Home Prices are impacted by many things. But only one thing really hits hard. And that is Interest rates on Calgary Mortgages. Mortgage Interest Rate History is easy to find on the Bank of Canada's website. The charts below use the Average Detached Home Prices in the City of Calgary from the Calgary Real Estate Boards MLS Database since 1968. Along with the Average Yearly, 5 Year Posted Mortgage Rates by Canada's Major Banks since 1968.
When you look at these charts some patterns become obvious. Interest Rates in the short term move in the opposite direction of home prices. If mortgage rates go up, home prices go down in the short term. If home prices go up in the short term we know interest rates are not going up at that time.
One trend that is very obvious over the long term is home prices go up. As the price of homes goes up, homeowners are paying off their mortgages. At some point in the future, smart homeowners will reap the benefits of buying the right property no matter what prices and interest rates are doing. It is true the best time to buy a home was years ago. The next best time is today!
What other investment can you buy with 5% of your money and 95% of the bank's money? Sure you pay rent on the 95% from the bank, but you reap 100% of the property appreciation in order to pay the rent on the bank's money. Right now you can rent money from a bank for 2% to buy an asset that has gone up 375% since 1968. That is about 7% a year average. With proper money management, smart mortgage choices and buying the right properties, you can do very well owning Calgary Real Estate.
Calgary Detached Homes Price Averages - Year to Year Change - Change Since 1968
Home Prices vs Mortgage Payments
This next chart calculated the monthly payment it would take to buy a Calgary Home at the average sale price since 1968. In 1980 the average monthly payment was about $1,600 a month on a home that cost a bit over $100,000. As interest rates fell from ridiculous highs that made bankers rich, so did the monthly cost of homeownership. It took about 10 years and a doubling of home prices combined with lower interest rates to hit the 1980 $1,600 monthly high. Those that kept their homes did fine. The panic sellers lived with regret. I'm talking strictly about detached homes in what are now older neighbourhoods. Anyways like the stock market you should sell your losers quickly and let the winners run. Treat your real estate portfolio the same.
Home Prices vs Mortgage Interest Rates
This chart shows you the average detached home prices in Calgary since 1968. With the plot of the Bank of Canadas historical 5 year average mortgage rates posted over it. Was there a good time to buy a house in Calgary based on mortgage rates? 40 years ago was the peak of mortgage interest rates in Calgary with the average detached home going for about $100,000. Today those same homes sell for almost $500,000 in terrible condition. So I guess the peak of mortgage rates was a pretty good time to buy. Who knew...
Calgary Home Prices vs Oil Prices
In Calgary Alberta, the old-timers love to tell you about the boom and bust cycles that are caused by the price of oil. Sure oil is a big part of the local economy and will be for some time to come. Should the price of oil be a determining factor in your plan to buy a home? Yes of course, if your livelihood depends on it. Does the price of oil affect the price of homes? Maybe a little, but if you examine the chart below that has the average detached home prices in Calgary since 1968 with the price of a barrel of oil plotted over it, we see no clear-cut patterns. So my answer would be the price of oil in Calgary has very little effect on the price of homes.
Calgary Home Prices vs Gold Prices Since 1968
Do you think the price of gold could tell the best time to buy or sell a house in Calgary Alberta Canada? Have a look at the chart below. Let me know if you see any clear-cut patterns that would have caused you to buy, buy, buy or sell, sell, sell real estate in Cowtown at any time since 1968. I see nothing but a few blips where gold was going higher but really told us nothing about home prices. But I thought I'd check for you anyways.
How Many Ounces Of 2021 Gold does it take to Buy A Home in Calgary?
It's an interesting question that has an answer that is at the most interesting as well. But not much else. In 2021 it would take about 340 ounces of gold to buy an average-priced detached home in Calgary. That is the same quantity of gold that would have bought a house here in 1973, 1976, 1991, 2010, and the year 2013. In 2007 it would have taken twice the amount of gold as today. Like I said it's interesting to look at, but not much more.