Thursday, March 8, 2012

A Mirrored Image

I'm not sure how I think.   I stop a lot throughout the day and wonder how these neurons and microns throughout my nervous and intelligence systems are programmed.  I doubt too much...  Not my thoughts, but the things around me... they make me nervous with their intelligence systems.  I read... I doubt... Mostly politics... some religion... and well a few other things.   The other day, with my skip to my beat, I got a virtual signal from my inbox that life's lessons could be taken for free; some facts and figures on how to take what you want by signing on the dotted line and how it would be the smartest investment decision of you're life; the cost would only be a small fee and your life's soul... A signal from a REIN supremer so hidden with sub-primal tendencies that non-primed engines would never be stopped....  The signal by the REIN supremer in the dark, my response in the light... 

Discover Canada's Top City For Real Estate Investment
Here Are The Facts, Figures & Details You Need To Make Smart Investing Decisions Today
There is no doubt that Calgary is one of the hottest hubs for real estate investment in the country... one could argue the globe over, yet this powerhouse is flying under the radar of most Canadian investors, especially Albertans. The grass always seems greener somewhere else, a phenomenon that never ceases to amaze, but the numbers simply don't lie.   
Calgary real estate has been hot.  And for some time.  While growth in the energy sector has resumed and the oil sands are developed, Canada is ramping its production rate right up to it's export pipeline's capacity.  But some problems persists; our Gateways are closed, and XLs too supersized for other's needs.  We can't move it anywhere.  And to further compound problems, the tea, shnitzel and cappucino makers are considering labelling us as "dirty", but fortunately we know and told the right people in Europe that doing so might lose a few profits to couple of BPs, Totals and Stats and that thing should keep going for a while longer... 
It's time you have the information, all the facts & figures that major corporations are looking at and have been looking at for the past few years. Money continues to pour into Alberta for a reason - many reasons - so take a look at the latest research our team has just put together. This is something we usually keep just for members of REIN™, but not this time - it's too important.
Research is defined as the study of something thoroughly so as to present trends and determine or infer hypotheses of events happening...  Research is not defined as interpreting a small sample data over a short time line and suddenly declare: ALL IS GOOD, we're all getting rich!!  Keep buying!!! and either ignorantly or greedily declairing money is pouring in like Pacman makin rain cause we all good...   Research can be muddled with fake facts and fake fools.  
Take a minute or two, absorb all the latest research included below, and who knows, maybe you'll gain some new perspective on the opportunities available here in Canada.

A new perspective would mean to differ from the status quo... and what has the status quo been?  Buy real estate. Buy BuY BUY!!   The status quo is so so, as the sow and flow of dough was thought at prid-quo-pro, but the pro was so that the dough went to the bro, da b of m's and da t dot c of i b sees.  Da bee o see... See?   Buy means borrow.   Borrow means one thing.  Bucklet boots and beer bellied bottle rockets of bubbles.  Bubbles and bubbles of debt. 

   With a population of over one million people, Calgary offers amenities and business opportunities found nowhere else in Alberta. As such, the city will continue to experience growth as it is recognized as a prime location for both businesses and home owners. 

It is a city in the province of AlbertaCanada and is located in the south of the province, in an area of foothills and prairie, approximately 80 km (50 mi) east of the front ranges of the Canadian Rockies. The city is located in the Grassland region of Alberta. John Glenn was the first settler in 1873, then the gush came.....

 As of the last Civic Census (April 2011), the City of Calgary had a population of 1,090,936, an increase of 19,421 residents (a growth of 1.81%) from the 2010 census. During this time period (ending April 2011), four communities grew more than 100%, reflecting a migration to some of the newer developments: Mahogany (205%), Walden (183%), Skyview Ranch (154%), and Sage Hill (102%)1.
Five communities had population increases of more than 1,000 people. Often, depending on the original number of inhabitants, this number is more telling than percent change (i.e. an increase of 10 residents to 20 residents is still a 100% increase). These communities include: Panorama Hills (1,952), Auburn Bay (1,552), New Brighton (1,236), Cranston (1,186), and Skyview Ranch (1,093)2.
As the baby boomers age, driving the average age up in most centers across the country, Calgary will have a distinct advantage as it continues to attract younger families. This important fact will help drive the economy longer and farther than most other major centers in the country. In other words, as other areas age, Calgary continues to renew itself

So if boomers age, and agers boom... and younger families become more and more attracted, they'll keep buying and buying, building up loads and loads of betchas and dont'chas.   Sure, they don't make money now... but when they do make money, they'll be ready to high five their way to their 5% down and on the five by five plan... just tell them not to worry about those newly formed credit debts from the donuts... and that the best investment strategy is to join the party that every one is invited to!!   The more the merrier... everyone into the pool... last one in is the rotten egg!!!!! 
Despite the overall decline in net-migration compared to previous record years (9,563 this year down from a peak of 25,794 in 2006)3, Calgary will continue to be a magnet for a vibrant populous. Calgary is no longer just attracting people from Canada; it is also becoming a more attractive location for immigrants and foreign workers.
Calgary's labour participation rate increased to 74.5% in the CMA as of December 2011 from 73.4% in December 2010. At the end of 2011, the unemployment rate stood at 5.5%, down from 6.2% the previous year. By the end of December 2011, employment was up 2.9% from 2010. A majority of the jobs created during that time period were full time-positions, adding over 16,000 jobs4. With employment opportunities improving, more people will be drawn into the labour force, preventing any large declines in the unemployment rate. CMHC is predicting the unemployment to drop marginally, to 5.4%, by the end of 20125.
In the beginning of 2008, the CMHC determined that housing sales would be slower, but only drop 3.9%.  Everything was fine... nothing to see here....  but by the end, there were a few more worried at the time that the CMHC was a little off...  and they can always be a little off...

Take for example, advising on mortgages... When advising, they tell you how much and by when... they tell you how often and who to talk to.. they tell you this and that and the other... But they don`t restrict...  and they don`t check.  And when they don`t restrict ... yes, they will drive up the prices of houses.  But when they don`t restrict and they don`t check... and if things get bad... and by bad I mean bumpy... and by bumpy I mean bubbly... and by bubbly I mean not affordable by the bump up in the price of houses... then we might have that correction... 

Housing Trends

Like most cities in the wake of the recession, Calgary has also experienced some ups and downs in the housing sector in the last several years. 2006 and 2007 saw record building permit values and housing starts in the city, while starts dropped off in 2008 and 2009 before increasing again in 2010. By the end of 2011, it appears that market conditions have started to improve.
The City of Calgary reported a total building permit value of $4.5 billion in 2011, an increase from $2.9 billion in 2010 and the third highest year on record. The city posits the building permit value growth to an increase in new builds over improvements. Several large residential projects have bolstered the total building permit value, including the University Residential Towers ($55 million) and Eight Avenue Place - West Tower ($195 million)6.
The Calgary CMA recorded a total of 9,292 housing starts in 2011, a slight increase from 9,262 units in 2010. The increase in housing starts can be directly attributed to the increase in multi-family construction. In 2011, 4,208 multi-family units began construction, in comparison to the 3,480 units started in 2010 (an increase of 21%). On the other hand, single- detached housing experienced a small decline: 5,084 units began construction in 2011, a decrease of 12% from 5,782 units in 20107.
Residential construction is expected to lift even further in 2012 as the economy improves, increasing job creation and net migration. CMHC predicts that the city's housing starts will increase 11% to 9,400 in 2012, with gains in both the multi- family and single-family housing markets. Single detached starts are forecast to reach approximately 5,500 units in 2012, while multi-family starts should hit 3,900 units8.

So to start, we need a beginning.  And when was the beginning?   At the last end.   The last end was when again?  Back then again?    Although they start, housing start stats aren't really indicative of a healthy real estate/mortgage industry.  They need the middle of the start of a recovery.... but if we never really ended the last beginning to end, then how can we start?  Anyways... what starts do is lag... they wait for the all clear and then they start... they don't dig until the dust has settled and the doorbells are ringing... So to say housing starts lead they way to a safer and better housing stats might be a bit misleading... they lag... they let things start.. and then they start.... And in reality, we haven't started that fast... in 2007 we started faster... about 2 times faster back then... To compare the starts to finishes from now till then isn't the best presentation.  That's just weak Don.

Sale and Rent

Getting into the housing market with positive cash flow properties in Calgary has proved difficult for investors in the last decade and that is one key consideration that kept Calgary out of the #1 spot for several years. 2006 and 2007 were characterized by multiple offers, zero days on the market, bidding wars and offers with no conditions. Most home-owners and investors were wishing the market would come back to normal. As the pendulum swings the other way to a buyers' market, we are seeing the opportunities for sane purchasing once again entering the market.
According to the Calgary Real Estate Board (CREB), residential sales in Calgary have increased 8% in the past year, with 18,568 sales in 2011 compared to 17,267 in 2010. While sales activity was lukewarm in the first half of 2011, job growth,

Insanity is reckless... it's harmful and it is sometimes hurts to type responses to virtual signals...  But sane purchasing habits are misleading.  Most mortgages (95%) today high five their way to the 5% down variety, and our affordabilities are being pushed to the limit.  So when affordabilities are pushed to the limits with our gases and our peanuts escalating their ways to  black gold and cashews, we have recorded our debts to record high territory.  So how can it go down?   The answer is, it has to.  We simply cannot afford it anymore.

Stronger migration, and higher earnings all contributed to lift sales in the second half of the year9. In addition, low mortgage rates continue to provide prospective buyers, especially first-time home buyers, with many opportunities.
While sales were up in 2011, elevated levels of inventory limited housing price growth. At the end of 2011, the average price for a single-family home in the Calgary CMA was $466,402, an increase of just over 1% from $461,132 in 201010. The median price of a newly constructed home sat at $457,271 in 2011, an increase of 5.1% from 201011.
One negative of the renewed momentum in Calgary's real estate market, however, is the decrease in housing affordability. Calgary's affordability index is currently sitting at 38.2 for a standard two-storey home, meaning 38.2% of an average person's pre-tax income is necessary to afford an average home in the city. But when compared to other major cities across Canada, Calgary still comes out on top. In the third quarter of 2011, Toronto recorded an affordability index of 61.3, Montreal came in at 52.2, and Vancouver sat at 94.412!

Numbers never lie.  remember that... 

Smaller means better.  In comparing Apple A to Apple B.  Apple B is two times larger than Apple A.  Therefore, Apple A is much smaller.  But when Apples A and B are both larger than the healthy average... then what does that make Apple A and B?  Both higher than normal?     Comparing an index to some of the worst indices in the world that are both indicative of a normalized bubble is not a great way to make an argument for a safe investment.    Numbers never lie.  Unlike the ones in the dark.  

Rental rates in Calgary have also increased in the past year. The average rent for a private apartment in Calgary was $978 in October 2011; an increase from $969 in October 2010. The average rent for a bachelor unit was $705, down slightly from $709; a one bedroom unit rented for $899, up from $894 in 2010; a two bedroom unit was $1,084, an increase from $1,069 the previous year; and a three bedroom unit sat at $1,077, up from $1,057 in October 201013.
Numbers never lie. Rental rates are fine.  These are increasing with inflation.  The numbers do not lie.  Is it better to rent than "invest in real estate".  Don't be a greater fooler.  The Lesser Wiseman told me.  He's smarter than you or I.  But you can also do the math.    The numbers don't lie. 

Increased economic activity will support rental demand in 2012. Improved activity in the energy sector will create jobs and attract newcomers. New migrants are expected to be the main contributor to rental demand in 2012 as many of them will look to rent and familiarize themselves with the city before deciding to purchase a home. As demand for rental housing rises, rental rates are also expected to increase. The average rent of a two-bedroom apartment is anticipated to reach $1,100 by October 2012. However, despite the rise, the average two-bedroom rent will still be below the peak of $1,148 experienced in 200814.
Canada is losing jobs.  The only sector churning anything is the heavy oil industry, while economic activity has stalled with our GDP only being propped by the mortgage industry.   But even our best sector is having problems; we can't ship it east, as they get their oil non-synthetically from the middle East, and have peaked in their growth, so oil consumption may not increase.  We can't ship it south, as they've been boosting their own production and reserves while increasing theirs.. and we can't sell to anyone unless country we get a pipeline.

Vacancy Rates
As the rental market tightened in response to increased economic activity, the Calgary CMA experienced a dip in the average vacancy rate. As of October 2011, the vacancy rate of a private apartment in the CMA was 1.9%, down from 3.6% in October 2010. This is the lowest vacancy rate the city has experienced since October 2007.

A bachelor unit had a 1.9% vacancy rate, down from 4.1% in October 2010; a one bedroom private apartment sat at 1.8%, down from 3%; the vacancy rate of a two bedroom unit sat at 2%, down from 4.2%; and a three bedroom unit had a vacancy rate of 3.3%, down from 5.3% in October 201015.
Downtown Calgary reported the lowest vacancy rate, sitting at 1% in October 2011. Demand for rental units in the downtown area has remained high, as many people strive to live close to their place of work. The Beltline area has also benefitted from increased activity in the core, posting a vacancy rate of 1.7% in 201116.

So you've just moved to Calgary.   Welcome aboard.  We hope your flight wasn't too bumpy on the way through that turbulence.  Here's $500,000, you can be on your way now...

Yes, we've grown.  And we've benefited. And with that $500,000 you get to live in the 'burbs.  There's no room for you in the un-vacated rental boxes.  And if you take that $500,000 and just rent it there's lots of people  who need it - it's just you need to rent it for $2,500 per month to pay for it... hmm... something seems funny...

Top Investment Town
Calgary, the head office center of the west, is no longer a city with wild economic swings like it experienced in the 1980's..  It's economy has diversified  (with more work to do), the population growth continues to be leading the Nation, incomes are increasing faster than anywhere else, and the lifestyle it offers has been rated one of the best in North America.
Receiving an 'A' grade from the Conference Board of Canada17, Calgary showcases many investment opportunities. A growing population, steady job creation and the strong resale housing market are driving growth.
During the economic recession, Calgary's real estate market made a predictable correction resulting in slightly more affordable housing compared to recent years passed. It was economically impossible for the market to continue at the pace at which it was heading and now finds itself adjusting to market realities.  
Here is just one lie after another.  As recent as 3 years ago, we had a wild economic swing.   And as recently as 2 weeks ago, we almost had another.  We are on a constant swing over cycles and balances of supply and demand, which can, at times, be dictated by people who have vested interests.  We cannot control the swings.  Sometimes they miss... but every once and awhile - - they hit.  
The next lie is the assumed value that 'A' is a good grade.   Maybe the student paid off the teacher... maybe the A is not graded on a curve and every one else got A+++'s.... maybe the grade is a given by someone who benefits from dolling out A's all day long... maybe the AAA plus ratings are better?  A grade from a institute that wants economic properties and growth is not going to give you an F- and cause a panic.  It would be akin to economic suicide... 
Well the last one is kind of true;  it is economically impossible for the market to continue at the paces at which is has headed for 13 years without adjusting to market realities:  we overinflated and overborrowed... and we're cooked.
Housing affordability will continue to be an issue in Calgary, with rents increasing and a high average price. However, when we look at that price versus average income, we see that other cities in this country have a much larger problem on their hands. Calgary has the long-term economics to support long-term market strength while other cities do not.
Ah, here is where the lies continue.  Housing affordabilities DO LOOK AT PRICES VERSUS AVERAGE INCOME.   If it continues to be an issue... it will remain an issue.   Saying other cities are worse off doesn't mean that we are not worse off....  It doesn't work to say: "you gone stepped in some big pile of shit", when you are knee-deep as well.... FACK!
If you are investing in Canadian real estate right now or hope to do so soon... or even if you invest outside the country, the information presented above is hugely important. Understanding exactly what's going on in Calgary and all of Alberta is key to making smart investment decisions for the next decade and beyond. So whether you're living in Saskatchewan, British Columbia, Alberta or Ontario, Calgary has to be on your radar as a sophisticated real estate investor. The numbers simply don't lie - Calgary is poised to perform.
I hope this research has been helpful to you and your investment business and if it has, it would be great to hear back from you. Even better - repost, re-blog, forward or tweet anything and everything you learned

Please do not invest in real estate in Canada right now.  Understanding exactly whats going on in Calgary and all of Canada is key to making wise investment decisions for the next decade and beyond.  So
whether you're living in Saskatchewan, BC, AB or the none of these should be on your radar as a sophisticated human.  The numbers simply don't lie... but in the dark, they can be muddled to look like truth.

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