It’s all about committing to your numbers, and controlling your emotions!  Over the years, fear and greed have taken many real estate investors completely out of the game.  And today’s real estate market in Calgary is full of fear, doom, gloom, and “the sky is falling” mentality.  So how do we move forward as investors and rental-housing-providers?

We start by recognizing that real estate moves in a predictable cycle—the only thing we don’t know is how long each phase of the cycle might last.  This phenomenon has been observed for over 100 years, and is best described by brilliant economists.  However, regular humans like you and I can easily understand what drives the cycle by reading Don Campbell’s book, Secrets of the Canadian Real Estate Cycle.  Kieran Trass also has an excellent book on the subject, The Housing Bubble.

The very brief summary of the cycle is that it can be divided into 3 basic phases:  Boom, Slump, and Recovery.  It’s fascinating that these phases occur, over and over again, in many developed countries in the world (where supply and demand are essentially driving the real estate market).  The picture above starts in the Boom phase:  we start happy, and quickly progress towards greed.  Recent Boom phases can clearly be seen in Vancouver and Toronto.  Then there is the dreaded slump:  we start with the worriers and those in denial, but then it descends, like a snowball rolling downhill.  Capitulation has been seen in Alberta several times—remember people mailing their keys back to the bank in the days of the Kyoto Accord?  Unfortunately, some people are again capitulating in Alberta today.  And this week, the real estate predictions came out for 2019.  Very intelligent people have worked very hard to try to be realistic about their numbers.  The news media has picked up on all this negative energy, and is feeding already fearful, and sometimes panicked, homeowners and investors.

Where others are fearful, we are cautiously exploring opportunities galore.  Do you see the box in the graph that says “highest potential for earning?”  This is simply a result of the age-old strategy of buying low.  Nothing fancy.  No rocket science.  Simply recognizing opportunities, following our investing strategies, and sticking to our numbers.  Will we make money overnight?  Absolutely not.  Do we know for sure that the market will turn around in 2020?  Of course not, nobody does!  Are we trying to time the market?  Yes, and No.  We are using strategies that are appropriate at this stage of the market cycle:  basically acquiring properties while prices are good—possibly even moving toward excellent.