jump to navigation

Calgary Misery Index – A Reason For Optimism in The Housing Market September 23, 2008

Posted by DustinRJay in Calgary real estate, inflation.
Tags: , , ,
13 comments

The misery index is a commonly used as a metric for stagflation.  Stagflation is a combination of high unemployment and high inflation.  High inflation and low unemployment rates created sharply rising house prices in the Calgary real estate market during the period from 1973 – 1983.  In 1983, rapidly rising  unemployment caused inflation levels to cool significantly, and house prices to fall. Again in 1990, upward trending unemployment rates caused house prices to stay flat for roughly 8 years.

In general, the following conditions are supportive of real estate growth:

  • Low unemployment
  • High Inflation

Today, we have near record low levels of unemployment (3.6%) and relatively high inflation (4.3%) and therefore provides two reasons for conservative optimism in the Calgary real estate market.

The following graph illustrates the relationship between inflation and unemployment to house prices:

Data Sources: CREB, Bob Truman – First Place Realty, Statistics Canada – Calgary Inflation, Alberta Unemployment Rate

The Long View August 25, 2008

Posted by DustinRJay in Uncategorized.
Tags: , , ,
13 comments

The following graph shows the average house prices from 1973 to current.  For most of the graphs on this blog it has shown Calgary real estate from an inflation adjusted perspective.  If one was to consider inflation however, it can be seen that buying real estate can be helpful as a hedge against inflation.

There are better times to buy than others, however I believe that for the average person that bought at the peak in 1983 or 1990 with a 25 year horizon that they are still probably very happy with their decision.

What do you think?

Data Source: CREB, Bob Truman – First Place Realty