The fragile buying public has yet again been given another article to chew on, thanks to Mario Toneguzzi’s article in yesterday’s Herald. He quotes the ‘Canadian Centre for Policy Alternatives, whoever they are, who say that Calgary and five other markets are an ‘accident waiting to happen’. Hogwash. Basic economics teaches you what happens to prices due to supply and demand. Of course, if you say something often enough, people will believe it to be the truth. Other economic indicators say otherwise.Calgary’s surge in prices in 2006-07 were due to a workforce that was basically 100% employed, high oil prices, low interest rates, huge optimism in our economy, and an over-heated stock market. Throw in a huge migration of people and a low inventory of resale homes and BAM!, you had your perfect storm. It’s interesting to note that another rather prominent think-tank in this country, the C.D. Howe Institute, disagrees with the CCPA’s theory that we are in a ‘bubble’ that will pop to the tune of perhaps 20% in the next three years.

Incomes in Alberta are still holding their own, interest rates are rising slowly, and the economy is recovering. It’s true that the Canadian Real Estate Association and other Boards have downgraded their forecasts on this year’s sales volumes. That is always a moving target. I would say that articles like this just pass on speculative theories, which in my opinion is just irresponsible. The name of the game in the newspaper business is getting people to read the headlines. You may think that my opinion is a little biased, but on the other hand, you can’t deny that Realtors are the ones working in the trenches every day, and who see the real market and it’s trends.

The mistake many have made over the past three or four years is to consider their primary home their ‘nest egg’ for retirement. While you will never hear me say that real estate is a bad investment long term, I would say that diversifying is always wiser. If people are worried about homes prices, consider the stock market, oil or natural gas prices, an other commodities and the hit they have taken since the world’s economies went south in September of 2008. No one went unscathed.

My job isn’t to recommend investment vehicles, it’s to watch the real estate market and guide clients in the right direction when buying or selling. Markets will rise and fall, as will house prices. As I have said many, many times, if you want to know what’s happening in the real estate market, ask a Realtor. We don’t sell homes, we protect people’s interests and put parties together so they can buy or sell a home.

One last thought. Calgary’s prices also rose due to it’s relative undervalue when compared to other major cities, such as Vancouver and Toronto. If I were looking at a bubble, I would first look to see how much of their income people were spending on housing. We may be at the mercy of the central bank, but no one in Ottawa wants to be known as the one who killed the Canadian real estate market. Too many people make a living in construction, sales, design, supplies, and yes, banking and mortgages to see that happen, in my opinion. As the ‘Dude’ in the Big Lebowski said, ‘that’s just your opinion, man’. I suppose that’s all the CCPA was giving as well.