According to Statistics Canada's 2006 Census of Population and Housing, 73.1% of Albertans own there "dwellings."
What does this mean?
It translates into the fact that the pool of remaining buyers in Alberta's real estate market is small. During the boom years of 2006 and on, many Albertans were "hyped up" to purchase properties to catch the fad of eternal property appreciation. It was a vacuum phenomenon, pushing home ownership levels to new highs. The real estate marketing machine was huffing and puffing, sucking in all buyers, qualified or not.
Now that the market is softening, speculators are in a state of debt shock. For sale signs are sprung up in a weed like fashion to attract potential buyers. The problem is the negative sentiments realised by the public towards home ownership. Reality has set in. House prices do increase forever and ever.
With sales already down 30%-50% yoy, and an inventory gluttony epidemic - who is going to save the sellers now?
Apparently, few are left with those heroic abilities.
The key to salvation - a conversion of the masses of "bitter" renters and "basement dwellers" into potential home owners. This would increase the pool of buyers in the market. To accomplish this would mean for realistic price reductions in the market.
UPDATE (June 4, 2008):
Home Ownership At Record Levels ... So Is Mortgage Debt.
"In total, Canadians owe an amount fast approaching $850-billion on their homes, more than double what it was a decade ago, with percentage growth in double digits in recent years.
If trends continue as expected, the value of all outstanding mortgages will surpass the $1-trillion mark some time toward the end of next year."
Home Qwnership And Mortgage Debt Highest In Decades: More are buying outside their means
'The rise in mortgages likely reflects more incentives now available to entice first time home buyers, said Jim Rawson, regional manager for Invis in Toronto.
"Younger people are stretching themselves," he said in an interview, although he said they are still qualifying for the mortgages.'
Small Pool of Buyers Remaining
Sunday, June 1, 2008
Posted by crebb at 12:27 AM
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15 comments:
Interesting chart... we're already almost 5% above the national average of home ownership. Could be due in part to a stronger economy here than elsewhere though.
I mostly wonder how this compares to historical data... would be interesting to see changes over the last few years and compare to boom times and non-boom times in the past.
Great topic!
I remember me and my wife looking at showhomes last year. One saleswomen was 21 and she and her boyfriend recently bought a house. Every one of my peers have bought except us. Some at good prices others not so much. At 26 I am an old man renting. seriously.
Edmonton probably has some of the lowest housing utilization in Canada. There are many young 20-30 childless couples with full sized houses here. There is very little pent-up demand.
What happened in 2001-2006 was the perfect storm. 30+ Gen-Xers starting starting to get into ownership after the difficult 90s. massive in migration, lower interest rates loosening credit standards, HGTV. Gen-y getting into debt headfirst. Also, baby boomers began hoarding as much real estate as possible. So even if the economy remains and in-migration picks up - that is only one of the above factors thats why i think any type of recovery will be weak at best.
Isn't it all starting to make sense now? The reason why sales have sunk in consecutive months as compared to boom years? Maybe the reality of the market is in deed because of a small group of buyers left. With the high prices, the pool of buyers is far less because (for example) young couples buying one single property (because of financial requirements) consumes 2 potential buyers.
Regarding historical trends, 2006 was the record year for home ownership in Alberta and across Canada.
I was able to find this tidbit on google:
http://www.realestatewebmasters.com/blogs/joe-samson/2803/show/
"Figures from the 2006 census, released Wednesday by Statistics Canada, show that more than two-thirds - 68.4 per cent - of all Canadian households owned the place they lived in, the highest since this information was first collected in 1961."
Thanks to easy credit.
Does anybody know what is happening in Canmore?
I had it figured as a bubble in 2003, but of course pricesmore than doubled in that time frame.
The place is filled with empty condos, owned by non-residents or owned by locals as investment properties.
The average single family house is something like $600 000 (I'm guessing, it may be higher).
It seems to be ripe for a fall.
Hey Biil, you're right. Just went to Canmore this weekend and stayed over at a friend's house. As you can imagine, there were quite a few for sale signs. So the situation is quite the same. I believe that the ave house price in Canmore is close to 1 million(?).
I know a couple of people with $1 million houses in canmore, but they are defintelly not average houses.
Whatever it is the average is significantly above Calgary.
Perceived mountain getaway for Calgarians. Nothing special. It's more a novelty. And it will wear off as all other novelties do. $1,000,000 for a house by the mountains is a gross overpayment, every way you look at it.
I expect it to fall harder than Calgary.
Time will tell.
Have you read Bull Truman's blog? It's certainly dying down except for the couple of bulls left in Calgary. I wonder if Bob Truman screens his bulls as much as he does bears? I guess not.
"John said:
Buyer,
I don't agree with your comments about migration.
They're coming to Calgary and Alberta,economy here is superb. Those who go out are those LOW INCOME people who can't even afford to buy the popcorn. We don't need street poors. I'm not surprised for those ones,maybe they want to live in the paper house,like some houses in Mexico made from paper. Those homes maybe cost 2 bucks. :)
Read here Net Migration coming to Alberta :
http://www.canada.com/calgaryherald/news/city/story.html?id=d35084ad-a113-4eeb-925f-eb5c1545f1f4
"We're going to see another migration as people lose their employment in Eastern Canada -- they're looking to come here. We're getting more applications and inquiries."
The Calgary Housing Corporation says its wait list is getting longer, increasing by 150-200 individuals or families in the past month, partially because people are putting themselves on the list even before they move out from Ontario and Quebec."
All specuvestors expect that people who move here from Ontario and Quebec will immediately buy houses from them. This is not reality. Bulls are certainly looking for every possible saviour at this point in time. Desperation.
As per www.creb.com for today.
Median prices for last 30 days fell to 415k.
It's starting. This should be hella fun!!!!
Canada may not have the mortgage lunacy of sub-prime loans, but even though we hear about those a lot, the reality is that people in the usa are having problems even with normal (non sub-prime) loans, as varialbe rates rise. And Canada is not immune to that. Those 40 yr mortgages will peter off as those homes are sold and refinanced.
My son is 27. Two years ago, I saw that he was priced out of anything but a condo, and condo fees in Calgary are ridiculously high. I convinced him to move into my walk-out basement to save on rent. His bank account has over way 35,000 in cash now, his car is paid off and he is debt free. By next year, if he sticks to the plan, he will be in a position to buy a nice little bungalow for under 200,000. How do I know this? Because I am old enough to remember the 8o's ... They couldn't give away houses in Coach Hill and Strathcona Park at that time. I ofen wonder, don't today's young people have parents to advise them?
Anonymous of June 17, your son is very lucky to have you. I wonder where all the parents are myself - but many of the parents have also fallen for the bubble, and will probably have to move in with their children when it`s all over.
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