Saturday, May 19, 2007

Is real estate part of the Alberta Advantage, or a casualty thereof?

In the spirit of what WC Varones wrote the other day about what $349K buys you in the bay area (hint: not much), I took a look at too see what's up with our market.

Do you want to know what a million bucks (to be accurate, $1,150,000) in Edmonton gets you?

How about a nicely appointed, but not exceptional, and in fact rather pedestrian-looking 2000 sqft house?

Two years ago, I would have expected a similar house to sell for ~$600K.
Oy vey.

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Anonymous said...

On one there are 57 residential properties in Edmonton, 245 in Calgary, 1 in Grande Prairie, 1 in Fort McMurray, and 5 in Red Deer priced at $1,000,000 or more. In Edmonton, the top price is $4,799,000, while in Calgary it is $12,000,000. For $12,000,000 one gets an acre lot in the city with the inconvenient presence of a 1953 bungalow. In a few cases the property is simply a lot. However, what is perhaps more important is how many "starter homes" are priced in the neighbourhood of $400,000. The property "gold rush" is bound to lead people to take on more debt than they can reasonably carry. As well, not everyone's pay packet is benefitting from the current boom. When the next bust comes, it will no doubt have the same effect it did the last time; houses will be worth less than the amount of the mortgage. Banks are not too fond of that. It can be a scramble to find enough money to keep the house. Is there a solution? Probably not, but one can hope that fewer people will be infected by the rush.

Flatland Pastor said...

From the "It's worse than that! He's DEAD, Jim!" file comes this little tidbit -

I went to see Shrek 3 yesterday. Before the movie was an ad by Scotiabank offering a 100% mortgage.

Banks may not like it when property values drop and they end up with a large number of defaults, but they seem to be ready to give buyers all the rope they need - and then some - to hang themselves. The trouble for the banks will be that with all that "rope" around it may be hard for them to avoid getting into a bind. When that happens you can rest assured that the banks will find someone else to ultimately foot the bill. And all of us will lose - big time!

On a personal note: as an ex-Edmontonian who was born there and lived there 25 years I despair over the thought of ever being able to return to the place that remains most like home for me. Alberta's economy needs people, but it's economy is becoming increasingly hostile towards people's fundamental needs. Somethin's gotta give - and it may be sooner than you think.