AFFORDABILITY AND TIME
Yup, we’re continuing with the Zen vibes again this week! Why? The news media would have us believe that the sky is indeed falling: Crypto collapse, Stock market mayhem, Inflation soaring, yikes! Is it even possible to be both positive and realistic in June of 2022?
We think so! Especially as Real Estate Investors, in Calgary and in Alberta. What do we need for successful investments? Two key ingredients are tenants, for our Buy and Hold properties, and affordability, to buy and sell our properties.
Tenants are in fierce competition for many properties in and around Calgary these days. ATB just reported on positive net interprovincial migration for the third quarter in a row; and they expect this to continue for the remainder of 2022. https://www.atb.com/company/insights/the-owl/interprovincial-migration-q1-2022/?fbclid=IwAR3DEOoRImCzEN6Frdif0NqfDbxYWnxSJG3pluSHbFTi3yp6jTbKEs6A0-M. This is what many of us have been noticing with out-of-province license plates for months now. Jobs are plentiful, and unemployment rates continue to trend downwards. Bottom line: as rental housing providers, we can carefully screen and place employed tenants into our properties. Rental increases are possible in many (not all) communities; see the latest data here: https://rentals.ca/blog/rentals-ca-may-2022-rent-report.
Oh yes, and did we mention that Calgary just tied for the third most liveable city – IN THE WORLD?!!! https://www.cbc.ca/news/canada/calgary/calgary-third-most-liveable-city-world-economist-1.6499827. Quality of life is VERY important to our Millennial and Gen Z tenants; truthfully, the older folks love a great quality of life too!
The next key ingredient for successful real estate investing is affordability. The Royal Bank just released their latest Housing Trends and Affordability report: https://royal-bank-of-canada-2124.docs.contently.com/v/housing-trends-and-affordability-june2022. There is plenty of geek-worthy data in there to explore! For the purposes of this article, we are pulling out a miniscule amount of information. Calgarians use approximately 35% of their household income to put towards home ownership costs. Interestingly the long-term average is 38% of our income. Huh. Who would have guessed? Certainly no one who reads headlines. This current RBC report also closely examines rising interest rates, and the disproportionate effect these rates will have on properties at higher price points. Based on average house prices in Calgary, the average increase in mortgage payments, due to interest rate increases, is roughly $240 per month. In Canada it’s $380, and then of course it’s most expensive/dramatic with the higher priced cities like Vancouver and Toronto.
Everyone needs somewhere to live, but almost no one wants to be “house poor.” When rent and home purchase prices are affordable, the city and surrounding communities are live-able, and jobs are plentiful, it’s just an easy choice to move for opportunites and quality of life.
And yet we hear a lot of panic, worry, and stress. We see many people getting out of real estate, or going south. A few people even laugh at us for being “picky and patient.” But we know that real estate is not a get-rich-quick scheme. We believe that the real estate fundamentals are very exciting in Alberta right now. The challenge is to remain focused on Why we’re doing all of this. We’re also shifting our focus a little, to align with what our clients are seeking: newer and higher quality products. Stay tuned for updates coming in the fall!
