Category Archives: Flood of 2013

Calgary prices post-flood

It’s enlightening to look back and see what the experts were predicting about Calgary real estate immediately after last June’s flooding. One got it right, one got it wrong. Mike has the details on his blog http://calgaryrealestatereview.com/2014/06/08/june-1-7-2014-calgary-real-estate-statistics-trends/

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What’s really behind Calgary’s higher home prices

Has Mayor Nenshi’s desire to see Calgary build “up” rather than “out” resulted in a lack of land on the outskirts of the city for new builds?  The director of the University of Calgary’s School of Public Policy, economist Jack Mintz thinks so…

“Calgary now has moved towards what’s called an intensification strategy. And it’s a good thing to have some intensification because you don’t want to hollow out the middle of the city,” says Mintz.

“But you have to have some balance and if there’s no more expansion that’s going to be allowed, maybe we have to close down parks to make way for new housing. Otherwise prices are going to go up because you’re simply going to have higher land prices.”

Mintz says the city needs to think carefully about limiting new housing development if it wants to make housing more affordable.

“The prices can be policy induced. and if you think of it being artificially high that can happen if you’re no longer getting enough supply relative to the number of people who want to move into Calgary.”

ATB economist Todd Hirsch has a different theory…

“I think that’s part of the reason building costs and material costs and labour costs are a little bit elevated in Calgary still because again we’re not seeing the same impact in Edmonton. So I think Calgary’s flood last year still having some residual carry over effect to these new home prices even today.”

Hirsch says once the flood rebuilding is complete, building costs will come down — and we will likely see more moderate growth in new home prices.

Read more Curbing urban sprawl, flood driving up new home prices

What we didn’t hear in this story is that Calgary is inundated with thousands of new residents every year.  Last year alone, net migration to Alberta from the rest of Canada totalled almost 45,000. Would there be a problem with supply, and higher prices, if we weren’t growing so fast?

The flood: for the record

Garth Turner has been notoriously wrong with his predictions about Calgary real estate. You’d think he’d know better…

CREB says…“While it might stave off a bit of activity on the sales from what we originally were thinking we were going to have for the rest of the year, I don’t think it’s going to be significant,” says real estate board economist Ann-Marie Lurie. “If there are less listings on the market because some of these properties are coming off, it actually could improve pricing activity in some of the other areas. You could actually see prices really continue to grow at the rates we’ve seen. So I wouldn’t expect much change there.”

Garth Turner(GreaterFool.ca) says…Then Calgary would be unique. Flood experience in other urban centres (like Brisbane in 2011) shows house values dropped by about 20% in affected areas, and as much as 60% for periods ranging between months and years. In fact in Brisbane (twice the population of Calgary) the average house price for the entire city – flooded or not – dipped between 10% and 30% for months after.

Other studies show that over a long period of time, there’s a flood discount, with properties that were underwater appreciating at a slower rate than those which stayed dry. http://www.greaterfool.ca/2013/06/24/the-deluge/

After his epic failings in the past, Garth has become quite reluctant to come out and make a definite prediction for Calgary, but it would seem in his contorted way that he’s predicting Calgary will follow in Brisbane’s footsteps with a 60% drop. No, a 20% drop. Sorry, I meant a 10% – 30% drop.

Update Aug 31, 2013: Stay renting. This is not the time to buy in Cowtown. -Garth Turner http://www.greaterfool.ca/2013/08/30/divine-guidance/