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OTHER ITA SITES:
Alberta – Land Of Milk And Honey… Or Is It?
The average house price in Edmonton, Alberta goes up by roughly $161 a day. A day! This real estate market is what dreams are made of. According to the National Post (July 28, 2006) “current daily output capacity at the Athabasca Oil Sands Project is about 155,000 barrels and after three continuous expansions, it will climb past 500,000 barrels by about 2012”. With the price of oil obviously not going down anytime soon we have been in the center of the biggest oil-induced real estate frenzy that can be remembered and it shows no signs of abating. Those of us astute enough to recognize what is going on have been buying up any and all real estate we can get our hands on and then sitting back and watching our investment grow.
With Alberta having a vacancy rate of less than 1%, owning rental properties is a dream come true. We watch as our tenants pay down the mortgage while the value of the property itself grows daily. Not a bad gig if you get in at the right time and get out at the right time. It can be tricky but there are ways of hedging your bets if you do your homework and pay attention. There are a dozen jobs for every person looking for one right now and the in-migration of people from across Canada and indeed the world, has bumped up the population of Alberta up by 25,900 in the first quarter of this year. That is bigger than the whole population of the town I grew up in! When you look at it that way we are increasing by the size of a new town every three months. These people are coming here with the dream of getting a great job and a great home.
The great job part is relatively easy since the minimum wage was increased from $5.00 per hour to $7.00 per hour recently which is nothing compared to the average wage of $20.94 per hour. These higher wages mean that people can afford to live here even though the housing prices are going through the roof. So many people I talk to are convinced that it can‘t go on much longer and the “bubble is about to burst”. The basic fundamentals of real estate investing says this is not true and they will continue to be strong for some time yet so it’s still not a mistake to buy when the prices seem so high because your investment still has room to grow.
Having said that, we have to take a look at just how the housing market is serving the people who need it. We go home to our comfy houses and lay our heads on our pillows in our warm beds to dream of the money our investment properties have made and where it will take us. On the other side of the street though are those who have come from other provinces to find a better life here only to find that the job of a lifetime eludes them and they can’t afford a home here. What’s wrong with this picture?
Our job as real estate investors is to provide housing and yet so many are homeless. Isn’t there a way to reconcile the two? Sure we have had an incredible influx of people and getting enough housing may take a little time but it’s disappointing to think that we didn’t see it coming. The Promised Land is falling down on its promises, as campgrounds are full and have waiting lists of those who need somewhere to stay until they find that job.
I wish I had an answer to these two extremes but at this point I can only raise the question and hope we can work together to see that the people who need the housing are able to get it from those of us who have it.
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Travel Part B