CMHC Calgary Rental Report

Written by Wade Graham | 15 December 2011

real_estate_formulaOnce a year CMHC releases their Calgary Rental Report.  Not to sound arrogant but anyone who has been following me on twitter or Facebook already knew what this report was going to look like.  I felt like I had heard an echo after reading it as it sounded a lot like the report I put together!

Investors have some good news coming their way for 2012 and if the world economy keeps it together 2013 could be another banner year for Calgary!

 

Calgary Highlights
  1. „ The apartment vacancy rate in the Calgary CMA reached 1.9 per cent in October 2011, down from 3.6 per cent in October 2010.
  2. „ Average rent for a two-bedroom apartment unit was $1,084 per month in October 2011, compared to $1,069 in October 2010.
  3. „ The vacancy rate for row (townhouse) rentals was two per cent in 2011, down from 3.7 per cent a year earlier
Alberta Highlights
  1. The average apartment vacancy rate in Alberta’s urban centres declined to 3.4 per cent in October 2011 from 4.6 percent in October 2010.
  2. „ Vacancy rates in October 2011 ranged from zero per cent in the Canmore and Okotoks Census Agglomerations (CA) to 9.4 per cent in Medicine Hat and Wood Buffalo
  3. „ The apartment vacancy rate in the Calgary and Edmonton Census Metropolitan Areas (CMAs) declined to 1.9 percent and 3.3 per cent, respectively.
  4. „ The provincial average rent for all apartment types was $951 per month in October, up slightly from $943 a year earlier. As was the case in the previous year, Wood Buffalo had the highest average rent among all urban centres in  Alberta at $1,949 per month while Medicine Hat had the lowest at $663 monthly.

2012 Predictions for Calgary

Written by Wade Graham | 30 November 2011

Well, 2012 is just around the corner!  Man that year FLEW by!  It was a good year for real estate investors in Calgary.  Prices were up and rents were up.  That means happy investors!  But what does 2012 have in store?  The world seams locked in fear right now....Greece, China, US....blah blah blah!

Peeling back the onion I put my predictions on the table for all to see, encourage, critique, criticize or mock!  But hey at least I'll take a shot :)


GDP - 3.5%

Calgary will lead the country in GDP growth and this will move into the 4% realm for 2013-2015


Jobs - more than we know what to do with.

We created a lot of Jobs in 2010 and 2011 bringing back all that we lost in 2009.  Office inventory is being eaten up ferociously quick and that space will be filled with people.  I am actually expecting another labour shortage in Calgary and Alberta.  This  will push up wages and inflation.


Oil - $100 consistently

We are already consistently in the high $90 per barrel right now.  Demand won't increase dramatically but supplies are coming down.  If the Middle East gets ugly and Israel attacks Iran that we could see that pop up dramatically.


Vacancy - 2.5% maybe lower

We are already seeing a big drop in vacancies within Calgary and inventory is being dragged down too.  We had a drop of 30% in rental inventory this year alone.  With tight CMHC rules for investors we will see very little rental product added to the supply.


Rents - up a very strong 7%

With decreasing vacancy we will see a very strong push in rents for 2012.  It won't surprise me to see a 7%+ increase in rents across the city.  High demand areas will push above that.  Look to transportation improvements for the largest increases.


Prices - up 3%

As inventory keeps pricing muted and the world economy weighs on people's minds.  I hope I am proved wrong here.  We never budget for more than 3% anyway but many are thinking this could be higher.  I am not so bullish.  Looking longer out I can see us getting back to the 5-9% appreciation but that won't happen until the global woes leave and confidence returns.


Interest rates - on the floor for quite some time.

No surprise here.  Marc Carney and the Bank of Canada have openly stated that we will not see an increase until the world gets its finances in order.  If that means inflation than so be it!  He (and I) will happily watch inflation take hold rather than deal with a deflating economy....Besides how else do you pay off huge amounts of government debt?!


Downside risks -

Europe doesn't pull it together.  The US doesn't create any jobs and slips back into a recession.  China slows more than expected.  1 out of 3 of these will happen....Take your pick.

Upside risks -

Israel attacks Iran and oil takes a ride to the sky.  Inflation really takes a good run.  Obama actually gets the US moving forward.  Im not sure any of these will happen but if I was to pick one it would be the Inflation card.

What does all of this mean for real estate investors? Well long story short we will have healthy rents and lower vacancy thus providing strong yields (cash flow).  In the mean time we will see mondest price growth.  Tell me where you are finding that in the stock market these days?


What are your thoughts?  Where do you think we are headed?  What sort of risks do you see?  What does your city look like?

While your at it check out this video I put together discussing the ins and outs of the Calgary market.  A ton of graphs and a lot of great info on exactly what is going on RIGHT NOW in the Calgary rental market.

RBC Affordability November 2011

Written by Wade Graham | 25 November 2011

RBC released its affordability report today and I wanted to share two sections.  As I mentioned in the Calgary Economic Drivers video, I expect affordability to erode over the next while.  Strong GDP growth in Alberta and Calgary will be the main fundamental reason.  Investors want to be in the market before this happens.
Alberta — Still the most affordable market in Canada
The Alberta housing market is showing signs that it is finally on a strengthening path, benefiting from the provincial economy shifting to a higher gear this year (in particular, the impressive employment gains that have been recorded so far this year). In the third  quarter, home resales and, especially, housing starts picked up steam and reached their highest levels in more than a year. Renewed demand for housing also likely benefitted from attractive
affordability levels in the province. The RBC affordability measures for Alberta remained the lowest among the provinces, mostly unchanged in the third quarter (the measure for two-storey homes, the only housing type that
changed, in fact, improved by -0.4 percentage points). We expect positive underlying fundamentals to keep resale activity on a strengthening path in the period ahead.
Calgary — Regaining momentum
The good news is that the Calgary market regained some momentum in the
third quarter after somewhat of a lull in the second quarter. Both home resales and prices picked up again for most housing categories in the area. The Calgary market has been invigorated by strengthening local employment
where more than 25,000 net new jobs (a 3.7% increase) have been created so far this year. The flipside of renewed momentum, however, has been an erosion of affordability. The RBC affordability measures deteriorated for most housing types in the third quarter, rising between 0.2 and 0.5 percentage points. Two-storey homes were an exception, as the measure edged lower by 0.3 percentage points. Despite the modest deterioration that took place in the latest period, affordability remains quite attractive in Calgary, ranking at some of the better levels among Canada’s largest cities.
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Why Staging Your Rental Makes Sense

Written by Donna Ragona, Suite Design | 17 November 2011

Staging your rental property:

We’re all aware of the importance of staging a property for selling – generating maximum appeal and demand, and getting the most ROI as quickly as possible. But staging also plays a key role in securing tenants for rental properties.  Investors looking to get the most from their real estate investments want reliable, headache free tenants who will pay top dollar. And they want to secure them quickly and this is where rental staging comes in.

So, is your investment packaged and ready for rent? Would someone walk into your property and say “WOW I want to live there?”

Remember, you are in stiff competition renting.  There are a lot of other houses out there for the renters to see.   To get the edge, you need to STAGE YOUR HOME!

The main reason Home Staging is effective is because most people rent homes based on their emotions. Staging is all about tapping into the renter’s psychology. A professionally staged home allows tenants to envision themselves there with family and entertaining friends.  A professional stager takes into consideration the target market, furniture placement, appropriate accessories and artwork for the space as well as repairs and updates the home may require that will help you secure great tenants and higher rent.

Staging rental properties will help your potential tenants remember your property over the others that are vacant/not staged because tenants can have difficulty visualizing the space and may be questioning whether their belongings/furniture will fit (bedrooms/living rooms).  Having the room staged, helps take the guesswork out.  Also, less time your rental property is on the market means less expenses for you to incur.  In addition, in many cases staging rentals have helped investors get more rent for the property.

Do you need to stage the entire home?

It is not necessary to stage the entire rental property, only the key areas.  Curb Appeal is also a key aspect to remember when renting. A well maintained yard including some simple planters or flowers helps add some colour.  In addition, making the entrance inviting and welcoming is important.  A simple table, artwork or a silk plant are some quick ways to help stage this area.  I would also recommend staging the living room and kitchen.  Some ideas for these areas would be using simple accessories on the counter, artwork and a table and chairs if possible.  Bathrooms are also key areas and very easy to stage.  The use of simple rolled towels, shower curtains and artwork does wonders.  If possible, at least one bedroom (preferably the master) gets staged.

Benefits of Staging a Rental Property:

1. Helps build an emotional attachment by creating a warm and inviting place to live

2. Highlights positive characteristics and focal points addressed in your advertising (fireplaces, finished basements, eat-in kitchens)

3. Turns a negative into a positive (use small square-footage wisely/properly)

4. Creates better-looking online pictures

5. Helps  “close” tenants; now they can visualize the space better

So does Staging really work?  In our experience, with our customers over the past 12 months, we have an average of 2 weeks on the market AND prices were sold/rented for no less that 98% of asking on average; in some cases, more than asking.

Here are some quick stats to show that Staged homes really do sell and rent faster and for top dollar:

  • Return on Staging / Showcasing Investment is 586% ***
  • Staged Homes Sell 2-3 times faster than Un-Staged Homes*
  • 92% of people surveyed said “Green” features are important when buying property*
  • 78% of a buyer’s decision about a house is already made before they actually see it*
  • Vacant houses sell almost 80% faster when they are Staged with furniture**
  • 78% of people say that home presentation makes a difference in most sales**

Sources: *Real Estate Staging Association, **Certified Staging Professionals, ***Home Gain

To get more information about staging, please contact Donna Ragona, Suite Design, www.suitedesign.ca or 289-291-1211.

What Is Really Driving Calgary Real Estate

Written by Wade Graham | 17 November 2011

 

Here is a question I get all of the time..... Where is Calgary's real estate market headed?

Every investor wants to know.  With all of the schizophrenic "headlines" out there who can blame them.  We see conflicting forecasts daily and as an investor you would like to either burry your head in the sand or cry.

Actually there is one more strategy, you could look behind the scenes and look at what is really going on.  That is what I chose to do!

I just got home from speaking at 3 major events, The Canadian Real Estate Magazine Investor Forum in Vancouver, the Real Estate Investment Network in Calgary and Edmonton.  In total, I must have spoken to over 1000 investor and it was a great feeling to be helping them look into the future of Calgary Investment Real Estate.  The feedback was incredible!

I have put together a video to help you understand what is really going on.  No one has a crystal ball but I must admit I like what I see!

Video Here

real_estate_formula

 

What's Driving The Calgary Real Estate Market?

We get deep into what drives Calgary real estate prices. GDP drives real estate over the long term. GDP = Job Growth = Population Growth = Rental Demand = Rental Increases = Increase House Prices

Let's see what is happening in Calgary in 2011 and moving forward

Please let me know your thoughts.  I appreciate the feedback from everyone!

Download the slide deck here!

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