Real estate investment still favourable in Calgary

Keys are low vacancy rates, positive net migration

The perfect storm for long-term real estate investing in Calgary continues to build steam despite low oil prices and fear mongering by industry naysayers.

In fact, the six market rules Mortgage360 talks about in its Cash Flow Club meetings – which cover market vacancy rates, employment, rental rates and net migration – are still being met, even though some would have you believe the proverbial real estate sky is falling. For example, vacancy rates remain low. Our revenue property, purchased in November, rented out within days of us putting it on the market in April, and for the full asking price.

Furthermore, it rented to a young lady being transferred into the province by Nexen, which is a positive sign for both jobs and migration. Certain companies are still hiring.

In fact, Mortgage360 has seen multiple clients who have been either promoted or brought into the city to fill vacant positions.

Given some vacant positions are being filled by out-of-province candidates also indicates there is a shortage of skilled workers in certain positions within the province. That too, is a good sign.

Positive net migration is fueling the rental market. Those who are moving to Alberta need a place to live, and rentals are where they often turn.

The downside is eager investors are buying many of the best rental units on the market. In early January, an investor could pick from many sub-$200,000 two-bedroom inner-city condos. Today, that same investor would be lucky to find one for less than $235,000.

That said, owning a home in Calgary is still relatively affordable. A recent BMO survey suggested homeownership in the city requires less than 45 per cent of buyers' average household incomes. That's considerably less than other markets such Vancouver, Toronto, Montreal and Edmonton.

When housing is affordable – less than 45 per cent of income is being used on average to support the loans – the real estate market tends to remain stable. And in doing so, a stable market creates new investment opportunities.

For more information, join Mortgage360's Cash Flow club by visiting www.mortgage360.ca/cash-flow.

Nolan Matthias holds a bachelor of arts in Economics, is the co-founder of Mortgage360 and the author of The Mortgaged Millionaire. Call Nolan at 403-615-6132 with your questions or to set up an appointment with an Accredited Mortgage Professional (AMP).

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