Real wealth through multi-family real estate
Why Edmonton?
​
And why not Calgary?
​
I think Calgary is an excellent place to invest right now, in fact all of Alberta is. Let me walk you through why Alberta is a great place to invest, and then I'll give you my reasons for Edmonton, but before we get to that I want to go through the factors that make house prices go up (and down), and how we apply this to our investing to add another level of safety.
One of the first real estate teachers I ever had was a guy buy the name of Raymond Aaron back in 1992. I still have a copy of the free course I took from him on audio cassette. It was titled simply "Buy Low Sell High".
​
I ended up taking his full course (twice), but even in the free course there were a few gems on how to maximize your chances of making money and minimizing your risk.
Like the name implies, if you want to make money while minimizing risk, you need to buy low and sell high. But how do you know what is low? Or high?
​
Way back in 1992, he introduced the concept to me of contrarian investing. that is, not following the masses because they are always late. He demonstrated this by using gold as an example. When gold was at $300 an ounce no-one was buying it. When it hit $800 an ounce there were people lined up to buy it (too late). It's the same with real estate. If you want to buy low you have to buy before the buying craze hits. And it is coming. Like gold, many will be too late.
​
He also introduced the concept of the biggest factor in what makes real estate prices go up (and down).
​
Almost everyone knows that supply and demand dictate prices on everything. So what influences supply and demand in real estate?
​
The biggest influencer in real estate demand is migration! That is people moving to or from a province or city. The way he put it back then in 1992 was something like "The two biggest cities in Canada are Toronto and Vancouver and the average price of a 2 bedroom townhouse is $250,000. The next two are Calgary and Edmonton (he didn't invest in Quebec) and the average price is $75,000. Now a teacher in Toronto or Vancouver doesn't make more than a teacher in Alberta, so all they have to do to have more money is move."
​
Looking at migration patterns is how we tell if prices are low or high. If people are moving away, house prices are high. If they are moving in, they are low.
He may have oversimplified the example, I don't know. What I do know is that right now, people in other provinces are moving to Alberta in record numbers because it's cheaper for them in Alberta!
​
Let's just look at today's data to see what's happening. Here's how much of a family's income is being spent on housing:
So yes, it is easier for families to buy houses in Edmonton than Toronto or Vancouver. You can also see one of the reasons I prefer Edmonton to Calgary, for investing right now. It's just a little cheaper.
​
Let's look at wages.
Albertan's make more money, on average, than the rest of Canada - another great reason to move here.
​
The argument against this is that Alberta is oil & gas dependent and that the volatile market can quickly turn around.
The reality is Alberta is much more diversified than it used to be. It is going to take A LOT to bring our income below our neighbours. Having said that though, Calgary is more heavily weighted to oil and gas than Edmonton (a lot of government jobs in Edmonton that are not going to go away). This is another reason I like Edmonton, for investing.
​
So with higher wages and better housing affordability is migration actually happening?
We are adding people from EVERY province and on top of that we have a lot of people coming from other countries as well. What do you think that is doing to the demand for housing?
​
And if the demand is high, do you think the supply is keeping up? Are we building enough homes fast enough to meet that demand?
Not at all. There's less listings than a year go. That's because it takes TIME to build new housing. Eventually it will catch up, but that's still a few years away. It's also why we invest NOW - because it DOES take time for us to build a new building.
What does REIN say?
If you want another perspective you can look at the Real Estate Investment Network (I used to be a member). They are a group that teaches people how to invest in Canadian real estate. They have a success formula that gives you a good idea when property prices will make a big move.
A recent article from CBC shows that vacancy rates in Edmonton have hit their lowest rate in 10 years. That puts us fairly close to the end. And if you talk with Edmonton real estate investors, they will tell you that rents are going up.
Almost everything points to Edmonton being a low risk-high reward place to invest. There are, of course, other things that will impact house prices. Things like the economy and interest rates. I could write a ton more on that, but migration is really a bigger factor and everything else changes so rapidly it would take a ton to cover all the variations. Reach out and ask me about it if you want to know more.