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Thread: House Prices - due to tumble?

  1. #1

    Default House Prices - due to tumble?

    I googled Edmonton house price bubble and came across this site which has some interesting graphs, statistics and discussions putting our housing prices into a longer term perspective...

    http://edmontonhousingbust.com/files/090304-4.jpg


    "It’s quite sobering to realize that those who bought during the peak of the last bubble took at least 25 years to see their property values recover to what they paid for them when accounting for inflation. It should also serve as a warning to those looking to buy into the current market, as prices are still well above historical measures." - Historical Prices and Inflation

    http://edmontonhousingbust.com/2009/...and-inflation/



    I read this man's blog early last year and thought it was a good contrarian view to the idea that we were behaving so much more conservatively than our American neighbours. He makes some very interesting points and highlights some interesting statistics. Scroll down half way to the Alberta discussion... look for these headings:

    "Household financial leverage in the key oil producing regions of Canada is very high."

    "Statistics greatly understate Alberta’s dependence on oil revenues."

    "As frightening as these numbers appear, they are in fact conservative. The mortgage figures were compiled as of December 2007. Population figures are estimated as of October 2008. At least some of the new immigrants to Alberta, in 2008, would have purchased a home last year." Oilguy1

    http://www.stockhouse.com/Blogs/View...t.aspx?p=87557





    As an aside, it's interesting that this next very generic graph is a match to the controversial Kondratieff Long Wave - if anyone cares.

    http://edmontonhousingbust.com/files/091211-3.jpg
    Last edited by KC; 29-04-2010 at 09:11 PM.

  2. #2

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    Trudeau and the NEP had nothing to do with this, so who's to blame?
    Time will tell on this new Alberta Government.

  3. #3

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    So when is the tumble coming? When is a good time to buy?
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    Interest rates will head up.

    Housing prices will drop down.

    Can't have rising interest rates, and rising house prices without major wage increases (not going to happen in the next couple of years, for most).
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    Quote Originally Posted by Komrade View Post
    So when is the tumble coming? When is a good time to buy?
    When there's panic and doom and gloom from discussions with the common middle class.

    Probably become a vulture in the next two years.
    The world is full of kings and queens, who blind your eyes then steal your dreams.
    It's heaven and hell!

  6. #6

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    I thought that housing prices already had fallen significantly.

  7. #7

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    Just an observation from a few decades viewing or things....

    Doom and gloom forecasts almost always come true.

    Funny thing is it takes a few years of prediciting it, promoting its going to happen, getting people to believe its going to happen, then acting like its going to happen and then lo and behold it does happen.

    I've come to think that (outside of an external force like the NEP or Bank meltdown) the doom and gloom happens because of the predictions and promoting of the down turn.

    Pity it does work as well in makinig things get better.

    Tom

  8. #8

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    If you predict "doom" long enough, it will eventually come to pass. Conversely if you predict "boom" long enough, it too will come into effect!

    There are always "experts" out there and a lot of them have a product to sell.
    Edmontonian and proud of it!

  9. #9

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    Individuals and experts seldom make any difference. Right or wrong people will do what they will.

    My view is that housing was likely underpriced for a long time (during the 80s and 90s) and then that underpricing was quickly 'corrected' by the latest housing bubble. Now the issue is; has the correction gone far enough, or even too far?

    The only thing I know is that when I look at the potential selling price of my house, it seems way overvalued and when I look at what I'd buy - I'm just not tempted at current prices.

  10. #10

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    Why do people have the idea that their home will serve as a financial investment?

    Over the long term, the amount of time you're likely to live in a detached home (25+ yrs), the price should more or less follow inflation. In a country like Canada where we have so much available land, there is no rationale for housing prices rising faster than general inflation over the long term.

    Of course over the short term you can expect a lot more variability.

    If you are living in a crummy rundown apartment and really interested in moving into a home of your own, I think it you try to wait and "time the market" then it just means more time in the crummy apartment for you. Have fun!

    The #1 reason for buying a home should be for the extra space/lifestyle, not to make a profit off it.

  11. #11

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    I've always seen my house as a lifestyle asset. ...and I went against almost all learned 'financial' opinion in its selection. (i.e. just one of the many rules I broke - I didn't buy smallest house in the 'best' neighbourhood I could afford.)

    However, whether we like it or not, houses are a financial investment. When you sell, see if you can bring yourself to cut your asking price by 20% or 25% - just for the fun of it. As for inflation, I would expect that over time averaged prices should track inflation but I doubt that in our boom bust economy they will often price at that inflation adjusted price. They'll either over or undershoot, averaging out over time to a near inflation adjusted level with adjustments for population growth and its impact on demand or lack of it.

    My concern is that entry into this market comes with HUGE long term risk. Risk to the primary group of first time buyers - young couples. So when prices boom, young couples unwittingly impoverish themselves by choosing a higher standard of living now to a potentially much lower relative standard of living later. In most respects, the price they pay determines their return. If they substantially overpay they may never recover from that mistake. People that pay a lower price will soon have savings available to diversify and reduce their risk and exposure to one market and have a higher standard of living later in life. Of course, upgrading under similar circumstances can be proportionately just as bad.
    Last edited by KC; 09-05-2010 at 07:22 AM.

  12. #12

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    Quote Originally Posted by Transplanted_Edm View Post
    Why do people have the idea that their home will serve as a financial investment?
    We put down $20k on our house, which has grown into $200k equity in 7 years, a 1000% return. Over that period we paid less on mortgage payments (interest and principal) than what we were paying in rent. If that isn't a financial asset, I don't know what is.

    There is a saying, buy appreciating assets, lease depreciating assets. I have never made any money on an auto as an example. Land appreciates, buildings age and depreciate - this is why a small house on good land financially beats a big house on bad land.
    Last edited by moahunter; 09-05-2010 at 09:36 AM.

  13. #13

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    ^ Yeah but the only way you can realize financial gain from a hot housing market is to sell out and go to a lower cost housing market.

    If you sell your house but want to stay in Edmonton in an equivalent standard of house, you'd just need to sink that equity back in.

    That's why it's a fallacy - you need to trade equity vs. having a roof over your head.

    For people who paid like $89k for a home in 1992 that would be worth $350000 today, explain to me how they have access to that "gain"? They don't unless they sell their principal residence.

  14. #14

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    Quote Originally Posted by Transplanted_Edm View Post
    ^
    For people who paid like $89k for a home in 1992 that would be worth $350000 today, explain to me how they have access to that "gain"? They don't unless they sell their principal residence.
    They could take out a reverse mortgage. House over head, and an annual payment of perhaps $50,000 per year, most of it tax free, until death (depending on age).

    Or they could sell and rent. I don't understand your point, I know a house is less liquid than shares or gokd but it is still an asset. The power of easy leverage is why many people have made a lot of money from prooerty as a financial asset.

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by Transplanted_Edm View Post
    ^
    For people who paid like $89k for a home in 1992 that would be worth $350000 today, explain to me how they have access to that "gain"? They don't unless they sell their principal residence.
    They could take out a reverse mortgage. House over head, and an annual payment of perhaps $50,000 per year, most of it tax free, until death (depending on age).

    Or they could sell and rent. I don't understand your point, I know a house is less liquid than shares or gokd but it is still an asset. The power of easy leverage is why many people have made a lot of money from prooerty as a financial asset.
    Obviously reverse mortgages are more applicable to retirees or those nearing retirement due to the minimum age 60 requirement. Those under 60 can apply for a line of credit against your house. But both of these instances are loans after all on which interest is due at varying points in time. Ideally, if one is willing to downsize housing in their retirement years it is more cost effective to simply sell and buy cheaper or rent.

    Some people have been known to sell their houses when prices peak and rent whilst waiting for the next market downturn. If someone like Moahunter sold to realize their $200k in equity, one could conservatively invest that money in a bond ladder yielding 5% per annum (per current market rates) that would help subsidize one's monthly rent. A portfolio of dividend yielding stocks would be more tax effective although more risky in terms of loss of capital. Where else can one make capital gains of $200k without having to pay taxes?

    Not that this is necessarily everyone's cup of tea. As KC has pointed out, a house is also a lifestyle asset and if one has a home they are emotionally attached moving into an apartment is undesirable. But from a purely dollars and cents point of view this could be justified.
    Last edited by norwoodguy; 10-05-2010 at 03:07 AM.
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    Quote Originally Posted by moahunter View Post
    They could take out a reverse mortgage. House over head, and an annual payment of perhaps $50,000 per year, most of it tax free, until death (depending on age).
    it would have to be one hell of a house, or be on your deathbed to get that kind of cash from a reverse mortgage.

  17. #17

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    If you need the money you'll look where ever you can find it thus having a house represents diversification.

    The problem is that if prices go into bubble territory then young couples are forced to put all their eggs in one basket - for a long, long time.

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    Quote Originally Posted by KC View Post
    If you need the money you'll look where ever you can find it thus having a house represents diversification.

    The problem is that if prices go into bubble territory then young couples are forced to put all their eggs in one basket - for a long, long time.
    This ties in quite nicely with this topioc - http://www.connect2edmonton.ca/forum/showthread.php?t=17087

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    Quote Originally Posted by andy8244 View Post
    Quote Originally Posted by KC View Post
    If you need the money you'll look where ever you can find it thus having a house represents diversification.

    The problem is that if prices go into bubble territory then young couples are forced to put all their eggs in one basket - for a long, long time.
    This ties in quite nicely with this topioc - http://www.connect2edmonton.ca/forum/showthread.php?t=17087
    how? particularly if prices are not in fact substantially in "bubble territory"?
    "If you did not want much, there was plenty." Harper Lee

  20. #20

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    Quote Originally Posted by whynow99 View Post
    Trudeau and the NEP had nothing to do with this, so who's to blame?
    I was around for that one. No comparison. Absolutely none. Foreclosure lawyers had full time practices back then, doing nothing but real estate foreclosures. That hasn't happened here yet.

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    When I hear my parents and other people talking about double digit interest rates it sounds like another planet to me.

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    Quote Originally Posted by Halo View Post
    Quote Originally Posted by whynow99 View Post
    Trudeau and the NEP had nothing to do with this, so who's to blame?
    I was around for that one. No comparison. Absolutely none. Foreclosure lawyers had full time practices back then, doing nothing but real estate foreclosures. That hasn't happened here yet.
    i was around as well... the foreclosures and the institutional/lending failures of insurance and trust firms as well as developers and landlords was mind-numbing. on the residential side, the foreclosure situation was almost overshadowed by the property management issues of looking after empty houses where the bank didn't even have to foreclose...
    Quote Originally Posted by Marcel Petrin View Post
    When I hear my parents and other people talking about double digit interest rates it sounds like another planet to me.
    ... the banks didn't even have to foreclose because on receipt of the renewal notices that had rates go from 10.75% (which was actually considered to be a very attractive rate) to 20.75% or more, people would simply pack up and leave the province, dropping the house keys off at the bank on the way. it was a pretty sad planet all around.
    "If you did not want much, there was plenty." Harper Lee

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    I remember my first years RRSP purchase had a 19% interest rate benefit into the plan ...........
    I think that CSB's were about 17.5% that year

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    Default Nearly 20% of Homes Overvalued: Report

    "Twenty per cent of homes in BC are considered overvalued, 17 per cent in Alberta, 13 per cent in Manitoba and Saskatchewan, 13 per cent in Quebec, 11 per cent in Ontario and 8.6 per cent in Altantic Canada."

    Globe and Mail Article

    All the same a 5-10% price correction could potentially be better than a 20+% stock market correction although the period for price recovery will likely be longer.
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    Quote Originally Posted by norwoodguy View Post
    "Twenty per cent of homes in BC are considered overvalued, 17 per cent in Alberta, 13 per cent in Manitoba and Saskatchewan, 13 per cent in Quebec, 11 per cent in Ontario and 8.6 per cent in Altantic Canada."

    Globe and Mail Article

    All the same a 5-10% price correction could potentially be better than a 20+% stock market correction although the period for price recovery will likely be longer.
    the fact that someone else (even an institutional someone else) thinks your home is overvalued probably doesn't have much real, direct impact on a day to day basis as to whether you choose to remain living there or not (and either way you still have to live somewhere) just as someone else's thinking that your home is undervalued probably doesn't have that much real, direct impact on you either if you cannot afford to keep it for whatever reason. home ownership will almost always be an individual and personal choice, not a market choice, for most people.
    "If you did not want much, there was plenty." Harper Lee

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    Quote Originally Posted by kcantor View Post
    the fact that someone else (even an institutional someone else) thinks your home is overvalued probably doesn't have much real, direct impact on a day to day basis as to whether you choose to remain living there or not (and either way you still have to live somewhere) just as someone else's thinking that your home is undervalued probably doesn't have that much real, direct impact on you either if you cannot afford to keep it for whatever reason. home ownership will almost always be an individual and personal choice, not a market choice, for most people.
    I agree for the most part. There hasn't been the degree of speculation locally that there was in the US with mortgages being proffered in a criminal fashion and speculators sometimes juggling several homes with the hope of flipping them quickly. As one wealthy American put it, he saw the writing on the wall when his housekeeper was flipping houses and holding down a couple of mortgages.

    A small retrenchment in house prices is not a bad thing, IMO affordable housing is a major quality of life indicator. For large cities like Vancouver and Toronto the lack of affordable housing puts pressure on the middle class that detracts from what advantages may lie from living there.
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    Quote Originally Posted by norwoodguy View Post
    A small retrenchment in house prices is not a bad thing, IMO affordable housing is a major quality of life indicator. For large cities like Vancouver and Toronto the lack of affordable housing puts pressure on the middle class that detracts from what advantages may lie from living there.
    which in a strange sort of way is good for Edmonton real estate, as our housing is relatively more affordable. That's what makes this latest report a bit strange, we have that other one saying that both Vancouver and Toronto are less affordable than Edmonton and in more of a bubble, but this one reached a different conclusion.

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by norwoodguy View Post
    A small retrenchment in house prices is not a bad thing, IMO affordable housing is a major quality of life indicator. For large cities like Vancouver and Toronto the lack of affordable housing puts pressure on the middle class that detracts from what advantages may lie from living there.
    which in a strange sort of way is good for Edmonton real estate, as our housing is relatively more affordable. That's what makes this latest report a bit strange, we have that other one saying that both Vancouver and Toronto are less affordable than Edmonton and in more of a bubble, but this one reached a different conclusion.
    Less affordable, but more desirable. Location always sells.

  29. #29

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    From Chou Funds semi-annual report...

    I wonder long term how Edmonton, Calgary will perform (assuming rising oil demand or peak oil or whatever keeps oil prices high).

    Interesting that Chou doesn't recommend much leverage (is suggests people not borrow much). If we see the highly expected inflation going forward, the more debt one has the better. Plus rates are relatively low right now.

    Personally, debt scares the heck out of me but in the 70s those with the greatest mortgage debt sure did well until things turned down.



    http://www.choufunds.com/pdf/SemiAR11.pdf

    "Canadian Real Estate

    Among the G8 nations, Canada has done the best since the Great Recession of 2008 and has been widely lauded for its fiscal and economic performance. Its real estate prices have reflected that positive opinion. But therein lies the problem. In most countries, real estate prices have declined substantially, while in most of Canada, especially in the big cities, prices have actually increased. Based on ratios such as rent-to-house-price and disposable-income-to-house-price, Canadian house prices are out of line with historical standards. In addition, household debt as a percentage of disposable income is unprecedentedly high. This does not mean that Canadian real estate prices will decline soon, but it does indicate that valuations are stretched. We would be cautious in this environment. If there is a choice, it is better to rent rather than buy a house. However, if you are determined to buy a house, we would urge you to do so without borrowing too much money."

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    Default Edmonton’s housing most affordable in Canada, survey shows

    EDMONTON - Edmonton enjoys the most affordable housing of Canada’s six major metropolitan regions, according to a study released Monday.".............
    Cox and Pavletich specially denounce urban growth boundaries, which restrict the amount of land available for new housing development in places like Auckland, New Zealand and Portland, Ore. The authors advocate repealing such legislation where it exists to restore housing affordability.
    http://www.edmontonjournal.com/busin...570/story.html
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  31. #31

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    Toronto not in condo bubble:*RBC
    John Shmuel* Jul 24, 2012

    http://business.financialpost.com/20...do-bubble-rbc/

    Canada House Prices Set To Collapse 25 Per Cent In Long Term: Capital Economics
    CP *|* By Melinda Maldonado, The Canadian Press
    Posted: 07/25/2012

    http://www.huffingtonpost.ca/2012/07...#slide=1068276
    excerpt:

    "We've got house prices now that are just so completely detached from underlying fundamentals," he said.

    Rabidoux said the most likely scenario is either a quick correction or a slower correction, also known as a "soft landing."

    "There is just no way to duplicate the last decade in real estate prices here in Canada absent government loosening credit requirements, which I think is really off the table."

    "The report comes just a day after a Royal Bank of Canada report said there's no housing bubble in Toronto, one of the country's hottest markets."

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    With population going up every year, I don't see any bust coming soon. People will have to live somewhere whether they rent or buy. People often forget that when we talk about buyers, we are also including investors who are looking to be landlords. If price is too high for people to buy, they will rent which encourages investors to buy.

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    ^I think the biggest concern for Tornoto is the rental yields on condos. If they drop to much, then that would indicate that prices of new condos should fall. If I moved to Toronto today, I would probably rent, as there are a lot of amazing properties available for very reasonable rents downtown, in brand new buildings, for less than 2k. Its a very different story in some other cities.

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    CBC news had a story on The National tonight in regards to prices in Vancouver have dropped by 18% in the second quarter of 2012 and the Toronto condo market is retracting by 20% in the same time period but Calgary prices went up by 16% and Edmonton homes listed above $450,000 went up by 23%.Up to July.

    http://www.cbc.ca/player/News/Canada/ID/2263358804/
    Last edited by NielCole; 03-08-2012 at 01:39 AM.

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    Quote Originally Posted by NielCole View Post
    CBC news had a story on The National tonight in regards to prices in Vancouver have dropped by 18% in the second quarter of 2012 and the Toronto condo market is retracting by 20% in the same time period but Calgary prices went up by 16% and Edmonton homes listed above $450,000 went up by 23%.Up to July.

    http://www.cbc.ca/player/News/Canada/ID/2263358804/
    i believe it's the number of sales that has dropped year over year - vancouver sales prices haven't dropped and are pretty much at the same levels as last year and toronto's pricing is pretty much on a par with where they started the year. volume and pricing, although related, are not the same thing.
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    our pricing is on par as well from last year.
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    It should get interesting. I hope people don't get into the usual knee jerk behaviour if the reality is going to be falling prices. In equities people tend to get all uptight and focused on the short-term rather than see any value in falling prices.

    Note the person below that is willing to wait yet spends every weekend shopping for a house. (My view of waiting on lower housing prices is more like 3 - 5 yrs, not weeks and months like this person seems to be doing.)


    Canada braces as housing slowdown takes hold
    Andrea Hopkins, Reuters | Nov 5, 2012

    http://business.financialpost.com/20...wn-takes-hold/


    excerpt:
    "Canadian households hold more debt than American families did before the U.S. housing bubble burst, which has led the government to tighten mortgage lending rules four times in four years."

    ..." “We have all the time in the world, and we’re waiting to find some value,” said Sandra Blake, a lawyer who moved back to Toronto from Geneva with her husband two years ago and has been waiting for a more sensible market to buy. "

    Blake spends every weekend touring open houses..."

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    This thread is 2.5 years old, when exactly are house prices tumbling?

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    If the thread lasts long enough, we may get there...
    They're going to park their car over there. You're going to park your car over here. Get it?

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    Report in journal today that Edm/Cal lead the nation in housing growth, $ and rents.
    www.decl.org

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    i saw an ad on TV for some condo development, 2 bedrooms for $120,000! that's so cheap, i wish i could remember the name of it to find out if its in a good area etc. much cheaper than rent

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    In order for housing market to tumble, there have to be decreasing in demands. As long as people move to Alberta from other provinces and countries, housing market in Edmonton is not going to tumble.

    I have noticed that raise of the housing price may be linked to raise of City's property tax. Price of building a new house is same as 2010, but the price of a lott has raised dramatically. Shop around, and ask salespeople.

  43. #43

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    Honestly don't know why Edmonton's housing hasn't skyrocketed with the massive population growth, coupled with buying power, over the past few years. Yet in softer economies like Vancouver and Toronto, they had a massive real estate boom that only cooled down this year.

    The only thing I can think of is the boom town mentality. People moving here for work aren't necessarily planning on staying. And noone wants to make roots in an oil town that doesn't have the rosiest outlook (US is buying less and less, difficult to get it overseas).

    But I think Edmonton, as a city, has a lot to offer and people are starting to come to realize this. Though I don't want a boom like 2006/2007, I would like to see a steady and strong rise in prices which would be a sign of our good economy and that people are willing to stay here.

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    Quote Originally Posted by bolo View Post
    Honestly don't know why Edmonton's housing hasn't skyrocketed with the massive population growth, coupled with buying power, over the past few years. Yet in softer economies like Vancouver and Toronto, they had a massive real estate boom that only cooled down this year.

    The only thing I can think of is the boom town mentality. People moving here for work aren't necessarily planning on staying. And noone wants to make roots in an oil town that doesn't have the rosiest outlook (US is buying less and less, difficult to get it overseas).

    But I think Edmonton, as a city, has a lot to offer and people are starting to come to realize this. Though I don't want a boom like 2006/2007, I would like to see a steady and strong rise in prices which would be a sign of our good economy and that people are willing to stay here.
    much of the "boom" vancouver and toronto experienced was investment and speculation, both local and off shore, and not strictly demand for housing. edmonton's demand has almost entirely been end user demand with very little speculative investment. we avoided the artificial portion of their "booms" but also don't have an artificial floor that is going to "drop off"...
    "If you did not want much, there was plenty." Harper Lee

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    ^Agreed. But with our economics and immigration, I would expect to see a rise in prices. So far, pricing per sqft hasn't really changed in the last 3 years. The growth in average house pricing we have seen is attributed to the growth of the size of the average house sold.

    http://edmontonrealestateblog.com/20...-edmonton.html

    I would feel better if average price per sqft rises. It would show that our land values are appreciating and promote densification.

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    Quote Originally Posted by bolo View Post
    Honestly don't know why Edmonton's housing hasn't skyrocketed with the massive population growth, coupled with buying power, over the past few years. Yet in softer economies like Vancouver and Toronto, they had a massive real estate boom that only cooled down this year.
    Location, location, location.
    "The only really positive thing one could say about Vancouver is, it’s not the rest of Canada." Oink (britishexpats.com)

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    I prefer it when house prices stable out. I bought the house I live in now in 1997 and it has gone up x3 since I bought it. All well and good if I was thinking of selling but I'm not. Sure if I was moving out of town and did sell I would make a good profit but that could be taken up depending were I bought again. The people who could get caught up badly in fluctuating house prices are people in the military who buy high and then they are transferred out. If the price of their house has gone down considerably they stand to loose a fair amount of money.
    "The man who does not read has no advantage over the man who cannot read." –Mark Twain

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    Quote Originally Posted by Gemini View Post
    I prefer it when house prices stable out. I bought the house I live in now in 1997 and it has gone up x3 since I bought it. All well and good if I was thinking of selling but I'm not. Sure if I was moving out of town and did sell I would make a good profit but that could be taken up depending were I bought again. The people who could get caught up badly in fluctuating house prices are people in the military who buy high and then they are transferred out. If the price of their house has gone down considerably they stand to loose a fair amount of money.
    RCMP sort of make up the difference. Couldn't tell you about the military, but one would expect them to have something similar?
    "The only really positive thing one could say about Vancouver is, it’s not the rest of Canada." Oink (britishexpats.com)

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    ^ Oh, that's nice. If I get transferred out I'd get squat. No taxpayer funded make-up $$ for me. Shoulda been a Mountie rather than get 'mounted', I guess.
    Nisi Dominus Frustra

  50. #50

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    Quote Originally Posted by Thomas Hinderks View Post
    Just an observation from a few decades viewing or things....

    Doom and gloom forecasts almost always come true.

    Funny thing is it takes a few years of prediciting it, promoting its going to happen, getting people to believe its going to happen, then acting like its going to happen and then lo and behold it does happen.

    I've come to think that (outside of an external force like the NEP or Bank meltdown) the doom and gloom happens because of the predictions and promoting of the down turn.

    Pity it does work as well in makinig things get better.

    Tom
    I don't agree. In fact I think it more often the other way around. People at heart are optimists. That's why bubbles build slowly and go to great extremes, while collapses occur rapidly. Look at the 2000s credit bubble and collapse, or Alberta's 1970s bubble vs. it's 1980s bust. People think the good times are going to just roll along forever, despite the doom and gloomers's bad vibes, which get repeatedly discredited. Plus doom and gloomers's are rarely successful people and rarely have much money or influence, because they have a mind set that they can't break out of.

    Once a bust occurs though, then the late arrivals to the bubble develop a persistent risk adverse nature after having suffered huge losses. The buy high sell low'ers. Some jump right back in, since they got rich in the last bubble, but if the slide continues for a while, they eventually lose it all due to a misplaced faith in recovering prices, despite potential long lasting over capacity.

  51. #51

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    I'm glad to be in Edmonton and not Toronto or Vancouver...


    When the Canadian Housing Bubble Pops
    Strong average loan/value ratios may not fully protect the country's banks.

    http://news.morningstar.com/articlen...aspx?id=596540

    Is the Canadian Housing Market Falling Apart?
    13 May 2013 | 7:02 AM ET
    http://www.cnbc.com/id/100725735
    Last edited by KC; 15-05-2013 at 02:06 AM.

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    Anyone else get the feeling that most major Canadian media outlets are downright cheerleading for a housing downturn or outright collapse?

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    And in the above case American outlets.

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    Quote Originally Posted by Marcel Petrin View Post
    Anyone else get the feeling that most major Canadian media outlets are downright cheerleading for a housing downturn or outright collapse?
    Given the how they opened the year, it'd be pretty embarrassing for them if it didn't crash.


    "For every complex problem there is an answer that is clear, simple, and wrong"

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    Wouldn't be the first or last time they embarrass themselves. Truthiness seems to push newspapers and magazines.

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    Quote Originally Posted by jmart81 View Post
    Wouldn't be the first or last time they embarrass themselves. Truthiness seems to push newspapers and magazines.
    Who buys newspapers and mags anymore. They're desperate.

    However, at least the scare mongering offsets the endless cheerleading that all the vested interests engage in, no matter how damaging it can be to young innocent inexperienced homebuyers.

    Almost no one out there wants just fair and reasonable home prices.

  57. #57

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    Quote Originally Posted by Paul Turnbull View Post
    Quote Originally Posted by Marcel Petrin View Post
    Anyone else get the feeling that most major Canadian media outlets are downright cheerleading for a housing downturn or outright collapse?
    Given the how they opened the year, it'd be pretty embarrassing for them if it didn't crash.

    How's it going out there?

    Canada's Central Bank is removing any wording about normalizing interest rates. A worldwide trend according to a Bloomberg article.

    The Great Subsidy looks set to become permanent. I feel I should be borrowing heavily and buying something, anything.

    This article was interesting...

    Did Monetary Policy Cause the Recovery? - October 21, 2013
    http://www.hussmanfunds.com/wmc/wmc131021.htm





    I'm back. So it seems all is well in Vancouver according to these folks:

    Vancouver home sales rebound with 64-per-cent upturn - The Globe and Mail

    Excerpt:

    "In Vancouver’s closely watched west side, the index price for single-family detached sales last month was $2,089,700, up $1,000 from September, 2012. While that is an increase of only 0.05 per cent, it marks an improvement from January, when the West Side’s detached index price dropped 7.5 per cent year-over-year.

    A balanced market has emerged, with buyers in a calm state of mind ..."
    http://www.theglobeandmail.com/repor...ticle14659128/



    .
    Last edited by KC; 24-10-2013 at 06:04 PM. Reason: Add Vancouver link

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    Edmonton won't experience a housing bubble, in-fact, immense data that I have collected suggest new home prices rising over the next couple years, albeit gradually.

    Calgary on the other hand... I am going to the Calgary Real Estate forum tomorrow, should be interesting what people have to say.

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    Quote Originally Posted by KingCalvin View Post
    Edmonton won't experience a housing bubble, in-fact, immense data that I have collected suggest new home prices rising over the next couple years, albeit gradually.
    More or less accurate. Consistently desirable locations such as Toronto or Vancouver will always overinflate and then somewhat readjust. Prices in second or third tier cities such as Edmonton and the like are slowly dragged upward by the demand created on the back of the upswings and the general upward trend in property prices over time.

    That said, Edmonton being a boom/bust town things can change in a heartbeat due to the erratic nature of industries that underpin it.

  60. #60

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    ^ You should play tennis with that excellent backhand. Nice "second or third tier" dig.

    Just what are you an expat of BTW?

  61. #61

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    Quote Originally Posted by PJC View Post
    ^ You should play tennis with that excellent backhand. Nice "second or third tier" dig.

    Just what are you an expat of BTW?
    Hilarious !

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    Quote Originally Posted by PJC View Post
    ^ You should play tennis with that excellent backhand. Nice "second or third tier" dig.

    Just what are you an expat of BTW?
    A first tier city.

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    A first tier city that couldn't provide for you and your family??? Sounds like a fantastic place

  64. #64

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    Quote Originally Posted by Hilman View Post
    A first tier city that couldn't provide for you and your family??? Sounds like a fantastic place
    We've been there too. In the '80s Alberta had net migration out of the province. We ran up our municipal debt levels, muni and provincial budgets, adopted grand life styles, became wholly dependent on rising oil prices and oil & gas development and then the NEP and falling oil prices did us in. I don't think " tier" what ever the heck that might really mean makes any difference.

    Question: With the 2008/09 recession, even with the massive taxpayer and central bank bailouts of banks and auto companies, did several major eastern cities fall off their tiers? Or is it the access to massive bailout money that makes a tier 1 city a tier 1 city? With everyone else in the country being driven to tears instead?


    .
    Last edited by KC; 29-10-2013 at 09:28 AM.

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    Why are you referencing the net migration loss from 30 years ago, is that really relevant? So when are Edmonton's housing prices collapsing again, its been 3 years since this thread started.......

  66. #66

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    Quote Originally Posted by expat View Post
    Quote Originally Posted by PJC View Post
    ^ You should play tennis with that excellent backhand. Nice "second or third tier" dig.

    Just what are you an expat of BTW?
    A first tier city.
    Me too. Toronto. Also spent many years in Vancouver and L.A.

    How about you specifically?

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    There's never been a better time to buy. As any Real Estate agent
    aka Jim Good; "The sooner you fall behind, the more time you have to catch up." - Steven Wright

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    humbag!

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    Quote Originally Posted by Hilman View Post
    A first tier city that couldn't provide for you and your family??? Sounds like a fantastic place
    London provided magnificently, both financially and culturally, but doesn't happen to be part of our long term plans.

    For us Edmonton is merely a convenient (if somewhat regressive) stepping stone to said long term goals.

  70. #70

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    Quote Originally Posted by Hilman View Post
    So when are Edmonton's housing prices collapsing again, its been 3 years since this thread started.......
    I think people who rent often try to convince themselves they are making the right decision by hoping things are going to collapse. Sad thing for them, is that while they are paying off somebody elses mortgage through their rental payments, somebody is building up equity (the rentor). Oh well, disaster is just around the corner (isn't it always?). Meanwhile, since the thread started, my floating mortgage has contunued around 2percent, and I've built up an additional equity of about 50k. It will take quite a dip to make that go away.
    Last edited by moahunter; 29-10-2013 at 02:39 PM.

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by Hilman View Post
    So when are Edmonton's housing prices collapsing again, its been 3 years since this thread started.......
    I think people who rent often try to convince themselves they are making the right decision by hoping things are going to collapse. Sad thing for them, is that while they are paying off somebody elses mortgage through their rental payments, somebody is building up equity (the rentor). Oh well, disaster is just around the corner (isn't it always?). Meanwhile, since the thread started, my floating mortgage has contunued around 2percent, and I've built up an additional equity of about 50k. It will take quite a dip to make that go away.
    I'm a homeowner, have been for over twenty years. I also have other real estate in and around Edmonton.

    The 3 year reference above is somewhat revealing. Like people that buy stocks saying that they are in for the long run but sell six months or a year later if the price has dropped, the long run to people is seldom over say four or five years. To me it's more like 10, 15, 20+ years on investments.

    My view is that history tends to repeat itself often after people decide that it won't. I'm not saying that prices are going to tumble anytime soon, especially here in Edmonton and in light of prices in Vancouver and Toronto, but for those that have leveraged their purchase via a mortgage and upwards of a 25 year commitment I think care needs to be taken. Young couples have to be especially careful and not buy into the hype of those with great past returns. It's the future that matters to them.
    Last edited by KC; 29-10-2013 at 03:31 PM.

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    Quote Originally Posted by KC View Post
    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by Hilman View Post
    So when are Edmonton's housing prices collapsing again, its been 3 years since this thread started.......
    I think people who rent often try to convince themselves they are making the right decision by hoping things are going to collapse. Sad thing for them, is that while they are paying off somebody elses mortgage through their rental payments, somebody is building up equity (the rentor). Oh well, disaster is just around the corner (isn't it always?). Meanwhile, since the thread started, my floating mortgage has contunued around 2percent, and I've built up an additional equity of about 50k. It will take quite a dip to make that go away.
    I'm a homeowner, have been for over twenty years. I also have other real estate in and around Edmonton.

    The 3 year reference above is somewhat revealing. Like people that buy stocks saying that they are in for the long run but sell six months or a year later if the price has dropped, the long run to people is seldom over say four or five years. To me it's more like 10, 15, 20+ years on investments.

    My view is that history tends to repeat itself often after people decide that it won't. I'm not saying that prices are going to tumble anytime soon, especially here in Edmonton and in light of prices in Vancouver and Toronto, but for those that have leveraged their purchase via a mortgage and upwards of a 25 year commitment I think care needs to be taken. Young couples have to be especially careful and not buy into the hype of those with great past returns. It's the future that matters to them.
    So you are saying prices aren't going to tumble any time soon yet make threads like this

    Time to admit you were just plain wrong....

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    Oh Hilman, KC just likes to make threads about anything and everything.
    They're going to park their car over there. You're going to park your car over here. Get it?

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    Quote Originally Posted by Gord Lacey View Post
    Oh Hilman, KC just likes to make threads about anything and everything.
    Though it must be said, at least some of his threads make a pleasent change from the "Another fantasy rendering", "Calgary has one, so we want one too" and "oh look, another burger joint" threads that this forum mainly comprises of.

  75. #75

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    Quote Originally Posted by Hilman View Post
    Quote Originally Posted by KC View Post
    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by Hilman View Post
    So when are Edmonton's housing prices collapsing again, its been 3 years since this thread started.......
    I think people who rent often try to convince themselves they are making the right decision by hoping things are going to collapse. Sad thing for them, is that while they are paying off somebody elses mortgage through their rental payments, somebody is building up equity (the rentor). Oh well, disaster is just around the corner (isn't it always?). Meanwhile, since the thread started, my floating mortgage has contunued around 2percent, and I've built up an additional equity of about 50k. It will take quite a dip to make that go away.
    I'm a homeowner, have been for over twenty years. I also have other real estate in and around Edmonton.

    The 3 year reference above is somewhat revealing. Like people that buy stocks saying that they are in for the long run but sell six months or a year later if the price has dropped, the long run to people is seldom over say four or five years. To me it's more like 10, 15, 20+ years on investments.

    My view is that history tends to repeat itself often after people decide that it won't. I'm not saying that prices are going to tumble anytime soon, especially here in Edmonton and in light of prices in Vancouver and Toronto, but for those that have leveraged their purchase via a mortgage and upwards of a 25 year commitment I think care needs to be taken. Young couples have to be especially careful and not buy into the hype of those with great past returns. It's the future that matters to them.
    So you are saying prices aren't going to tumble any time soon yet make threads like this

    Time to admit you were just plain wrong....
    I start threads like this to get discussions going not because I have a great belief in my ability to predict the future. I see some possibilities like anyone else but I hold few views about what The future will actually be like. On housing some people though believe they can predict the future and that it will be forever and continuously rising house prices. I like to challenge those beliefs by tossing out contrary opinions to see which arguments crumble.

    So ok, I guess I was plain wrong, but I'm not sure about what this time. I'm usually wrong about a lot of things.

    I however, can't predict the future, but I don't believe anyone else can either. Three years ago though I thought there were definitive risks. After the big increase we had and the US housing market crash I suspected that there was considerable risk that we would see a drop in prices too. I started this thread because I like to seek out the unconventional views and hash them out, since vested interests often spin the reality to their own benefit.

    We are lucky that we have one of the strongest economies in North America and oil resources were increasingly disappearing ("peak oil stuff") and world oil demand growing, thus keeping oil prices up. So I haven't been too surprised by house prices staying up here.

    Also, I'm a home owner with a long term view so I could care less about what short term house prices will do to my situation. Even if I miraculously somehow actually knew that prices we're going to tumble by half I wouldn't be selling.

    Now, Vancouver and Toronto prices not slumping by now is a real surprise to me. $2 million for a bungalow! That seems a bit pricy to me and it's hard to see my average house here in Edmonton actually being worth anything like $2 to $3 million let alone our market encouraging people to pay that for a house. To me that's Tulip mania like bubble prices. But it could happen. I'm still not used to our current prices (3X what I paid) though so I guess once I see them as normal, the sky's the limit.

    Quote Originally Posted by KC View Post
    Individuals and experts seldom make any difference. Right or wrong people will do what they will.

    My view is that housing was likely underpriced for a long time (during the 80s and 90s) and then that underpricing was quickly 'corrected' by the latest housing bubble. Now the issue is; has the correction gone far enough, or even too far?

    The only thing I know is that when I look at the potential selling price of my house, it seems way overvalued and when I look at what I'd buy - I'm just not tempted at current prices.
    Last edited by KC; 29-10-2013 at 08:22 PM.

  76. #76

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    Quote Originally Posted by expat View Post
    Quote Originally Posted by Gord Lacey View Post
    Oh Hilman, KC just likes to make threads about anything and everything.
    Though it must be said, at least some of his threads make a pleasent change from the "Another fantasy rendering", "Calgary has one, so we want one too" and "oh look, another burger joint" threads that this forum mainly comprises of.
    I love those threads. But I get bored quickly, so I'm amazed at threads with hundreds or thousands of postings that don't seem to me to be making any sort of collective headway. Those posters are amazing in their tenacity.

  77. #77

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    I'm renting a condo downtown at the moment. I don't plan to get into the market until I decide to have a family. I sure hope there's a new "crash" right around that time in roughly 2 years.

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    It seems that many delayed projects are coming to life. As Subaru mentioned in another thread there are 5 at about $19 billion. I don't like land prices now but my expectations are that they aren't going to go down. They held quite firm from the 07 crash as well.

  79. #79

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    Okay my experience: bought a house may 29th 2007. The absolute peak! My house was valued at $368000. It is only at $315. According to city assessment My wage has gone up over 25%. People are moving to Alberta at an alarming pace, I sat with a property underwater for 5 years. It is finally coming back, in the 80's it took 5-6 years from the bottom to get back to peak levels this year Calgary has reached this milestone while Edmonton is only springtime away.

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    Quote Originally Posted by Swillv8 View Post
    Okay my experience: bought a house may 29th 2007. The absolute peak! My house was valued at $368000. It is only at $315. According to city assessment My wage has gone up over 25%. People are moving to Alberta at an alarming pace, I sat with a property underwater for 5 years. It is finally coming back, in the 80's it took 5-6 years from the bottom to get back to peak levels this year Calgary has reached this milestone while Edmonton is only springtime away.
    assuming the house still "works" for you and your family, what it's worth - or not - shouldn't affect you too much but i wouldn't count on it only being worth its assessed value. if you do need to know i would pay more attention to what similar homes in your neighborhood are actually selling for or get an appraisal. as the assessment sets your taxes however, i wouldn't push for them to match...
    "If you did not want much, there was plenty." Harper Lee

  81. #81

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    As for taxes I believe the city has actually been very accurate. I had a value as low as 252000. That's quite a drop from the 2007 high. I own a house built in 1927, could use a foundation(has had previous fix before). And I live in west mount architectural heritage area. My home serves it's purpose, love the area, and provides shelter which a family will always need.

  82. #82

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    About housing bubbles, we have great fundamentals in Edmonton, real estate prices have increased substantially in both Toronto , and Vancouver, now it is Alberta's chance to experience very slight modest gains not a crash

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    Quote Originally Posted by Swillv8 View Post
    As for taxes I believe the city has actually been very accurate. I had a value as low as 252000. That's quite a drop from the 2007 high. I own a house built in 1927, could use a foundation(has had previous fix before). And I live in west mount architectural heritage area. My home serves it's purpose, love the area, and provides shelter which a family will always need.
    The city's assessments are generally very conservative, if only to ensure that they don't get flooded with people disputing them. I don't think I've ever seen an assessment within 10-15% of my condo's value.

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    ^this. They are often 10-20% low from my experience.
    www.decl.org

    Ottawa-Edmonton-Vancouver-Edmonton

  85. #85

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    Quote Originally Posted by Swillv8 View Post
    About housing bubbles, we have great fundamentals in Edmonton, real estate prices have increased substantially in both Toronto , and Vancouver, now it is Alberta's chance to experience very slight modest gains not a crash
    I tend to agree. However, never trust "fundamentals" to keep you from bankruptcy. Never trust a forecast, good or bad either. We had absolutely fantastic fundamentals in 1980 and two years later we were headed for a local depression.



    Now a question. I know everyone wants to see their own property's market value increase. However, who also wants to see Edmonton's overall market prices all move up substantially? Would you prefer a strong economy with or without rapidly rising house prices? Why?

  86. #86

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    I wish I had the name of a realtor based out of Calgary but he has amazing graphs, charts, statistics About the crash of the 80's, if my memory is correct. It took 18 months to find bottom and another 5years for pre recession highs to be met. Currently the markets are on course to repeat this common trend of real estate booms and busts.

  87. #87

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    For myself and a few others in my situation it would be nice to see inflation to be met on any investment, the run up of prices 2005,2006,2007 of course was unrealistic.

  88. #88

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    Quote Originally Posted by Swillv8 View Post
    I wish I had the name of a realtor based out of Calgary but he has amazing graphs, charts, statistics About the crash of the 80's, if my memory is correct. It took 18 months to find bottom and another 5years for pre recession highs to be met. Currently the markets are on course to repeat this common trend of real estate booms and busts.
    From the creator of the site in at the start of this thread.

    http://www.blogonomics.ca/

  89. #89

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    Alberta forecasted to have the biggest house price increase for 2014.

    http://www.ctvnews.ca/business/avera...crea-1.1595313
    "The man who does not read has no advantage over the man who cannot read." –Mark Twain

  90. #90

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    Quote Originally Posted by Gemini View Post
    Alberta forecasted to have the biggest house price increase for 2014.

    http://www.ctvnews.ca/business/avera...crea-1.1595313
    I wouldn't be surprised. But if so, that's too bad for most of us and our kids isn't it.

    Gemini, I believe I promised you no more Buffett quotes. However, how about videos? The first minute or so, on why Buffett prefers that his stocks fall in price.... . I'd say the same thinking should apply to house prices.

    http://youtu.be/Z4glkcb7HHE



    -
    Last edited by KC; 17-12-2013 at 06:29 AM.

  91. #91

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    I don't think the market is going to crash anytime soon. There are so many great paying jobs in Alberta, and so many people moving here, the demand keeps outpacing available stock.

    I do wonder if housing is unaffordable for many people in this province given the house prices. I currently rent and look at the prices and just shudder at the thought of buying a house (and my household income is a couple hundred thousand dollars a year)

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    Lots of affordable stock in the inner city in neighborhoods that are on the upswing.

    There's detached housing ranging from $150,000 tear downs - $250,000 solid houses that are usable, but have outdated finishes - all the way up to $500,000 infills. Whatever happened to buying and add value over time? It feels like an endangered species.

    First time home buyers seem to want to skip the first few rungs of the property ladder (I find, anyways).

  93. #93

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    Quote Originally Posted by Downtown View Post
    Lots of affordable stock in the inner city in neighborhoods that are on the upswing.

    There's detached housing ranging from $150,000 tear downs - $250,000 solid houses that are usable, but have outdated finishes - all the way up to $500,000 infills. Whatever happened to buying and add value over time? It feels like an endangered species.

    First time home buyers seem to want to skip the first few rungs of the property ladder (I find, anyways).
    Many people are petrified to 1) attempt renovations themselves, as many people don't have handyman skills anymore 2) hire a contractor and undertake a big renovation, as many people have had terrible experiences, and have been down right criminally ripped off by contractors in the past.

    To many it's not worth the stress, worry and time to attempt the strategies you suggest.

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    I get that.

    But, if people refuse to learn new skills, then there's something to be said about "learning" to tolerate those harvest gold appliances or that green tub. It's still usable.

    Instead of sitting on the sidelines complaining about affordability, wishing for that shiny new house they can't afford - they can have a decent, affordable place that will participate in price increases.

    My parent's first place in the 70's was a 450 sqft 1 bedroom apartment in Boyle Street. It got them in the market.

    Something's got to give somewhere - can't always have your cake and eat it too.

  95. #95

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    Quote Originally Posted by Downtown View Post
    I get that.

    But, if people refuse to learn new skills, then there's something to be said about "learning" to tolerate those harvest gold appliances or that green tub. It's still usable.

    Instead of sitting on the sidelines complaining about affordability, wishing for that shiny new house they can't afford - they can have a decent, affordable place that will participate in price increases.

    My parent's first place in the 70's was a 450 sqft 1 bedroom apartment in Boyle Street. It got them in the market.

    Something's got to give somewhere - can't always have your cake and eat it too.
    For me, you can, that's why I'm waiting ofr Blatchford. Inner city living, new houses.

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    If you shudder about the thoughts of buying a house right now, then you must think that Blatchford is going to be a very decent product at a very reasonable price?

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    ^yes it will be... reasonably in context and type.
    www.decl.org

    Ottawa-Edmonton-Vancouver-Edmonton

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    Quote Originally Posted by Downtown View Post
    If you shudder about the thoughts of buying a house right now, then you must think that Blatchford is going to be a very decent product at a very reasonable price?
    For the simple fact that it's right next to lrt and walking distance to stores etc means my family can live with 0 or 1 car instead of two. That's a massive savings over a lifetime just in transportation costs. Many inner city neighbourhoods aren't within walking distance to our offices downtown (especially in the winter) and aren't served that well by public transportation.

    Add in the fact that (most likely) they will be well built new homes, with warranties, that will probably be 3 bedroom 1250 sq foot range, then absolutely I think they will be good value.

    If the community turns out to be as great or sought after as Edmonton politicans think it will be then it will go up in value a lot faster than some dumpy fixer upper from 1920.

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    I guess until the price ranges and the products are released, it's all speculation, but I know you are privy to many things, Ian

    I'm very excited about Blatchford and I want to buy a townhouse as an investment, perhaps to even live in. I am budgeting $375,000-$400,000.

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    Quote Originally Posted by Johnny199r View Post

    For the simple fact that it's right next to lrt and walking distance to stores etc means my family can live with 0 or 1 car instead of two. That's a massive savings over a lifetime just in transportation costs.
    You're preaching to the choir. I haven't owned a vehicle since 2009.

    Quote Originally Posted by Johnny199r View Post
    Many inner city neighbourhoods aren't within walking distance to our offices downtown (especially in the winter) and aren't served that well by public transportation.
    Incorrect. All inner city neighbourhoods have really good ETS coverage - I depend on them since I don't have a car. Quite a few are serviceable to the LRT. If your offices are Downtown and you don't consider an area like, say, QMP not walkable there (especially in the winter), then Blatchford is?

    Quote Originally Posted by Johnny199r View Post
    Add in the fact that (most likely) they will be well built new homes, with warranties, that will probably be 3 bedroom 1250 sq foot range, then absolutely I think they will be good value.
    Good point - I agree with this 100%.

    Quote Originally Posted by Johnny199r View Post
    If the community turns out to be as great or sought after as Edmonton politicans think it will be then it will go up in value a lot faster than some dumpy fixer upper from 1920.
    Absolutely, but not everything in our inner city areas are "dumpy 1920's fixer uppers" - I stand behind my opinion there's something for almost everyone in the inner city.

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