ZEN AND REAL ESTATE?
May I begin by saying this post is not for everyone. Real estate investors who live and buy outside of Alberta, and especially Calgary, may not find that today’s message applies to them.
Okay … only Alberta investors left to hear today’s thoughts?
This has been an incredible week of media-induced panic!! Doom and gloom on the stock market! What do you mean it wasn’t going to keep going up forever? Crisis with interest rate rises! And that stat that has everyone talking, Nearly one in four homeowners say they will have to sell their home if interest rates go up further, according to a new debt survey from Manulife Bank of Canada. (taken from https://www.cbc.ca/news/business/homeowners-interest-rate-survey-1.6487137).
All this fear-mongering must be selling some ad spots!
What if we take a breath? Turn off the tv, radio, and yes – even social media! Then what? What if we look at how far we’ve come and what we can control and reasonably plan for. That’s all. No drama, no exciting headline.
Remember 2016 in Calgary? It was bad. Thousands of layoffs, and an unemployment rate of 9.5% (according to www.regionaldashboard.alberta.ca). Or July of 2020, when Calgary’s unemployment rate was a staggering 15.5%? Calgary is now sitting at 6.6% unemployment—for comparison.
Or think back to the 2018 days when rental housing providers literally had to beg and bribe tenants to come stay in their properties. “That’s a free TV for you, and you, and a free month’s rent for you, and you, and ….”
As for property values, investors were thrilled for a few years (eg 2016 to 2021) when their property values increased by even 3% per year! Now, some areas have seen homes appreciate by that much and more, in a month, in 2022! How quickly we lose perspective.
As for the Manulife survey that has tongues wagging far and wide, let’s dig a little deeper. Is this fact? The survey actually measured how homeowners and Canadians are feeling and thinking. That’s it. No actual math was done to prove this economic theory, and no crystal ball foretold the full extent of interest rate hikes that Canadians are likely to receive. So the survey measured consumer fear. And then it was used to fuel more fear.
Now, before the naysayers get their knickers in a knot, I am not trying to say that life is Rainbows, Roses and Unicorns. I am asking my friends and colleagues to keep an eye on the bigger picture TODAY. Many of us have jobs and work opportunities. Many of us have tenants aplenty. And many of us have seen a recent rise in our property values. These are all reasons to celebrate!
Yes, the winds of change are blowing again. But we need to stop looking for the twig on the roof after/during the storm. Yes, interest rates are going up. But be honest, did your mortgage payments change on your rental properties? For most people, nope, not a penny; the only change was the amount of interest versus principal paydown. And yes, some of our expenses are going up. Did you notice how much rents have risen lately, in most areas, in most property types? And nope, the real estate market has not been flooded with people panic selling their homes, like that survey might suggest.
No one is claiming that the next year will be easy. But Covid in 2020 wasn’t easy, and we survived and even thrived after that. And no one should be claiming that they have a way to predict the future. Life has always been unpredictable. But as rental housing providers, we need to remember that there is no national housing market—so all these national surveys and research studies are a bit ridiculous. Halifax is different than Vancouver (even if they both have gorgeous water views); Toronto is different than Montreal (even if they are both cool and thriving cities); and yes Calgary and Edmonton are also very different—just ask Lethbridge!
Tonight, enjoy a beverage, some relax time, and then simply breathe. If you already own a second investment property, you are already truly blessed. If your goal is to grow, then plan to the best of your ability. Try adding a little more zen into your real estate investments by shutting out the noise, focusing on your goals and your properties (what you can control), and remembering to take a glance back at where you started (all the obstacles you’ve already overcome).
Special thanks to my Mastermind group for the inspiration for today’s article. Y’all know who you wonderful people are!
