NEW WORLD THINKING?!
As we all emerge from our Covid and winter hibernations, the world is a different place. From finances to travel, from business plans to buying groceries, the usual way of thinking about things just doesn’t quite fit anymore. We’ve noticed that the people who are adapting the best, and recovering the fastest, are quick to re-think their approaches … to just about everything!
As Alberta real estate investors, we’ve been conditioned to protect the downside. Like 7 years of thinking this way! But looking at the January real estate numbers, and the previous months, it has to become clear to us all. We’re in new territory. Experts are suggesting this is a healthy market. In contrast, the media thinks that sellers hold all the cards like Victoria or Toronto; but the statistics suggest a healthy seller’s market. It’s just hotter than we’ve seen things in a very long time. What that means to Calgary real estate investors is that we need to negotiate differently with our real estate agents, we can no longer expect “wicked deals” around every corner, and we can start to include some conservative passive appreciation on our proformas. Yup, I said it. We actually have passive appreciation again – yippee!
Now, I’m not suggesting that we throw out all of the old thoughts. Cashflow still matters. Tax planning is relevant –especially with the unknown government initiatives that will be designed to target Toronto and Vancouver, but will have far-reaching consequences in every corner of Canada. And location will always matter – it’s not that hot in Calgary!
Part of the paradigm shifting that we’re seeing with other investors is around the allocation of resources. I mean everything from 2 X 4’s (have you seen those prices lately?!) to property management. If renovations are part of your strategy (flips, BRRR’s, or simply forced appreciation), then you MUST have a healthy contingency fund. Oh, we are so NOT kidding here. We all hope that prices stabilize in 2022, but needless to say the year isn’t starting off with solutions to supply chain woes. Please leave yourself a healthy buffer in your budget; and try to have a few backup plans in place.
The economic drivers are already changing, whether we recognize and admit it or not. More tech companies means a different tenant profile for some neighbourhoods and real estate types and price-points. At the same time, more construction will mean more blue collar tenants as well; their collars may be blue, but with the skilled labour shortages we expect them to be paid quite well in the coming years. In addition, there will be a long delay before we really learn about the in-migration numbers from other provinces. However, may I just say that a LOT of people can do basic math. You can get a GREAT house in Calgary for $500,000, compared to some other cities in Canada these days. It’s no wonder that these homes are “flying off the shelves” when they’re listed. Calgary is a city for homeowners who love detached houses.
Regardless of the media reports, the country doesn’t detest Alberta. Many people from other provinces can already see the shifting tide here, and are already taking different actions. As Albertan real estate investors, it will be almost impossible to simply shed our abundance of caution – and that’s a good thing. And yes, there will continue to be conflicting stories in the media. But when we sift through it all, dig into the facts and watch the trends, we are forced to shift our paradigms about Calgary real estate investing. Wait a minute: this is a great place to live and work and enjoy a great lifestyle. Isn’t that what so many of us are looking for as we emerge from the pandemic?
Connect with us anytime to learn more and discuss investing in and around the Calgary area. @mtnedgerenovate @mtnedgedevelops.
