AFFORDABLE ALBERTA, GROWING AND BUILDING
Let’s be real: having disposable income just makes life more fun! Many people don’t even need a lot of extra dough. Going out to dinner once a week, or to a movie each month, or buying a new pair of pants are some of life’s simple pleasures. But stressing over budgets and each little purchase, that’s a major downer.
That’s why housing, inflation, interest rates and carbon taxes have become such a hot button these days. For many people, far too big a percentage of their take-home pay is now designated to food, shelter and other necessities. No fun has created a lot of grumpy people, or is that just in my corner of the world?
And so, people go in search of solutions. New Canadians can literally settle anywhere. With zero provincial sales tax, and an overall lower cost of housing (to rent or buy), Alberta offers an enticing opportunity. ATB has just released their quarterly economic outlook: https://www.atb.com/company/insights/the-owl/alberta-economic-outlook-march-2024/. In it, they suggest an estimated population growth for 2024 of 3.4%, down from the 4.1% of last year. It will be interesting to see how much longer Alberta can maintain an affordability advantage.
But we’re sure trying! “In January 2024, Alberta municipalities issued $1.5B in building permits, an increase of 26.3% from January 2023.” https://economicdashboard.alberta.ca/dashboard/building-permits/. No wonder it’s hard to get tradespeople these days! It seems like the faster we build more homes, the more people come here to live, work and put down roots.
For real estate investors, Alberta cities and towns are hitting a lot of the boxes on the good ‘ol Property Goldmine Scorecard from the Secrets of the Canadian Real Estate Cycle, by Don R Campbell, Kieran Trass, and Greg Head.
It almost seems too obvious that now is a great buying time in Alberta. But wait, competition for those winning offers is heating up! Yes, that’s right, we’re not the only ones looking to purchase new properties. A January 2024 research study showed that as many as 49% of adults surveyed had intentions of buying a home within the next 5 years. https://www.nerdwallet.com/ca/mortgages/2024-canadian-home-buyer-report.
With no shortage of demand, and a limited supply, real estate investors will need a little discipline to maintain their objectivity. For example, do those perfectly cash-flowing properties exist in a neighbourhood full of your ideal tenant profile? Undoubtedly economics will change in a year, 5 years, 20 years –will this property still provide a good location and home for your tenants? Here’s one opinion of the 10 best neighbourhoods in Calgary these days: https://www.hgtv.ca/best-neighbourhoods-in-calgary/.
We are completely biased, but currently loving newly built properties, especially townhouses. Clean and new attracts a lot of great tenants, plus it limits our repairs and maintenance. In addition, the closer to Net Zero a home is, the better our utility bills will be. It’s a challenge these days to stay out of the FOMO and remain true to our investing purposes and goals, but we’re sure trying!
This is such an exciting time for real estate investors who are trying to be part of the solution to create more homes for new and seasoned Canadians!
