As we monitor the monthly economic fundamentals for real estate investors, we are reminded of an ancient story. I came across this many years ago while reading the Tao of Pooh and the Te of Piglet by Benjamin Hoff. Wait, how does a spiritual teaching apply to real estate investors? Let’s begin with the story:
There was once a farmer in ancient China who owned a horse. “You are so lucky!” his neighbours told him, “to have a horse to pull the cart for you.” “Maybe,” the farmer replied.
One day he didn’t latch the gate properly and the horse ran away. “Oh no! That is terrible news!” his neighbours cried. “Such bad luck!” “Maybe,” the farmer replied.
A few days later the horse returned, bringing with it six wild horses. “How fantastic! You are so lucky,” his neighbours told him. “Maybe,” the farmer replied.
The following week the farmer’s son was breaking-in one of the wild horses when it threw him to the ground, breaking his leg. “Oh no!” the neighbours cried. “Such bad luck, all over again!” “Maybe,” the farmer replied.
The next day soldiers came and took away all the young men to fight in the army. The farmer’s son was left behind. “You are so lucky!” his neighbours cried. “Maybe,” the farmer replied.
This version of the story is copied from https://medium.com/finn-jackson/the-parable-of-the-taoist-farmer-8f52bba7f12c.
My point today is that numbers are just numbers, even if they are produced by people and organizations we respect: Statistics Canada, Canada Mortgage and Housing Corporation, or the best economists in the big banks and real estate organizations. We continue to share and follow the trends, but we realize that the meaning in each of these values will be different for each person’s perspective.
- GDP for Canada came in at 0.2% for November, and is estimated to be 0.3% for December. Is this good, aka better than a recession? Or is it suboptimal, aka much worse than the GDP numbers in the USA for Q3 and Q4? https://www.atb.com/company/insights/the-owl/gdp-by-industry-november-2023/
- Alberta GDP is predicted to be 2.1% for 2024. Is this good, aka one of the highest in the country? Or is it suboptimal, because it has already been downgraded from earlier predictions? https://www.creb.com/-/media/Public/Forecast2024/2024ForecastReportD.pdf
- The above CREB resource and experts are also predicting slightly lower population growth for Calgary in 2024 of 3.6%, compared to the 4.7% approximated from 2023 data-to-date.
- Now match all of these interprovincial and international migrants with the already existing vacancy rate of 1.4% in Calgary, and the year-over-year rental rate growth of 14.3% for purpose-built rentals (and yes these statistics are usually from about 6 months ago). As an investor, is your income keeping up with your expenses, a good thing? As a tenant or newcomer, is rental pricing affordable? Will there be a shift into a more balanced market with all of the office conversions and the new purpose- built rentals that are coming into the market in the next few years? https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/market-reports/rental-market-reports-major-centres
- As for those looking to buy, sell or develop, we continue to see tight supply and rising prices in Calgary. Calgary’s Benchmark price currently sits at $572,300, which is up 10% year over year. Months of supply is currently at 1.3, an astonishing 36.3% decrease from last year! While overall inventory is down 12.3% from last year. New listings have increased, so maybe that will help? We’ll see. These are all loaded numbers, and people will see and hear them very differently depending on their agendas (eg buy vs sell). https://www.creb.com/News/CREBNow/2024/February/January_sees_strong_sales_fueled_by_boost_in_new_listings/
We share these numbers every month with our friends and colleagues, to help us all make the best possible decisions in “the Wild West” of uncertain times. We also share the relevant articles that backup these stats on our Facebook page https://www.facebook.com/MtnEdgeDevelops/ if you want to follow along. And as we embark on a variety of projects for 2024, we will be sharing images of our new builds, backyard suite and secondary suite on our other page https://www.facebook.com/MtnEdgeRenovate/ . Think of us more like a humble working partner than an expert, a fellow traveler along the real estate investing journey. We see both opportunities and risks ahead, but continue to proceed with a positive yet realistic mindset.
