I happened to pull out a Calgary Sun paper from April 10 2001 because I was looking at pics of the U2 concert I attended that year lol... but we ended up looking at the prices of homes at the time, only 8 years ago. A NEW 3 bedroom, 2 bathroom, 1700 sq ft house in Chestermere was $189,900. I just went to MLS.ca to see what the same type of house costs there today and 4-5 yr old 1800 sq ft with 3 bedrooms and 2 bath is $359,900. I could not find a similar newly built detached home, so unsure if the cost would be even more. But the general price was almost $200,000 more than only 8 years ago. Is that even remotely rational?
But this is what I have talked about before - people who bought homes in the past few years and are now upset about the value creeping downward... well what did you think was going to happen? My parents bought a house in 1985 for $72,000. Mom sold it in 2002 for $142,000 (so it took almost 20 years to double in price). I saw the house in the paper in 2006 selling for $260,000 (almost doubled in only 4 years) and again it was selling for $280,000 in 2007. WHAT? I lived in that house for many many years and even with some improvements (new driveway, flooring, and paint job indoors), it was NOT WORTH almost $300 grand! How much did people think the houses in our small city were going to go up? Did they think a house built in 1974 would eventually cost $500,000 in Medicine Hat? Are they crazy? But I know several people who purchased homes in the past few years, with intent to sell again and make money. Now they are crying out that their homes are not valued as high as they thought. Well I'm sorry but NO KIDDING. I have no formal training in real estate or economics or any form of banking, but I could see a bad deal from a mile away. All over Alberta, house prices sky rocketed and people fell for it, thinking they were richer than they really were, because they used No Money Down and 40-50 year mortgages to get their dream home. When I grew up, you EARNED your dream home over time and hard work. You didn't just get a job and a few months later land the big house. Now, everyone seems to think you need to Keep Up With The Joneses and are frantic that their plans did not work out. You do not need a degree in anything, only common sense, to see that prices were horribly inflated and it was not a good time for a regular family to buy. I don't want to hear the sob stories of people who purchased beyond their means. And I certainly don't want to pay for them to be bailed out either.
I chose to rent because I flat out refused to pay through the nose for a home that was not worth anywhere near what the current real estate market said. No way. So, if times do get harder in Alberta, I should still be able to keep a roof over our heads without begging someone else for money. If my landlord decides to put rent up to a ridiculous amount, then I say SEE YA and wish him luck finding someone else responsible enough to pay on time every month. Meanwhile, you can see that prices almost doubled in only a handful of years, when previously it was taking 10-20 years for prices to double. Then ask yourself why it would have been a good plan to buy one of those grossly inflated homes and risk higher, longer payments overall through the schemes lenders offered. Then ask yourself why you should help pay to bail out someone else, if it comes to that here like it has in the US.