Carrying Costs for Calgary Houses – Highest Since the 1980’s January 27, 2008
Posted by DustinRJay in carrying costs.Tags: appreciation, boom, bust, calgary house prices, correction, crash, interest rates, rally
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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:
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Historical annual carrying costs above ~$17,500 in 2007 dollars appear to be unsustainable
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Recessions often follow peaks in the housing cycle (as is currently being exhibited in the United States)
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Upward trending house prices from 1997 to 2005 is rational due to decreasing interest rates
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It is unlikely for there to be interest rate relief in the magnitude necessary to bring carrying costs into sustainable territory
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Interest rates are still relatively low in a historic sense
