Stocks are the same in the sense that timing makes a big difference.  Someone like CC can be 100% correct on fundamentally why prices are overvalued or undervalued but it could take 2 years for prices to line up.  By then you may have missed on opportunities.  I have noticed this this year on several stocks.  People always say stocks are 6mths ahead of the markets.  By my valuations they are about 2 years ahead but if it was that easy to get it right everyone would be rich. Housing takes even longer to move change course so you really have to be patient on predictions.

I don't remember but some poster tell:"In 2010 Oilsands companies will hire new grads!!!! Telling that  poster must smoke something strong and drink to hard.No any improovement in Oilsands job market next 4 years.More layoffs yes.

Oil price rebound?  nope

stock market?   nope

unemployment rate:  not going down.  People hired on contracts in oil industry and were let go were not included in EI stats.  Spoke to a customers who are delinquent in payment of their credit card are still waiting for a job/contract from oil company since Dec 08.  My friend worked for Trans Canada on contract was let go in March.

So a hiccup in house price in summer months means rosy picture?!

Speculation or investment?!

Agree with Vinny, get the house you want and the one you can afford.

Otherwise, make sure you are not the last person who are left holding 10 pots with only 8 (lids).

There has been a marked improvement in business hiring intentions from Q1/Q2 2009 (see page 8).

http://www.business.ualberta.ca/wcer/pdf/125electronic.pdf

Anecdotally I know of an engineering firm in oil and gas that is hiring in the fall. Kearl was restarted earlier this year. They need to anticipate demand at least 1-2 years out with the oilsands projects. Oil has already doubled in price from March lows, Stock market is also up over 40$ from then.

Where will oil be in 1-2 years? I don't know but my guess is higher than 60 (call it a prediction)

Many people choose to forget that unemployment is a lagging indicator at times like these because it suits their world view.

Inflation is almost a certainty down the road - is it manifesting in today's oil and RE prices? Maybe.

The biggest risk to Calgary/Alberta development continues to be environmental regulations and a global "oil tariff" in my mind.

Hey Bob:

It would appear that the Alberta Bubble blog has now opted to censor and delete comments which do not agree with their ongoing theme of economic doom in Alberta. All comments that concur with, supportive of or simply cheer on a perpetual downturn in the province do remain on the blog.

Very interesting...

They must be very insecure over there. Why don't you start a blog for all those who are "Banned from the Alberta Bubble Blog?" If someone gets something up and running, I'll post a link for you here.  -Bob

Hi Bob

Regarding the  Alberta Bubble Blog....

I was the one who posted a request to the blog to put a stop to the troll posts. It has nothing to do with those of opposing ideas etc. but simply to put a stop to all the troll posts on a blog that I have enjoyed following for some time and wish to continue to do so without having to kill file a lot of garbage comments that have nothing to do with the economy.

Also I would like to bring to your attention that blog servers are now beginning to take a look at troll like posts throughout the net and take action on those that are questionable in relation to harassment.

One of many examples.....

"Apologies to those of you who were responsibly using the comments; however, Blogger rules were broken with regard to the harassment of individuals other than myself and so they have gone away until I can come up with a reasonable solution that does not add hours of work to my day.

http://fuglyhorseoftheday.blogspot.com/"

So I suggest that we all support the concept that bandwidth can be put to better use  :)

I'd get my hearing checked if I were you. (grin)

OP on your blog stated that the A.B.B was censoring comments and I simply posted an explanation to clarify that the statement was not correct and explained why comments were being screened.

I have no idea of what your concept of  "IDENTIFIABLE INDIVIDUALS" would be so I have no comment on your question.

I had a look for myself and I see the Alberta Bubble Blog IS censoring comments.  My hearing may be bad but my reading ability is excellent. -Bob

I have no idea where you are going with this....

The moderator of the blog has taken steps to stop troll like posts such as the one you have retrieved from archives ( Although...why you would take the trouble to do this remains a mystery to me) and you are not happy????

Seems to me that the only unhappy person would be the troll who can no longer post under others name  but each to their own :)

The blog moderator is not interested in stopping trolls. She is interested in stopping dissent otherwise she would have deleted the comment. - Bob

"...the blog moderator is not interested in stopping trolls. She is interested in stopping dissent otherwise she would have deleted the comment. - Bob"

And you would know this to be a true statement because.........?

shouldn't we dicuss about real estate here?  Any update?

Yea the price per sqfoot is interesting. I wonder if it reflects bungalo purchases for tear down infill builds?

It would, but I don't think many homes are being sold right now for bulldozing. The inner city builders still have inventory(old houses on 50' lots) which they're working their way through. - Bob

Bungaloes (especially inner city) always have higher price per sq foot than 2 stories generally.

I guess we'll have to watch housing starts next month to see if that was the case.

That 10 million dollar house is going to screw up the means and price per sqfoot in August if it goes through, so the pending average is probably a little too high (not the median though)

I agree the prices will come down eventually this fall but inventory is still too low to support a steep drop.

Bob do you know what rental vacancies are at? I seem to remember thinking that Calgary's vacancy rate was too high to support a house price increase in the near future?

I don't know about rental vacancies, but for homes listed on MLS, the % which are unoccupied is the same as it's been for the past two years Vacant Listings -Bob