Calgary Enters Fall...Hang onto Yer Hats!
That title is meant to be a double entendre. Seasonally, we are entering fall, no doubt about it. There is a crispness in the air that was lacking just a week ago. But we're also entering another fall. Seems to me a real estate fall is just around the corner too. The signs are there for those who care to read the tea leaves. Jayman Builders is laying off 40 employees, and the Gateway Midtown condo project is being "suspended" while it's just a big hole in the ground. I've heard the term "right-sizing" not "down-sizing" being bandied about. Give me a break. Whatever you call it, those people who lost their jobs, lost their jobs!
Now, I've been a bear about the Calgary real estate market since it took off in a fit of irrational exhuberance in 2006-07. It had to come back down to earth. The fundamentals dictated that. Those fundamentals include if first-time buyers cannot enter the market, the entire market cramps up. Well, we've got bad cramps right now. But people are greedy and still believe they deserve their pot of gold for a 1940s, 1950s, 1960s fixer-upper.
For those who think Calgary is immune because "we have oil", think about this: the market was just as cramped up and just as bottlenecked when oil was at $140/barrel as it was when oil was $100/barrel. Fundamentals, people. How much money people can afford to pay for housing on a monthly basis - that's the only indicator that really, truly matters.
We need to get over ourselves. We're not special. We're not unique. This is happening all over the world. And we're not London, NYC or Paris. We're a small-ish prairie city striving hard to be more than we are.
Calgary needs a good dose of reality, and methinks it is just around the corner.
Comments
Of course, even if it stays high there's no guarantee it will support real-estate, as you say. While that might pour money into certain pockets, it's not much help if the rest of the economy is plummeting, except perhaps you're in a town where everyone is getting the oil money. I suspect that is not the case for Calgary.
due to dud real estate loans kept on its books. As this may be the next shoe to drop in the credit crunch, small Denmark is showing the way for the world."