Any advice for one looking at buying a home in Calgary?
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  1. #1
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    Any advice for one looking at buying a home in Calgary?

    I'm not desperate to buy a house unless it makes financial sense, by which I mean, it will be cheaper than renting (not viewing as investment). However, if I can save my monthly outgoings by buying, and allowing me to save more to invest, I would be interested.

    Currently paying $1400/month for rent. I pay all utilities on top of that.

    Assumptions:
    Mortgage: 3%
    Downpayment: 20%
    Home value increase: 2%
    Property taxes: $2.5k
    Maintenance: $5k/year
    Stay a minimum of 10 years
    Closing and selling costs: $30k

    Correct me if I'm wrong (math isn't a great skill of mine), but by my calculations, (20% downpayment vs 6% return on that downpayment) the house would need to be under $320k to make sense (if not considered an investment).

    Now as I look at Realtor.ca, there isn't much in Calgary for this price. I'd consider a decent semi-detached home, but would prefer a detached property. I need a either 4 bedrooms, or 3 bedrooms and a basement.

    Does anyone know much about the market in Calgary? How much are people moving on list price? What about new builds in places like Airdrie? Are they selling for list, or below?

    Any advice here would be appreciated, whether you know the Calgary market or just the Canadian market in general. I'm not a native Canadian, so determining prices and the market in a place where you haven't much personal history is more difficult.

    If you think I should just continue renting, let me know as well. I'm quite content to do that, unless it makes sense to buy.

    Thanks! Really appreciating the wisdom here and learning a lot, and hoping I can be helpful in return, too.

  2. #2
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    Calgary is in the midst of a huge downturn. Value has dropped like a stone, and the economy shows no signs of a turnaround anytime soon. I imagine the new carbon tax won't help jumpstart the oil industry.

    Many people seem to be having a lot of trouble making ends meet so, as opposed to 2% growth, I'd expect a large growth in the number of foreclosures.

    If something happened to turn the oil industry around, it might signal a bottom in the Calgary real estate market, until then I'd wait until you find something you want at your price.

    Prices have nothing working to drive them up and a lot of factors to drive them down.

    Time will be your friend in this market.

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    Quote Originally Posted by Just a Guy View Post
    Calgary is in the midst of a huge downturn. Value has dropped like a stone, and the economy shows no signs of a turnaround anytime soon. I imagine the new carbon tax won't help jumpstart the oil industry.

    Many people seem to be having a lot of trouble making ends meet so, as opposed to 2% growth, I'd expect a large growth in the number of foreclosures.

    If something happened to turn the oil industry around, it might signal a bottom in the Calgary real estate market, until then I'd wait until you find something you want at your price.

    Prices have nothing working to drive them up and a lot of factors to drive them down.

    Time will be your friend in this market.
    Yes, it seems that more are leaving Calgary than coming in, which should work in my favour.

    I can see rent prices dropping, but house prices not so much.

    Have you any tips for getting a bargain? Are foreclosures where the deals are? If so, is there a website that lists them?

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    He high end of the market >$1M have taken about a 25% correction according to appraisers I've talked to.

    The main way to find bargains is to find someone who needs to sell when no one is buying. There are many causes for this death, divorce, foreclosure, relocation (in the old days companies used to absorb the loss as part of the moving expense).

    December is an excellent month to buy, hardly anyone looking, banks want things off their books for the year end, people need money for the holidays...

    You should start seeing foreclosures enter the market this year. It takes a while for them to trickle through the system and get on he market...people lose their job, make some payments, fall behind, renegotiate, give up, move, court proceedings and paperwork, then goes to bank lawyers, realtors and gets on the market. It doesn't usually happen overnight, especially as people really don't like losing their house.

    If you want a truck, I hear the airports in Alberta have thousands of abandoned ones in long term parking that are just now getting repossessed.

    That being said, You can walk away from your house in Alberta with only a credit history hit.

    I wouldn't buy yet, but it's definitely a market that's on my radar.
    I'm not JustAGuy (without spaces), or Donald, or <insert name here>.

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    Quote Originally Posted by Just a Guy View Post
    He high end of the market >$1M have taken about a 25% correction according to appraisers I've talked to.

    The main way to find bargains is to find someone who needs to sell when no one is buying. There are many causes for this death, divorce, foreclosure, relocation (in the old days companies used to absorb the loss as part of the moving expense).

    December is an excellent month to buy, hardly anyone looking, banks want things off their books for the year end, people need money for the holidays...

    You should start seeing foreclosures enter the market this year. It takes a while for them to trickle through the system and get on he market...people lose their job, make some payments, fall behind, renegotiate, give up, move, court proceedings and paperwork, then goes to bank lawyers, realtors and gets on the market. It doesn't usually happen overnight, especially as people really don't like losing their house.

    If you want a truck, I hear the airports in Alberta have thousands of abandoned ones in long term parking that are just now getting repossessed.

    That being said, You can walk away from your house in Alberta with only a credit history hit.

    I wouldn't buy yet, but it's definitely a market that's on my radar.
    Good advice. A couple of questions in response.

    1. Can you negotiate the price of a foreclosure, or do they always look for the listed price?

    2. How do I get one of those trucks?? lol

  6. #6
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    1) everything is negotiable...some banks drop their price, some don't. I think the offers are presented to the bank's lawyer in a big stack. It's not worth their time in a lot of cases to drag it out (plus their "losses" could be covered by CMHC).

    Of course, other people may bid against you, but price isn't always the determining factor...unconditional offer may be worth more than a couple grand to get it off the table.

    2) I imagine they go to auction.
    I'm not JustAGuy (without spaces), or Donald, or <insert name here>.

  7. #7
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    Quote Originally Posted by Just a Guy View Post
    Calgary is in the midst of a huge downturn. Value has dropped like a stone, and the economy shows no signs of a turnaround anytime soon. I imagine the new carbon tax won't help jumpstart the oil industry.

    Many people seem to be having a lot of trouble making ends meet so, as opposed to 2% growth, I'd expect a large growth in the number of foreclosures.

    If something happened to turn the oil industry around, it might signal a bottom in the Calgary real estate market, until then I'd wait until you find something you want at your price.

    Prices have nothing working to drive them up and a lot of factors to drive them down.

    Time will be your friend in this market.
    To be frank, no body knows where market will go. Recently people are started getting back to Jobs. Oil companies have increased the capex based on that we have a bottom but I cant predict anything. If market even goes up by 2% then you loose 10k on 500k house. Calgary sales have been up in last 2 -3 month because people dont want to miss the low prices since oil is going up. I think, I will buy a house when I have enough money in account and right house
    Last edited by gladaki; 2017-01-15 at 01:38 AM.

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    Quote Originally Posted by gladaki View Post
    To be frank, no body knows where market will go.
    Correct.

    I'm not going to attempt to time the market in Calgary. I will buy when I find something suitable that will cost me approximately the same as my current rent or less. So I have $1400/month. to play with. That way it is less likely to negatively affect my savings and retirement plans, except that I'll lose 50k or so that could be working for me in a non-reg account.

    Excel Homes seem to be building some duplexs in Airdrie for low 300s which might work for us.

    Speaking of which...on new builds, is it always best to avoid every upgrade? Or do some upgrades make financial sense on a new home?

  9. #9
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    Information on foreclosures on CMHC insured homes, which are the most likely homes to be involved in foreclosures.

    http://www.greaterfool.ca/2014/06/30/mortgage-prison/

    A couple of years ago, the CMHC ordered realtors not to list CMHC insured homes as repossessed homes.

    I don't know if that rule still exists today. It would make it challenging to ferret out repossessions.

    https://www.cmhc-schl.gc.ca/en/corp/..._id=TWT2013_53

    If a CMHC home sells for less than the insured value paid by CMHC to the bank, the CMHC seeks reimbursement of the shortfall from the original debtor. Gail Van-Oxade wrote an summary of the process :

    Course that doesn’t mean CMHC won’t come after you for any difference between what a property had to be sold for and what the insurance coverage was originally. Here’s how the process works:

    Once your mortgage has been in default for 3 months, legal proceedings are started through power of sale and the bank takes possession of your property.

    The bank sells the property and submits a claim to CMHC for any shortfall.

    CMHC gets a judgment against you as the defaulted mortgagor for this shortfall and CMHC tries to collect.

    If this attempt is unsuccessful, the account is forwarded to one of CMHC’s collection agencies.

    http://gailvazoxlade.com/blog/archives/5835

    The "fair market value" concept likely derives from the CMHC avoiding a legal battle over their mitigation of the debt on behalf of the debtor.

    Interesting that according to Garth Turner (in 2014 at least) Saskatchewan is the only province with non-recourse debt.

    Apparently, CMHC insured homes are considered recourse debt in Alberta.
    Last edited by sags; 2017-01-15 at 02:40 AM.
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  10. #10
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    Quote Originally Posted by bobsyouruncle View Post
    Correct.

    I'm not going to attempt to time the market in Calgary. I will buy when I find something suitable that will cost me approximately the same as my current rent or less. So I have $1400/month. to play with. That way it is less likely to negatively affect my savings and retirement plans, except that I'll lose 50k or so that could be working for me in a non-reg account.

    Excel Homes seem to be building some duplexs in Airdrie for low 300s which might work for us.

    Speaking of which...on new builds, is it always best to avoid every upgrade? Or do some upgrades make financial sense on a new home?
    You wont able to negotiate the house price on new houses, they may throw in 8 to 10k for upgrades. I have been told even for buying new houses it good to take real estate agent they can help in somethings. If you want to negotiate old houses are way to go

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