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Calgary real estate market

Surrealplaces

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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.
I think it comes down to more than one factor such as higher costs. Some of the trend in today's renting/buying culture can be attributed to cost, but I think it's more than just that. I think the aspect of mobility plays a part of it, and people having children at a later age isn't only to do with the cost of accommodation.

I agree that affordability was better in the 80's, 90's, or up to say 2004ish when the real estate market took off in Calgary, but was it light years more affordable? Looking at ratios of mortgage payments compared to take home pay, my first house purchase in the late 90's the ratio was around 1:3 in mortgage payments compared to monthly take home pay, with an interest rate of around 8% iirc.
I don't know what the ratio is in Calgary these days, but my niece payed 210K for an older, but in good shape 2 storey townhouse in NW Calgary. Her monthly payments are less than a 3rd of her take home pay. Her monthly payment ratio isn't much different than mine was 25 years ago. I don't know how much she put as a down payment or what her interest rate is.

As far as Toronto and Vancouver go, that's a whole other situation. Definitely not near as affordable as they were 25 years ago.
 
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Robo

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I always feel that real estate is much more expensive for the average person today, but Surrealplaces makes a valid point. In order to qualify for a house today or 20 years ago you still need to have your mortgage payment be less than a 35% of your net income.
That said, I think house prices on average in Calgary have risen more than the average wage over the past 20 or 30 years, and even factoring in the interest rate I believe housing is still somewhat less affordable than it was 20 or 30 years ago.
For other cities like Vancouver and Toronto housing is way less affordable than was 20 or 30 years ago, to a point that it’s a crisis level. Here in Calgary people can still afford a house if they really want a house bad enough it can be done but in places like Vancouver or Toronto you don’t have any choice no matter how badly you want it.
 

Robo

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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.
Priorities have changed for sure, I don’t think anybody needs to buy a house nowadays, and it's more normal in Calgary to have the choice of renting or buying.

I don’t want to date myself here but I bought my first house in 1990. A shit box of a place in Temple, but it was cheap and it was an easy way to get into a place.
Back then there wasn’t really much of an inner-city culture for Calgary’s core and to be honest it never even occurred to me to try and live somewhere inner-city. Buying a house at that time and even in a place like Temple was a no brainer.
Fast forward to today and I could see myself trying to live somewhere in the inner city as the first priority, how that would shake out renting or buying, who knows. If renting rather than owning allowed me to live in the inner city it would be an option for sure.
 
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darwink

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When I bought my condo there weren't really new options on the rental side, so the option for me were old rental apartments or renting from a condo investor. At that time mortgage+condo fees was less than rent for what I wanted, so that is what I did.

Didn't really anticipate that at 5 years I'd be underwater, and at 8 years I am close to catching up my mortgage to the market value of the place. Would have sold it a few years ago otherwise.

On the flip side, was able to secure a large rent increase with a new tenant after I did some minor renovations (new carpet and reglazing the bathtub), and it now supports its property taxes, interest, insurance, and condo fees plus 25% of the principle payment.
 

Alex_YYC

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Here’s my two cents. If you plan to stay or live in the same place long term it’s better to buy, if you plan to move in the near future or need mobility options it’s better to rent.
 

JustDandy

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When I bought my condo there weren't really new options on the rental side, so the option for me were old rental apartments or renting from a condo investor. At that time mortgage+condo fees was less than rent for what I wanted, so that is what I did.

Didn't really anticipate that at 5 years I'd be underwater, and at 8 years I am close to catching up my mortgage to the market value of the place. Would have sold it a few years ago otherwise.

On the flip side, was able to secure a large rent increase with a new tenant after I did some minor renovations (new carpet and reglazing the bathtub), and it now supports its property taxes, interest, insurance, and condo fees plus 25% of the principle payment.
You have discovered the Cash Flow/ Appreciation debate. Can you really have both in a single market? I'm not sure, but what I try to do is try to avoid making a cash flow play in an appreciation market and an appreciation play in a cash flow market. For me Calgary is purely a cash flow market, and i don't factor any appreciation into my models unless its forced appreciation. YVR and YLW and YYJ I focus way more on appreciation potential, than cash flow.

I know clearly most people don't pay attention to this when buying real estate but its just how i function as an investor.
 

Urban Outdoorsman

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Starting to get a little FOMO with all this talk of out of province investors... I hope the market doesn't get to crazy over the next couple years

torontorealtyblog.com: Pack Your Bags: We're Moving To Calgary!.
 

MichaelS

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Interesting blog post, and I can see how attractive the Calgary market would be if you are priced out of Toronto. But, the enthusiasm and expectations of at least a 3% increase in condo prices is pretty optimistic. Considering we have seen declining values in condos since 2007, maybe we are due for some gains. But I would be a bit more cautious than what the testimony in that blog suggests.
 

UrbanRED

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I think it comes down to more than one factor such as higher costs. Some of the trend in today's renting/buying culture can be attributed to cost, but I think it's more than just that. I think the aspect of mobility plays a part of it, and people having children at a later age isn't only to do with the cost of accommodation.

I agree that affordability was better in the 80's, 90's, or up to say 2004ish when the real estate market took off in Calgary, but was it light years more affordable? Looking at ratios of mortgage payments compared to take home pay, my first house purchase in the late 90's the ratio was around 1:3 in mortgage payments compared to monthly take home pay, with an interest rate of around 8% iirc.
I don't know what the ratio is in Calgary these days, but my niece payed 210K for an older, but in good shape 2 storey townhouse in NW Calgary. Her monthly payments are less than a 3rd of her take home pay. Her monthly payment ratio isn't much different than mine was 25 years ago. I don't know how much she put as a down payment or what her interest rate is.

As far as Toronto and Vancouver go, that's a whole other situation. Definitely not near as affordable as they were 25 years ago.
With interest rates being so low, payments aren't actually super unaffordable, but I think complaints come from:
1. Down payments become difficult to save up for, especially if you aren't already in the housing market
2. Interest rates can rise, and if you buy now at today's interest rates but rates rise significantly, it could make the purchase very unaffordable, very quickly
 

DougB

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The housing market will revert to mean as interest rates revert to mean. I wouldn't be surprised by 10-20% declines in Calgary and 30-40% in Ontario and BC. Low interest rates have distorted buyers' perception of risk. They are in for an awakening.
 

CBBarnett

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The housing market will revert to mean as interest rates revert to mean. I wouldn't be surprised by 10-20% declines in Calgary and 30-40% in Ontario and BC. Low interest rates have distorted buyers' perception of risk. They are in for an awakening.
The weird part about a decline of this scale is that would only take these markets back to 2020 or early 2021 prices.
 

JustDandy

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I just got a updated price list from Argyle in UD, $500+ sq ft for a Calgary woodie seems a bit on the high side, but it if they are getting that then good on them. It still works on the upper end of my investment criteria, but it just feels slightly off.
 

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