[Sky of Blue]

I’m currently renting here, as much as I like owning and have owned in the past. It used to be a no brainer to buy. But the last several years in Alberta the places I’ve rented have been substantially supplemented financially by the owner to the point I’m saving significantly every month by not buying. Given the property value is likely to stagnate or drop the next few years, that’s a knife I’m not trying to catch at the moment.

When I do buy it will be less about potential gains and more about stability. No risk of my place being sold out from under me or otherwise being displaced is the value to me.

 

[Mountain Man]

Like MichaelS said, buying property as a short term investment is pretty risky at the moment. In saying that, no one that bought in Calgary in the 90's regrets their investment, especially inner city. It might be worth finding a good financial advisor to run your ideas by if you haven't already.

Financial advisor is good advice, I should do that.

 

[JonnyCanuck]

I bought a new condo in the Beltline in 2007. It took 2 1/2 years until completion. By the time I moved in early 2010, condo values had declined during the great recession.
By early 2014 as the market improved, I just might have been able to sell it for what I paid for it 7 years earlier. Since 2014, it's value has declined once again. If I decide to sell 5 years from now, I doubt whether I would get what I paid for it. That would be a span of 18 years from original purchase to sell. Although condos do not represent Calgary real estate in it's entirety, mine is a pretty good example if you invest in real estate with the idea of expecting capital appreciation over time. It was the economic boom periods in the last 20-25 years that caused a spike in real estate values. I don't think we are going to see a return of those again.

 

[Mountain Man]

I would like to buy in a more trendy area like Renew, Altadore or Parkadale so the value holds a bit better, but those areas are super pricey!

 

[darwink]

Lots of different variables on this one. First one for me would be whether you're going to live in it, second would be if you're maxing out your TFSA and RRSP each year. The tax treatment available to your incremental investment can swing things a lot, since a house as an additional asset and if you're living in it is not taxable.

Can also think about lifestyle factors which may be worth money to you.

How much is secure tenure worth to you a month? How much is being able to modify your property worth to you (whether minor things like painting to major things like renovating a kitchen)?

TBH it is really hard. By the metrics available at the time my purchase of property made sense when I did. But years on, I would have ended up much better off not buying. At that time renting a comparable property was more expensive than buying, and even if property prices declined by 10% over a 5 year term I would have been neutral versus saving via a TFSA at 7% compounding. But then prices declined by 20-25%. The loss has turned the difference between renting+TFSA and buying into around a $90k delta.

 

[JonnyCanuck]

There was an article in the Globe & Mail last week. A buyer enlisted an agent to find him a deal on a new condo in the Beltline. The agent was able to negotiate a purchase price of $385, 000 for a 2 BD/2 bath unit in The Guardian. This was a $45,000 price reduction off an already discounted price of $430,000.
It shows you how dire the market is for new condos in the inner city. You have hundreds of investors that bought units in the last 10 years hoping they would appreciate in value, as they rented them out. Now these condos are not only worth less than what they paid for them, owners are now competing with a glut of purpose rental buildings on the market.

 

[potatopizzafan]

Gone are the days of buying real estate in Calgary and seeing significant appreciation in value within 10 years. It is pretty clear that millenials see things differently than their Gen X & Baby Boom predecessors. Millenials are not driving up demand for real estate. I don't believe we are going to see the migration to Calgary that we saw in previous decades. The attractive high paying jobs are fewer. We still have a lot of people unemployed in those fields. If you a buy a property, then you really have to consider how much maintenance/improvement you can afford to put into it in the medium to long term. You may not recover it when you sell.

probably the same thing people were saying after the oil crash of the late 80's

 

[ByeByeBaby]

probably the same thing people were saying after the oil crash of the late 80's

I would hope so. Based on the New Housing Price Index, the price of a new home in Calgary increased only 5% in inflation-adjusted dollars over the 10 years between January 1986 and January 1996. But of course, if you bought a new home in 1986, you were selling a 10 year old home in 1996, presumably for even less money. If you had the bad luck to buy in the peak of 1981, you would have to wait 25 years to break even.

 

[Surrealplaces]

I don’t have any stats in front of me, but if I recall correctly most markets in North America tend to stay relatively flat and have upturns every once in a while. Calgary was definitely an anomaly. It’s possible there could be another oil boom in price has gone crazy but outside of that Calgary will likely end up being similar to most other North American markets.

 

[JonnyCanuck]

I don’t have any stats in front of me, but if I recall correctly most markets in North America tend to stay relatively flat and have upturns every once in a while. Calgary was definitely an anomaly. It’s possible there could be another oil boom in price has gone crazy but outside of that Calgary will likely end up being similar to most other North American markets.

With the exception of Toronto and Vancouver and some U.S cities like San Francisco and New York. Those condo markets have been on a steady rise since the great recession with only brief pauses of flattening or slight decreases.

 

[Surrealplaces]

With the exception of Toronto and Vancouver and some U.S cities like San Francisco and New York. Those condo markets have been on a steady rise since the great recession with only brief pauses of flattening or slight decreases.

True, as well as a few other smaller more resort type places. Seattle, Washington and LA could probably be added into another category just below that of SF and NY which are ridiculous.

 

[Mountain Man]

Maybe I'll buy in Canmore and commute a couple times a week lol. Resort communities tend to hold value reasonable well, at least in my limited research...

 

[MichaelS]

That will be an interesting outcome of COVID. Now that everyone has sort of realized they don't need to commute into an office every day, will smaller, nicer communities see a rise in population, and congested big cities see a decline?

If you can convince the bosses, somewhere like Nakusp in the interior BC may be a better bet than Canmore, as it is a fraction of the price, and comes with high speed internet....

 

[darwink]

That will be an interesting outcome of COVID. Now that everyone has sort of realized they don't need to commute into an office every day, will smaller, nicer communities see a rise in population, and congested big cities see a decline?

If you can convince the bosses, somewhere like Nakusp in the interior BC may be a better bet than Canmore, as it is a fraction of the price, and comes with high speed internet....

If only Revelstoke or Castlegar/Trail/Rossland had a reliable airport. That is my partners and mine barrier to trying out mostly remote, the need to be in Calgary reliably within 24 hours. That being said we have pivoted our plan to upgrade to a house in Calgary and instead are looking at 3-4 days a week at a future cabin within a 2-3 hours drive.

 

[JustDandy]

There was an article in the Globe & Mail last week. A buyer enlisted an agent to find him a deal on a new condo in the Beltline. The agent was able to negotiate a purchase price of $385, 000 for a 2 BD/2 bath unit in The Guardian. This was a $45,000 price reduction off an already discounted price of $430,000.
It shows you how dire the market is for new condos in the inner city. You have hundreds of investors that bought units in the last 10 years hoping they would appreciate in value, as they rented them out. Now these condos are not only worth less than what they paid for them, owners are now competing with a glut of purpose rental buildings on the market.

Interest, I wouldn't say it was a glut of purpose buit rentals as the leasing velocity and occupancy for the newer more expensive units is more robust than you would think. When I moved to Calgary in 2008, I rented a three bedroom house by north hill for $1200 including utilities. I don't think even today youd be able to get something like that for $1200. The only thing that I think i concerning is the people who bought the old rentals turned condos. These typically have rediculous fees which prevent you from being able to rent it out at a profit and they aren't appreciating.

Wages for the lower income have also increased since then, albeit COVID took a large swipe at that. That being said two minimum wage earners can still support upto $1560 in rent using standard govt guidelines.

I chaulk it up to that Calgary is just a income market not a growth market. If it fits your investment strategy, then I don't see it as a big deal.

That being said, perhaps i'm an optimistic investor in the Calgary market.