No Bubble in Calgary

Duane Page of Coldwell Banker Lifestyle Realty in Calgary, AB sent me this article he wrote about the housing bubble in Calgary (or lack thereof):

In Calgary, house prices have gone up by an average of about 6% - each year - for the last ten years, almost doubling in price since 1995. This is great news, especially if you bought a home back in 1995. However, some people start to get nervous when they see prices increase steadily; they assume ‘what goes up must come down’ and therefore, the real estate ‘bubble is going to burst’. To find out if house prices are going to go down, you have to figure out why are house prices going up.

The simplest reason is that everything goes up; it is called ‘inflation’. In Canada, the inflation rate has been at around 2% over the last ten years. House prices in Calgary have tripled this amount. Inflation can’t be the only reason.

Supply and demand is always a factor. According to CMHC, demand is high when the number of places sold is 60% or more than the number of places for sale. This percentage, or what is called the ‘sales to listing ratio’, has averaged around 0.65 for the last 10 years in Calgary indicating that demand has been high. But what is the cause for the high demand? The economy; factoring in taxes and wages, Calgary has the second most affordable houses for all the major cities in Canada (Edmonton is first). There are also plenty of jobs here. Calgary has one of the lowest employment rates in the country.

Another factor is affordability. Interest rates are still lower than they have been for over 40 years. But this tends to scare people too – we know rates are going to go up and when they do, what will happen to those that bought with little or nothing down? If rates go up only 2%, your payments could go up by 22%. A lot of people remember the early 80s when rates went way up, and people were walking away from their mortgages and selling their houses for a dollar – yes a dollar! But remember; only about half of us in Alberta have a mortgage these days. And those that are getting mortgages are still using 5 year terms, and at fixed rates, and those that use variable rates still have to qualify at a 3 year fixed rate.

You also have to look at who is buying these places. Older people still buy houses. In fact, the 65 to 74 year old age group is showing one of the fastest growth in homeownership. They are buying secondary homes, more expensive homes, and recreational properties. And if things do go wrong, older buyers tend to have more disposable income and liquid assets to help ride out any hard times, if they occur. Also we are seeing fewer investors buying houses and more homeowners buying, revealing that it is not mere speculation that is behind the increase in house prices. Another concern is that the number of fist time buyers is declining as the population ages. Although this is true, there are still a lot of people in the 25 to 39 age range buying homes.

There will always be those that believe real estate in a risky investment because they are afraid that house prices will crash because of a bubble. The truth is that there is no bubble. Houses are not stocks. You don’t wake up one morning to find out that your house is worthless; real estate always has value. Shelter is a necessecity. Historically, on the average, house prices have actually never gone down except for the depression in the 30s when unemployment was over 25%. The pace in Calgary may level out, and there may even be correction or two in the coming years.

In the long term, the worst that should happen is that house prices will continue to increase at about 1% above inflation –as they have historically done – meaning that if the Bank of Canada is right and inflation should run at about 2% in the upcoming years – then the average return should be 3%. The good news is that if prices do go down, you will hear a ‘hissing’ sound if the bubble leaks not a bang because the bubble can’t burst.

By Duane Page,
www.duanepage.com,
duane-page@coldwellbanker.ca.

Great Signage

This photo was sent in from one of the newest Coldwell Banker offices. Coldwell Banker Vancouver Island Realty now has an office in Nanaimo and did they ever do a great job with signage! More info on Wayne Dumbrell and the crew on the island coming soon.

Company Spirit

We recently visited Carol Clark's office - Coldwell Banker ONTRACK Realty - in Red Deer Alberta. I've visited a lot of offices since I've worked with Coldwell Banker and Carol's office definitely has a sense of energy about it when you walk in. Everyone is very excited to see you and happy to be there; they all genuinely like working there.

They sent me some photos of a recent event they participated in and you can see from the pictures they do know how to have a good time in Red Deer. Here are their comments:

On July 20/05, the annual Red Deer Parade took place. For the past six years Coldwell Banker Ontrack (Carol Clark) has entered a float and in the past 2 years we have received an "Honorable Mention for Commercial Floats." Everyone in the office participates with this event. Kelvin Kloss is our ring leader. He gets everyone motivated about a month before. We build, fluff flowers, paint (drink a few beers), & have lots of laughs. The theme for our fair is "Old time county fair" so we put our thinking caps on & try & decorate the float following that them. This year being Alberta's 100 birthday we put a cake on the float. One of our administration staff contacted a square dancing group and they danced & sang the entire time. In our kissing booth we placed our "Queen" Carol Clark where she puckered up for a big smooch. Coaching her on is Sheralyn. (Please ignore the Remax balloon behind us)!! We have a great time, as we go though the streets of Red Deer, waving, and clapping our hands to the music; friends & clients give us a big cheer when we pass them. Without Kelvin none of this would take place as he works steady until the job is done.

Post a Comment, Improve Search Performance

Before you read this post, read the one below about search engine marketing.

Ok, now that you've done that you know that linking your site to other websites can help your search engine performance. Posting a comment on this blog that includes your website address has the same effect. AND since this blog is hosted by Google it's a pretty good place to have your website listed.

That's all for today ;)
Sara.

Search Engine Marketing

If you have a website there is no doubt you'd like to generate some business from it. How do you do that? There are three key steps:

1. Get people to come to your website.
2. Give them what they want so they spend some time on your site and eventually contact you.
3. Respond to them immediately and turn that lead into a deal.

If there is one thing that being part of a network can help you with, it's generating business from other parts of the country. Why don't we all help each other help ourselves and get more traffic coming to our websites? We can help each other with Step 1 and get more people coming to our websites. (Steps 2&3 are up to you.)

How do we do that?
Link to each other! The number one way that websurfers find websites is through the search engines. The search engines need to find your website if anyone will be able to find you through the search engines. The more websites that link to your site, the easier it is for the search engines to find you and therefore the higher your rank will be on the search engines.

So... add a link to http://www.edmonton-homes.ca on your website and email us when you've done this with your website address, and we'll add it to our website.

Share Your Funny Stories and Win

Over the years we've heard a lot of funny things that have happened when out showing or listing properties:

• showing a show home to a family...the kid disappears upstairs and no one thinks anything of it. Turns out he had to use the washroom and as it was a show home the plumbing was not hooked up. While pointing out the features of the kitchen...holy crap! Little nuggets started falling from the kitchen ceiling, almost hitting the agent and family in the process.

• taking an agent caravan to the wrong home and not realizing the mistake until you find the owner of the home in bed and she has no idea why there are 20 real estate agents in her house!
• unknowingly showing a grow house to an RCMP officer.
• walking in on a couple having sex who don't miss a beat so you just continue with the showing.
• walking in on a homeowner in the shower...

Share your funny story (click the "comments" link below) and the author of the best story will win a Mr. Housing Bubble t-shirt!