Edmonton Real Estate Investor: invest in alberta

I think this little parable is going viral. I really liked it and it was forwarded to me today. Thought I would share.

This is something to think about when negative people are doing their best to rain on your parade. Remember this story the next time someone who knows nothing and cares less tries to make your life miserable.

A woman was at her hairdresser's getting her hair styled for a trip to Rome with her husband.. She mentioned the trip to the hairdresser, who responded: " Rome ? Why would anyone want to go there? It's crowded and dirty.. You're crazy to go to Rome . So, how are you getting there?"

"We're taking Continental," was the reply. "We got a great rate!"

"Continental?" exclaimed the hairdresser. " That's a terrible airline. Their planes are old, their flight attendants are ugly, and they're always late. So, where are you staying in Rome ?"

"We'll be at this exclusive little place on Rome 's Tiber River called Teste."

"Don't go any further. I know that place. Everybody thinks its gonna be something special and exclusive, but it's really a dump."

"We're going to go to see the Vatican and maybe get to see the Pope."

"That's rich," laughed the hairdresser. You and a million other people trying to see him. He'll look the size of an ant. Boy, good luck on this lousy trip of yours. You're going to need it."

A month later, the woman again came in for a hairdo. The hairdresser asked her about her trip to Rome .

"It was wonderful," explained the woman, "not only were we on time in one of Continental's brand new planes, but it was overbooked, and they bumped us up to first class. The food and wine were wonderful, and I had a handsome 28-year-old steward who waited on me hand and foot.

And the hotel was great! They'd just finished a $5 million remodeling job, and now it's a jewel, the finest hotel in the city. They, too, were overbooked, so they apologized and gave us their owner's suite at no extra charge!"

"Well," muttered the hairdresser, "that's all well and good, but I know you didn't get to see the Pope."

"Actually, we were quite lucky, because as we toured the Vatican, a Swiss Guard tapped me on the shoulder, and explained that the Pope likes to meet some of the visitors, and if I be so kind as to step into his private
room and wait, the Pope would personally greet me.

"Sure enough, five minutes later, the Pope walked through the door and shook my hand! I knelt down and he spoke a few words to me."

"Oh, really! What'd he say ?"

He said: "Who messed up your hair?"

Canada's natural resources are what the world needs.

"Despite its economic ills, Canada is the best place to ride out a worldwide recession, ....And the best place in Canada is Alberta.

"Compared to the ailing economies of nations such as the United States, Germany, France, Italy and Japan, Canada is faring well..."

"We've got a lot of problems in this country, but there's no country in the world that you want to be in to weather the economic storm (other) than in Canada," Warren Jestin Scotiabank's senior vice-president and chief economist Wednesday

Click Here To Read Full Article

The latest economic forecasts from the government of Alberta proves the province is an economic rock in Canada.

Some highlights include:

Alberta's population growth continues to outpace the rest of the nation

Increased crop production expected in 2008

Drilling activity picking up

Canadian Real GDP rises for the second straight month

Latest string of data paints a gloomy U.S. economic outlooks

Download your copy here

As a whole the recent cooling has balanced out the market of course as an investor your investment area should not focus on the national market but on one specific area.

"The property market in Canada is well balanced and prices should rise in line with general inflation, according to economists.

The market has moved from a strong sellers market but it is unlikely to suffer a serious downturn, economists from Scotia Economics say in a new report.

But there are significant regional differences. Former hot locations like Calgary, Saskatoon and Vancouver are now favouring buyers." Read Article

"CBRE's second quarter 2008 report says investment sales volume year-to-date was $1.65 billion, compared to $2.2 billion for all of last year. The numbers show "continued investment confidence" in the Calgary real estate market, said Bruce Irvine, vice-president of business development and retention for Calgary Economic Development. " Click Here

The reason is Alberta and Calgary and, yes, Edmonton have great economic fundamentals. The article states that Alberta has "mojo" and is the shining star of the Canadian economy.

Funnily enough when talking to our Realtor and property manager (the on the ground team) the say the area is rife with pessimism and that many Albertans just can't see the Alberta Advantage. If you are someone that can see the advantage then you have a clairvoyance that can set you up for life.

Where others see crisis successful people see opportunity.

Real estate meltdown? Not likely - "It's true that a few Canadian cities are showing much smaller price declines - Edmonton down by 4.9 per cent in the past year, Calgary down 2.4 per cent and Windsor down 5.5 per cent - but only in Windsor does this reflect economic distress. In Alberta, the price reversals look more like a hiccup after huge run ups.

So is Porter really suggesting that Canada's housing market is about to follow that of the U.S. down the drain? Apparently not, despite the provocative words. "No, we don't think we're headed for a U.S-style bust, said a colleague at BMO Capital Markets, senior economist Sal Guatieri."

Alberta's business owners optimistic - "Despite worrisome economic signs in the United States and Central Canada, optimism among Alberta businesses is rising, suggests a new provincial survey.

The business sentiments index, released Thursday by ATB Financial and the Western Centre for Economic Research, asked 403 companies across Alberta to gauge their opinion for the third quarter of 2008."

Alberta posts highest earnings growth - "Albertans continue to earn more than other Canadians, according to figures released Friday by Statistics Canada.

April figures show average weekly earnings for Albertans were $873.25, including overtime.

That's up six per cent from the same month last year -- the fastest growth in Canada."

First of all if you are trying to sell in Edmonton better make the deal pretty sweet because about 11,000 other properties are on the market looking for a new owner. To be frank I wouldn't sell now unless I had a pretty good reason.

If you are an investor then why not ride out the dip and wait for the low unemployment, high provincial in-migration and stupendous economy to see you right?

For those of you who are just trying to sell your home then this advice is quite useful:

"What about the seller? Should he despair? Not at all! Firstly, if, as is frequently the case, the seller is planning to buy a replacement home immediately upon selling, the difference that he can expect to pay remains relatively constant, regardless of the market condition. That is the precise reason to at least be in the market, and not on the sidelines.

To achieve a best-value sale in today’s market, the seller must face a number of realities that may not have been as critical to a successful sale over the past few years.

Realistic pricing tops the list. With much greater competition for fewer buyers, pricing even one or two per cent over market may dramatically reduce the chances of an offer. Testing the market with a higher price is not a great idea." Peter Dolezal

Read More Click Here

graph courtesy of StatsCan

Alberta again led the country in population growth in the first three months of 2008. The province now weighs in at 3.5 million. Although there was a small exodus from Alberta in 2007 the net in-migration is still the highest in Canada.

"Alberta's population rose by 0.41 per cent over the January to March period to reach an estimated 3,512,400, mainly as a result of strong immigration and net inflows of non-permanent residents," Statistics Canada

Simple math tells me that more people means a continued demand for housing, whether it be rentals or purchases. If anything the buyer's market that the two major cities find themselves in now will attract people to the area as a bonus to great jobs at national high wages.

I've heard of people picking up properties for the legal cost out in Edmonton. Of course deals like that are hard to find but with a little motivation and a list of properties that aren't selling it shouldn't be too hard. If you are moving out west with a great job waiting for you who wouldn't pick up a home rather than renting?

When Albertans are looking for a recreational property they often go to British Columbia. The province's overflow of wealth has increased prices in the Okanagan area so much that until now there was multiple offers and double digit increases on recreational properties. Now that Alberta is cooling down so is this area.

"Alberta buyers are a very important part of our market, and not just southern Alberta, but northern Alberta as well," Rob Shaw, Vernon Realtor and director of Okanagan Mainline Real Estate Board (OMREB)

What that means is the beautiful Okanagan valley is also leveling out and becoming a buyer's market. Alberta's stellar economy is effecting the real estate market across Canada - from B.C to the east coast. People who have made their wealth in Alberta go back to their home province and buy their dream house.

Most importantly is to know when to buy where. Alberta is in a slow cycle and has leveled to a buyer's market, giving investors the opportunity to pick and choose their terms on an incredible selection of properties. When your Alberta property increases in value over the next 3 years, you can buy your dream house from the proceeds.

When I hear people say that buying investment real estate is dangerous or risky it makes me wonder what could have happened to make them feel that way. Sometimes its a sour deal or bad tenants but more often than not it's who they bought the property with.

It's easier to buy a house if you split the down payment with a family member or friend but it's also a great way to ruin a perfectly good relationship. So how do you avoid the troubles that may come in purchasing together?

Excellent legal advice, a clear strategy and a clear separation between the private a business relationship is crucial.

"The most important thing is to do your planning," "A house is something that has an emotional tie to it, yet people want to go out and do things very quickly, especially if a real estate market is booming, and if you dawdle along you're not going to get that house you're after."

"What if one of them dies; what if one of them gets married; what if one of them takes a job transfer and moves out of province? You have to set out in advance what those what-ifs could be and try to document them into a co-ownership agreement. It could be a simple thing like who pays for some of the expenses." Investors Group financial planner Murray Pituley of Regina

IF you shudder at the idea of making a legal document with your brother, mother or friend then imagine what will happen when everything unravels and nobody has a clear idea of what should be happening

Todd wrote this article to help house buyers and investors make sure they aren't getting a huge financial and environmental headache when they pick up that "deal" down the street.

"Sadly, we live in dangerous times. We not only have to be careful of shoddy plumbing jobs, leaky roofs and shifting foundations, but we must also check for dangerous and illegal uses of our potential homes. Don't be fooled into thinking that only houses in rougher, low-income areas harbour drug operations: Many marijuana Grow ops are located in middle to upper class suburbs." Read Full Article

Last year when prices in Edmonton rose close to 50% first time buyers were afraid they would never be homeowners. The frenzy that resulted in "conditionless" contracts, bidding wars and listings on the market for mere days left a lot of people feeling out of control in their buying. The attitude was buy it now or never see that chance again.

However since the market has cooled a little buyers can take there time picking a choosing deals. They can have terms that protect them or help them buy more easily.

"With the best selection of homes listed for sale in years, entry-level buyers have the luxury of time on their side,...""No longer forced to act in haste, first-time purchasers can make offers conditional on financing and home inspections." RE/MAX

We are certainly able to pick and choose the properties we are buying now and with better terms and a lot of room for negotiation. It's a nice time to buy.

This great nugget is from www.marketwatch.com:

"A boom of unprecedented dimensions is sweeping Canada's spectacularly scenic western province of Alberta, the Texas-sized territory with a population of 3 million that is home to a pair of world-class cities -- Calgary (population 1.2 million) and Edmonton (population 1.1 million)." Marshall Loeb, Market Watch

It doesn't matter what the Edmonton property market does in the short term because all the international investors who are coming to Alberta, Canada are looking at the long-term. That is how the "strong hands" do it. For more information on Alberta Oilsands click here

But I leave you with this:

"Canada has rather rapidly become the largest supplier of oil to the U.S. Alberta is producing more than 1 million barrels of so-called synthetic oil a day, and the province is sitting atop the largest petroleum deposit outside the Arabian Peninsula (as much as 300 billion recoverable barrels).

As a result, the economy of Alberta since 2002 has been growing an average 12.2% annually. That's not far from China's average, 14.8 %. In the past decade, Alberta's per-capita GDP has almost doubled, to $66,000.

Demand for labor is so intense that Alberta has basically run out of people. Fast-food emporiums, for example, are closing down because managers cannot find folks willing to work for their modest wages." Read More

Good question if you think in a Boom and Bust mentality...

This is a reply to "Is Edmonton Real Estate Too Hot?"

In reality what you have happening in the province of Alberta, specifically Edmonton, Calgary and Red Deer cities is a healthy slow down in the market. It's not a Boom and Bust. It's not a 'Too Hot', in fact it has slowed enough to become a buyer's market- opening up the market for the first time in the past 2 years.

When a market is firing on all cylinders it has growth stages and moderating stages where it absorbs the outflow of energy produced. It's a self-regulating safety valve so that the economy doesn't get overheated.

As a sophisticated investor you don't want to target a market that is doing double digits year after year... you want to target a market that has a diverse, multi-tiered economy that is set to grow year after year.

Too many novice investors (read: Speculators) chase the percentages. They look for the next 'Big Town' that is going to BOOM. When in reality, seasoned investors look for a growth market where real estate appreciation is between 6% and 8% per year, sustainable. When your market goes above your targeted 6% to 8%, it's gravy- a nice bonus.

My job as an investor is to study the Edmonton market and the province of Alberta's economic fundamentals. When the economy can't support the growth, then you begin to research other areas or property types that will support that growth.

In a nutshell, the economy remains diverse in Edmonton and will prove to be a very stable place to invest for the next 5 years. Of course as the market shifts you may need to adjust your target property type and check to make sure that it still makes sense. For example, if single family homes are no longer priced in your target range of affordability, look at Town Houses or Condos, which still remain quite affordable.

Too often in the media, regional areas and investments get painted with one big brush. On one hand that may be good, because it shakes out the inexperienced and continues to regulate the market. Look at year over year averages and check the fundamentals to decide what is a 'Boom or a Bust'.

Here are a few quick facts below:

Alberta's unemployment rate is the lowest in Canada at 3.20% . An incredibly healthy employment percent is 3% (11/07 to 2/08 Stats Canada)

Alberta's GDP: $290 Billion- yes, Billion. In a province of 3.4 Million people.

If you still think Alberta's economy is on the slide, then read the RBC (Royal Bank of Canada) Report released February 2008:

http://www.rbc.com/economics/market/pdf/provfcst.pdf

"Alberta's economy remains the 800-pound guerilla of Western Canada. At some $290 billion, Alberta's GDP -- gross domestic product -- is almost 15 per cent larger than that of B.C. and Saskatchewan combined.

So when housing starts in Saskatchewan's two major cities soar by 60 per cent -- as they did in 2007 -- it's from a tiny base. Even with a slowdown, Alberta's housing starts will top those in Saskatchewan by six or seven to one in 2008.

Indeed, although home builders in Edmonton plan to curtail new construction in the first half of 2008, some are already worrying that they won't be able to meet new demand by this fall, when inventories are likely to be depleted. In short, rumours of Alberta's economic demise are greatly exaggerated."

Affordability: Although Alberta's housing affordability has increased the past few years, so have the wages. Alberta leads Canada in job growth and average median salaries are the highest in Canada at $854.28 (with the exception of hardship posts in the Yukon and NWT)

Despite the high Canadian dollar and manufacturing/export slowdown related to the slow in the U.S. market as well as cyclical slowdown, the GDP is still up 0.02% Alberta's GDP far outpaces nearly all Canadian provinces and has been pacing slightly behind China's growth. Although it will slower this year- which is what healthy markets do, enabling them to continue moving forward at a sustained pace.

http://www.statcan.ca/Daily/English/080303/d080303a.htm

"Looking forward, although Alberta’s outlook for growth has eased, given the large number of major projects that are still underway, the province is still likely to outperform the rest of the country for the next several years. CanaData is forecasting the province’s real (inflation-adjusted) Gross Domestic Product (GDP) growth to be 4.4% in 2007 and 3.7% in 2008."

Economic Indicators - GDP Alberta vs. Canada

Is Alberta diverse? Yes. It's not just Oil and Gas- although they make up a fair percentage of the current growth. In fact investment dollars into the Oil Sands were LESS than other areas of investment. Read the Report Here: http://www.alberta-canada.com/statpub/

Nothing.

I read an article about the prices in Edmonton being stalled (which to me generally denotes stopped/not working/dead). Then the writer went on to say that houses are:

• selling for near list prices

• not staying on the market long

• in strong demand

These are good things right?

Ending with this quote,

"Nothing is for sure" about real estate, but sales agents "are not concerned about the health and vitality of the Edmonton market," association president Marc Perras said in a statement.

"Buyers still have lots of choice." But sellers are encouraged by the reduction of sales waiting time. "And sale prices are typically close to the listed price," Perras said.

It makes me think writers need to get a thesaurus and get their adjective usage under control.

What is it with us Canadians? Do we suffer from ‘the grass is always greener, the sand always warmer’ syndrome? During a -40 snap, you bet we do. And it’s not all bad either.

Due to increases in salaries and the great rise in Alberta real estate values have helped make many Albertans quite well off. Our strong dollar and the perceived bargains in the U.S. have brought droves of Realtors and salesmen from South of the border to flog their wares, when we’re feeling at our most vulnerable-bitter winter.

Albertans are prime targets.

I too admit to a weakness for a house on a palm-treed beach. Actually, I’m lucky to have two palm trees in my garden but their leaves turn brown and fall off during cold spells, far from the beach of my dreams.

The number one thing to remember is that Alberta is where you can safely and steadily grow your profits over the coming years. Let the folks with knee jerk reactions and short-term thinking get shaken out of this market.

Savvy investors think long-term strategies.

I wouldn't look at properties outside of Canada as investment at this time, but instead as a potential 'lifestyle choice', if that applies to your goals at this time, meaning, if you're ready to retire or cash-out.

Otherwise, take advantage of the current breather the Alberta market is taking and use this welcomed chance to move forward with investments that make sense.

It's easy to get sidetracked when pitched an emotional 'deal of a lifetime'; it's not so much the property down South you’re being sold, it's the ‘dream life’. When is it time to buy a retirement home outside of Canada anyway?

Here are some quick points to ask yourself that will help take the emotion out of your decision:

1) Have I reached my investment goals and am I at a stage of my life where I can realistically afford to buy and upkeep a property for pure pleasure?

2) Have I done enough research into the area that I plan to be buying in to understand what it'll be like to live there, receive medical care/coverage and visit family? How will I be taxed? Can I receive income? Can I live there permanently?

3) How will property values and neighborhoods change over the next few years in relation to the sub-prime? How will this affect my lifestyle? Have I visited the area in the peak AND off season- do I like what I see? Is the weather agreeable year round or am I in a hurricane zone?

In my opinion it's not yet time to pick up properties in America. U.S stats forecast another wave of losses to the tune of 2 million foreclosures over the next few years.

You need to wait it out longer until the final mortgages have been reset and prices begin to stabilize, probably at least fall of this year or preferably past spring of '09.

Incredibly strong markets in Western Canada are keeping Canada's real estate markets buoyant even through America's housing slump.

"We expect construction, sales and price gains to moderate in 2008 due to decreasing affordability, especially for first-time buyers, and some softening in domestic economic conditions associated with the intensifying U.S. slowdown and persistently strong Canadian dollar,"Adrienne Warren- Scotiabank senior economist/ author of Real Estate Trends Report

In what is the strongest and longest postwar housing boom cities like Edmonton and Calgary are keeping the market strong and in good condition. Although both cities saw affordability drop slightly the current balancing out of the market in 2008 will bode for good deals for buyers and price increase in 2009.

In Alberta where investment is always spoken of in BILLIONS not MILLIONS - this year will stand out as the year we beat all manufacturing across Canada for the first time.

"That one small little area of Alberta is attracting more investment than every manufacturing industry across the country." Philip Cross, Statistics Canada economist

This money isn't invested "willy-nilly" with no idea of ROI - extensive research is done; every possibility factored including Royalty reviews, Kyoto accords and oil prices. It is long term thinking with an eye on the future.

So if all this investment is going into a tiny little area in Alberta there is going to be a boom on jobs, on retail sales and of course on housing.

That is why I can't think of a better place to buy investment property in Canada and possibly the world.

The Financial Post has a sub-section under Small Business called "12 Weeks To Start-up" which is to help new entrepreneurs get started and motivated by successful people in business.

This week Century 21 Real Estate Canada's founder Peter Thomas was interviewed to speak on his "virtual mentors" in his early start- up days. When times were tough and there was no one to call Mr. Thomas turned to four greats: John F. Kennedy, Indira Gandhi, Martin Luther King, Jr. and Ernest Hemingway to guide him on the rocky road to success.

Each person guided him in a different way,

"For years, as he established Century 21 Real Estate Canada and became a busy property developer in Western Canada and the United States, whenever he ran into a problem he would ask himself, "What would my virtual mentors do?" For inspiration he would look at the life of JFK; as a moral compass, he would turn to King. Former Indian prime minister Gandhi supplied passion, vision and humanity. Hemingway was the "rogue" advisor, providing gung-ho inspiration whenever Thomas felt his life needed more fun or adventure."

In our business we look to Trump and Kiyosaki for business savvy and real estate acumen, Dr. Wayne Dyer and Deepak Chopra lead us spiritually and numerous travel writers and adventurers help us relax and injecting adventure into our long weeks of work.

Of course we have real life advisors who guide us through the pitfalls like lawyers, accountants and Realtors - but sometimes it is the people who you can't meet who really inspire you too new heights.

Who guides you?

Read Article Click Here

Due to high demand, limited supply and increasing rents Edmonton office space is in hot demand.
Prices by the square foot have increased 76% since the beginning of last year.

"Overall, office vacancy has reached historical lows, with unprecedented rental rates being achieved in both the downtown core and suburban office markets," says Canadian real estate services company DTZ Barnicke. READ MORE