Breaking Down The Headlines

Calgary Real Estate/Business Headlines

I haven’t really touched on any of the recent headlines many of you have been reading lately, so now is probably a great time to break down some of the stories for you. There are three specific stories I want to touch on, so let’s get started with the big jump in sales for August!

 MLS sales in Calgary saw a huge increase of 22.1 percent compared to August of 2010. However, the actual prices only increased by just 2.2% from that time. What this tells us is that while the market is still a buyer’s market, where obviously people are price conscious, the amount of activity is heating up.

Sellers need to be very price conscious if they want to see their property sold quickly and those that are still asking premium prices are finding their property is just sitting there. More and more people are coming back to Alberta for work and this trend that won’t disappear any time soon.

This is partially what’s spurring the extra sales, but more Albertans are also becoming more comfortable with their job security and are willing to look at upgrading or becoming first time buyers while the market appears slower. Basically, they are comfortable, As the economy continues to pick up steam locally, watch for additional pressure to be put on first the rental market and then the buying market eventually leading to values increasing for property.

Oil heading for $130 a barrel is another recent headline that has caught people’s attention. In my opinion, this is quite optimistic and really wouldn’t be good long term for Alberta. Our biggest trading partner, the US, would essentially collapse if prices became that high and even the growth of Brazil, India and China wouldn’t offset that enough for us.

This doesn’t mean oil won’t still increase and oil companies are handsomely profiting already. When it does increase, watch for additional large project announcements from big oil companies and even more demand for workers across the province. This will put more pressure on both the rental markets and the sales market in a situation very similar to 2006, although not quite as crazy.

The final headline I want to touch on is the recent announcement of a potential condo boom coming. While this isn’t entirely implausible, we are a long ways away from it becoming a reality. The condo market was overbuilt during the last boom and the market still has a long ways to recover.

Many “investors” became stuck with units during the boom and when they found they couldn’t sell them they turned them into rental units while they waited for the market to recover. Many developers, who saw the market stall, also delayed their projects as they too wait the recovery of their market. Once the condo market does start to pick up steam, both of these groups will suddenly start moving their product onto the market again, creating a new glut yet again and stalling any potential boom.

Add in the new announcements for additional towers being built near and in downtown and it becomes quickly apparent that we will see to much product on the market for this section of the housing market to really boom. Now I can never say it won’t happen, but I’m quite sure it won’t happen for several years, which is another reason condos are way down on my list of potential investment products.

So that’s my take on the current state of the headlines out there, what are your thoughts?

About admin

Bill has been investing in Calgary Real Estate since 2003 and has been writing about various Real Estate topics since shortly after he started. With a significant amount of Real Estate transactions and experiences he is able to pass his knowledge on to other investors and partners, and now you through his Real Estate blog. To automatically receive new posts, be sure to sign up on the top right of this page and I will send you a free ebook on Screening Tenants.
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4 Responses to Breaking Down The Headlines

  1. Fay Whitford says:

    as always, great information. I too expect a glut in the condo market. Why do people insist on doing what everyone else is doing and at the same time?

  2. Garth Chapman says:

    Well said Bill! Reading the headlines, and often as not, even the body of the articles doesn’t really tell what is happening…but it does appear to sell newspapers. Often the last paragraph is a somewhat more accurate reflection of the truth. Always enjoy your commentary.

  3. Bill Biko says:

    People are followers, they see what others are doing and then follow them. Rather than watch what everyone around you is doing, why not watch what the people with money are doing and follow their lead.
    I cannot remember who said this (and I have probably mangled it, but I still have the essence of the message), Never take financial advice from someone who isn’t at least three times wealthier than you.
    Ironically this leaves out 80% of the financial advisers that 80% of the population listen too. Mmmm, wonder if that will ruffle any feathers.


  4. Bill Biko says:

    Thanks Garth,

    Headlines are rarely the story, so you have to look a bit deeper to find out what’s really going on.



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