Small Pool of Buyers Remaining
June 5, 2008 – 11:43 pmCALGARY REAL ESTATE BUBBLE BLOG
According to Statistics Canada’s 2006 Census of Population and Housing, 73.1% of Albertans own there “dwellings.”
What does this mean?
It translates into the fact that the pool of remaining buyers in Alberta’s real estate market is small. During the boom years of 2006 and on, many Albertans were “hyped up” to purchase properties to catch the fad of eternal property appreciation. It was a vacuum phenomenon, pushing home ownership levels to new highs. The real estate marketing machine was huffing and puffing, sucking in all buyers, qualified or not.
Now that the market is softening, speculators are in a state of debt shock. For sale signs are sprung up in a weed like fashion to attract potential buyers. The problem is the negative sentiments realised by the public towards home ownership. Reality has set in. House prices do increase forever and ever.
With sales already down 30%-50% yoy, and an inventory gluttony epidemic - who is going to save the sellers now?
Apparently, few are left with those heroic abilities.
The key to salvation - a conversion of the masses of “bitter” renters and “basement dwellers” into potential home owners. This would increase the pool of buyers in the market. To accomplish this would mean for realistic price reductions in the market.
UPDATE (June 4, 2008):
Home Ownership At Record Levels … So Is Mortgage Debt.
“In total, Canadians owe an amount fast approaching $850-billion on their homes, more than double what it was a decade ago, with percentage growth in double digits in recent years.
If trends continue as expected, the value of all outstanding mortgages will surpass the $1-trillion mark some time toward the end of next year.”
Home Qwnership And Mortgage Debt Highest In Decades: More are buying outside their means
‘The rise in mortgages likely reflects more incentives now available to entice first time home buyers, said Jim Rawson, regional manager for Invis in Toronto.
“Younger people are stretching themselves,” he said in an interview, although he said they are still qualifying for the mortgages.’