SNAPSHOTS VS TRENDS
Happy anniversary to us! This little blog turns 3 years old today! What began as a weekly posting about using real estate investments to create Financial Freedom, has evolved into a short-but-sweet weekly snapshot about the Calgary market and our involvement as investors.
These next 2 weeks it seems like almost everyone is out on vacation and taking snapshots. All these images are capturing those moments in time that are fabulous, or sometimes just hilarious. Is anyone else out there like me? Do you often wonder what happened just before or right after the perfect image?
Stats are like snapshots. They capture just a moment in time—and sometimes they are reported weeks or months after the data was collected. Let’s use unemployment stats. They are just one way to measure the health of an economy. Specifically, Calgary’s unemployment rate went up in June to 9.2%. However, talk to almost any small business owner and you’ll find unfilled vacancies in this city. My daughter and I went into the book store this week and were approached to see if she would like to work there. That’s right! No resume, no interview, just “oh, you like books, would you like a job?!!”
Another great example of a tricky statistic is rental rates. CMHC (Canadian Mortgage and Housing Corporation) releases an Annual Rental Market Report. They collect data in the fall of the previous year, then release their report in January. https://www.cmhc-schl.gc.ca/en/professionals/housing-markets-data-and-research/market-reports/rental-market-reports-major-centres It’s better than nothing, but every landlord knows that the January rental market is different than the spring, summer or fall markets. Also, the data tends to come from larger landlords (aka property management companies); sometimes this skews the numbers for us “smaller fish,” as the rental housing providers. And this year specifically, the stats (for everything) are affected by the Covid wild card. Calgary’s rents are up 11% overall from 2020—but how will that play out as the world recovers and re-balances?
Most smart investors follow some basic economic fundamentals. And the main way to measure those concepts is with stats (GDP, employment rates, population growth, rent pricing, home pricing, etc…). Today, we’re just drawing your attention to the fact that the stats aren’t perfect. Taken alone, or worse out of context, they are not absolute truth.
So what is one of our top learnings from 3 years of this blog? Trends are way more important than the snapshot that one stat will provide. YES, we are paying attention to the fundamentals on a monthly basis; but no, we don’t panic when the stats go up, or down, in one measurement. With respect to the “snapshots,” we are always asking ourselves, “what happened before and after that specific moment in time?”
And for all of you on your summer vacay’s: have a blast, hug your loved ones, and keep taking lots of snapshots of the joys of summer! Cheers to your financial freedom!
