There was a story in Saturday’s Calgary herald with the Headline “Alberta housing market may be cooling”. RBC economics has said it’s premature to get concerned but we should be on watch for further negative developments. I think that is too wish washy really…take a stance tell us which way it will go, stop hedging your bets.
They say that the average price of a home fell 4.3% in the last quarter of 2007 versus the third quarter. They say later in the article that the average price of a two story home is still 63% higher then 2 years ago. How significant then at this point is a 4.3 % drop from one quarter to another?
Affordability for real estate in Alberta peaked last year and was the only place in Canada that had a gain in affordability bolstered by a small drop in price and solid income gains of 5% last year. Incidentally I think affordability will increase in 2008 as well because of significantly reduced mortgage rates, a likely modest drop in prices and income gains yet again in Canada’s hottest economy.
Now for 2008. As I have reported earlier this week it certainly does look precarious this year, but compared to what? If we are going to continually compare to the last two years I think this is likely not a good idea, because we would be comparing to a crazy overheated market. Besides, let’s say prices drop 5-10% this year, this is probably good. First it will bring affordability up and coupled with lower mortgage rates will bring more buyers into the market. Second as owners prior to 3 years ago, look at your bigger picture. You are still way up. For those of you who bought at the peak of the peak, it’s ok don’t sweat it, you only lose money if you sell. Just hold as 2009, and beyond looks very balanced as soon as we get through 2008 and all these lousy vacant listings.
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