Calgary market ‘totally out of whack’

Good news! Real estate ‘only goes up!’

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Listings soar as panicked homeowners seek to bail

‘The perfect storm’ says realtor as over 10,000 homes hit the market

CALGARY HERALD – Calgary’s MLS listings are currently “totally out of whack” surpassing the 10,000 mark in April and growing by the day while at the same time sales are slumping.

Listings are at an all-time high for single-family homes and condominiums and they are being described as “extraordinarily high.”

April MLS sales for single-family homes (1,363) in Calgary metro were the lowest for the month since 2000 while condo activity (581 sales) was the slowest since 2003 – even before the years immediately leading up to the city housing market boom in 2006 and 2007.

“If inventory was a tenth of what it is right now,” overall sales would still be pretty good, said Gary MacLean, a realtor with Re/Max Real Estate Central.

“But we have an inventory that is way out of control.”

MacLean said there are a few reasons for the continuing rise in active listings in the Calgary real estate market.

“You almost look at it like a perfect storm,” said MacLean. “You’ve got cost of living issues. People’s disposable incomes are being eroded quickly by food prices, gasoline, heating, and electricity. The cost of living in this town is going through the roof.

“The other factor is a lot of people got in the market when it was peaked and paid a lot for their house . . . With the cost of living going through the roof, the first thing to go is the house because they’re over-extended. They’re house poor.”

MacLean said recent data showing declines in housing starts and residential building permits also have a ripple effect on the local real estate market, as do speculators.

“Those are the people that went out and bought four, five, six, seven condos in a building that wasn’t going to be built for two years. All of those buildings are now being completed. Those people did not want to be landlords. They were going to buy the condo, hold it until the building came due and put it on the market,” said MacLean. “Well the problem is of course we have the highest number of condos in history for sale.”

At the end of April, the Calgary Real Estate Board was reporting the month-end inventory in Calgary metro for single-family homes at 6,881 listings (2,881 in April 2007) and 3,214 for condos (898 in April 2007). The average MLS sale price for a single-family home in April in the city was $474,564, up 0.07 per cent from a year ago while condos dropped by 5.11 per cent to $312,586.

As of Friday, CREB’s website was reporting active listings for single-family homes in the city were 6,999 with 1,369 sales in the past 30 days.

Total MLS inventory at the end of April under CREB, including towns outside Calgary, acreages and rural land, was 14,480, up more than 155 per cent from the 5,665 at the end of April 2007.

“We’ve never had anything like this . . . It is totally out of whack,” said MacLean, adding the inventory keeps rising every day with sales not keeping pace. “March, April, May are the three best months of the year (for sales). We’re not getting that. It’s actually falling.

“We have a giant inventory and we’re adding to it by hundreds a day. I don’t see anything good coming out of this. It’s a supply and demand scenario and prices rise when supply is low and prices fall when supply is high. And this is as high as it gets.”

The listings are “extraordinarily high,” said Don Campbell, president of the Real Estate Investment Network in Canada. “The pendulum has swung to the exact opposite of what it did over the last couple of years. You go back to that analogy that we finished playing golf like Tiger Woods. Now, we’re going to start playing like Mike Weir. What we’re doing is reinventing our swing.

“It’s not a reason to panic unless you’re trying to sell right now. Trying to sell right now is ridiculous. It would defeat the whole purpose for yourself.”

Campbell said Calgary is still seeing market activity but there are slower sales and higher listings which leads to a buyer’s market.

“The normal course of action over the last five years is that’s there a normal group of people who are listing their properties because they’re moving or just moving up and we’re going to continue to see those people trying to sell while the buyers are sitting back saying ‘you know what, I’m in no hurry. I’m going to sit back and wait’,” said Campbell, the author of two books – Real Estate Investing in Canada, and 51 Success Stories from Canadian Real Estate Investors.

“And what happens it becomes self perpetuating . . . We’re going to see less sales this year. We’re going to see more listings this year. I think there’s fear in the market.”

He said the province’s “economic fundamentals haven’t changed” but the “emotional fundamentals have changed.”

This is the highest level of total active listings we have on record right now, said Lai Sing Louie, senior market analyst in Calgary for Canada Mortgage and Housing Corporation.

“It wasn’t that long ago that we had a record high level of housing starts. All those houses are built and it means people are moving in there and selling their existing homes. That’s where the supply’s coming from,” said Louie.

“There are also investors who might not want to when there’s price pressure it’s not a good time to be speculating. That speculative market is probably cleaned out. I would say in terms of people trying to sell if you’re a speculator you’re probably selling. You wouldn’t be adding to the demand by buying in this kind of market right now because prices are wobbly and speculators don’t really like to participate in markets when price trends are not going up.”

Another factor is negative interprovincial migration in recent months so some people are leaving Calgary and selling their houses.

43 comments ↓

#1 Future Expatriate on 05.11.08 at 10:33 am

Next stop on the “totally out of whack” panic train… Vancouver/Vic BC. And eventually, all of Canada.

The bulls are partially right though… it won’t equal what happened in the US.

It will be WORSE. Because what will happen here will be ON TOP of what already happened south, and we have changing climate considerations as well. Much more severe winter storms.

Down south they didn’t see the freight train coming; we’ve seen it coming for a long time.

#2 Leah on 05.11.08 at 11:37 am

I wonder how this is going to look for BC. People here are convinced that it is the Albertans that are keeping the prices up.

Albertans are the new Rock Stars in BC. My RE agent would actually drool when he talked about Albertans and loved to brag how they would fly in by million dollar plus properties and fly out (which was great for us to hear when we were having trouble finding a house).

Comments?

#3 Jace on 05.11.08 at 12:08 pm

People keep telling me to buy here in Alberta. That prices will soon go up once the inventory erodes.

It’s funny how the basic principle of supply and demand evades people when it comes to housing. If this were a stock I would be running in the opposite direction.

#4 Leah on 05.11.08 at 1:25 pm

Climate Victoria

I have met quite a few Americans recently who are complaining about Victoria weather. They thought it was the California of Canada (they were here in the summer). They are disappointed. They should have done their homework. Fools.

We have friends who live in the Songhees and she said all the retirees complain about the weather – it is not what they thought.

I first thought “fools” but then again we moved here from Toronto 5 years ago and I have to be honest – both my husband and I thought the weather would be much nicer and not rain as much. I am cold all the time and find the grey 8/9 months of the year very depressing. We are in our early 40s and moved for job reasons. We are fools too.

Victoria is pumped as the California of Canada by developers and RE agents. I don’t get it. I know plenty of Brits that like it because it reminds them of England.

Lets be honest … if you don’t like snow this is probably the place to be (in Canada) but California it is not.

#5 Cam on 05.11.08 at 1:53 pm

At dinner last night I was talking with a friend who told me I should be in the market now, that I can never go wrong and it’s not coming down. He also suggested that I look at getting into the new infinity towers as an incredible opportunity. Despite what people might claim, Whalley is nothing like Yaletown. Never has been, never will be.

Here’s what 330,000 gets you in Whalley, mind you it includes an LCD TV!
http://vancouver.en.craigslist.ca/rfs/670984406.html

The ironic part of our conversation is that he really loves San Diego and is tempted to move there by selling his home and buying in their surpressed market. One example he cited was a 4 bedroom 3 bathroom 2500sq ft. duplex that has complete panoramic ocean views. One side of the house faced the pacific ocean, the other mission bay. He said that a house like that in Vancouver would cost millions and it has come down to $400,000 in San Diego. After he talked about how much better the climate was etc. etc. I asked him, don’t you think there’s something wrong with the picture you’ve just painted for me? His answer, it’s different here.

#6 John on 05.11.08 at 4:31 pm

Why is this happening in Calgary — in a provice where oil is booming — but not in Toronto — in a province which some say is already in a manufacturing-led recession?

Is it simply a matter that house prices in Calgary appreciated that much faster/higher and are more prone to a correction?

Wait. — Garth

#7 Terry on 05.11.08 at 5:21 pm

“If inventory was a tenth of what it is right now,” overall sales would still be pretty good, said Gary MacLean, a realtor with Re/Max Real Estate Central.
“But we have an inventory that is way out of control.”

I love how real estate agent can spin the market, I think maybe prices have hit levels people can no longer afford. I wonder how many people in Calgary who bought over the last couple of years are now starting to understand that there dream house has now become there nightmare as the real cost of owning a home is more than the monthly mortgage in there badly built homes. I think Calgary will see many more homes hit the market or as in the 1980’s the dollar home sales hit the market creating a real estate collapse. Calgary’s version of sub prime.

#8 John on 05.11.08 at 6:14 pm

Garth, thanks for saving me from making a really really bad decision. I was about to buy a big home in the 600 K range in Victoria but now I’m staying put for a while at least. I own a half duplex real close to downtown and have a really small mortgage.

This is coming to Victoria soon. I think Victoria and Vancouver will be hit harder than cowtown because of the level of stupidity here. There are still people who think the party’s still going! They think the west coast is immune. There’s ads for 1 bedrooom condos for rent for $1800 a month when the average rent is $750 for something like that. Who’s going to rent that? It’s coming and I feel sorry for some people but I certainly have no sympathy for the realtors.

#9 Beefeater on 05.11.08 at 7:45 pm

Is calgary a boom town because of the oil sands, or of speculative housing construction? Every white pickup in my neighborhood have logos for housing related companies not oil and gas.

The local condo complex has recently removed the 15 “For Sale” signs from the front entryway. Perhaps it was depressing for all those peak borrowers?

#10 David on 05.11.08 at 8:20 pm

It is always hard to gauge when the wealth effect turns into the poverty effect with respect to real estate ownership. In a normal functioning real estate market there is about 2% of the available housing stock turnover every year. When listings to sales are grossly imbalanced or there are an excess number of months housing inventory not clearing the market there are most assuredly big storm clouds on the horizon. Looks like the housing market completely overshot in Calgary.

#11 Terry on 05.11.08 at 9:06 pm

Unlike Vancouver which has run out of land Calgary has room to expand as land is abundant and vastly wasted in the inner city. In Vancouver your 1mil house is a $999,000 piece of land with a house either not worth restoring or will end up costing you to demolish. Land values in Calgary have gone way beyond what it is worth. Calgary has to start to understand that new subdivisions are not about how cheap builders can built new homes but is this a area you want to live in. This is typical of the Alberta mentality of the heck with the way it will look or function lets just make as much money as fast as we can. Driving through these new areas always bring that same tune to my mind “Little houses on the hillside……………”. Take a wild guess which areas will see the highest decreases in housing values first as the rising price of gas will make buyers think twice about living in these ugly subdivisions. Calgary has become another ugly example of American urban sprawl. Where the heck are the politicians?

#12 Jonesy on 05.11.08 at 10:24 pm

I agree. A 400,000 dollar home with 0 down mortgage + taxes as well commuting an hour or so to work, with gas at 1.50/liter(+), ends up eating most of the wages made at the job in town. These burbs will be the first to be abandoned and left to rot. These communities cannot self sustain. Not everyone can work at the local 7/11.

#13 Patrick on 05.12.08 at 1:47 am

Don’t panic… take it from the expert:

“It’s not a reason to panic unless you’re trying to sell right now. ”

Which means more than 10,000 sellers should be panicking right now? Or maybe not quite that many; do we count the ones who bought multiple units?

Am I ever glad I live in Vancouver… it’s different out here, isn’t it??!

#14 Dom-GTA on 05.12.08 at 6:17 am

http://www.canada.com/montrealgazette/news/yourbusiness/story.html?id=bc157021-e19a-4f1e-83bd-c8d1393e071c

Interesting story on why our lending practises are different from the rest of world.

Had a chuckle when I read the criticism of US Ninja loans and the next line is how there has been a huge increase in 40 year loans and 0 downs.

Wow, I must be missing something, but seems to me there are more parallels than differences.

Looking forward to a huge inventory glut in the GTA, would be nice to see a little sanity return.

#15 David on 05.12.08 at 9:31 am

Their may be structural differences between the Canadian and US banking systems, but the net effect of inflating the housing asset bubble is the same. The Canadian housing bubble came in the wake of dot bomb bust the same as the USA. Just because Canada has a banking system based on oligopoly practise, it does not necessarily follow that the patterns of corporate behaviour were appreciably different from those in the USA.
The real truth is that huge amounts of capital in both countries were in most instances misdirected toward the housing sector. Both Canada and the USA housing market bubbles were driven by weak fundamentals, negative savings rates and an ephemeral wealth effect associated with home ownership.
Sadly many of the new housing developments that popped up in the Calgary market are poorly constructed cookie cutter assembly line made homes. The price drop for the few will have a cascading effect. Many of the new developments are miles away from any type of services. If what is happening in central California communities like Stockton is any indicator, it really will be a case of their goes the neighbourhood in Calgary as well, when the bubble breaks.

#16 Alex on 05.12.08 at 12:37 pm

Posted by Donald J. Trump on 5/12/2008 at 10:33 AM

It’s hardly a surprise but in the midst of today’s terrible economy and the nation’s housing crisis, the majority of Americans say they don’t plan to buy a home anytime soon.

In fact, more than a quarter of homeowners worry that their home will lose value over the next couple of years, and one in seven mortgage holders are afraid that they won’t be able to make their monthly payments in time over the next six months.

People are worried that housing prices will continue to fall which is good news if you want to buy but obviously terrible if you have a house to sell.

In addition, we have record-high foreclosure rates and an estimated 9 million homeowners actually owe more on their homes than they are actually worth. If you’re in that situation, the best thing you can do is to sit tight if you can and try to weather out the storm.

If you’re one of the fortunate few who is looking to buy, you could hardly be in a better position. Shop around, find a house and make an offer. Chances are, any good deal will get accepted and if you have decent credit you should be able to get financing.

I think the housing market is going to get better and it’s going to get better fairly quickly. The market is depressed and that’s when you want to go in. So if you have the money, now’s when you want to go out and buy.

But that’s just my opinion. After all, what does Donald Trump know about real estate!

#17 Daniel on 05.12.08 at 12:46 pm

Where was Gary MacLean 6 months ago? Was he one of the people talking about how real estate would keep going up, up, up? I wonder if all those real estate “professionals” will talk about how they were wrong or were outright lying?

Thank goodness I found Garth’s website and book before I bought into the market in January. It’s just a waiting game now for me to see how low prices will go.

#18 David on 05.12.08 at 2:01 pm

Daniel, it is important to remember that the real estate bubble will deflate at different rates in different communities. It might be incorrect to assume their will be a perfectly linear pattern Canada wide. If one uses the USA pattern as a guide post, Cleveland and Detroit housing prices have already deflated to 1999 pricing levels due to community job losses and shrinking employment in the industrial sectors. Central California has deflated about 20% from peak prices due to a combination of weak borrowers and long commutes to work. South Florida has deflated to massive overbuilding of see through condos. Every market will have slight variations on the deflationary scheme.
The flimsiest markets with the largest number of marginal borrowers will naturally enough be the first to show accelerated declines in housing prices. Just because a market declines precipitously does not necessarily mean it is a good deal for the buyer when compared to the option of renting.
When the better quality properties show major signs of price softening and those least inclined to discount have to start swallowing losses might be the time to jump into the market.
The biggest declines naturally enough will occur in the over inflated junk property that will be the last to sell in a market downturn.

#19 Terry on 05.12.08 at 3:04 pm

How many homes are actually for sale? 10,000 homes is what MLS has listed for sale, what about the dozens of new web sites that have listings for private sales. A lot of home owners today are tired of high real estate fees are now turning to private listings in hopes of saving thousands in real estate fees. Kijiji alone has over 2,000 listings for the Calgary area. I would suggest the figure to be closer to 15,000 homes, a lot of these private sellers will get frustrated later on this year and will turn to real estate agents to try to sell there homes.

#20 Daniel on 05.12.08 at 3:50 pm

Hi Davd: I understand what you’re saying. I’m under no illusions about the nature of local markets (a decrease in Calgary, AB of 10% does not translate into a similar decrease in Neepawa, MB). This said, the prices in Winnipeg are very high relative to the local economy and the average age of homes available.

Winnipeg has no oil and a relatively small manufacturing sector. We are relying on call centres, mineral prices, and a few large federally and provincially funded construction projects (Floodway expansion, Hydro Building, bridges, etc) for our “booming” economy. When the construction projects end and the feds tighten their belts as a result of the slowdown in the global economy, Manitoba’s boom ends. For me, this will mean an end to the ridiculous bidding wars for homes.

In February, I saw a 50 year old house, with nary a lick of work done in 20+ years, albeit in a good (not great) end of town, sell for $209,000 ($35,000 above asking) when that same house would have sold for barely $60,000 five years previously.

Prices will be coming down out here too.

#21 Calgarian on 05.12.08 at 5:32 pm

I agree with the person who said it’s construction and not oil that has helped feed the frenzy in Calgary. And i think we’re going to find out just how many of those disgusting and depressing homes in the outer wastelands were actually ‘purchased’ by speculators who expected at least a 20% windfall by selling on completion 6 months after signing the building contract. It’s going to be ugly for some people, but hopefully housing will eventually return to normal pricing of about 3 times the average income.

#22 vultur on 05.12.08 at 7:14 pm

BTW, I guess Darth Mortgage missed this little bit of data:

>>>in Calgary, prices rose 5.3 per cent between March 2007 and March 2008, slightly faster than the 5.2 per cent increase between February 2007 and February 2008.<<<

#23 liverless on 05.12.08 at 9:13 pm

From the Calgary Herald May 7: “The poll said… 10 per cent of Calgarians already own an investment condo – the highest percentage among the six major Canadian cities polled (Greater Vancouver, Calgary, Greater Toronto Area, the Montreal Metropolitan Community, Halifax and Ottawa).”

10% is nothing to dismiss. When you put that together with some other facts, you get a picture that makes you really wonder how this is all going to play out in Calgary:

– as of the end of January Calgary had 8200 condos in construction, 30 months of supply according to CMHC (Calgary Herald, March 8).

– Since the beginning of the year Calgary had 4300 new multifamily starts (Calgary Herald May 8).

– Right now Calgary has over 3300 condos in inventory while sales are running at a little less then 600 a month (Daily Stats)

A downturn in the condo market, which given the supply situation described by the clippings above seems very possible, could be a recipe for a lot of wealth destruction in the city.

#24 vultur on 05.12.08 at 9:27 pm

David, you’re a bigger alarmist than Darth Mortgage!

Here’s the difference- US mortgages got packaged and securitized and bought by investors who were starved for yield and relied too heavily on rating agencies.

Canadian mortgages are originated by Canadian banks and stay on Canadian bank balance sheets. There is virtually no Canadian residential mortgage backed securities market to speak of. That doesn’t mean that the Sched-A’s didn’t get a little over-zealous, but they still do much better underwriting because the risk is not sold off to some faceless entity.

And yes, CHMC has also loosened their standards in the wake of the competition from GE but again, that only goes so far and only affects a limited amount of the market.

#25 Jas on 05.12.08 at 9:30 pm

we all beleive whatever we want to beleive.
Sure, in the long term real estate and stock market will go up…but how long is long?
If you have to wait for 20 years like RE in Japan or the stock market of 1972/73 then the argument of long term sounds a bit hollow, doesn’t it?
Long term has to be measured in relation to human life span. And waiting 10/15 + years for prices to recover, boy, that is rather XXX long!

#26 snapshot on 05.12.08 at 9:51 pm

Big drivers of the housing ‘boom’ are the amount of cash (or credit) sloshing around Calgary looking for a home (evidenced by the thirty-odd Porsche 911-variants I counted on the way home from work today), and those who were trying to get into that bracket by speculating, and a modest influx of people needing housing. The first 2 fed off of the last one.

#27 wealthyrenter on 05.12.08 at 11:05 pm

A couple of questions for the Calgary crowd.

Are there really people commuting >1 hour to work? I thought only Vancouver, Montreal and the Greater Toronto area traded postage sized lots for soul destroying commutes.

How much has the population of Calgary increased since the oil boom began?

I think the perception of non Albertans is that Calgary is probably the only place in North America with strong enough economic fundamentals for a sustainable housing boom. It strikes odd that it would be the first city to correct.

#28 Keith in Calgary on 05.12.08 at 11:16 pm

Once again Vultur, or should I say turkey, cannot tell the truth from his own lies…………

Most of the Canadian banks and credit unions, as well as trust companies, were involved in selling off packages of mortgages to the securities markets.

http://www.tdcanadatrust.com/invest/fixedinc/icrcipmb.jsp

http://www2.standardandpoors.com/portal/site/sp/en/ca/page.article/3,2,2,0,1148324636685.html

http://www.canequity.com/mortgage-news/archive/2003/2003-09-02_CMHC-introduces_variable_rate_mortgage-backed_securities.stm

http://www.equitabletrust.com/mortgages/mortgage_backed_securities.htm

http://www.mccarthy.ca/expertise_detail.aspx?id=195

#29 vultur on 05.12.08 at 11:24 pm

Wealth, the problem in Calgary is just too much speculation. Too many oil kings buying multiple houses and condos with their spare cash. I don’t think it will correct (again prices did rise) as much as level off and gradually absorb all the inventory. I think the town adds about 20,000 people per year. The inventory could be absorbed relatively quickly as long as the local economy stays red hot.

#30 Robert B. on 05.12.08 at 11:51 pm

This blog paints a bleak picture of Calgary so I’d like someone’s comments on this website:
http://www.bobtruman.com

He paints a rather rosy picture of Calgary.

#31 Terry on 05.13.08 at 12:06 am

Calgary’s population has grown from about 1mil in 2000 to about 1.2mil+ by the end of 2007. If you decided to take a stroll around Calgary it would be a 100km+ walk. Calgary only has one major freeway being Deerfoot Trail which runs north to south. Even the Trans Canada runs on 16ave which is stop light to stop light. If it takes you less than an hour to commute to work in rush hour consider yourself lucky. When I moved to Calgary in 1971 Calgary has just grown past 400,000 and the first leg of Deerfoot was still under construction.

#32 Another Albertan on 05.13.08 at 12:51 am

Wealthy,

There are most definitely people who are hitting the 1-hour mark. I know a few who work in the diametrically-opposite corner of city compared to where they live. Most would prefer not to be doing this, but when a job changes, a job changes. One guy spends 45m in each direction when hitting the best conditions. Miss the ideal travel window by a few minutes and it’s another 20 in each direction. All within the city limits.

I believe the population has been growing at a nominal number of around 25000/yr from 2001 to 2006. Stats in 2007 and 2008 may be off. Google will give you a more accurate set of readings.

And define “strong enough economic fundamentals”? High energy prices? Low full-cycle nat-gas prices combined with sky-high labour and material costs basically crushed nat-gas drilling in the past 18 months. The juniors have been generally trading well below their respective NAVs for quite a while. A lot of this was due to oilsand infrastructure work. In 2005 and 2006, the economics of conventional O&G was getting cannibalized by oilsands. Robbing Peter to pay Paul, in a roundabout way.

Right now, the major oil companies are rolling in cash. Their quarterlies reflect this. But as I look at their spend plans and confer with my associates, there is a lot of caution when it comes to kicking off net-new projects. No one is admitting it, but it is clear to a large number of us that the big players are hedging that the current price structure for energy will eventually pull back significantly.

The first part of June will hold the telltale signs, as companies are through the spring break-up period where drilling drops and will lay out their capex plans for the rest of 2008. Even with high prices for the product, it may still be uneconomical for some companies’ plays to work out.

A large number of people I know in Calgary are simply tired right now. Since 2005, it’s been an on-going slog. Yes, the money typically rolls in, but the pace is unsustainable. I liken it to people running flat-out every day but not realizing until too late that this is a marathon race, not a series of sprints. You can only go so far, so fast before you collapse – figuratively and literally.

#33 David on 05.13.08 at 2:48 am

Renter, sometimes people forget that Calgary is a very important air, rail and ground freight transportation hub, not to discount the energy sector at all, either. Life was pretty swell in Calgary when the Loonie was 63 cents per US Greenback. Calgary lives and dies by exports to the US market and the Loonie value. Right now, the Loonie is strong and the US export markets are weak except for oil. Under normal circumstances Calgary has great access to the huge US markets of California, right now that is not considered a competitive advantage. Calgary has incredible infrastructure for transportation, logistics and warehousing, so the city is hardly an economic 98 lb. weakling. The housing bubble is another story.

#34 snapshot on 05.13.08 at 7:58 am

AnAlb,
Having lived and worked in other economic ‘hot-spots’ throughout the world in the last couple of decades, I’ve seen that economic activity is not really impacted by some sort of collective ‘tiredness’. You wil always have people who are very motivated to perform (or to swindle others) in a rich environment because their present situation somewhere else is hopeless. The more desperate ones will push out (and lower salaries of) the established ones whenever possible. That has been going on since ancient Roman times. Just think of young people moving to New York and trying to ‘make it’ there – if you get tired, or old, or things just don’t work out you get the hell out while you have some cash left, and are replaced with the next young grad in line.

The established capital-holders will take advantage of that. For example, that is why most decent middle-class work has long since fled away from the USA to cheap manufacturing and service countries like China and India. ‘Sky-high labour’ costs in the Calgary/Fort Mac corridor will very quickly flop over to the other direction once the majority of extraction or upgrading plants have been completed in the next 8 to 10 years. Already, large numbers of residential labourers and trades have left for Saskabush. The industrial-construction trades will have it better than them for the next half-decade or so. Commodity prices will stay high, because the world market can easily transport and digest cement, steel, copper wire, etc to China, Abu Dhabi or wherever.

#35 snapshot on 05.13.08 at 8:14 am

wealthy,

The commuting traffic problem is catastrophic now. Think urban California or Texas. Only recently has upgrade construction on the most critical intersection (Glenmore & Macleod) been completed, but it’s a drop in the proverbial bucket. It’s a typical suburban-sprawl problem, where tons of people in all of the far-flung ‘burbs converge in & out every day in new gas-guzzlers.

There might not be a Lions Gate bridge to get stuck on for an hour, but the convergence of so many vehicles onto the major routes all at once has exactly the same effect. And that’s when the weather is good. Add in a freak snowstorm and the fun increases dramatically.

#36 Beefeater on 05.13.08 at 9:07 am

A young couple I work with purchased a small house in Calgary early spring 2007. After signing on the dotted line, their realtor assured them that after 1 year they would gain enough equity from appreciation to start buying investment properties in saskatchewan.

A year on, they certainly didn’t expect to see several virtually identical houses(or better) to their own on surrounding streets with asking prices 30-50k less then what they paid for their house.

I believe the extent of real estate speculation has more to do with borrowing against equity gains rather than spare cash of Calgary oil barons.

#37 Wealthy Renter on 05.13.08 at 5:26 pm

I just want to take a second to thank the people who wrote really detailed answers to my Calgary questions. Intersting persepectives all round.

#38 RM on 05.14.08 at 12:20 pm

Daniel,

You should have bought a house last year in Winnipeg and then sold it next year instead of doing nothing. You can’t win if you aren’t in the game. And that’s what housing has become in the past three years.

When Saskatoon boomed, that was your cue that you guys in Winipeg were next.

BC spread to Alberta which spread to Sask which now spread to Manitoba. It’s so obvious what’s happened.

So it looks like Brandon, MB is the next BOOMTOWN! Oh puke.

#39 nonplused on 05.14.08 at 6:29 pm

The Calgary commute is definately approaching 45 minutes because most people now live outside the McKnight-Deerfoot-Glenmore-Sarcee box but work right in the middle of the box downtown. The traffic is fairly freewheeling outside the box but if you are on any of those roads or inside them you go nowhere. Deefoot is supposed to be 100 kph but it’s less than 30 from 4-6 PM.

But the commute that kills is if your kids play sports! Try getting home, picking them up, then getting to a field on the far side of the box by 6:15! You have to leave work at 4!

#40 Schroedinger on 05.22.08 at 1:06 am

I walk to work in downtown Calgary. I pay 1375 for a 2 bedroom renovated condo within a 5 min walk of 17th ave, 4th street, and 10 mins of downtown. My rent includes all utilities and I have underground parking.

If I tried to purchase the condo that I currently live in, I would pay twice that per month, including all the utils, condo fees and prop tax…possibly more.

Why in God’s name would I buy when the market’s looking sour, buying means really significantly lowering my standard of living, and I’d have to drive to work every day and pay for parking??? sheesh. I’ll wait, thanks very much.

#41 Islander on 05.25.08 at 5:42 am

Vultur, you’re quoting stats from Feb and March. Might as well be quoting stats from 1953. Also, average prices are almost meaningless because they get distorted by a handful of big sales on the high end; median price is more meaningful. Lastly, the G&M ran a story the other day pointing out that a third to half of all mortgages in the past year were 40-year mortgages.
Having said all that, it’s not guaranteed that house prices will decline in nominal terms because governments the world over are in a race to inflate their currencies. Your $400K suburban box might still sell for $400K 10 years from now; of course, so could a loaf of bread.

#42 D on 01.30.09 at 11:20 am

Fundamental food for thought. Consider the bigger picture …

There is nothing worse than a state of denial. Production and consumption implies a distribution of wealth unfortunately such has been unsurped by greed and international globalization. All the activity that we deemed as an economy is based upon debt and the outsourcing of jobs. The situation in the U.S. is only worsening and the Obama money printing tree will only prolong the inevitable. The tide is about to go out and many people will be caught with their pants down. Canada is not immune to this and it will be hit hard. Housing prices in Canada will collapse as the demands for commodities go into free fall and the jobs that people rely upon are no longer there. Simply put until such time the jobs are reinstated back into the U.S.A. and away from the likes of China, and other third world economies there will be no economy and no solution in sight. Wild price fluctations in housing and oil are indicative of a unstable system and not something that you are suggesting be otherwise.

#43 D on 01.30.09 at 11:24 am

The is nothing worse than a state of denial. Production and consumption implies a distribution of wealth unfortunately such has been unsurped by greed and international globalization. All the activity that we deemed as an economy is based upon debt and the outsourcing of jobs. The situation in the U.S. is only worsening and the Obama money printing tree will only prolong the inevitable. The tide is about to go out and many people will be caught with their pants down. Canada is not immune to this and it will be hit hard. Housing prices in Canada will collapse as the demands for commodities go into free fall and the jobs that people rely upon are no longer there. Simply put until such time the jobs are reinstated back into the U.S.A. and away from the likes of China, and other third world economies there will be no economy and no solution in sight. Wild price fluctations in housing and oil are indicative of a unstable system and not something that they are suggesting be otherwise.