[JonnyCanuck]

Most of your points I believe to be contributors to a very buoyant single family resale market. I don't think this extends to the condo market however. I have definitely heard there is interest from out-of-province buyers in single family homes as they are viewed as bargains. Whether most people plan to sell in their home market and move here, or buy and rent out the Calgary property, is not clear to me. Either way, people seem to be betting that there will be a return in their investment sooner than later.

 

[JustDandy]

Im pretty open and have a good dialogue with SurrealPlaces.. I have just minted about $400k on one pre sale in YVR since Summer 2020. I will be looking to deploy a portion of that capital into the Calgary market. Its anecdote, but i suspect this is similar feeling to many YVR and GTA based individuals.

 

[Surrealplaces]

I tend to agree. There's definitely interest from people in the GTA in buying Calgary real estate. It's only anecdotal from my end, but I have encountered this myself personally a few times already. 4 different people I know or work with, who are in the GTA are looking at Calgary. Some for investment, and some by people considering moving here. either way Calgary's RE market looks good to people in other parts these days.

 

[MichaelS]

Great summary list, but I am with you, it is very difficult to parse out real measureable data behind it all. From my personal anecdote, the condo market is definitely not rising like the single family home market. That said, it seems since December that activity has picked up. But "seems" is not an objective measure, and in terms of pricing, there was a lot of downward movement that needs to be regained before any sort of positive messages can be said about condos in Calgary.

In terms of the large amount of new community "sprawl", that is true, but there is still quite a lag time to turn dirt into doors. I am sure local developers/home builders are working overtime to get units up and sold as fast as possible, but with all of the supply chain issues the world is experiencing, that hasn't been the easiset task lately.

 

[gsunnyg]

https://financialpost.com/real-esta...p-as-homebuyers-from-ontario-b-c-help-fuel-it

Starting to get some anxiety over this. I still need to buy my first home and so does my brother. The last thing I wanna do is have to buy a $1 000 000 worn-down detached home, similar to how things are in Vancouver. The bidding wars are what's really getting me nervous. I'm also hearing ads on the Punjabi radio stations in Surrey of how realtors can help Lower mainland folks purchase homes in Edmonton and Calgary. I really don't want to see the Calgary market become the next GTA or Vancouver market. My mom has also been considering buying another home since her separation. At this point, FOMO is getting to me as well because I see no end in sight in the number of speculators and non Albertans driving up Calgary's housing market. I'm pushing her to make her purchase ASAP as well.

The thing with metro Vancouver is, on average the lots are much bigger in size than Calgary. Currently, our boxy subdivision layouts for a majority of the homes in the suburbs don't warrant an $800k asking price IMO. At least in Vancouver, you can break an old home down and build a new one with multiple basement suites to subsidize the mortgage.

 

[darwink]

For larger real-estate investors, not being exposed to the Calgary market represents an asset allocation issue. You have gains sitting in Toronto/Greater Golden Horseshoe, Ottawa, Waterloo and/or Vancouver/lower mainland. You can continue to double double in those markets, or you can diversify into Calgary, buying the dip. Eventually the market between the big cities is somewhat arbitrage-able, as various national employers are making expansion decisions disconnected to past geographic restraints. Sure I doubt the markets will converge, but that doesn't need to happen for Calgary to be much more profitable as an investment.

Should we expect the big pension funds building 1000s of apartments in Calgary to be doing so while 'retail' real estate investors sit on the sidelines?

And heck, it is less likely Calgary will have a 40% drop given the last 7 years. And I know my condos which were in general not the greatest ideas to purchase when we did, would be cash flow positive based on rents today, if the mortgages were based on today's prices.

All adds up to a great opportunity.

 

[ByeByeBaby]

Should we expect the big pension funds building 1000s of apartments in Calgary to be doing so while 'retail' real estate investors sit on the sidelines?

And heck, it is less likely Calgary will have a 40% drop given the last 7 years. And I know my condos which were in general not the greatest ideas to purchase when we did, would be cash flow positive based on rents today, if the mortgages were based on today's prices.

All adds up to a great opportunity.

I mean, Ikea makes 1000s of tables and I couldn't make even one for a profit. Tim Hortons pours 1000s of cups of coffee every morning while plenty of mom-and-pop coffee shops struggle. There are many industries where large corporations, backed with tons of capital, long time horizons and global outlooks can operate profitably and where individuals can't or can only make a profit if they ignore the value of their own time..

Anyways, I was looking at the past performance of the Calgary market; this is the inflation-adjusted MLS® HPI benchmark price (the multifamily price is the average of apartment + townhouse; they move basically identically).

The little chart at the bottom shows roughly what the annualized real return would be for both SFD and MF based on 5 and 10 year horizons for every starting date. Buying before 2006 was a great deal; afterwards, not so much.

I personally wouldn't want to own something unless it was strongly cash flow positive, and that seems unlikely based on units I've looked at. I couldn't rent my apartment to myself and make a profit.

 

[UrbanWarrior]

Why does anyone “have to” buy a house? I feel like that’s just not a possibility for like… 60% of my generation. Maybe more? Except for those stuck in small towns like my siblings.

Pretty much the only way to have enough money for a down payment while living a half decent quality of life before 35 is by being born into generational wealth. And there’s a huge divide between those in their 30s trying and those in their 20s having.

 

[gsunnyg]

Why does anyone “have to” buy a house? I feel like that’s just not a possibility for like… 60% of my generation. Maybe more? Except for those stuck in small towns like my siblings.

Pretty much the only way to have enough money for a down payment while living a half decent quality of life before 35 is by being born into generational wealth. And there’s a huge divide between those in their 30s trying and those in their 20s having.

The only issue with renting in Canada is you're left at the mercy of your landlord. Economics aside, renting isn't as lucrative as it is in many European nations where the laws are highly favorable for tenants. For me, the FOMO is because I don't want to get stuck in a renters market similar to Vancouver where the landlords have the upper hand in dictating which tenants they want and how they should live. I'd rather have my own place with peace of mind. Calgarians haven't faced this sort of market in a while but if renting demand begins to outstrip supply, then unfortunately we'll get a reminder.

 

[Urban Outdoorsman]

I'm not gonna lie, as someone in my mid 20's I don't really resonate with the complainants people my age make about never being able to get ahead.

Don't want to be that guy, but I find the issue has more to do with an inability of my peers to live below one's means. For the past several years I've made less than $30,000 per year while being a full time student, I'm financially independent, haven't gone into debt and I have healthy savings. Truth is between hard work and frugality you can stretch your money pretty well in Calgary. (Toronto and Vancouver probably not so much.)

Obviously the downsides are I don't have a nice place, I eat pretty cheap food, I don't go out as often as I'd like and I often have to work like crazy to stay ahead...

 

[CBBarnett]

I'm not gonna lie, as someone in my mid 20's I don't really resonate with the complainants people my age make about never being able to get ahead.

Don't want to be that guy, but I find the issue has more to do with an inability of my peers to live below one's means. For the past several years I've made less than $30,000 per year while being a full time student, I'm financially independent, haven't gone into debt and I have healthy savings. Truth is between hard work and frugality you can stretch your money pretty well in Calgary. (Toronto and Vancouver probably not so much.)

Obviously the downsides are I don't have a nice place, I eat pretty cheap food, I don't go out as often as I'd like and I often have to work like crazy to stay ahead...

Congrats on getting your financial house in order early. It is a key thing that will help in the long run.

Do people live beyond their means and does that contribute to their inability of affording housing? Absolutely. But it's only part of the issue and plays a lesser role in cities where prices are higher, rent is higher and wages are lower (on average).

If you are 25 now for example, Calgary has been the opposite than most of the other big cities for the whole time you've likely been in your 20s - higher than average wages, lower than average rents , lower than average house prices.

All those benefits compound - it's easier to save more in Calgary for many people (due to higher wages and lower rents), the savings goal to purchase is lower (due to the price and downpayment being lower), then the ongoing costs are also lower (due to smaller mortgages in the first place).

So the generational challenge on housing is accurate to more than you may think in Canada that don't have nearly the same favourable math in their regions. On average, others make lower wages, have to save even more to account for higher prices and pay more for rent all that time as well.

The "generational" part becomes because the housing price/wage balance hits one group fairly specifically - young people starting their careers at lower wages and just starting to enter the housing market as they often head towards starting families.

Importantly, there are no perfect answers in the rent/own debate - ownership and renting have different trade-offs and at different times in life, both from your life stage/lifestyle choices but also general economic conditions and prices that change outside your control.

As others have said, what seems to be good idea to rent or own at one time, often only turn out to be the "wrong" choice later with hindsight. The future is hard to predict, but the ones who guessed right will be happy to tell you how smart they are after the fact.

 

[Surrealplaces]

As many have mentioned, the decision to buy or own is one with a lot of variables. I do feel that it was somewhat easier to purchase a house 20-30 years ago than it is today, but back then the culture and mindset of young people was different. In my day, it was more common for young people to plan on buying a place early. It was more common when I was in my 20's, myself and most of my friends were saving up down payments to buy a house. We didn't eat out much, or do a lot for entertainment back then. We spent a lot of weekends hanging at someone's house watching movies from blockbuster. Young people were less mobile and likely to move to other cities, and were having children at a younger age. That also factored in to the desire to purchase.

These days it varies. My niece purchased a condo recently, but it required some sacrifices. She lived at home with her parents until she was 26, saving for a down payment, etc... A lot of people that age want their freedom to enjoy some of the best years of their lives. My other niece (her sister) decided to spend money traveling instead, and has been on a couple of extended trips overseas (Europe and Asia) Those are experiences that you can't put a price on.

 

[MissingMiddle]

It's the other way around, we are adjusting our priorities to reflect the reality we live in.

According to StatsCan, the average (individual) income in 1985 was around $25,000. The average home price was about $100k. Rounded, that's a clean 1:4 ratio. In 2021, that ratio is now 1:14, or 1:23 if you live in Toronto or Vancouver. Before anyone says it, the interest rate for a 5-year term mortgage in 1985 was ~12%, even with that factored in, affordability isn't even in the same hemisphere.

 

[googspecial]

Considering selling my place in Calgary and getting a fixer-upper outside of city limits, and run mine and my partner's small businesses out of it. With the market up currently, we would likely make some money on the sale. But concerned about never having the opportunity to make it back into the Calgary market if these trends continue...

I'm not really sure what I'm trying to get out of this comment, but just have had a lot to think about this week lol. For what it's worth, I'm 30yo and one of my parents is co-signer on the current house. We likely wouldn't need a co-signer for this new place.

 

[CBBarnett]

Considering selling my place in Calgary and getting a fixer-upper outside of city limits, and run mine and my partner's small businesses out of it. With the market up currently, we would likely make some money on the sale. But concerned about never having the opportunity to make it back into the Calgary market if these trends continue...

I'm not really sure what I'm trying to get out of this comment, but just have had a lot to think about this week lol. For what it's worth, I'm 30yo and one of my parents is co-signer on the current house. We likely wouldn't need a co-signer for this new place.

It's tricky stuff to juggle eh? We are also in the market for a new home and trying to balance all our needs and fear/hopes for future + big dollars involved, it makes a lot of stress. The way I am thinking about is making moves that I would be happy with for the next 10 to 15 years if life goes to plan regardless of the value change in the house over that time. Everyone gets obsessed with the price in booming housing markets, but houses have use beyond their market value. Paying more than you hoped but having a place that satisfies your lifestyle for the next 10 - 15 years of life isn't necessarily a bad outcome, regardless if you "missed the market".

We are about 6 months into a booming Calgary market - but it's also a super weird one. Projecting that out into the distance future is a pretty much guess work. Super low interest rates and out-of-province buyers aside, it's not like we aren't continuing build sprawling new development of pretty steady ongoing supply of housing (unlike Toronto and Vancouver) and it's not like we have seen a massive population spike requiring new units (nor are expecting one from any forecasts I have seen). I find it really hard to believe that enough rich Toronto and Vancouver folks would move here or buy properties here to sustain a permanent elevated housing market - across all market segments available, in all areas - on their efforts alone.

Complete guessing game here - I think things will moderate in the near-term once interest rates start increasing and the supply picture stabilizes. I doubt that means prices will decline and may actually keep increasing just more moderately to match the long-term future of Calgary which is quite optimistic (IMO), but I can't really see how Calgary switches to Vancouver and Toronto affordability issues overnight and remains that way. If such a rapid increase in prices in Calgary actually did happen, it would be so extreme I don't see how it wouldn't be self-correcting fairly quick.

Who knows though - perhaps I am underestimating just how many rich people are out there pumping up prices everywhere forever!