PLAYING THE LONG GAME
Climbing a mountain can begin with any number of roads. Or if you’re a true contrarian, take the off-road, unbeaten path!
These days, saving for retirement, planning a legacy, or creating financial abundance feels like climbing Mount Everest. So many potential paths and training regimens, so many potential pitfalls, detours and traps. Or if we listen to the media, … well maybe it’s just time to give up!
As an outdoor adventure enthusiast, I’m not afraid of a challenge. And I have always tended to play the long game. Generally, I believe this expression means making sacrifices today-ish to reap benefits later in life. For example, eating healthier today, to enjoy better long-term health.
Until recently, real estate investing had quite the easy short game for many in Canada: low interest rates, dramatic appreciation, strong rental demand, etc…. However, for those of us in Alberta, we have seen and played the long game for years. Ho hum to 2022’s challenges! They’re different, but we’ve been through plenty already, so we’ll just bring out the resiliency cloak.
Even RBC’s latest housing report is noticing “the Alberta advantage.” In Calgary specifically, the “economic and demographic fundamentals [are] still solid.” https://royal-bank-of-canada-2124.docs.contently.com/v/downturn-deepens-in-canadas-housing-markets. The first Friday of every month is typically our update on Alberta’s fundamentals with respect to real estate investing, so here we go!
GDP: Canada’s GDP was essentially zero in May, 0.1% in June. The USA is already in a recession (by some people’s definition), and Canada is predicted to enter a recession for 2023. Only time will tell.
Jobs: Canada’s unemployment rate for June and July of 2022 was 4.9%. Alberta’s unemployment rate was 4.9% in June, slightly improved to 4.8% in July. Calgary’s unemployment rate dropped from 5.5% in June, to 5.0% in July of 2022. And Edmonton saw a dramatic drop in unemployment from 5.9% in June to 5.1% in July. Essentially jobs for anyone that wants one!
Population: In Q1 of 2022, Alberta saw a net in-migration of $16,510 people, compared to only 2919 people in 2021. In case you were sleeping, that’s a 465.6% increase!! This year’s numbers break down to 11,159 people from international destinations, and 5351 people from other provinces.
Rental Demand: Ok, this is such a moving target right now. Some are quoting less than 1% vacancy (Hope Street Management), while some are seeing higher numbers. Regardless, the demand has been enough for landlords to raise rents by as much as 25% this year, and still have multiple applicants begging to be accepted. Such a lovely change from 2016 to 2018!
Property Pricing: The housing market is cooling, but multiple offers just adds multiple stresses if you’re buying! Overall, there is roughly 2 months of supply (trending upwards), and the overall benchmark price is $540,000 (a 12.3% rise year over year). Detached prices are seeing a 14.8% increase year-over-year for the July stats, but detached prices are slowing. There is a noticeable increase in apartment/condo and row house sales.
Influencers: Needless to say, with inflation at 8.1% and interest rates rising rapidly, these two influencers will continue to weigh heavily on consumers minds as the winter approaches.
But here’s the thing: the more rising rates and inflation squeeze affordability, the sexier Calgary becomes to real estate investors playing the long game. The more jobs and diversification come to Alberta, the more customers we are seeing as Rental Housing Providers.
Climbing the Financial Freedom Mountain isn’t going to be easy as we enter the fall and winter. Ah, but it will be a worthy pursuit! Follow us @MtnEdgeDevelops as we share news and updates, especially about the Calgary area, and Alberta in general.
