CALGARY INVESTOR MINDSET?
Warren Buffett once said that it’s wise for investors “to be fearful when others are greedy and to be greedy only when others are fearful.” Oh my goodness there’s a lot of both in the Calgary and Alberta real estate investing community these days! But what if we take the emotions out of it? Yes, that does require some discipline in today’s marketplace!
Looking at the economic fundamentals for this month? Most of the data will inspire greed:
- GDP—real GDP is anticipated to grow 2.3% for 2024. (It is estimated that 2023’s growth was 2.5%. Early predictions for 2025 are 2.7%) https://interactive.atb.com/economic-outlook-mar-2024. Canada’s GDP overall is expected to grow by roughly 1.0%, depending on which economist is doing the forecasting.
- It is interesting (maybe only academic, maybe not) that Alberta has the highest GDP per capita. The contrarian province again! https://economicdashboard.alberta.ca/dashboard/ Have you seen all the headlines about productivity lately?
- Population—”Alberta added 202,324 residents—roughly the population of two Red Deers—between January 1, 2023 and January 1, 2024 for a growth rate of 4.4%” https://www.atb.com/company/insights/the-owl/population-growth-alberta-fourth-quarter-2023/.
- Jobs –Alberta’s March unemployment rate was 6.3%, up from 6.2%. Calgary’s unemployment rate was 6.5%, up from 6.1% in February. Edmonton’s unemployment rate was 6.4%, down from 6.6%. And Lethbridge’s unemployment rate climbed to 6.6%, from 6.3%. Canada’s nation unemployment rate was 6.1%, up from 5.8%. https://www.atb.com/company/insights/the-owl/atb-economics-weekly-wrap-april-5-2024/.
- Alberta continues to have the highest average weekly earnings in the country. https://economicdashboard.alberta.ca/dashboard/.
- Rental Demand—CMHC just released their housing outlook: https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/market-reports/housing-market/housing-market-outlook#tabSwitcher. Calgary ended 2023 with a vacancy rate of 1.4%. We have a predicted vacancy rate of 1.1% for 2024. And a further vacancy rate of 1.0% predicted for 2025. Fascinating because it seems there is new housing being built on almost every street!
- Rents in Calgary for a 2 bedroom are up another 9.5% year over year. https://rentals.ca/blog/february-2024-rentals-ca-report.
- Housing Demand –It’s like first year economics class: huge demand, limited supply. We can all understand those dynamics! Price is expected to trend upwards through to 2026; at which point some experts think that the new supply will catch up to the demand. https://www.creb.com/News/CREBNow/2024/April/March_reflects_strong_sellers_market_and_price_increases/.
But then, looking at the influencers like politics, interest rates and inflation—we start to trend towards fear. I’m thinking we don’t need a deep dive into any of these issues because they’re all over mainstream media.
And then, there’s the drama—aka FEAR. Real Estate Investors are losing money all over Canada these days—largely due to unsecured lending instruments. Some are also losing deposits on pre-build speculation. And some are simply over-leveraged. We respect and sympathize with so many people in difficult situations. However, some investors and reporters are catastrophizing that all real estate investments are bad. Nope. We know plenty of slow, steady, boring investors who have made impressive returns and grown generational wealth with cautious real estate investing.
We are not trying to be so arrogant as to argue with Warren Buffett. However, we are noticing that neither greed, nor fear, is helpful for today’s real estate investor. We are making every attempt to be more rational and less emotional, in spite of some of the whirlwinds around us. It’s a significant challenge! Is your financial freedom up for this latest challenge?
