TRY NOT TO BE SHORT SIGHTED

Realtors take long-term view, see real estate as 'strong investment'
Mario Toneguzzi, 
Calgary Herald February 23, 2015

Calgary’s housing market is the hot topic of conversation these days not only in the city but across the country.

The once-sizzling real estate sector has cooled tremendously thanks to a precipitous decline in oil prices and that has people, from economists to realtors to homeowners and potential buyers, speculating and wondering what that will do to housing prices.

And there is no lack of opinion on the topic, ranging from forecasts of a small increase in average prices for the year to a 10 per cent or more decline. MLS sales are expected to fall dramatically this year – TD recently said by as much as nearly 50 per cent – with new listings rising at a steep pace.

“There is no surprise that the range is so vast. Trying to forecast an average sale price change . . . in today’s market is impossible,” said Don Campbell, senior analyst with the Real Estate Investment Network. “Why? Simply because the most important variable is not known.

“How long oil will stay under $70 and how confident the oil industry is about it levelling at that number.  Without that knowledge, real estate market price forecasting is mathematically impossible.”

According to the Calgary Real Estate Board, year-to-date up to and including Saturday there have been 1,758 MLS sales, down 37.17  per cent from the same period last year, while new listings have risen by 24.66 per cent to 5,551. The average sale price has dropped by 2.17 per cent to $463,938.

Since 1990, the annual average MLS sale price has fallen from the previous year only four times – 1991, by 1.08 per cent; 1995, by 0.47 per cent; 2008, by 2.46 per cent; and 2009, by 4.67 per cent.

The biggest annual hike was recorded in 2006 when prices soared by 39.78 per cent from the previous year to $358,385 and then jumped another 18.25 per cent in 2007 to $423,798.

According to the Conference Board of Canada, the city’s economic growth in 2006 was 7.0 per cent – the second highest rate of growth in the past 25 years behind only the 7.9 per cent recorded in 1997.

Christina Hagerty, a realtor with RE/MAX Realty Professionals, who started in the business in 1991, said real estate in Calgary has always been a good long-term investment.

“In fact, if you look at real estate values over the course of 10 years, all have performed double to triple their value right across the board, not just in the inner core,” said Hagerty, who specializes in that area.

“So the old-timers like us who have seen a couple of decades of activity aren’t fretting.”

Hagerty said the current rental vacancy rate in the city remains low. That combined with some of the lowest interest rates in history and still good overall consumer confidence will keep the real estate market healthy.

“I would say based on this, housing prices should continue to see a slight positive gain. Unless there are reasons for sellers to take a substantial decrease, most would not do so.  Why would you want to lose 10 per cent on your real estate value when you can lease out for a premium based on such low vacancy rates?,” she said.

Ann-Marie Lurie, chief economist with CREB, said there is a wide range of price expectations for this year because there is a significant amount of uncertainty regarding the duration of lower oil prices and ultimately the impact on employment.

“Regardless if you look at average, median or benchmark prices, annual home prices within city limits declined in 2008 and 2009,” she said. “During that time several global economies were in a recession. In 2009 Calgary saw GDP contract by nearly four per cent, net migration fell, full-time jobs were being lost, there was a large amount of newly-constructed product available, and the impact of the financial crises created several changes to the lending industry.

“This year the housing market has seen sales activity fall, likely a result of reduced consumer confidence in the market.  At the same time, listings have continued to rise, driving up inventories. If this continues, this will place downward pressure on pricing. However, to reach the double-digit decline rates in housing prices, this would assume that the energy prices would stay low for this year with not much upside prospect into 2016, causing  job losses, low levels of migration, and persistent excess supply in the housing market.”

For prices to remain stable, said Lurie, the city would have to see stability in the employment sector and the pace of new listings slow.

“With this much uncertainty I think it is prudent to consider there are several factors that can drive the prices. Based on current expectations, prices are likely to remain at or just below levels recorded near the end of last year,” she added.

Hagerty said Calgary is a young city and many people are not used to the volatility of the oilpatch and its relation to the real estate market.

“So those of us who have been around for a couple of decades aren’t concerned,” said Hagerty. “We aren’t day-trading real estate. We get to live in this tangible asset as it grows in value. Savvy investors are sitting back hopeful the next seller will think the sky is falling so they can seize the opportunity. They know that Calgary’s a sure thing with strong fundamentals that make it a great investment.”

Campbell said real estate continues to be a strong long-term investment and income replacement.

“We have always believed that real estate is a safe long-term play. The numbers don’t lie – since prices have begun to be tracked, they have increased,” he said. “Of course we have seen short-term fluctuation with dips and corrections, but in the long term the arrow has always pointed up.

“Calgarians have hosted many an oil boom party in the past and have learned of these inevitable dips. However, because the province’s population, and the city itself, has grown at record numbers over the last two years, we have a large cohort of the population who have never experienced a Calgary ebb and flow.  That has led to an increase in knee-jerk response in the market as shown by the dramatic increase in listings.”

He said it is at about this point that strategic Calgary investors start to hunt for good deals, knowing that when the market recovers – be it in one or two years – that it will prove to be the ultimate buying window.

TOP MARKETS

Calgary and Edmonton displace Toronto and Vancouver as top real estate markets
Limited supply in Calgary pushes rents higher
By Mario Toneguzzi
Calgary Herald November 6, 2012

CALGARY — Calgary and Edmonton have displaced Toronto and Vancouver as the top-ranked cities for overall real estate prospects, according to the Emerging Trends in Real Estate 2013 report released Tuesday.

The report, by PwC and the Urban Land Institute, said the Canadian real estate market is expected to remain steady with “modestly good” investment and development prospects across most property sectors for 2013, reflecting expectations of solid supply and demand.

Calgary was the top-ranked city in the country followed by Edmonton, Toronto, Vancouver and Ottawa.

In this year’s survey, Calgary ranked first in both investment and development prospects and second in homebuilding prospects.

“Growth characterizes Calgary’s future; it displaces Toronto as the top ranked city for 2013,” said the report. “This has made it challenging to acquire high quality real estate in Calgary, absorption of prime properties has reached record levels, and rents are being pushed due to limited supply.

“This trend will continue in 2013, especially in office and industrial employment space. Construction will increase in the housing and non-residential arenas, but nowhere near pre-crisis levels.”

According to survey participants, Canada’s real estate market will follow along in a seeming state of near-perpetual equilibrium compared with other more volatile regions studied in the report, including most obviously the United States.

“The results of this year’s Emerging Trends report reflects the fact that the Canadian real estate community understands real estate fundamentals and knows how to react to fluctuations in monetary policy and capital markets. Canada’s real estate industry continues to operate well despite uncertainties in domestic and global economies,” said Lori-Ann Beausoleil, PwC Canada’s Real Estate Leader.

The report said Calgary’s expanding economy is requiring a larger and more highly-skilled workforce. Employment forecasts indicate growth of 2.8 per cent next year and 2.9 per cent in 2014.

“This growth, driven mostly by the oil and gas industry, has made it challenging to acquire high-quality real estate in this market,” said the report.

“Absorption of prime properties has reached record levels and rents are continuing to be pushed due to limited supply.”

The report said potential approvals of controversial pipeline projects to the United States and into British Columbia would boost real estate construction projects further in Calgary.

The strength of Calgary’s real estate market is evident in both the residential and non-residential sectors.

According to the Calgary Real Estate Board, year-to-date as of Monday, total MLS sales in the city of 18,905 are up 15.56 per cent from the same period last year.

Canada Mortgage and Housing Corp. is forecasting total housing starts in the Calgary census metropolitan area to finish at 12,400 units this year, an increase of more than 33 per cent from 2011 and the highest level since 2007.

RealNet Canada recently said Calgary has experienced the second best ever year for commercial real estate transactions for the first nine months of the year with $3.394 billion in sales so far this year.

And a recent report by Jones Lang LaSalle suggested a downtown office development boom in Calgary could be on the horizon.

YOU KNOW IT'S THRILLER

The 'thrill' of buying a house
William Hanley, Financial Post
Apr. 21, 2011

You walk into the open house, take one look and say to yourself: This is it. It’s the house I have to live in. Where do I pay? A bidding war? I’m in.

Over my years of buying houses, I never bought one that did not have that frisson moment, that thrill of finding a place so suited to my wants. Indeed, I have in the past decided that I wanted to buy a house in what seems, in retrospect, to be nanoseconds. (By contrast, I’ve taken weeks to decide on the right pair of shoes.)

It is no way to make an “investment,” to be sure. But, as I’ve previously discussed in this space, buying a house is perhaps the most uninvestment-like of investments.

Just about anyone who’s purchased a property or thought about purchasing knows that it is much about gut-feel, in which the senses can conspire to trump sense.

Now, as the major real estate selling season gets under way, along comes a survey commissioned by BMO Bank of Montreal to give statistical weight to the notion that intuition carries a particularly heavy weight in the house-buying process.

The survey by Leger Marketing found that more than two-thirds of Canadians cited a “good feeling” toward the property as a reason to buy. Meantime, though, good sense is not thrown out of that gorgeous bay window and into those manicured flower beds. More than 90% of house-hunters value affordability and location over resale value.

So, the axiom that there are three important things in real estate – location, location and location – might reasonably be replaced by the Three Ps: Price, place and personality.

Nevertheless, that resale value is not a big concern to these surveyed house-hunters – people between 25 and 45 who plan to buy a home within two years – is a telling sign of the real estate times.

With some dips here and there, Canadian house prices have been rising strongly for more than a decade. Indeed, even the recession created just a downward blip in the chart of ever-growing values, with the average national price rising 8.9% last month from the previous March (but just 4.3% excluding Vancouver).

As a result, most of the house-hunters surveyed might never have been aware of a housing market that was not rising. I suspect many in this 25-to-45 demographic believe house prices basically keep going up forever, that though they downplay resale value in the survey, the expectation for solid gains is, well, a given. (Any significant drop in prices would surely shake that belief.)

In recent times, investors have been asked if they are stocks or bonds. If you’re a stock, you are prepared to take on more investment risk. If you’re a bond, you are not.

Perhaps, though, many people are probably houses when it comes to investing. A home is both partly a stock and a bond – and somehow neither.

It is a bond because over the long term it will likely produce modest returns through the enforced savings required by paying down the mortgage. It is a stock because the gains could be outsized if the investor were to buy and sell at propitious entry and exit points for market-timing gains.

And it is neither because it is an “investment” with many moving parts and frictional costs. You don’t live in a stock or a bond, but when the house leaks, it costs money and cuts into the investment. Meantime, the costs associated with buying and selling a property are becoming more daunting in many jurisdictions, with some observers reckoning that a house is often a mediocre investment at best.

But most young first-time buyers and mover-uppers are not fazed by such commentary. Home ownership is a cornerstone of our culture, with 70% of the population owning properties and many of the other 30% looking to join the majority.

And the real estate industry has become far more adept at marketing and selling than in the days decades ago when I was in the market. Today, houses are often professionally “staged” to produce that frisson moment. Prices are sometimes set artificially low to produce that exciting bidding war and that extra frisson of “winning.”

A house, it is said, is not a home. And a home is not strictly an investment. But does a stock have granite counters? Does a bond have stainless steel appliances?

HOT REAL ESTATE MARKETS

The 10 real estate markets wealthy investors are going gaga for

Gus Lubin, Business Insider
Apr. 7, 2011

The most favored investment type of rich people around the world is property, according to the Citi Private Bank and Knight Frank Wealth Report.

True high rollers consider real estate of all kinds in all countries. Like distribution and industrials in the UAE. Or development land in Zambia.

The Wealth Report picked out 10 great international real estate investments.
1 means low risk, poor yield, low potential; 10 means high risk, high yield, high potential.

#1 Commercial real estate in emerging Asia
Risk Factor: 8
Yield Factor: 8
Capital Appreciation: 8

"We like emerging Asia for one simple reason – real-estate returns are driven by economic growth and very favourable demographics, rather than leverage and yield compression. Greater trade and industrialisation drives demand for logistics facilities; growing incomes swell the middle class, which creates opportunities in retail and leisure; an expanding services sector opens up opportunities for offices; while a young, growing population needs modern residential accommodation."

#2 Development land around Lusaka, Zambia
Risk Factor: 7
Yield Factor: 8
Capital Appreciation: 7

"Zambia has a serious housing shortage – it needs to build at least 150,000 housing units a year. Construction is a major contributor to the country’s economic expansion. Growth in the sector is expected to have reached 10% in 2010, driven by strong demand for residential and commercial developments, energy, mining and transport infrastructure."

#3 Secondary UK residential investments
Risk Factor: 5
Yield Factor: 7
Capital Appreciation: 7

"First, go for secondary stock in good locations in central London. Headline figures demonstrate the strength of the recovery in the London market, but they also mask that secondary properties, even in good residential areas, are trading at a deep discount to the best stock. They offer some of the best rental returns and improvement can often add value. Second is development stock in good regional cities, such as Manchester, Birmingham and Bristol..."

#4 Commercial property in Poland
Risk Factor: 5
Yield Factor: 7
Capital Appreciation: 6

"The Warsaw office market has avoided the overdevelopment that it experienced during previous market cycles, keeping the vacancy rate well below those of other CEE capitals, at 9% at the end of 2010. Warsaw’s rental growth prospects are among the best in Europe – forecasts say that prime office rents will increase by 3.2% in 2011 and 4.7% in 2012."

#5 Distribution and industrials in the UAE
Risk Factor: 6
Yield Factor: 8
Capital Appreciation: 5

"In some sectors values have fallen by as much as 60%, but away from high-profile offices, glittering shopping malls and alluring waterside residential schemes, the understated “shed” sector can provide robust income returns. Values have fallen along with other property assets, meaning that now could be the time to take advantage of a sector that looks undervalued, yet is supported by strong market fundamentals."

#6 Luxury new homes in prime European cities
Risk Factor: 1
Yield Factor: 2
Capital Appreciation: 5

"The smart money going into the European residential market is likely to keep a clear focus on property that offers both the very best quality, and for which there is a marked scarcity. A beautiful private home in a sought-after location will always attract interest. The appeal is to owner-occupiers and the commitment is long term. The enjoyment of ownership is equal to the performance of the investment."

#7 Education real estate in Asia
Risk Factor: 5
Yield Factor: 0
Capital Appreciation: 8

"Investments in education real estate demand the same selection discipline and risk appetite by investors as with any other residential real-estate investments in developing countries. For longterm visions of such projects, investors should choose to work with developers who are not only locally rooted, but also understand the education needs of the community."

#8 Residential development in eastern Mumbai
Risk Factor: 6
Yield Factor: 4
Capital Appreciation: 8

"The coming decade will see most infrastructure spend and development in Mumbai to the east of the city and on enhancing connectivity with the west. Infrastructure projects, such as enhancements to the Eastern Express highway, the Versova-Andheri- Ghatkopar Metro rail project and the proposed new airport at Panvel are expected to benefit the eastern corridor more than the west. This is likely to accelerate change in residential and commercial markets in eastern Mumbai."

#9 Distressed US real estate and property debt
Risk Factor: variable
Yield Factor: NA
Capital Appreciation: NA

"The next two years could provide opportunities for investors seeking to exploit the challenges many financial institutions face. These asset dispositions should create attractive investment opportunities in underperforming and nonperforming loans. Non-performing loans can often be purchased at an attractive discount to par value."

#10 Commercial property in Sao Paulo, Brazil
Risk Factor: 6
Yield Factor: 8
Capital Appreciation: 5

"The demand for A+ and A-grade office space has been exceeding supply as newcomers are establishing activity in the country or expanding their operations. Sao Paulo is experiencing a vacancy rate of 2.8% and as of October 2010, about 105,000 sq m have been absorbed in the A+ and A-grade office market. Private equity and real estate funds have been very active, as they expect further increases in lease rates and price per sq m. Cap rates of about 11% have proved attractive to foreigners."

Photo By: PnP

WHERE'S WALDO BUYING?

Where to buy: Top 10 cities
Jesse Kinos-Goodin, Financial Post
Sunday, Aug. 8, 2010

When investing in real estate, sometimes it’s necessary to look beyond your own backyard. The Real Estate Investment Network (REIN), a national organization of investors, has compiled what it says are the top 10 Canadian cities in which to invest. Few are major cities and some are surprising. Don Campbell, president of REIN, as well as one of the researchers on the study, says the results are based on factors such as planned transportation improvements, or if the area’s average income, population growth and job growth are increasing faster than the provincial average.

Oddly enough, nothing east of Ontario shows up on the list, and while Mr. Campbell says cities like Halifax, Saint John and Moncton “still provide decent returns,” the top cities are ones that will outperform the national average between 2010 and 2015.

1. Calgary

Calgary is “poised to outperform the average by a wide margin,” says Mr. Campbell, making it the top-ranked city.

After two years of declining average resale housing prices, the Canada Mortgage and Housing Corp. has predicted they will increase year-over-year in 2010.

The REIN report credits the downturn to a much-needed correction, and that it was “economically impossible for the [Calgary] market to continue at the pace at which it was heading.” But now that it is coming out of the recession, along with economies elsewhere, Calgary’s strengths in producing food, fuel and fertilizer will boost its growth.

“Calgary is in a unique economic and geographic position to take advantage of the direct and indirect jobs this increase in demand will create,” says Mr. Campbell, who adds that with strong in-migration and renewed affordability, the city provides a good buying window for long-term investors.

2. Kitchener-Waterloo-Cambridge, Ont.

REIN refers to Canada’s Technology Triangle as the “economic Alberta of Ontario.” That means KWC is not only seen as the economic engine of the new Ontario economy, but also that it “will outperform all other major regions in eastern Canada,” Mr. Campbell says. For indicators, he points to job growth, student growth and a new light rapid-transit system.

3. Edmonton

Edmonton sits near the top of the report’s list because of its future potential. Calling it a “perennial overachieving market,” REIN says the city is a “growing market, [with] an increasing population, and a forward-looking leadership.”

It will also be the main benefactor of energy development in Western Canada, says Mr. Campbell, resulting in a “very affordable, strong rental market with strong in-migration from across Canada.” Major infrastructure improvements, such as the ring road and LRT expansion, will be key.

4. Surrey, B.C.

British Columbia’s second-largest city is growing so fast it could become even bigger than Vancouver.

“Just a decade ago, it was known as the punch line to many a joke,” Mr. Campbell says. But with two border crossings to the United States, links to five major highways, deep sea docks and four railways, Surrey is a prime location to do business, he says.

Although there may be a strong rental market, it’s a city that requires a closer examination, taking “neighbourhoods and even the street’s characteristics into consideration when deciding where to purchase,” REIN warns.

5. Maple Ridge & Pitt Meadows, B.C.

The Translink and Gateway Project infrastructure improvements have made these B.C. towns the “most accessible regions in [Vancouver’s] Lower Mainland,” the report says. They’ve come a long way, Mr. Campbell says. The unofficial motto of Maple Ridge used to be “You can’t get there from here.” As a result of poor infrastructure in the past, property values have been historically low in this area. But with the improvements, it’s predicted an additional 400 business will move into the area, REIN says, improving the demand for both residential and commercial property.

6. Hamilton, Ont.

“The perception no longer matches the reality of Hamilton,” Mr. Campbell says. “The city’s leadership, as well as local business owners, have transformed what was once a rough-and-tumble steel town to a city with economic vitality, diversification and population growth.” REIN applauds Hamilton’s leadership as being innovative in revitalizing the city, adding Hamilton

“has beaten its overall building permit value for the second year in a row.”

7. St. Albert, Alta.

“Long thought of as a satellite of Edmonton, St. Albert is poised to be the biggest benefactor of the new Edmonton Ring Road,” says Mr. Campbell, who adds that as the transportation access improvement is completed, the city will begin to experience “a flood of not only new residents, but also the relocation of companies and jobs into town.” Other attributes of the city include consistently low vacancy rates, high rents and strong property value increases. It also helps that the city has “turned itself into a major retail centre for the northern region while adding to its industrial and commercial job base,” REIN says.

8. Barrie & Orillia, Ont.

These two cities have been shedding the perception of being just cottage country and have become a “hot bed for growth,” Mr. Campbell says. University and college expansion campuses have brought new life to the area, and the addition of Go Train access has made them viable commuter towns for the Greater Toronto Area, REIN says. For investors, this all adds up to healthy property appreciation, a respectable vacancy rate of 4.7% and the youngest residents on average in a given Census Metropolitan Area (CMA).

9. Red Deer, Alta.

In the centre of the Edmonton-Calgary corridor, Red Deer is not close to either. But REIN suggests reviewing city plans, as there will be a lot of hidden opportunities. “The whole central Alberta region has witnessed very strong population and job growth, as well as a real estate market that has continually outperformed most other regions of the country,” Mr. Campbell says. He adds that with a continually expanding industrial and commercial job base, Red Deer is in a good position to “take advantage of the inevitable growth in demand for food, fuel and fertilizer.”

10. Winnipeg

Winnipeg is often left off the real estate investment radar, but Mr. Campbell says it’s a good city for “consistent economic performance — not too high during booms and not too low during downturns.” But people should stick to buying top-quality properties. REIN also notes that housing prices, after dipping last year, are back to double-digit increases, which could “lead to an influx of inventory on the market.” But with one of the lowest vacancy rates in the country, at 1.2%, there is room for movement. Another positive factor for the city is international immigration is expected to increase under the provincial nominee program being undertaken by the government.

EAT, PRAY, DWELL, LOVE

'Flippers' replaced by condo dwellers
Shift to homes to live in instead of simple investment
By Marty Hope, Calgary Herald
June 19, 2010

Calgarians aren't doing it as much as they were a year ago.

Those thinking about buying a condo for investment purposes has declined from just a year ago, says a national survey.

But despite a decline to 40 per cent this year, down from 52 per cent in 2009, Calgarians continue to lead the country in terms of those considering the investment route, says a TD Canada Trust poll.

But the number of flippers in the marketplace -- people buying and reselling in a short period of time -- has dramatically declined, says Christina Hagerty of Re/Max Realty Professionals.

"I am seeing a shift toward people buying a home to live in as opposed to speculators," she says. "People are seeing a long-term value and aren't looking to flip, (which is) what got us in trouble in the first place."

Forty-two per cent of Calgarians polled say lower maintenance with condos versus other styles of homes is the biggest motivating factor for buying a condo.

Affordability is the second strongest driver -- but only at 18 per cent.

"Calgarians continue to see the value in purchasing a condo as an investment strategy," says Chris Wisniewski, associate vice-president of real estate and secured lending for TD Canada Trust.

"Affordability and stable monthly expenses can make condos very attractive for both first-time buyers and investors."

Of the 40 per cent looking at condos as a possible investment opportunity, 41 per cent of that total would consider using the condo as a long-term source of rental income compared to 35 per cent nationally.

While slightly more than one in four Canadians say they plan to eventually move into their rental unit, only 16 per cent of Calgarians have plans to do so.

Jessy Bilodeau, mobile mortgage specialist in Calgary for TD Canada Trust, says condo prices in Calgary are starting to increase, as has the number of available units for sale.

"The current increase in supply would suggest prices may not rise any further as buyers will have more options to choose from," she says.

Carlimi and Jose Velazquez decided the time was right for them to get out of rental and into homeownership.

For the couple, who are expecting their first child in October, affordability and location were key to their decision to buy their first home.

"We're going to be paying less a month for our townhouse than we've been paying in rent," says Carlimi, adding that they are currently living in the Sasso development in the Beltline region of Calgary.

The couple, who married four years ago, also took advantage of historically low rates.

"Rates were going to start to go up, so we decided it was time to buy," says Carlimi.

The couple moved up its original purchase date because of the expected rate changes.

What they bought was a 1,300-square-foot home in Mosaic Aspen Hills by Heartland Homes.

They expect to take possession of the three-bedroom, 2 1/2-bath townhouse in August.

"We like the layout of the townhouse and also the location, says Carlimi. "We're still close to downtown and to our jobs and we have good access, and this area isn't as expensive as some others around the city."

Both work in the oilpatch -- Carlimi for Saxon Energy and Jose for Husky Energy.

The survey of Calgarians by TD Canada Trust found that they appreciate the affordability of condos.

However, even if they had more money, many wouldn't change their plans to buy a condo -- 61 per cent of those consider purchasing or already own one.

"Additionally, one-third of Calgarians considering a condo purchase would raise their family in one," says the survey.

Hagerty, who specializes in condos, says the majority of condo owners also live in their units -- a total that increased this year compared to 2009,

"We see both men and women purchasing," she says. "I'm representing a lot of couples either married or into shared ownership because of the more stringent banking guidelines."

Hagerty also sees a more balanced condo market, adding that those for sale that are priced right are selling, but those who are "reaching" with their prices are sitting and will likely have to make price corrections.

Figures from the Calgary Real Estate Board show the average selling price of condos listed on the MLS system was $304,662, up from $275,212 a year ago.

For the first five months of this year, the average was sitting at $291,802, up nearly six per cent from 2009.

The TD Canada Trust survey reports that for the fourth year in a row, the majority of Calgarians (82 per cent this year) say they would spend less than $400,000 for a two-bedroom condo.

In terms of condo fees, only six per of respondents would pay more than $400 per month.

Photo: Active Listing (#307, 3600 15A Street SW) MLS# C3433222

LIFE is NOT waiting for you

Forget market timing, it's all about life timing
Garry Marr, Financial Post 
Wednesday, Jun. 9, 2010

'You know, you're making the biggest mistake of your life. The housing market is going to fall."

I got this great piece of advice from another journalist at the Financial Post, who has since left the newspaper, after buying my first home. Not exactly the type of thing you want to hear after taking on huge debt and making the biggest financial decision of your life.

Lucky for me, I didn't heed that advice about Toronto's red-hot real estate market -- in 1998. I'm not going to say I made a shrewd business decision 12 years ago, or even six years later when I bought a larger house.

For me, it wasn't a case of not following what turned out to be bad advice from a fellow business journalist. Nor was it about trying to time the market.

I was simply following the same pattern as most Canadians: I got married and decided to stop renting and buy something. Later came the need for a bigger home when the second kid was on the way.

Which brings us to today. The supply of housing is rising fast as people try to list their homes for sale before the market "crashes." This is happening at the same time that demand is starting to wane. Economists and even the real estate industry are all predicting a correction, the only argument being how severe it will be.

So, the question for anyone buying is, should you wait?

Don Lawby, chief executive of Century 21 Canada, thinks the strategy of waiting for a crash is not going to work during this economic cycle. "For a market to crash, you have to have people who are desperate to sell," says Mr. Lawby. "People will [only sell] if they can't afford their mortgage or they don't have a job."

He doesn't see a decline in prices, "unless you are predicting that mortgages will renew at a hefty premium, which is not the case, or a whole bunch of people are going to lose their jobs."

Mr. Lawby believes neither will happen.

And, he adds, you are really into a risky game if you are timing the market. "A house is a home. If all you are doing is looking at it as an investment --that's what happened the last 15 years--it's not just that. It's a place to live and a place to raise a family," says Mr. Lawby.

Even Benjamin Tal, a senior economist with CIBC World Markets, who last month said in a report that Canadian housing is 14% overvalued, has doubts about playing the market. But he suspects that's exactly what some Canadians will do.

"Is there a sense that prices will go down and people will wait? I think it might be an issue," says Mr. Tal. "It won't be the main reason [people don't buy], but it will happen at the margins. The fact that people sell at the peak and wait to buy is a normally functioning market."

But even if you do make the right call on housing prices, it could end up backfiring on you in other ways. For example, if interest rates rise fast enough, any gains you make on price could be erased by interest charges, says Mr. Tal.

Edmonton certified financial planner Al Nagy says you need to think of your house the way you think about any long-term investment. "Whether it's an investment for use in your retirement or a house to live in, it's a long-term thing. The timing becomes less critical than it would be if it is a speculative [investment]."

And he says making a call on the housing market is as tricky as any other investment call. "It's very rare you catch the bottom. You can't let the market dictate when it's time to buy. The time to buy is when you can afford it," says Mr. Nagy.

I'm not sure that philosophy would fly with my former colleague, but the problem with timing the market is, what if your timing is off?