Hi Guys,
Throwing this out there for discussion.........No flaming please
Summer of 2009 a scientist from the International Committee on Climate Change proves that Global warming is indeed tied to the consumption of fossil fuels. Governments around the work impliment strict measures to limit consumption, especially in developing countries where the infastructure for fossil fuel distribution isn`t developed yet.
The price of oil falls dramatically. OPEC decides they don`t like these Canadians taking a share of the pie, so they open the tap for a couple of years further supressing the price of oil. Production in the tar sands halts.
I know this sounds extreme and it is. I don`t believe that this is going to happen, but I do believe that the housing prices in Sask and Alberta are still out of line even with the slight correction in the major Alberta markets.
My wife and I looked at an average show home in Regina. The price $600k. Lumber is cheaper than ever before. Drywall, insulation, floor products all cheaper than they have been for years.
The builder claims that an increased demand coupled with a short supply due to a lack of labour is causing the housing prices to jump so dramatically. Thats great, but what happens when the supply catches up to the demand. It will eventually all systems reach an equilibrium. More workers will arrive to fill the positions needed, etc.
He also pointed out that our housing prices are still cheaper than in Vancouver, Montreal, and Toronto. Vancouver is sandwiched between an ocean and a mountain range, Montreal is on an island, and Toronto is bordered on one side by a lake and by suburbia on the other sides. Geography limits the supply in these markets. On the prairies we can build houses from Winnipeg right through to the rockies. One big city.
Look at strong economies in the US like Vegas, Dallas-Fort Worth, or Houston. Where are there housing prices? The TX markets have been relatively flat for 20 years even with a strong economy and inmigration that may actually out pace Alberta. Why are their housing prices flat, because there is nothing limiting the supply.
My concern is a small change in the economic fundamentals in SK/AB could have dramatic effects on our RE market, because there is no real limit on the supply out here and the prices have far surpassed the real costs of construction.
With a lot of people stretching mortgages out to 40 years in order to make a property cash flow, we could end up in real trouble. Try factoring in a 7.5% interest rate in your cash flow projections and see if your still in the black.
Discuss.
Neil
Throwing this out there for discussion.........No flaming please
Summer of 2009 a scientist from the International Committee on Climate Change proves that Global warming is indeed tied to the consumption of fossil fuels. Governments around the work impliment strict measures to limit consumption, especially in developing countries where the infastructure for fossil fuel distribution isn`t developed yet.
The price of oil falls dramatically. OPEC decides they don`t like these Canadians taking a share of the pie, so they open the tap for a couple of years further supressing the price of oil. Production in the tar sands halts.
I know this sounds extreme and it is. I don`t believe that this is going to happen, but I do believe that the housing prices in Sask and Alberta are still out of line even with the slight correction in the major Alberta markets.
My wife and I looked at an average show home in Regina. The price $600k. Lumber is cheaper than ever before. Drywall, insulation, floor products all cheaper than they have been for years.
The builder claims that an increased demand coupled with a short supply due to a lack of labour is causing the housing prices to jump so dramatically. Thats great, but what happens when the supply catches up to the demand. It will eventually all systems reach an equilibrium. More workers will arrive to fill the positions needed, etc.
He also pointed out that our housing prices are still cheaper than in Vancouver, Montreal, and Toronto. Vancouver is sandwiched between an ocean and a mountain range, Montreal is on an island, and Toronto is bordered on one side by a lake and by suburbia on the other sides. Geography limits the supply in these markets. On the prairies we can build houses from Winnipeg right through to the rockies. One big city.
Look at strong economies in the US like Vegas, Dallas-Fort Worth, or Houston. Where are there housing prices? The TX markets have been relatively flat for 20 years even with a strong economy and inmigration that may actually out pace Alberta. Why are their housing prices flat, because there is nothing limiting the supply.
My concern is a small change in the economic fundamentals in SK/AB could have dramatic effects on our RE market, because there is no real limit on the supply out here and the prices have far surpassed the real costs of construction.
With a lot of people stretching mortgages out to 40 years in order to make a property cash flow, we could end up in real trouble. Try factoring in a 7.5% interest rate in your cash flow projections and see if your still in the black.
Discuss.
Neil