Calgary Home Prices high for single buyer ?

[Thomas Beyer]

I find this article in the National Post misleading.



http://www.financialpost.com/personal-finance/family/Calgary+home+prices+high+single+buyer/5096373/story.html



My comment on it is below. What do you think ?



This article is very misleading, contains inaccurate information and
shows the bias of so called "financial planners" who are essentially
mutual fund sales people not advisors!



I'd expect more from the leading conservative national newspaper in Canada!



First
of all, a 7% growth in a stock based investment (like most RRSPs) is
not doable as evidenced by a FLAT-LINED stock market return from 2000 to
2010, unless you add some alternative investment into it, based on real
estate, or oil or agricultural land.



Secondly, she could also rent for around $1200 a month.



Thirdly,
condos in Vancouver are not $500,000 to $600,000. One can easily get
one below $300,000 near the SkyTrain in Burnaby, New Westminster or
Surrey.. or a small one even in downtown Vancouver.



Forthly, salaries in most income categories in Vancouver are lower than in Calgary, not higher.



Fifthly,
Calgary house prices are not high if one factors in the salaries and
economic stability of the Alberta region as a whole. Prices in
Vancouver, Toronto, Zuerich, Geneva, London (UK), New York and many
other cities are far higher.



The best option, unfortunately
lamented in this article by the "advisor" is to put down 10 - 15% [even
as little as 5%] and buy a modest house and rent the basement to another
person, or buy a townhouse or condo, which can be bought for around
$300,000 or less in the Calgary area. With a $250,000 mortgage at 3.6%
or better, variable at prime-0.8 (or 2.2%) is a VERY MODEST $1150 a
month.. lower with a variable rate.



Where is the problem?



This
is a great situation to be in for a young 30 year old person. The
mortgage paydown and appreciation potential of said small home or
townhouse would BY FAR exceed an RRSP investment at 7%. Using a modest
3% appreciation of a $300,000 home is $9000/year or $90,000 in ten
years, plus a mortgage paydown of about $50,000 in 10 years means her
initial equity of $50,000 would grow to $190,000 in about 10 years.. a
return of well over 20%/year on the cash invested s.th. that is very
unlikely in any RRSP or stock based investment recommended by an
"advisor".

 

[bizaro86]

The other thing about that article was the advisor said 25% down was required for a conventional mortgage, which is flat out wrong.

 

[wgraham]

If you have ever been " involved" in a news story you know that it wont be accurate. Some lower income student needed to get an article out before a deadline so they rushed to get it in and didn't check any facts and probably didnt have any background on the field of topic anyway.... Why should any other article be any different?

"Media facts" are just one misinformed person passing along a undedicated version of a "story" to lots of people!

I watched one well known Calgary real estate reporter state how healthy the Calgary commercial market was one day and the very next day say how hurting it was... No wonder the general public is so confused.

Investors need to be checking "facts" and getting behind the scenes.... It is part of the job!

Anyway Thomas.... As is often the case I agree with you whole heartedly!

 

[housingrental]

In all fairness:



Prices in Calgary are high. Both in absolute and relative terms -Above Canadian medians - especially when comparing similar quality builds - and priced high when looking comparing incomes, or wealth, to pricing.



In other words - at current prices the Calgary market has a LOT of risk for a purchaser and there are reasonable scenario's where it performs worse than other markets in the future.



Also with all the planner bashing - There are fee based one's to choose from

 

[RedlineBrett]

I read the same article and thought they missed the mark on a number of things.



Buying a home is not only a great and feasible investment but it has the added benefit of contributing to your quality of life in a significant fashion. People like shopping for houses and they WANT to own real estate. Can't say the same about shopping for mutual funds.



Getting into sensible home ownership is one of the biggest steps on life's ladder. Even if the numbers were a wash (which they aren't, as noted above) I would reccomend buying an owner -occupied residence for this reason alone.

 

[Thomas Beyer]

[quote user=RedlineBrett]I read the same article and thought they missed the mark on a number of things.



Buying a home is not only a great and feasible investment but it has the added benefit of contributing to your quality of life in a significant fashion. People like shopping for houses and they WANT to own real estate. Can't say the same about shopping for mutual funds.



Getting into sensible home ownership is one of the biggest steps on life's ladder. Even if the numbers were a wash (which they aren't, as noted above) I would reccomend buying an owner -occupied residence for this reason alone.


indeed .. plus any gain is TAX FREE !!