ROSS
EXTRAORDINARY PEOPLE AND LIFESTYLE ISSUE # 5 | FEBRUARY 2022
2022 HOUSING FORECASTS
NFT'S
VIRTUAL REALITY REAL ESTATE
The highest reward for a person's toil is not what they get for it, but what they become by it. - John Ruskin Read
EDITOR'S NOTE
Here we are. Embracing the 5th publication of ROSS Magazine and the first issue of 2022. What road lies ahead for us all to travel on this year?
One thing seems certain in today’s uncertain and seemingly unpredictable world. There is a feeling of hope in the air. Some would proclaim that there is not a resource more essential than hope, and no ingredient more fundamental to happiness, or even success. Some believe hope is the backbone to existence. Hope is what so often provides the sticking power to long-term goals and day-to-day activities and routines.
If it's hope that motivates us to strive for our goals, and to rise up in the face of challenge, then without it, there would be no reason to believe that we could ever change. We would not believe we could achieve anything, and therefore no reason to try. From global issues like the pandemic, to climate change to personal aspirations, hope makes anything possible. If you have ever felt your dreams falter or relationships crumble, and when life tests you to the limit, I hope that it's hope that spurs you on to keep going. Keep trying and keep moving forward, however slowly, painfully or challenging it may feel. When you feel like giving up, don’t. Success may be steps away.
Inspiration aside, the year ahead for the ROSS Magazine has high hopes for real estate related articles and themes, woven into its evolving existence. So let’s all hope for the best, do our best, and strive to be the very best version that each and every one of us can be. And remember, even in the face of adversity lies opportunity, and it is hope that whispers ‘tomorrow is another day’.
DANIELLE ROURKE Editor-In-Chief
ROSS MAGAZINE EDITOR IN CHIEF
Danielle Rourke
EDITORIAL ASSISTANT
Carla Grundison
ART DIRECTOR
Danielle Rourke
CONTRIBUTORS
James Clarke-Lister Simon Rose Danielle Rourke Mario Toneguzzi
ROSSMAGAZINE.COM
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03 Editor's Note 08 A 2022 REIN Forecast 28 NFT - Bubble or Opportunity? 40 Baby Boomers Want to Age in Place 46 How Old is Old? 52 People Are Moving to Alberta 70 Real Estate Forecasts and Loving Your Job 78 Calgary's Resale Housing Market: An Overview 84 Virtual Reality in Real Estate
A 2022 REIN FORECAST
By Danielle Rourke
It’s described as ‘the great Canadian (Real Estate) migration,’ a prediction that came to life in April of 2020, the beginning of our continually evolving and ever changing pandemic. Why and how does migration continue to rapidly sweep across Canada and impact real estate? My recent interview with REIN CEO Patrick Francey reveals this and more, including forecasts predicted for 2022 within the real estate landscapes of Canada. Firstly, despite the crisis of the pandemic, Patrick believes opportunity still thrives. The continual seeming melt down of the world over these past 2 years, has in turn created a major shift in people’s overall view of the world.
People generally have a greater appreciation of life, and more importantly, lifestyle. People imposed upon with the many conditions of working from home, schooling changes for their children, the plethora of other mandates and so much more, has created a major shift. This sudden adaptation to new working environments and new working requirements has affected almost every one of us, bringing about many new needs for individuals and families. The trends that have emerged from the pandemic will continue throughout 2022 and beyond based on the knowing that life will truly never be the same. For some, the newfound freedom from the daily commute is a true blessing, a new routine that will not be easily reintroduced or justified.
The trend of moving away from heavily populated urban centers, the switch to homeschooling needs of parents often based on disagreement of mask or even vaccine mandates, has effectively impacted households. Suddenly one parent is choosing to work less, or to completely stop working at all. All of this continues to impact family dynamics. A new cohort of work from home and home schooling parents continues to develop, and continues to dictate new real estate needs.
Overall, people are moving. The great Canadian Real Estate migration began with people moving in droves from Ontario to the Maritime East Coast provinces. A home that can be bought in the Maritime Provinces for $400,000-500,000 is barely a down payment in Toronto or the GTA. Vast numbers of people continue to move to Alberta from BC and Ontario.
Forecasts for the year ahead: 1. 1. The interprovincial migration trend will continue for 2022, with people moving to even smaller, often lovingly called ‘ex burb’ communities, hamlets and towns. People will continue to move away from heavily populated urban centers. If only a possible 10-15% population crowd moves to these smaller centers this year, the impact on the real estate sector in these locations will be significant. With these increased populations will come increased tax revenues, establishment of existing and entrepreneurial businesses. 1. 2. The great new shift in lifestyle needs, to work from home, to create more self sustainable options, to obtain more room for work spaces and children, will continue to impact housing inventory challenges. There is normal demand, but no supply. Patrick explains that, “People want to blame housing problems on someone or something, but you can’t. You could blame housing shortages on embattled investors, too much immigration, or foreign buyers. It’s not one of those things but it’s all of those things and far more.” Inventory is low when sellers seemingly have nowhere to go.
1. 3. The national forecast must consider the regional markets. Overall, there is a national 20%-30% increase in real estate. Patrick explains that there is no such thing as an average Canadian house price; rather it’s always regional. That’s the difference between Calgary and Edmonton, or Vancouver and Chilliwack, Peterborough and the GTA, or Barrie and Hamilton. It’s the regional markets that have to be considered. They are all different. Patrick states, “As much as all boats seem to rise on a high tide, when it comes to real estate, we have to look at what is happening economically for each city and province. I see prices moderating, but like interest rates, we’ve normalized a very low interest rate. So, even if interest rates double, they’re still very, very low. You can get a 5-year fixed mortgage for 1.5%, even if it goes to 3%, that is what was being paid in 2018, 2019. Just 2 years ago, 2, 3 and 4% interest rates were amazing and people were happy! The normalization of low interest will remain." 1. 4. Investment in real estate will continue to substantially spike. Investors and buyers alike need to pay attention, especially in the area of pre-built homes. Patrick reminds us that although it’s easy to sound like a genius when showing property value increases of 20-30% on paper, mistakes are being made. Investors make mistakes.
1. Deals get done that shouldn’t and investors don’t realize the impact today. Patrick notes that, “In the investment world, the mistake you make today sometimes doesn’t manifest until years later. For example, buying pre built condos and not understanding the nuances of what goes into a prebuilt property can be detrimental. Buying a pre-built property that won’t be ready for 3 years, will not guarantee that the banking rules will remain the same 3 years down the road.” Buyers must think about whether they will still be able to qualify for the same mortgage. Buyers need to consider the possibilities of escalating costs, what they are, and whether these costs are absorbed by the builder or by the buyer. And often, it is the buyer. So, someone who bought a condo for 500,000 may realize it turned into a much larger cost down the road. That is the environment that we are in. 1. Pre-built homes are subject to challenges in delays that relate to supply chain breakdowns and labor shortage. Overall, project delays for buildings are being experienced. Patrick warns buyers to be cautious about getting caught up in the ‘froth’ of real estate, of getting rich quick and encourages the inexperienced to educate themselves.
1. 5. Pay attention to specific property types. Patrick shares that, "It’s easy to paint the entire real estate market with one brush and that is that it’s going up, it’s going crazy. But, the more specific reality is, that this is truthfully mainly for single family detached homes.” In fact according to recent stats, the condo market in Calgary and Edmonton is currently anything but strong. Patrick says it could be described as an overbuilt sector and one to be cautious with. He advises that making a real estate investment in a condo in Calgary or Edmonton does not compare to the GTA or Vancouver, where the condo market is starting to come back. Why here and not there? Affordability. Now all of a sudden these property types, in specific regions, are more affordable.
1. 6. Technology will continue to shrink the world. In terms of real estate, technology has changed everything. The trend of Realtors not meeting buyer clients in person at prospective homes will continue. Realtors will continue to show homes to their clients over the phone using FaceTime while they ‘tour’ the house together. It will continue be more uncommon for a realtor to meet a buyer at a house to view it, than common. The large amount of capital flowing out of Ontario and BC into Alberta by investor buyers, will not require them physically traveling to Alberta to view these properties. As Patrick puts it, ‘It will instead involve taking a tour via a highly equipped and updated I-Phone.”
1. Patrick discussed how rather quietly and continually, companies like Bell, Rogers, Telus, and provincial governments have sunk billions and billions of dollars into 5G. Controversy aside, 5G is ramping up and rolling out. Everywhere. For the most part, people think 5G is primarily about faster Internet service, speed and phone connection etc. It is all of these things, and it’s shrinking the world. 1. The rise in technology is a part of the deinflation of other sectors. Travel, hotels, and hospitality industries are generally affected, since it’s no longer required to spend 3 days to fly from Vancouver to Toronto for the 3 hour in person meeting, that can now be conducted just as easily, and often more effectively, from the comfort of a home office. This technology helps include every team member, effectively eliminating the need for repeating information afterwards in many cases. In a recent survey, up to 37% of travellers confirmed they would no longer be traveling for business in the same way and in the same capacity. So as much as there is a threat to inflation rising, the flipside via technology is the de-inflationary effects like travel and so much more.
1. 7. Finally, take care of yourself. As Patrick puts it, “You are the center of your universe. If you aren’t looking after yourself, you don’t have the mental, emotional, spiritual, physical capacity to look after your family, friends and ultimately clients and customers.” Parents in general often think it selfish to look after themselves, however as Patrick explains it’s the opposite. “Looking after yourself is in fact the most selfless thing you can do. Because if you break down, so does everything else. You owe it to your family to look after yourself.”
You may already be familiar with Patrick Francey. Perhaps you’ve tuned into one of his Mindset Matters shows on his The Everyday Millionaire podcast series. Born and bred in Edmonton and an entrepreneur since 1984, Patrick is an advisor, mentor and coach to countless real estate investors, entrepreneurs and other individuals. This real estate path ultimately began when he began to study the success of entrepreneurs he admired. As he got to know them, he quickly realized one common denominator. Despite how well each of them did in business, they all owned various forms of real estate. In 2000, Patrick became a member of the Real Estate Investment Network (REIN) and began investing in real estate, including single and multi-family properties and light industrial. He continues to build his established Canadian investment portfolio. Today, with over 35 years of business experience, Patrick is the CEO of REIN. In this position he’s held since 2012, he continues to serve as a respected and inspiring leader for the organization. Patrick knows real estate and I think we can agree that his forecasts here encourage our future.
Success is S.I.M.P.L.E
'Significantly Impact Many People's Lives Everyday' - PATRICK FRANCEY
NFT - Bubble or Opportunity? By James Clarke-Lister NFT’s, or ‘non-fungible tokens,’ are revolutionizing the concept of ownership and transferability of nearly every conceivable item, whether it digital or physical. Most of you have likely heard the term ‘NFT’ going around – many of you wondering, what exactly is it? Is it a type of JPEG or digital art?
One way to think about an NFT is as a unique identification code, similar to that of a serial number. Unlike serial numbers stored in a database under a corporate entity, an NFT and all its data are stored on what's called the blockchain. Understanding the blockchain can be complicated; however, at a surface level, we can think of blockchain technology as quite literally, a chain of Internet blocks that carry data. Data stored includes transaction history data.
This data is all ‘chained’ together through cryptographic mechanisms. Given that the blockchain exists in the invisible Internet void per se, it can be seen as similar to a database, completely decentralized from any corporate entity ownership. B Y J A Mblockchain, E S C L A R K E - L I Scan T E R never be destroyed, This database, or public
replicated or altered. It is both safe as well as transparent. An NFT asset with its unique code lives in, or more accurately, on these blockchains. Now, when we hear about NFT’s as owning images or GIFS, it means that said image or GIF has a unique code embedded in it that distinguishes it from all the rest - this is what makes it non-fungible or, quite literally, ‘non-changing.
This process that makes up an NFT can more precisely be referred to as a smart contract, or NFT smart contract. The smart contract process is what is essential. Smart contracts represent nearly anything, whether that be a Y J A M Eof S Cart, LARa K Eticket - L I S T E Rto a private concert, a deed to a home, aBpiece
music festival, even a music album. It’s not too different from modern-day tickets, for example, where we often store the relevant info on our phones. The difference here is that an NFT has actual utilization depending on its embedded code. Perhaps the NFT ticket for the private art show you went to, has a bound digital art piece that can be collected and traded, potentially for a profit later down the road.
Nonetheless, the smart contract side of this technology is significant because it allows the people, not the corporations, to take complete economic ownership and oversight of how modern-day peer-to-peer trade is performed. Not only this, but because smart contracts take place on the public blockchain, all NFT’s bear a public record of all previous ownerships, all of which cannot be altered, and all of which will always remain publicly viewable, thus adding to their transparency. Let’s take a step back and see a real-world case of NFT’s being used for art. Think about the Mona Lisa. We know that because the genuine Mona Lisa is securely stored at the Louvre Museum in Paris, if we see the Mona Lisa painting in a restaurant, we know it isn’t truly the original, albeit looking practically identical BY JAMES CLARKE-LISTER
it’s just a copy! However, if side-by-side with the original, it may be hard to tell which is authentic unless, for example, it had its own NFT linked to it. In this case, the NFT says, “this is who I am, I am the original, and I have the unique ID to prove it.” Indeed, NFT’s can be linked to physical items. Several technologies allow this. Hopefully we’re beginning to understand their function.
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Let’s look at another example; if you were to invest in a luxury watch, say a Patek, it could take months to go through required paperwork to prove authenticity, making the process of ownership transfer time-consuming. An NFT, however, can practically be sent instantly between people, thus speeding up the transaction process significantly. Because an NFT can't be replicated nor altered, there's confidence in the watch's authenticity. The evolving applicability of NFT smart contracts is the backbone tool for both the physical and digital economic marketplace. .
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Let’s consider scenarios through the lens of real estate - this includes the digital real estate economy and digital land, two primary components of the metaverse. Let us not forget the impressive Mars House, the very first NFT virtual home created by Toronto-based digital artist Krista Kim, which sold for a whopping $500k worth of Ethereum. Additionally, there are now ways to purchase, own, and sell digital land through applications such as SandBox - a virtual Metaverse where players can play, build, own, and monetize their virtual experiences through purchasing digital land. Big names such as Atari and even Snoop Dogg have notably invested significant amounts in such concepts, their land being publicly viewable - go take a look! These are all digitized assets, enjoyed and utilized on the blockchain through technical mediums. And it's only in its infancy.
Physical real estate poses an equally noteworthy window of opportunity for NFT smart contract application. A recent notable example is TechCrunch founder Michael Arrington who sold his apartment in Kyiv, Ukraine, as an NFT. The new owner received the apartment and the associated NFT in addition to the regular sale - but what changed? When we glance at the current homeownership process, we can see that a lot changes. Documentation, mortgage approvals, inspection contracts, and third party fees - this process for a new homebuyer is complicated. If you have ever taken part in the buying or selling end alongside all of its complexities, one can quickly witness an uneventful and archaic form of commerce. The NFT brings in a new form B Y J A Mcontract, ES CLARKE-L I S T E R in all of the gaps of contact, the smart filling
speeding the process up immensely, allowing many more possibilities and opportunities. With an NFT smart contract representing your home, one can engage in other ‘Web 3’ protocols that function to utilize NFTs in various ways.
More simply, however, we can forget lengthy papers and contracts - the concept of peer-to-peer lending through tokenization and tokenomics can change how insurance and mortgages are held. Within the context of BY JAMES CLARKE-LISTER
blockchain technology, tokenization being the process of converting something of value into a digital token, usable on a blockchain application, and a token being a digital unit of a cryptocurrency, used as a specific asset to represent a particular use on the blockchain.
So, whether it’s watches, houses or digital art, NFT’s are revolutionizing the concept of ownership and commerce, alongside transforming the meaning of authenticity and transferability. Notably, this technology is accomplishing B Y J A M E S decentralized C L A R K E - L I S T E R from the corporate this new trade structure
elites, putting the power back into the hands of everyday people. This brings forth a heap of questions to ponder. What will regulation look like across borders? How will other entities view or accept this concept of tokenomics? How might countries legally differentiate regarding addressing (or quite possibly, ban, as we’ve seen) these uses? This is clearly only the beginning of the revolution.
BABY BOOMERS WANT TO AGE IN PLACE When society and culture shift, often slowly but sometimes rapidly, as in reacting to a global pandemic, these changes impact every area of life, including housing. Almost two years into the COVID-19 pandemic the real estate and housing market has undergone radical changes. Prices soared in some markets, people moved to places that traditionally see little growth in population, and a new trend emerged - Baby Boomers choosing to age-in-place. Rather than downsizing into a condo or moving into a group living situation, Baby Boomers began refusing to give up their larger homes.
In actuality, this is a continuation and variation of a pre-pandemic trend that was being documented back in 2018. Pre-pandemic, millennials who could not afford to purchase homes were moving back into the natal fold, or never leaving. Thus, Baby Boomers were alrady renovating their homes in droves, accomodating these increasingly common inter-generational households, particularly in expensive markets such as Vancouver and Toronto
Further solidifying the trend of aging-in-place, a 2021 real estate report by Engel and Volkers suggests that the disgrace and tragedy of the assisted living landscape, has made our seniors extremely wary. Today, Baby Boomers are not willing to move into retirement communities or nursing homes. With the bad press Long-Term Care Homes and retirement facilities received during the first year of the COVID-19 pandemic, it’s easy to understand why. This demographic now wants to avoid these facilities.
Recent Statistics Canada data indicates that in 2020, those 65 years and older accounted for 94 % of all COVID-19 deaths. Sadly, watching parents, relatives, or friends become isolated in these facilities, continues to cause a significant impact on this generation and their strong stance to age-in-place. The pandemic’s restrictions and lock-downs has also reportedly made Baby Boomers value their homes much more, including the larger spaces these properties provide.
A 2021 study by Royal LePage found that 52% of Baby Boomers would prefer to renovate their home rather than move. Baby Boomers want to age-in-place, so renovating their properties to meet upcoming agerelated needs such as ground-floor bathrooms and step-free access, has become much more important. And they can afford to do so. Baby Boomers often utilize the built-up equity in their homes to renovate. Reverse mortgages are another means available to Baby Boomers that allows them to age-in-place.
One Canadian bank that provides reverse mortgages recently stated that they now hold more than $5 billion worth of reverse mortgages. According to NPR, at the end of July 2021, Baby boomers (born between 1946-1964) in the United States held the largest share of real estate wealth – 44% - even though they only represent 28% of the population. Here in Canada this cohort represents more than 20% of Canada’s population. When the time comes, these baby boomers are also now prioritizing the hiring of their own private care as required, to further elongate their time at home. With 75% of this cohort owning their own homes, this new reality will likely impact the real estate market for decades.
'WITH THE NEW DAY COMES NEW STRENGTH AND NEW THOUGHTS' - Eleanor Roosevelt
Just exactly how old is old these days? Improvements in medical care and
HOW OLD IS OLD? \
By Simon Rose
deeper knowledge of fitness and nutrition have increased life expectancy. Today many people are living into their eighties and beyond, whereas thirty or forty years ago this was much less common. As the population has aged, this has led to a rethink in how companies engage in marketing and promotion to older potential customers.
The fast pace of technological developments over recent decades has been a big factor in this. It almost seems that in the past, companies simply assumed that old people wouldn’t be able to use computer technology or the Internet. Perhaps they would not even be interested in it at all. In addition, since this is an aging demographic, marketing companies stopped adding them to campaigns.
However, this brings us back to the question of how old is old these days. People in their sixties and seventies, and even those who are older, have been using personal computers, cell phones, and email, fully active in the online world for years now, and many are relatively tech-savvy. People don’t need to rely on the knowledge about how to fix a computer or phone, any more than they need to know how to fix a car. There are IT experts and mechanics that specialize in this kind of thing. We just need to know how to operate the technological devices in order to live our lives or perform certain tasks in today’s tech savvy world. Older people might not be among the majority of video game players, or use some of the most popular apps, for example, but they certainly use online platforms like Netflix and Amazon, are on Facebook, exchange photographs online with family members, text their friends, and much more.
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Technology has become so much a part of our lives, and in many ways we may have become almost overly dependent on it. Within the current COVID era, this trend shows no signs of slowing down or disappearing. So many things, such as banking, shopping, education, and even making medical appointments, have now moved into the online realm, some of them exclusively. Many of us don’t have a choice and are forced to do things online, older people being no exception.
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Look at the way people have had to download vaccination details from healthcare websites and add QR codes to phones, simply to be able to visit bars, restaurants, shops, and other indoor venues. This hasn’t been something that only younger people have had to deal with. It affects everyone. With people living longer and remaining relatively healthier to a greater age than they used to, there’s now far more individuals, especially the older generations, that companies must cater to.
Old people are no longer just potential customers for certain products and services. The ones formerly seen as being the exclusive domain of senior citizens or retired people such as healthcare items or age-related products and services are a thing of the past. Older people are just as relevant as younger ones, simply in a different way. This means that there needs to be a redefinition of older people in the current world of business and commerce and in the years to come.
PEOPLE ARE MOVING TO ALBERTA: SPECIFICALLY CALGARY
Recent data from the moving company U-Haul suggests more people moved into Alberta in 2021 than any other province. In fact, Alberta jumped from being the third most moved-to province in 2020, overtaking British Columbia for top spot. The number one city in the province for U-Haul arrivals last year was Calgary! Calgary’s bedroom community of Airdrie was also a destination of choice, ranking 24th nationally, a drop from its 19th place the year prior. In 2021, the communities of Red Deer and Medicine Hat also received a significant influx of U-Haul trucks, ranking 8th and 15th respectively, which again is remarkable as neither city placed in the top 25 the year prior.
These smaller locations that are experiencing an influx of people is a continuation of a trend that began in 2020 and is related to COVID-19: people are leaving densely populated cities across Canada for suburban or even rural areas. Many people can now work from anywhere, no longer tied to an urban core, a trend unlikely to reverse itself at this point. A lower cost of living often lends itself to a better lifestyle, a suspected reason for the influx of new residents. Alberta has some of the least expensive real estate in this country, particularly when we consider that Calgary is the fourth largest city in Canada.
U-Haul’s Vice-President for Western Canada is quoted in a news article suggesting that it is Alberta’s initiatives to create jobs that is attracting new residents. Nonetheless, even the company cautions that its annual Growth Index is not a direct measure of population growth. Not everyone uses a U-Haul to move, right?
International immigrants arrive by plane, and older or wealthier folks will likely use a moving company rather than do it themselves, as might those doing crosscountry moves. Instead, the company advises that its index is a gauge for how well cities do in attracting residents. This commentary suggests that Calgary is doing a great job of marketing itself as a location with potential, particularly for job-seekers who are mobile.
Statistics can be tough, so we need to dig deeper than the pretty headlines. Nationally, Calgary ranks as the fifth most moved to city in our country, which is still significant considering it did not even rank in the top 25 cities the year prior.
U-Haul reports there was a 33% increase in one-way truck arrivals coming into Alberta in 2021 when compared to 2020, which is a huge jump. However, there was also a 29% increase in departures, meaning there was actually only 4% more arrivals than departures by U-Haul. Another statistic from the 2021 index suggests that 51% of U-Haul’s traffic into Alberta was inflow, meaning 49% was outflow! That latter statistic is more in-line with the Albertan government’s statistic that Alberta had a growth rate of less than 1% (0.90%) between October 2020 and October 2021.
Table 1 outlines the shifting sentiments of where U-Haul rental trucks have ended their journeys over the last five years. In 2017, Calgary and Edmonton were the number two and three cities arrived at by U-Haul in Canada, while no other Albertan locations made the top-25 list. In 2018, only two Northern Albertan cities placed in the top25 list. By 2019 not a single Albertan city made the top-25 list for one-way U-Haul rentals, and in 2020 only Red Deer and Medicine Hat were on the list. Having four Albertan cities in the top 25 most moved to cities by U-Haul suggests a possible trend reversal in terms of where people are relocating. For Calgary to place in the top five of National cities hints at a return to urbanity, and a focus on Southern Alberta. Or at minimum, people are moving to less expensive real-estate locations in Alberta from other areas of Canada.
Table 1. U-Haul Growth Index Rankings (Source: MyU-HaulStory.com) YEAR OF RANKING
CITIES IN ALBERTA
2018
Calgary – 2nd Edmonton – 3rd Spruce Grove – 14th Leduc – 25th
2019
N/A
2020
Airdrie – 19th
2017
2021
Calgary – 5th Red Deer – 8th Medicine Hat – 15th Airdrie – 24th
But who are our new neighbours exactly? Unfortunately, there is little data available from official government sources, either provincial or national. We know international immigration made up almost half of the recent population growth throughout Alberta, and we also know a significant number of new residents came from Manitoba and Saskatchewan. It has yet to be published the age group, sex, or marital status of our new residents.
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Link to 2022 Forecast Here
Real Estate Forecasts and Loving Your Job By Danielle Rourke Ann-Marie Lurie loves her job. I mean she really truly loves her job. It’s one of those phrases so many of us strive to truly feel. With 11 years of working as chief economist for CREB under her belt, AnnMarie is no stranger to forecasting real estate. And she adores every minute of it. Many of you may know her as a popular CREB forecast speaker, this year recent presentation being no different. I had the pleasure of speaking with Ann-Marie, a born and raised Calgarian, uncovering a little more about her, and about what she sees in our future for 2022.
While studying at U of C, Ann-Marie originally planned on becoming an accountant. With the encouragement of several professors, she was drawn into the world of economics. Ann-Marie quickly discovered she thrived here. There was no turning back. This is where her analytic real estate journey began. From the pension assessment company in Edmonton, onto CHMC doing analysis and underwriting, over to Colliers International, she ended up where she remains today, at CREB.
Three years ago, this working mom’s role grew from the economic analysis of Calgary, to the entire provincial analysis, and most recently, expanding to that of Saskatchewan. Thus, she shares her expertise and time between CREB, AREA and SRA.
Now let’s get to the facts. Generally speaking, Ann-Marie shares that almost every area of Alberta hit record sales last year. Prices improved and hit new highs. On the whole, the low lending rates prevalent in the market during the pandemic benefited the housing market. Looking forward, regional differences will be related to what the economic recovery looks like in each place, and what will drive this economic recovery. For the most part, all centers should likely see improvements in their job markets.
The first of Ann-Marie’s top 3 macroeconomic factors to watch for in the housing forecast for 2022 is obvious. Supply. Calgary has seemingly had a sudden increase in demand for sales. Ann-Marie shares this could very likely be the result pent up pandemic demand, and partly uncertainty about what was leading up to the energy sector. It’s hard not to notice the historic housing demand currently in progress.
Ann-Marie’s Calgary forecast considers the following: 1. Supply Changes.
One area where supply increase will
ideally occur, will be the new home sector. She explains that Calgary has less land restrictions than other centers. This is helping meet the new home market demand. As we see construction levels improve, it’s adding to the overall supply. Although new home builds began to improve last year, they took much longer to complete. They came in at much higher prices, and there were other delays for various reasons. This year, this sector should offset the high demand, low inventory impact. Factoring in this sector, one must consider when these products will be available on the market, and when they can be added to the supply.
2. The employment market .
Ann-Marie explains that we
always have to consider what is happening in the employment market. This is an area where Calgary has had positive growth in the tech and professional development services; both tending to be higher paid industries. We must keep our eyes on improvements to other sectors, as the Covid restrictions ideally ease. Further growth is expected in other higher paid industries, including the energy sector, all of which is fabulous for the future growth of our housing market.
3. Interest Rates.
Low rates are what drew both seasoned
and new buyers into the market. Ann-Marie’s opinion is that there is no doubt we will see an increase in the interest rates this year. Other forecasts will disagree, but in Ann-Marie’s view, it’s not a mater of if, but when. The general expectation is that we will begin to see a gradual 1% rise in rates to occur gradually over the year. This will further encourage and support the current demand for housing today, as buyers want to get in prior to this projected increase. She points out the important difference between the posted rate and the discount rate. This ‘discount rate’ is what aided so many people to get into the market when they did, however some lenders are already seen this rate moving up.
Although Ann-Marie has never sold a home, I asked the highly experienced economist on her advice for agents during these tight market conditions. Ann-Marie realizes it is a challenge to say the least. It’s obvious we went from a buyers market to an extremely strong sellers market rather rapidly. She understands the competition of obtaining the affordable detached product, and that facing multiple offers is common. If there is any advice that she can share, it’s this:
1. Understand the Market.
As she explains,
“Very
different things are happening. For example, what is happening in the apartment/condo market is not the same tight conditions as in the single family detached homes. Clients need to be educated about the fact that the price games are not as strong within the condo/apartment sector. There isn’t the same supply challenges within the condo/apartment sector, clients need to be made aware of these things.” Ann Marie shares that there has been an oversupply in this sector for the better part of 5-6 years now. 2021 was the first time price changes improved in the condo sector. Members need to inform clients about the differences within the market.
There are overall market conditions, but many differences between property types, location and price range, so a member will have a very different experience based on what their client is looking for, and/or on what they are selling. So, an important consideration is to clarify those expectations. Lower priced homes are very different from higher priced.
The overall prospective from Ann-Marie is that Calgary is becoming attractive to home buyers again. The third quarter of 2021 saw many migrations from Ontario to Alberta and international migration is starting to come back. This is good news.
As she explains,
“Migration is key to future growth, so
it’s very important to see that turning around for Alberta. We are one of the largest cities of Canada and our prices are far lower than the other big city markets of Vancouver, Victoria, Toronto, Montreal, etc. Calgary’s single-family detached benchmark compared to that of other big cities, adds to the attractiveness and affordability of buying a home here in Calgary. A benefit in the long term for 2022.”
Ann-Marie enjoys working on the forecast materials for CREB members, ensuring that they are comprehensive and informative, and she most certainly won’t be leaving CREB anytime soon. When asked what she likes most about working for CREB, she replies that it’s the same things she strives to instill as a leader.
“I love the fact that they let
me do it how I think it should be done. They give me a lot of flexibility. They provide me with a great balance of not just work and personal life, but also creative flexibility to carry out things the way I think that they should develop. This is probably the main reason I have been here with CREB all these years.”
CALGARY'S RESALE HOUSING MARKET: THE OVERVIEW By Mario Toneguzzi
It won’t be another record year in 2022 for Calgary’s resale housing market but MLS activity is expected to remain stronger than levels experienced in recent years. Ann-Marie Lurie, the Calgary Real Estate Board’s Chief Economist, is forecasting overall prices in the residential market to increase by 4.46 per cent in 2022 compared to last year’s hike of 8.25 per cent with overall sales dipping to 25,598 from the record high of 27,686 in 2021.
In her annual forecast report, Lurie says the residential real estate market in the Calgary region is being supported by strong economic fundamentals. Citing the Conference Board of Canada, Lurie says Alberta can expect annual GDP growth of 4.7 per cent this year while it will be even stronger in the Calgary region at 6.0 per cent. The Conference Board also forecasts employment in the Calgary area to rise by 4.98 per cent and population to increase by 1.77 per cent. Net migration is also expected to increase to 19,553 from 17,331 last year.
“Economic improvements are also expected to support both job and population growth, adding new sources of demand for housing. Overall, all of these factors point toward relatively strong sales in 2022. Throughout the pandemic, supply has been a struggle for many industries, including the housing market,” says Lurie. “New listings have improved, but it has not been enough to offset high sales levels, keeping inventories relatively low and likely limiting sales growth in the market. As we move through 2022, new listings in the resale market should remain relatively strong thanks to higher home prices. At the same time, the new-home sector recorded a surge in starts last year. The completion of those starts should help add to overall supply choice in the market." “Supply levels are expected to improve relative to demand this year. However, conditions are expected to remain relatively tight throughout the spring market, supporting further price gains. As the market balance gradually improves, upward price pressure in the housing market should ease.”
Lurie says rising lending rates are expected to cool some of the demand later this year, but rates are still exceptionally low, supporting strong housing sales, especially from those who experienced increased savings and equity gains throughout the pandemic. “There is significant uncertainty in the economy, as the impact and duration of ongoing supply issues in the market are unknown and somewhat dependent on further disruptions caused by COVID-19. At the same time, energy prices are expected to rise."
"Higher energy costs, along with longer-thanexpected supply disruptions, could result in higher-than-expected inflation. Persistent and higher-than-expected inflationary pressure would not only impact the cost of living, but could also cause an earlier and higher increase in lending rates. This would pose the most significant downside risk to housing demand,” she says. “Supply levels are expected to improve relative to demand. However, renewed confidence in the energy sector, plus new industry growth, could result in stronger than-expected housing demand. If housing demand remains persistently strong and building delays and costs continue to increase, the housing market could take longer to return to balanced conditions, causing stronger-thanexpected price growth in the resale market.”
'Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence.' - HELEN KELLER
VR in Real Estate By SIMON ROSE
Virtual reality or VR is a kind of technology that’s been around for a while now. With VR, a person can view a three-dimensional image or perhaps an entire environment and even interact with it. VR is able to create and resemble how things will or do look in the real world. Alternately, VR can create a completely different fantasy landscape or an alien planet for one to explore.
It’s been predicted for quite a while now that virtual reality would be the next major technological development. Historically, its been widely utilized in things like video games and the entertainment industry. Today, VR is being used notably in the real estate business. The ongoing pandemic and restrictions on people meeting in close proximity indoor, has massively contributed to the increased use of VR technology.
Realtors usually have a number of properties available for clients to choose from, with clients usually visiting many different locations before making a final decision regarding a purchase or investment. Naturally this takes time. However, with VR, prospective buyers can view multiple properties through a virtual reality headset, even in the same day. This saves time for both the buyer and the realtor. Clients can explore homes or other properties that are in other parts of the country, saving money on travel costs.
Using VR provides a realtor with a much larger potential market to work with, showcasing properties to clients nationally or even internationally. Virtual reality technology can be employed to create 360-degree videos. Realtors use these to provide their clients with a virtual guided tour of a property. Potential buyers wear a VR headset and experience the place as closely as they can without actually being there in person. Interactive tours can be slightly more complex to create with VR technology, but are in turn a more effective way to showcase a property to clients. These types of virtual visits allow people to move around inside the property by clicking on designated places in the VR field of view. Clients view the interior in a similar way that they do on a guided tour, but the interactive element gives them a better feel for the different rooms.
Virtual reality is also a particularly useful tool when marketing a property that isn’t even built yet. With what’s known as architectural visualization, realtors can show clients the inside and outside of a building, just as they can with virtual staging of existing properties. Clients might not always be viewing a possible future home for themselves, and with architectural visualization they can decide whether to invest in a planned commercial building project or rental property, such as an apartment block. Virtual reality was around before the pandemic arrived, now used more often in the real estate business then ever before, and will undoubtedly remain a key marketing tool for realtors in the future.
IS A PERFECT STORM FOR REAL ESTATE INVESTMENT BREWING IN CALGARY? There is an age-old saying that applies to investments:
buy low, sell high.
And there is no doubt that housing
has become an investment in the minds of many. Calgary, the third largest city in Canada behind Toronto and Montreal, is the cheapest of the large metropolitan areas for housing. Does this alone make it primed for investors to start snapping up real estate? Not necessarily. Let's explores some of the factors influencing investment in Calgary real estate.
But first, let's address your shock that Vancouver is not bigger than Calgary. I assure you this is not a typo. The city of Vancouver is actually quite small at 631,486 people. It is the Metro Vancouver area that is large at 2,463,431 residents, only falling behind the Greater Toronto Area (GTA) or Montreal for population size.
In 2021, some unanticipated changes occurred to the national real estate picture. Driven by factors related to COVID, people moved in unprecedented numbers to smaller locations that don’t have big economic engines and whose populations had been stagnant for decades, such as Atlantic Canada. Case in point, in 2021, New Brunswick saw price growth above 30% year-over-year, and the Greater Moncton area was even higher. Compare that to the mid-to-high single digit price increases in Alberta in 2021, explored in more detail shortly.
These changes were driven by the new social demands and opportunities placed on people during the pandemic: the ability to work remotely; the desire for bigger homes and yards due to lockdowns; the wish for separate home office space; the requirement to home-school children; and the wish to co-reside with Baby Boomer parents who now want to age-in-place. We also know that international immigration picked up again last year after harsh pandemic-related restrictions in 2020.
According to Canadian Real Estate Association (CREA) data released in December 2021, Calgary is one of the few areas across the country that had greater sales activity in November 2021 than the GTA or Montreal. However, the MLS Home Price Index shows that the composite price for all properties in Calgary has remained relatively flat since the housing market crash in 2007.
In terms of actual price, in August 2007 the benchmark price (a “typical” home based on the features of homes that have been bought and sold previously) was $418,500. As of December 2021 (14 years later) the price has only risen to $451,200. Nonetheless, single-family home prices over the same time period did increase, from $443,100 in August 2007 to $507,900 by December 2021. This means that condos and townhouses are dragging down the composite price in Calgary.
Figure 1 shows a price graph from January 2005 until December 2021 for the average single-family home dwelling in Calgary.
Single family home prices in Calgary hit a recent bottom of $440,000 in April 2020, so there has been a $67,000 increase in price during the aforementioned pandemic related buying spree. Further, the average home price nationally was $720,850 in November 2021, an increase of over 19% year-overyear. Even when we remove the GTA and Metro Vancouver from the average price, we are still left with a national average of $562,850.
If Calgary is a solid $55,000 cheaper than the average home price across this country, the math seems simple and for some, enough reason to buy in Calgary. Who might want or need to save $55,000 on a home purchase? Conversely, who might be trying to dodge a market that has seen increases of 25-30%, as many markets in Canada witnessed in 2021? If you are a young, first-time home-buyer facing the stress-test, having to save up a down payment of 20% to avoid the Canada Mortgage and Housing Corporation insurance fees, you can work from anywhere, and you’re in a race against increasing interest rates forecasted for 2022, Calgary seems like a very appealing housing market, doesn’t it? Particularly when even Newfoundland’s home prices rose at a greater rate than Alberta’s last year. For comparison, Table 1 shows the benchmark price for a single-family home in some of Canada’s cities in December 2021.
Table 1. MLS Benchmark Prices in December 2021 LOCATION
BENCHMARK PRICE
Winnipeg, MB
$334,800
Saskatoon, SA
$359,900
Calgary, AB
$507,900
Kingston, ON
$546,400
Montreal, QB
$589,100
Ottawa, ON
$749,600
Victoria, BC
$1,066,800
Greater Toronto, ON
$1,429,300
Alberta has no restrictions on who can purchase property in the province, except for the Canmore adjacent communities of Deadman’s Flats, Harvie Heights, and Exshaw. If you can’t afford to buy in Canmore itself, well, Calgary is only one hour away. A report from a Chinese “real estate portal that connects Chinese buyers with international listings” indicates that in 2018, “interest by Chinese buyers in properties in Calgary increased by 234.4%. In contrast, inquiries into Toronto decreased by 10.3%, and Vancouver decreased by 2.8%” when compared to 2017.
You might not be a data-driven geek, but you still might wonder what is happening to the prices in the Calgary real estate market, and why. After almost two years of pandemic lock-downs, with the vaccine rollout, students from other countries are likely returning to live near campus. For example, “Sotheby’s International Realty found that 41% of Chinese buyers look to Toronto real estate for educational purposes.”
Further, Calgary is noted by the moving company U-Haul to have done a great job marketing itself, and in general, the city is diversifying its workforce and economy by focusing on attracting information technology and film industry dollars. Further, international immigration made up almost half of the recent population growth in Alberta. These folks often rent at first, but a tightening rental market will attract speculative investment as well. It’s all inter-connected. Shaun Cathcart, CREA’s Senior Economist cautions, “Housing cycles can be very long.” Is Calgary’s housing cycle changing due to speculative investment? It certainly seems primed to do so.
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There is a crack in everything. That's how the light gets in.' - LEONARD COHEN
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