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Carrying Costs for Calgary Houses – Highest Since the 1980’s January 27, 2008

Posted by DustinRJay in carrying costs.
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One macroeconomic factor affecting real estate is interest rates.  As interest rates go down, house prices should go up and vice versa.

Here is a summary of  conclusions that I have made regarding the graph below:

  • Historical annual carrying costs above ~$17,500 in 2007 dollars appear to be unsustainable
  • Recessions often follow peaks in the housing cycle (as is currently being exhibited in the United States)
  • Upward trending house prices from 1997 to 2005 is rational due to decreasing interest rates
  • It is unlikely for there to be interest rate relief in the magnitude necessary to bring carrying costs into sustainable territory
  • Interest rates are still relatively low in a historic sense

Carrying Costs for Calgary House Prices