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equalizer.
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November 10, 2006 at 6:21 PM #7891November 10, 2006 at 6:47 PM #39749
Bugs
ParticipantCalgary evidently has what the permabulls here in San Diego wish we had. Increases in population and wages sufficient to drive the market.
Most people define the elements that comprise a bubble to include price gains occurring based on speculation and irrational exuberance; and with little or no economic foundation. If the oil business in Calgary is pumping a ton of money into their economy that’s better characterized as a reaction to an improvement in their fundamentals. Sure, there might be some speculation in there too; but even after the short timers leave town those fundamentals will remain, and so will that portion of those gains that were tied to those fundamentals. Wages and population.
November 10, 2006 at 7:39 PM #39754powayseller
ParticipantWhat percentage of Calgary’s population got a wage increase, and by how much? If only a small percentage of people/companies are benefitting from the oil boom, then that would support a few big and expensive homes. It shouldn’t make existing home prices jump that much. Did rents and per capita income rise the same percentage as housing? If not, it’s a bubble.
The interview I listened to the other day, which featured Shiller and Robert Campbell, was hosted by a Canadian radio station. I remember they talked about a bubble in Vancouver, but I don’t remember the other cities.
November 10, 2006 at 11:16 PM #39755handyman
ParticipantExcellent questions powayseller!
One thing that happened this year is EVERYBODY got a wage increase because the Alberta government decided to give every man, woman and child a $400CND (or about $360US) “prosperity bonus” in order to distribute some of the their enormous oil royalty revenue. While it is unclear whether this program is to continue, it is my view that this windfall got capitalized to some extent into real estate prices.
This aside, the labour market in Calgary is very tight and the vacancy rate is also very low. I think in the face of strong housing demand vs. tight supply, that it is quite incorrect to say that income growth should equal housing price growth. The demand for housing is, in fact, quite elastic. In the face of higher costs, people will use less housing, or even move into their cars, if they have to.
Definitely, I can say that while Calgary has more than it’s share of McMansions, the price growth shown on the chart is not some sort of sudden shift in sales from shacks to McMansions. In fact, percentage price wise, the shacks are holding more than their own.
Calgary is an interesting housing market to study as it has gone through a number of extreme booms and busts over the years, largely linked to the price of energy. Most helpfully, for we students of urban land economics, the Calgary Real Estate Board http://www.creb.com publishes on their web site, district by district sales and price statistics going all the way back to 1988. I have yet to come across another real estate board this enlightening, when it comes to sharing data!November 10, 2006 at 11:16 PM #39756handyman
ParticipantExcellent questions powayseller!
One thing that happened this year is EVERYBODY got a wage increase because the Alberta government decided to give every man, woman and child a $400CND (or about $360US) “prosperity bonus” in order to distribute some of the their enormous oil royalty revenue. While it is unclear whether this program is to continue, it is my view that this windfall got capitalized to some extent into real estate prices.
This aside, the labour market in Calgary is very tight and the vacancy rate is also very low. I think in the face of strong housing demand vs. tight supply, that it is quite incorrect to say that income growth should equal housing price growth. The demand for housing is, in fact, quite elastic. In the face of higher costs, people will use less housing, or even move into their cars, if they have to.
Definitely, I can say that while Calgary has more than it’s share of McMansions, the price growth shown on the chart is not some sort of sudden shift in sales from shacks to McMansions. In fact, percentage price wise, the shacks are holding more than their own.
Calgary is an interesting housing market to study as it has gone through a number of extreme booms and busts over the years, largely linked to the price of energy. Most helpfully, for we students of urban land economics, the Calgary Real Estate Board http://www.creb.com publishes on their web site, district by district sales and price statistics going all the way back to 1988. I have yet to come across another real estate board this enlightening, when it comes to sharing data!November 11, 2006 at 9:56 AM #39766equalizer
Participantfirst post is from Aug 30, 2006 WSJ article. probably market top.
this website has detailed info on calgary market. scattered softening prices
<http://calgary-housing.blogspot.com/>“Thankfully, in a changing RE market, there is lots of funny listings on the MLS which would have been unheard of 6 months ago.
The market remains quite strong. Over 2000 sold. Average price highest ever. Inventories continued to increase, although at a slower pace than previous months. This is probably due to seasonal factors as listings tend to decline after the summer and drop until after Christmas While average prices remained elevated, readers began to see isolated instances of falling prices in certain areas / condos. Day's inventory has reached the average level of 1999 after a year of extremely low inventory levels.”
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