Despite sensationalism, Calgary still a great investment

Five reasons to buy rentals in Calgary

nolanDespite media headlines and continued sensationalism from economists both domestic and  foreign, Calgary continues to be one of the best places for real estate investment in Canada.

Here are five reasons why:

Vacancy rates remain low: According to the fall 2014 edition of the CMHC Housing Market Outlook for Calgary, vacancy rates remain low at 1.4 per cent and are not expected to exceed 1.8 per cent in either 2015 or 2016. Vacancy rates are deemed favourable for real estate investment when they are below five per cent.

Rental rates are rising: In response to low vacancy rates, rental rates are expected to rise through 2016. The average rent for a two-bedroom condo in Calgary is $1,290, and is expected to rise to $1,360 by 2016. In the same way that vacancy rates under five per cent are a positive for real estate investing, so too are rising rents.

Positive employment growth: Even though low oil prices will potentially have a negative effect on employment, the question is whether growth will slow or be eliminated all together. Back in 2009 and 2010, the last time oil prices fell, employment growth did not contract by more than two per cent in either year. In fact, over the last 15 years, those are the only two years employment growth was negative. For 2015 and 2016, the Conference Board of Canada expects growth to slow but remain positive, which is a good thing for real estate investors.

Positive net migration: Even with the economic slowdown of 2009, net migration has remained positive in Calgary every year for the last 15 years. Migration is expected to remain positive for 2015 and 2016 as well, which means newcomers to our lovely city will need a place to live – most of them will rent upon their arrival.

An affordable real estate market: According to the RBC Affordability Report, Calgarians still spend on average less than 40 per cent of their incomes on housing. By comparison, those from Toronto and Vancouver spend more than 60 and 80 per cent respectively, making Calgary’s housing market significantly more affordable both relatively and in real terms.

The low rate bonus: With rates at all-time lows, real estate investments can be bought at very low interest rates. Most people don’t realize they can also combine low rates with 30-year ammortizations when buying rental properties, allowing for attractive returns on investment.

These five reasons, plus low rates are what we call the perfect storm for real estate investment. To learn more, register for Mortgage360’s Cash Flow Club real estate investment seminar on March 19th or download the Why Calgary report at 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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