Did you see or hear the news this week?
Zoocasa published their research into Alberta’s housing affordability. How did they do it? They collected housing sales’ prices from various Alberta Real Estate Boards. Then they compared these numbers to average incomes in each city/town. Essentially, they come up with a House Price to Household Income ratio. Their data tells them that Calgary is one of the least affordable cities in Alberta.
So why are investors thrilled?!?
Investors don’t buy houses for emotional reasons. We buy houses based on cash flow, mortgage paydown, and hopefully passive appreciation over 5-10 years. Bottom line: we care more about the monthly cashflow than the actual “sticker” price that house sells for. And what “feeds” our cashflow? RENTERS!
So if people in Calgary can’t “afford” to buy … drum-roll please … they have to rent! More renters, renting for longer periods of time, means lower vacancies and higher rents. Hmm, did you catch that part? Higher rents translates into better cashflow for the investor (us!).
The Zoocasa research brings troubling news to home sellers and realtors who are indeed in a very tough market. But the silver lining in the Zoocasa story is for those of us actively looking for good deals—and renting those properties for strong, positive cashflow.
Once again folks, it all comes back to those Grade 7 Math problems, and reading the questions very carefully. As a real estate investor, ask the right questions, then do your math meticulously—then watch your path to financial freedom become shorter and more efficient!
