Oh no! What happened to Calgary?
A blip in Calgary real estate
Lately I've seen some posts in some online real estate investing communities talking about their Calgary properties seeing longer time to rent with less demand.
The rent trend has also reflected this with a small decrease in rent in Calgary:
Source: Rentals.ca
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Naturally, some people are concerned.
"Rent climbed too fast too quick and people can't afford it"
"Look at the unemployment rate, people can't find jobs and left"
"Immigration quota is reduced, less people are moving to Calgary"
These seemed to be the top themes that people are commenting in these groups.
I don't disagree with any of those comments, they are all reflecting what is happening NOW.
If you have been reading our newsletters, you know how we look at investing:
The future.
We quoted Gretzky's quote few times like a broken record:
Skate to where the puck is going.
It's powerful.
Focusing on the now is missing out on the bigger picture.
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The future and the big picture
It's a common human blind spot.
Our cave men / cave women ancestors discovered that if they didn't tune in to what was going on around them at the time, they could get attacked, or worse, lost their lives.
That survival instinct has imprinted into our DNA and it kept humans alive for generations.
Survival is not the same as thriving.
Investing is about thriving.
Investing is about the future.
Investing is about the big picture.
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A few months ago I hosted a webinar on the case of "Why Alberta Now".
We went through lots of data / charts on what makes me bullish on Alberta.
They still stand as of today.
If you are interested in attending the next Why Alberta Now webinar, click on the link below to put your name on the wait list to get notified when we decide to host it again:
What are some big picture items to focus on?
* Astronomical housing prices in many Canadian cities
* Limited increase in supply
* Inflation
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Today we’ll look at Inflation as the big picture:
The latest Inflation number (CPI) published by Statistics Canada showed the CPI rose by 2% on a year-over-year basis.
Compared that to 2 years ago, CPI was hovering around 7%.
Source: Bank of Canada
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Inflation is down, hooray!?
If we look into the future, and see the "bigger picture", it's impossible to ignore the following trends:
* Baby boomers continue to retire
A large population will be switching from producing to consuming, deceasing supply and increasing demand of goods and services
* Supply chain diversifying from China
More and more products produced are moving away from China due to political and economic policies.
Whatever we think about China, the reason why many things have become so cheap for the past 20 years is because they were made in China.
* Trade wars
Tariffs are either being implemented or been threatened to be implemented.
Last week, EU voted to impose tariffs on the import of Chinese electric vehicles (EVs).
Trump has proposed a 10% tariff on all U.S. import if he were to be re-elected.
* Monetary stimulus
Our economy is in a twilight zone right now.
Inflation is down and unemployment isn't too high. That seemed like the perfect combo for an economy.
Except, anyone who is tracking the economy and data closely will tell you, there are many things that's not being shown to the general public.
We have massive amount of government debt that will be coming due (needing to be renewed just like a mortgage), commercial real estate debt in the US about 1.5 Trillion Dollars also need to be renewed, not to mention both the Canadian and US government are keeping the economy going by bloating up the Federal government payrolls.
More stimulus will be coming in the coming years.
Mark my words.
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When you look at these 4 things above, ask yourself:
What's the bigger picture here?
Answer:
Inflation will be higher and stay around longer
What does that mean to investing in Calgary or Alberta?
That's a topic to dive deeper in a different day.
Just know that, short term market fluctuations are normal.
Focus on the big picture.
Because that's how you can grow your wealth consistently over a long time.
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What's the bigger picture here?
Higher inflation will return.
That bodes well for asset such as real estate.
Stay long my friends.
We're in this for a long ride.
Are you concerned about short term market movements with real estate?
Reply to this email and share with us
Eric Chang
Canmore, AB
October 8, 2024
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