On Monday we posted a survey asking our readers: "When is the right time to buy?" The response was fantastic and I have learned a lot from this process not the least of which is our readers like sharing their opinions and we should ask for them more!
The survey had 5 simple questions and 168 responses. Perhaps the questions were too simple, but I was trying to get a message across. When asked: "When is the right time to buy?"
- 96% said when inventory is high
- 98% said when prices are low
- 69% said when interest rates are low
- 96% said when there are few buyers to compete with
- 97% said when you can afford it
All in all the responses are not surprising. The only skewed answer is "when interest rates are low." Since most people have to get a mortgage, it makes sense to buy when mortgage rates are low, but those that don’t need a mortgage or have a very large down payments feel they can get a lower price when mortgage rates are high. You have to keep in mind that a .25% rate hike can take about a 5% price drop to equal out, so it takes a much smaller changes in rates than prices to impact affordability.
When asked: "If you wanted to buy a home in the next year, when do you think the best time to buy would be?" most people chose the second quarter of 2011, stating the longer you wait the better. It seems there are a lot of "wishful thinkers" out there that think prices are going to drop substantially. I’d like to point out that in 2008 we had a global economic crisis and prices only dropped a few per cent. I’m not sure what they think is coming that will bring a 20% or even 40% drop, but if it comes I don’t think they’ll be happy in the end since we’ll be in the middle of a major melt down.
I think it’s funny that people like to buy when prices are on the rise instead of falling. They feel that if prices are falling and you wait you will get a better price, but if they are rising and you wait you will pay more. There is another side to that though, if prices are rising all the other factors in the market place are not in your favour as a buyer (except maybe interest rates) – there is more competition, less to choose from and less room for negotiation.
10% said the best time to buy is between now and September:
- Because the conditions in questions 1-5 are in place right now…
- There is a lot of inventory at this time to choose from.
- Inventory is high right now, so when sellers start to pull off their properties, (at that very moment), which is obviously the key, is when you whshould buy.
- Inventory is high, buyers low, prices have dropped to a realistic level for the most part. No competing for the same house.
- Can’t hold out much longer. If we don’t buy a place soon, she’s gonna leave me…
- high inventory, seasonally low sales
- When your in a real estate market where inventory is sky high and sales are low its not a good time to sell but not its not easy to predict.
- Typically, the summer slows down for home sales, and it might be easier to find a seller who is willing to negociate.
- Interest rates are low. Inventory is high. Economy is bound to pick up eventualy.
- Lots of inventory out there right now and won’t pick up much the rest of this year. People will be getting a little more nervous yet. I would love to buy right now but would have to try to sell my home in this market as well.
33% said between September and the end of the year:
- I would guess with the back to school season, and winter approaching, there are less buyers in the market.
- Inventory/fear up in the fall. Q1 2011 will be good too, until the snow melts. I think we’re going to see shaky stuff out of the US and the EU that’ll cause the BOC to slow the rate hikes, and they’ve learned from the US that hiking rates doesn’t necessarily slow the housing market. (Chris Davies)
- I think high inventory, low sales are just starting to have an affect on prices. Usually there is a lag before prices are affected the most. I think there will be a period in the next 6 months that will make it a good time to purchase a house (assuming you can afford it!). Inventory will remain high enough for a decent selection and prices will have softened. Beyond that I will think you will see a rebound as inventory falls (people who don’t need to sell will pull off the market, others will try and rent to wait another day…). I could see this rebound playing out similar to 2008 which is why you will need to be ready to jump on the weaker prices, otherwise you’ll be waiting for the cycle to play itself yet again.
- People are less willing to move during the winter and/or before Christmas. They’d rather wait a few months and sell in the spring. So those that are selling in the fall, want to sell.
- Sales are slower in the fall. There will be fewer buyers and high inventory. Look for the vacant property and you will find a deal. Get a good deal now while interest rates are still low. We sold in 2007 and have been renting ever since. Sell when the masses are buying and buy when nothing is selling.
18% said first quarter 2011:
- The markets are traditionaly quiet after christmas and before Esater
- A lot of people have school concerns resulting in market churn in Feb.
- Buyer may be able to get a good deal in winter.
- Historically edmonton house prices and sales are low in Q1 relative to the rest of the year. Drawback is sometimes there is a lack of inventory at this time so finding the right house could be difficult
- summer move in
- I think you have to consider why you are buying. Is it a flip, a primary residence or a rental. Most realestate if purchased for the long term will be a good investment either way. You can never really "afford" to buy but at the same time if renting you can be making an investment vs paying off a landlords investment. I think buying in the first quarter is good as less people are inclined to go out in the cold and search out a purchase which would leave sellers with less interest leaving the buyer with more of a negotiating position. Naturally this only applies to the great white north.
- In Edmonton, good selection and limited competition makes winter good for time, selection and negotiations.
- if your looking stricktly on price the best time to buy is in the winter, Houses sales are generally slower in the winter…
If you are looking to buy for the actual property, then between now and september would be the best time you can see the condition of the yard. - usually weather is bad so alot of people not looking but also alot of people do not have product on the market but the ones that do are serious about selling and not feeling out the market
- Usually less buyers and you can get a possesion in spring and easily rent it
- Sellers who list before Spring are more serious about selling,
and likely to price their homes well.
39% said second quarter 2011:
- A natural influx of properties onto the market due to fairer weather. Would be the best time feasibly to have the pick of the crop as people wait until Spring before listing.
- Lower prices in 1st quarter; but more inventory in second quarter
- the later the better, it’s all down hill from here!
- I would have chosen 2012 if it was an option. I think the next 12 months will only be the start of the decline!
- I will probably wait even longer (even though I can afford it). I don’t think we’ve come close to the bottom yet…
- I feel like we wont see the bottom of the Edmonton real estate market until at least 2014. I’m happy to rent a place until then, rather than rent the capital needed to purchace real estate from the bank.
- I would pick 2013 or so if it was an option. House prices are going to melt over the next 5 years of so, down by about 30-40%. Only an idiot would buy a house this year.
- It was the furthest out time period. It’s not rocket science that prices will now continue falling (both nominal and real) until at least mid-decade.
- I guess price is on the falling side, and 2nd quarter 2011 is the last time frame in choices.
From those responses I’d say the people who said September to December of this year had the best arguments. Q1 2011 makes sense as well but from an inspection and ‘knowing what you’re buying’ point of view, looking at the home without snow is preferable.
Other comments included:
- The best situation is to buy a house you can afford (i.e. small mortgage or no mortgage) and for there to be high interest rates that keeps people without money out of the market, which reduces demand as well as prices.
- Why would i buy when prices are getting lower each day
- Fundamentally when I’m looking at buying a house I contrast the purchase costs with the costs to rent an equivelant house. My rule of thumb is if a house is priced significantly more than 15 times the annual rent then I would probably be better off renting. Also, I answered that it is best to buy when interest rates are high. In my opinion the way to "win" the house purchase game is to buy a house when interest rates are high with no mortgage (or a small mortgage). The high interest rates would keep the people buying who would be using mostly debt to buy their house out of the market, which lowers demand (and housing prices). If you buy during a interest rate peak, when the rates go back down the debt slaves will be able to re-enter the property market, increase demand, and your real estate assets will appreciate. If you buy when rates are low (like now), it is more likely that the reverse would happen.
- Because it will take sellers time to realize that the glut of listings means they’re charging too much, and a couple of interest rate increases are going to scare the over-leveraged VRM holders enough to create some motivated sellers. (This makes me doubt my answer to Q3. All else being equal, low interest rates are more affordable than high. But higher interest rates create a downward pressure on the price. Six of one, perhaps.)
- The most important question is #5. The rest is just semantics. Buy when you can afford and build yourself a home from that property
All in all the right answer to the question is when you can afford it. Thanks everyone for taking the time to answer our survey! If you have a suggestion for a future poll or survey let us know.
Good job you guys – that was a fun exercise.
I agree Gord
Most of the people are nice car, nice clothes, house rich and saving poor. These people can not take even 10% hit and 2 paycheck away to loose home.
There are few rare species who still believe more in owning than renting mortgages (5/35). I like to see high interest rates and lot of mortgage renters would not qualify and very few buyers left with big cash to buy to compete.
Very revealing!
Either way one looks at it, there will always be a buyer and a seller in whatever market.
Whenever I bought a home, it wasn’t for 3 months or 2 years: it was forever.
Even if resale prices will go down – and they will by 20% within 2-3 years, that $400k house will still be worth more in 2030.
You’d only lose money if you’d sell.
Great site as always and so more better than the crazys out there (i.e. garth Turner or squidly)
At last someone supports the view that prices will NOT drop 20% in the next year. Thank you for being forthcoming with that opinion. For what it is worth I agree.
Edmonton Expat what on earth do you see causing a 20% drop given the state of the market after the biggest economic jault in 20 years? Actually don’t bother answering that I know the speal off by heart now.
Time will only tell, Spud.
BTW, many banks & economists have said that Edmonton was overvalued:
http://www.edmontonsun.com/money/2010/05/25/14085131.html
The same banks and econimists that didn’t predict the GFC. Please lets do our own anlysis and not rely on these ‘experts’ who can tell you exactly why something happened…..after the fact.
There is a common theme in alot of countries where people look at the historical price of houses and say they are over priced today. It is too simplistic a view. Consider the amount of woman in the work force for example and working mums. It is the norm now for both members of a marriage to work meaning that their joint income is double (or increased) from what is was 20 years ago (on relative terms) when many mums stayed at home. These cultural changes are ignored when determining housing affordability. Even though looking at house prices and incomes in isolation says that housing affordability is tougher than it ever has been, the reality is that couples are managing because both are working. I’m not saying that is an ideal situation but it shows that peoples behaviours change so that they can afford their dream house thereby pushing prices up or putting a floor under the price. This is only one example. Another is the propensity for people to change jobs for a better wage. 20 years ago most people stayed with the same company for alot longer than what they do now.
Unless something unforseen happens like a war I think prices have found a new watermark and will hover here for a year or so before climbing again.This is only my humble opinion but I feel better relying on it as opposed to the goons at the bank.
Sara MacLennan … The only skewed answer is “when interest rates are low.”
House price goes higher when interest rates go down then vice versa is also true. Buyers need to focus more in saving principal not monthly just affordability. Debt is constant when we sign, its evaluation change with time and rates. This country has become hostage of monthly payment mentality. If interest rate goes 2% up and price goes 20% down.. I love to have 20% down and big down payment can go longer. Owing home is not human right but a privilege which needs a great fincial discipline.
Sara MacLennan …”I’d like to point out that in 2008 we had a global economic crisis and prices only dropped a few per cent.”
Ans: After that Govt and Jim F got panic attack and bring down lending standards (0/40, 5/35) and super low interest which fueled the RE market. Jim F pushed million of $ to CMHC to buy bad debt. This is not called recovery its called socialism (controlling the free market).
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EDMONTON EXPAT – Great site as always and so more better than the crazys out there (i.e. garth Turner or squidly).
Please attach the logic, not the person. Here is the future of Canadian Real Estate.
Slagging sales and rising listings now, price crumbles by Christmas, desperate sellers in 2011, vultures in 2012, then three years of mortgage renewals as VRM victims meet interest rate reality. If you think there’ll be housing bargains in a year or two, just wait for 2014. You’ll be able to buy houses and write the womenfolk into the offer.
Straight from the horse’s mouth, the Toronto Real Estate Board, Toronto prices in May averaged $446K, and in the first two weeks of July they’ve crashed down to $427K, putting Toronto prices on a pace to hit $340,000 in 1 years time— but in my experience, the acceleration of the downward trajectory will increase exponentially once the mortgage holders attempt to get out of their mortgages. I foresee prices breaking below $400K by Christmas, and then a steady progression towards below $300K for most of 2011.
WOW – project two weeks of sales data two years into the future. What Bear academy did you graduate from.
Ha Ha! Man did that ever give me a good giggle! Not that trends couldn’t be down in a year but down a 100 grand in a year based on data for two weeks from a time of year when prices typically soften? I’m still laughing as I write this. By the way, I just checked the TSX at 13:26 MDT and it is up 1.27 % I drew a line straight up, if we all buy the index right now for 11660 bucks we will all have 26000 bucks in thirty days! It’s fool proof, how could this fail, I drew a line on a paper based on the last 6 hours of trading, that should give us all the info we need about the trend for the market over the next thirty days! All aboard the S.S. Failship!
Hey… he’s on to something! So let’s see… Inventory in Edmonton doubled this year from January to July. So, by the end of 2011, if it keeps doubling we’ll have 8 TIMES the inventory on the market! Prices must come down!
I never imagined economics could be so simple!
The ‘Sept to Dec’ people will think they’re right by Spring ’11. There will be another small bounce provided by rallying commodities/stocks from the US mid-term elections ’til Spring 2011. However from there, the next leg down will last ’til late 2012.
Most Canadians are completely clueless that we’re barely into the second inning of the world’s worst financial crisis in history. This will take the better part of this decade to play out. The most recent 2008 crisis, stemming from a 25-year credit bubble, is unfolding the same way they always do (ie. 1837, 1873, 1929). We’re still in the ‘stimulative gov’t attempts at reflation’ stage. Hint: this just makes the deleveraging stages to come that much worse. This decade will most certainly be looked back on as a ‘lost decade depression’ (which btw is a misnomer as deflationary episodes are absolutely vital and necessary at restoring economic balance)
Few of the reasons Canadian real estate will get hit harder than most assets:
- bubbliest asset always deflates the most
- normalizing interest rates mostly due to bondholders demanding a sovereign default premium (no inflation ’til mid-decade)
- commodity supercycle ending
- aging demographics
REdown’til2020, I have also read economists who believe we are into the first stages of a major economic crisis and there is very credible evidence to believe they are right.
However, you are looking at the Canadian market in general. We appear to be heading towards an energy crisis and we will be seeing double-digit oil prices very soon. There will be greater incentive to go with further oil sands projects and if that is true there will be another influx of people moving to Alberta. If this happens then this would boost the Alberta real estate market.
I came to Canada from the UK in 2006, I work in the construction industry. I saw house prices escalate and got on the ladder quickly, the prices in the uk were far higher so prices ‘appeared’ relatively low to me.
I go to the UK regularly I was there this Easter, it is dire, the worst recession since the war, my X has been trying to sell her house for nearly a year.
We escaped very lightly in Alberta compared to the rest of the western nations. Despite the fact there is excess oil stored all over the world the prices have been unrealisticaly bouyed up on the hope that China/America will have an unsatiaable demand when they recover from recession. There is a shortage of oil production when the world is in full gear.
China relies on America to buy their produce that’s why they are predicted to be the driving economy out of this recession, America’s NOT buying.
The only reason the world is not in a worse place is because all the world governments have been chucking tax payers money into the pot like there is no tomorrow.
Because of that and the softer ‘recession’ in Canada and the ‘overvalued’ oil, real estate here has increased over the past year.
I don’t think I need to say more except that at some ponit you have to pay the piper and he’s long overdue.
It’s fun to make predictions.
Personally, I think house prices will trend downwards, but it won’t happen quickly. It won’t be affected by the desire to have a nice house. I think people have always wanted to have a nice house. What changes is how much they are able to pay for a house.
House prices are heavily influenced by three factors: incomes, savings and credit availability. To buy an “expensive” house (expensive defined as a house that costs more than 3x the annual income for the given household) they’ll need to come to the table with a bunch of savings or have a lot of credit available to them.
Credit availability is influenced by two factors: interest rates and lending standards. I would argue that the most recent boom was driven (almost exclusively) by reduced lending standards. We didn’t see significant income increases, savings increases, or reduced interest rates in the most recent boom (2005-2007). I read an excellent blog entry that put some interesting numbers that support this case:
http://edmontonhousingbust.com/2010/01/the-perfect-storm/
So, if the government wanted houses to appreciate, they know what to do. Unfortunately (or perhaps fortunately) they are concerned right now that Canadians are taking on too much debt, so I don’t think they’ll be reducing lending standards any time soon. I’d predict that the government will keep lending standards fixed to where they are currently. So, this variable won’t have any further upward or downward pressures on house prices in the next few years.
Next up, interest rates. I think most people agree that they will rise which puts downward pressure on housing. Over the next few years this will have a downward affect on prices as the rates creep up.
Incomes. I imagine they will be mostly flat, increasing only with inflation. So, no change.
Savings. Canadians are doing less of it, so this would have a downward affect on house prices, especially when you add increasing interest rates in the picture.
So, if the above four predictions are correct, I think we’ll see house prices decline slowly. Something on the order of 10% lower in the next two years, influenced primarily by increasing interest rates coupled with reduced savings. The “wild card” in the picture is government policy (i.e. what CMHC will insure).
Charles, there is not an excess of oil stored all over the world. World oil production peaked in 2006. Each year afterwards, production will decrease and as demand increases due to the growing economies of China and India, prices will rise more rapidly.
From Econbrowser, these remarks by Steven Kopits, a New York energy consultant:
The EIA, the statistics arm of the US Department of Energy, recently released its International Energy Outlook (IEO) for 2010. This is an important document for forecasters, as it represents the EIA’s integrated view of the global energy markets in the years to come and contains a long term forecast on the range of energy sources and CO2. Like it or hate it, the IEO is a touchstone for the energy industry and is treated as the authoritative government forecast in the press and in capital raising documents like prospectuses. It influences policy-makers, the media, public opinion and investors. What it says matters.
And what does it say?
That peak oil is all but on us. And that’s new.
Kopits continues:
In its forecast, the EIA, normally the cheerleader for production growth, has become amongst the most pessimistic forecasters around. For example, its forecasts to 2020 are 2-3 mbpd lower than that of traditionally dour Total, the French oil major. And they are below our own forecasts at Douglas-Westwood through 2020. As we are normally considered to be in the peak oil camp, the EIA’s forecast is nothing short of remarkable, and grim.
http://www.eia.doe.gov/oiaf/ieo/highlights.html
I would like to add that this news is very scary in the long run. However, in the short term as it plays out the demand for oil production in Alberta will be dramatically increased and I speculate that this will cushion the Alberta real estate market from price decreases. I know investors that have recently bought properties with the belief that as oil prices increase housing prices will as well. I am not sure that we will see massive increases in housing prices but I doubt there will be massive decreases.
I’m old enough to remember the housing crash of the late 80s and early 90s and anyone who thinks prices can’t crash here is delusional. Yes prices can will crash, it’s happened before and will happen again. The best time to buy a house, two or three years into a crash, the worse time. Now
And yes Canada has a subprime mortgage problem
http://www.rabble.ca/news/2009/10/canadas-sub-prime-mortgage-time-bomb
Some supply side considerations:
- countries like Saudi & Iraq have, and continue to, increase their productive capacity by millions of barrels per day (cost per barrel $5-10)
- OPEC has a poor track record of trying to control oil prices in a desired range (eg. $70-80)
- shale oil technology is where shale gas was 5 years ago (keep in mind what happened to natgas supply & prices)
- new EOR technologies are allowing companies to recover twice the oil from new & old wells (ie. technologies are keeping a lid on depletion rates)
* agreed gulf spill will have a short-term impact on supply & price due to drilling moratoria
Demand side:
- emerging market economies are now slowing as trillions in stimulus wear off (China’s most recent annualised growth rate of 12% will fall back to a more balanced 5 to 8% over the next few years)
- advanced economies, along with their energy consumption, will fade alongside all the recent liquidity provided by fiscal and monetary stimulus
(note: i don’t see advanced economy gdp’s actually turning negative again until late 2011 or 2012)
- EIA has a history of poor supply/demand predictions (granted there are many variables)
Far more to consider, but i see oil in the $40-60 range for the ‘majority’ of the next 5 years. However, i agree Alberta will fare far better than any other province (for a multitude of other reasons).
One response that Sara quoted made me laugh…
“Can’t hold out much longer. If we don’t buy a place soon, she’s gonna leave me…”
It made me laugh because it reminded me of something that I read on another real estate blog:
Argument: My wife will divorce me if I don’t buy a house.
Response: FALSE. She will divorce you if you do buy a house and go bankrupt trying to pay the mortgage. She won’t divorce you if you rent a much nicer place than you can buy, and then take her to Paris for a month each spring, which you can do just by avoiding that suicidal mortgage.
If she’s religious, you could also point out Proverbs 22:7: “The rich rule over the poor, and the borrower is servant to the lender.”
I remembered reading that gem on this page: http://patrick.net/housing/crash3.html
I wish prices would drop soon, Im trying to buy a condo in SHerwood Park and I can’t find what I want in my price range. GRRRR
- countries like Saudi & Iraq have, and continue to, increase their productive capacity by millions of barrels per day (cost per barrel $5-10)
** Not by enough to keep up with depletion.
http://en.wikipedia.org/wiki/Oil_Megaprojects
- OPEC has a poor track record of trying to control oil prices in a desired range (eg. $70-80)
** In the past they did, but now only Saudi has spare capacity. So they are OPEC. http://www.businessweek.com/news/2010-06-28/oil-swings-may-widen-as-spare-capacity-shrinks-energy-markets.html
- shale oil technology is where shale gas was 5 years ago (keep in mind what happened to natgas supply & prices)
**Shale oil doesn’t have near the initial production the shale gas is has. You gonna need 100′s of thousands of wells to come on line quickly to make up for depletion of conventional oil.
http://www.oilslick.com/PeakOilFacts/whataboutbakken.asp.
- new EOR technologies are allowing companies to recover twice the oil from new & old wells (ie. technologies are keeping a lid on depletion rates)
* agreed gulf spill will have a short-term impact on supply & price due to drilling moratoria
**EOR may allow them to recover more oil that’s in place, but at a much slower rate. EOR is a great big neon sign saying “This is the beginning of the end of the oil age”.
Demand side:
- emerging market economies are now slowing as trillions in stimulus wear off (China’s most recent annualised growth rate of 12% will fall back to a more balanced 5 to 8% over the next few years)
**Duh!! China slowing from 11.9% to 10.5% is still grow.
- advanced economies, along with their energy consumption, will fade alongside all the recent liquidity provided by fiscal and monetary stimulus
(note: i don’t see advanced economy gdp’s actually turning negative again until late 2011 or 2012)
**In developed nations, yes, in the short term energy consumption will be stagnate, but in developing nations (BRIC and middle east) energy consumption will still grow. Thus energy consumption as a whole will grow.
- EIA has a history of poor supply/demand predictions (granted there are many variables).
** EIA may have being that it’s that it’s American only, but the IAE, which in OEDC, doesn’t. And they’re saying peak oil is here.
REdown’til2020, by shale oil do you mean the Bakken shale oil deposits and the Marcellus gas? In fact, the Bakken shale formation is unlikely to produce more than a few hundred thousand barrels of oil a day in a nation used to burning about twenty million. A few hundred thousand might mean a lot if were only used to light kerosene lamps, but it is unlikely to keep the faithful motoring off to WalMart and Walt Disney World.
I agree with most of the reasons you said for an upcoming financial crisis. When you add peak oil into the mix it gets a lot scarier. Even with new technologies allowing companies to extract twice the oil from both new and old wells there is only a finite amount of oil in the world and there is not another energy supply that comes even close to replacing it. Even optimists believe that in the next 20 years we are headed toward a very serious energy crisis. With the growing appetites of China and India the demand will only increase.
The average price of a home in Fort McMuray is over $600K. If the new tar sands projects get moving then that will be a boost to Alberta real estate (in the short term). How the new pipeline to the USA to send raw bitumen (and jobs) out of Alberta is another factor that can affect the economy.
Rob, the housing crashes of the late 80s and early 90s were surrounded by high unemployment and high interest rates. That is not the case today. In the service sector, companies are still forced to hire foreign workers. When the tar sands projects start going, the demand for skilled labour will only increase and when that happens there will be another influx of people to Alberta.
Wrenches that have recently been thrown into the mix are the manufacturing of oil field equipment to Korea and China going through barge from Washington to Idaho, and then a newly constructed highway from Montana to Alberta to complete the trip. Also, as I have said the export of raw bitumen (and jobs) to the USA. Albertans will not get the total benefit of this boom this time and we are as naive as the natives were in the Belgian Congo.
Short term things look good. In the long term, once the tar sands have been exploited (and it is only a matter of time) we will be a have not province.
http://www.calgaryherald.com/technology/Calgary+population+hits+growth+rate+slides+year/3309618/story.html
Calgary’s population hits 1,071,515; growth rate slides to 26-year low
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So called good days:
-Mass migration inward
-Labour shortage that has Tim Hortons paying 18 per hour to pot coffee
-Less then a 1 month supply of housing for sale
-2% vacancy rate on rentals
- Sheep mentality “Buy now at any cost”
-Rent/price ration does not matter when there is big capital gain
- We are cheaper than NY, SFO, London, Hong Kong
Here we are now:
-No immigration
-8% unemployment
-7 month supply of housing for sale
-10% vacancy rate on rentals
- Interest Rates going high
- New mortgage rules
- Sheep mentality “Price doing down..wait”
There will be a 30% correction in housing. How long it will take that we need to discuss in forum.
Ron S wrote:
“There will be a 30% correction in housing. How long it will take that we need to discuss in forum”.
I’ve been saying that. A bit of gut feeling mixed with patterns that have been developping… I’d say 20% by end 2012
Obviously I have no cristal ball but the reason prices went so high until 2007 was supply & demand & speculation.
There is huge supply right now so logically it does “over meets” demand.
Right time to buy? Whenever your personal utillity is maximized. This is different for every person.
Where are prices going? Different question. I think it is telling if you look at the historical trends for each of the following factors. Each are availaible online and for free, but take some time to dig out.
Price of Oil (only because it is central to the Edmonton economy)
Price of Oil futures
Unemployment
Actual Size of the Labour Fource
Immigration Trends
House Price/Income Ratios
Total Household Debt
Interest Rates
Mortgage Rules for Lending
Housing Inventory
Housing Starts (i.e., future housing inventory)
Rental vacancy rates
Of all the factors listed above, only Interest Rates seem to be exerting upward preassure on prices compared to five years ago. All of the other factors seem to be exerting preassure downwards.
This list is just off the top of my head. Please point out any that I may have missed.
As of the unemployment rate in Alberta is 6.6%. Edmonton’s unemployment rate dropped 0.2% to 7.4% which is still above the 6.0% of May 2009. Calgary’s unemployemt rate is 7.6% which is above the 6.8% of May last year.
http://www.edmontonjournal.com/business/alberta+unemployment+rate+keeps+dropping/3112629/story.html
Interest rates went up .25%. However, this does not compare of the 8% interest rates of 16 years ago. If rates were to go that high again, we would enter a serious crisis.
The service sector is still staffed primarily by foreign workers (even in rural Alberta towns). I personally know a Tim Hortons owner who is currently in the process of bringing in even more foreign workers from both the Philippines and Mexico.
The unemeployed seem to be in skilled labour. However, this month, various renovators would not even return my calls when I left messages requiring their services for home renovation.
Price of oil and futures. 30 years ago the North Sea supply came online and Saudi Arabia had the valve wide open. Saudi Arabia’s massive Ghawar oil field is peaked out and producing less and less each year. The north sea is producing less and less each year. There is still plenty of oil, but it exists in places that are more expensive to extract.
The fact is that world oil production has peaked. Check out the charts.
http://www.theoildrum.com/tag/update
The price of oil will be increasing in the near term and this will have an effect on the real estate market.
I think buyers don’t realize this…sellers are already at their lowest prices now…me included. I am already not even going to come close to breaking even. I plan on taking it off the market before I would drop again in price, because honestly I’d rather it go into foreclosure first. At least then I’d break even! Why sell for less than u owe and be in further debt? There’s no motivation to sell then. Inventory may only drop further as people decide to keep their homes and just forget about selling. But that’s just my humble opinion!
We are taking our condo off the market in oct this yr. No use selling wen we can rent it for a few years and not lose money.
hmmmmm…
So I prices will never go down right? Since people will never sell at a loss like you two?
Give your head a shake.
Wow, I gave it a shake but now all i have is a headache.
Hilarious and realtor centric conclusion. Discard all of the feedback you received in the survey and conclude that it has nothing to do with the market but only your ability to afford.
I think the “right” answer is to avoid asking a realtor when the right time to buy is.
By the way, I don’t expect this to be published.