Alberta forecast for 2016

17 Replies

Hey guys,

what is your take on what is happening in Alberta with the oil down?

rents in Calgary are already going down and vacancy rate is above 5%

some experts predict oil to go down to $10 per barrel, that would put economy in Alberta in a hole for a long time, even if oil prices start going up end of next year because industry cannot recover that fast.

Are you still going full speed on buy and hold, flips, etc?

I have been told pretty much every where I look the us is where to invest they are on the up swing side of the fluctuation circle here in Canada we are falling fast on the downward swing witch is a buyers market when it hits the rock bottom. People are still selling and people are still buying, my personal opinion is to hold off until every thing drops to the bottom then buy buy buy. People are going to be looking to sell there big house they can't afford to down grade to something they can. On the way down we could be buying smaller cheaper properties to sell to this demographic then buying up the big properties to buy till it gets back to the top and sell to the small house owners back there big homes. The circle of life and real estate. Can anyone validate my theory? This would be best case and you would have to be triple checking your numbers to make a deal in such a crapy market, but that is why experience investers tell you have tool for every kind of market. 

Good points. I've heard  we're in a sellers market lately ( over in Okanagan and Vancouver) Is it worth it to invest abroad with how high the American dollar is right now or would anyone recommend staying in Canada? 

Originally posted by @Marcel Noel :

I have been told pretty much every where I look the us is where to invest they are on the up swing side of the fluctuation circle here in Canada we are falling fast on the downward swing witch is a buyers market when it hits the rock bottom. People are still selling and people are still buying, my personal opinion is to hold off until every thing drops to the bottom then buy buy buy. People are going to be looking to sell there big house they can't afford to down grade to something they can. On the way down we could be buying smaller cheaper properties to sell to this demographic then buying up the big properties to buy till it gets back to the top and sell to the small house owners back there big homes. The circle of life and real estate. Can anyone validate my theory? This would be best case and you would have to be triple checking your numbers to make a deal in such a crapy market, but that is why experience investers tell you have tool for every kind of market. 

 I would agree that's an excellent strategy if you can manage it. Real estate is cyclical in nature, so if Alberta is in the dumps now it will eventually bottom out in regards to home prices and oil prices and stay stagnant before we see any appreciation. It would be best to wait until you see this stagnation and then BUY BUY BUY. 

http://www.amazon.ca/Secrets-Canadian-Real-Estate-...

Good Book about this.

Originally posted by @Ryan Prokopetz :

Good points. I've heard  we're in a sellers market lately ( over in Okanagan and Vancouver) Is it worth it to invest abroad with how high the American dollar is right now or would anyone recommend staying in Canada? 

 With our dollar so low it would be much better to stay local in good market until it begins to recover. From any economic forecasts I have seen they were predicting a 70 cent dollar with 30-40 dollar a barrel oil. nothing seems to indicate our dollar getting much lower than 70, I think you are a little late to jump ship. You would spend a lot of money on conversion and could likely find similar returns and take your dollar a little further here in Canada.

I'm currently working in the Oilfeild. Frac to be more specific. We saw layoffs all of last year but work has actually been fairly steady throughout 2015. I still managed to make a six figure salary. Although i'd like to use my high income opportunity towards something that will secure a better future for myself, with the current state of oil, it seems as though right now wouldn't be the best time for me to invest in real estate in Alberta. Or is it?


Also, what do you guys think about this? (Kevin O'Leary: You'd be an idiot to buy a house)
http://www.bnn.ca/Video/player.aspx?vid=760243

I was looking in the fort mac market a year ago in the 850 range and holly am I glad I didnt buy there as prices are down 15 percent, dont quote me on that! I sold one house in the lower mainland, it went up 80 k in a year and a half, my other property went up nearly a 100 with a partial rehab that I did my self for 30. 

But in the lower mainland, Chilliwack/promoroty area expecially where you can get a house for 450 walk out basement rent upstairs for 2000 a mo and rent downstairs for 1000 a month and tenants voluntarly go on a one year lease. I was showing my house there for maybe 20 people a month three months before move in date. Great house as an investment. 

im going full speed ahead and dont have any intention in slowing down at all, being a carpenter helps a lot and obvs so dose the income that I make up north. I'm stuck in wapatraz at the moment. let me know if this helps at all - dont mind the spelling mistakes. 

I believe Edmonton is a prime investment city.  I'm actively looking for under-valued homes in Edmonton and expect to be able to help folks who need out due to mortgages above their means - many of them will still need a home in Edmonton for their families.  Rental rates may be down for a while but not difficult to ride out the storm provided there is adequate cash flow.  It's all about finding the right properties. My focus is on mid-range under-valued single family or suited rental properties that will cash flow with mid-range rents.  The employment created by the new Rogers Place Arena and ease of access with LRT transit expansions will have the city primed for future growth and profits.  Bold when all around us are fearful and fearful when all around us are bold.

http://www.edmontonjournal.com/Rogers+Place+construction+time+budget+officials/11248644/story.html

http://www.edmonton.ca/ets/transit_projects/future-lrt-projects.aspx

As it stands rent's are down in Red Deer by approximately 20-25%, with substantially fewer prospective tenants out there submitting inquiries.  The lack of high paying oilfield jobs (As compared to one year ago) seems to have put a lot of pressure on individual income and has also caused a portion of the work force to move away.  

According to Statistics Canada, the 3 month rolling unemployment rates for Calgary, Edmonton, and Red Deer as of November 2015 are 6.7, 5.8, and 5.5 respectively, as compared with 4.2, 4.7, and 3.4 last year.  I would imagine with the rates being higher in Edmonton and Calgary there must be some pricing pressure there as well. 

http://www.statcan.gc.ca/tables-tableaux/sum-som/l...

It seems as though the market here is finally turning around into a buyers market, and prices on listings are slowing starting to fall.  The consensus in speaking with colleagues seems to point to a turnaround of the oilpatch come Q4 2016, but with the turmoil in energy prices it's still anyone's guess.

Originally posted by @Sean Claremont :

As it stands rent's are down in Red Deer by approximately 20-25%, with substantially fewer prospective tenants out there submitting inquiries.  The lack of high paying oilfield jobs (As compared to one year ago) seems to have put a lot of pressure on individual income and has also caused a portion of the work force to move away.  

According to Statistics Canada, the 3 month rolling unemployment rates for Calgary, Edmonton, and Red Deer as of November 2015 are 6.7, 5.8, and 5.5 respectively, as compared with 4.2, 4.7, and 3.4 last year.  I would imagine with the rates being higher in Edmonton and Calgary there must be some pricing pressure there as well. 

http://www.statcan.gc.ca/tables-tableaux/sum-som/l...

It seems as though the market here is finally turning around into a buyers market, and prices on listings are slowing starting to fall.  The consensus in speaking with colleagues seems to point to a turnaround of the oilpatch come Q4 2016, but with the turmoil in energy prices it's still anyone's guess.

Sean,

That just puts your unemployment rates in line with much of the country (still lower than NB ;) ).

I think we will still see a further drop in unemployment and vacancies in 2017 and 2018!

With the price of oil the way it is, Canadian oil players can't invest in new oil projects and expect to receive profits. Any new projects started at current prices would not allow companies to break even, so we will likely see a reduction in new oil projects started in 2017/18, further reductions in jobs within that sector, and more people moving out of province and the industry.

We can expect more people out of work who can no longer afford their mortgages and more landlords who are looking to get rid of properties with negative cash flow as rents drop due to vacancies and competition for tenants.

@Ellen Hearsey - I agree with you. Eventually the severance is going to dry out and some landlords would like to liquidate to get their cash out.

I see that you're from Hinton AB - Nice spot, (I am there around 3 times a year for work) :)

Ram

@Steve R. great post. Thank you for starting this thread. I was asking the same question for months now. Been browsing Google for some answers, then thought that BP has more reliable infos with regards to this matter :). We have our sfh house rented out here in Calgary last year November 2015 into a property manager. We're able to have a positive cash flow of $200/month after factoring all expenses. So far it was a pretty good decision (in line with our real estate goals) but pretty nerve wracking at first (leaving behind our comfort zone). We stayed with my parents in Vancouver to cut expenses & save up money for future deals. From the infos here, 2017-2018 will still be in low side of the housing market trend. Depending all of course in the proposed new projects regarding oil industry. The plan is to buy, buy low. Scout for foreclosures & motivated sellers & also look for motivated buyers to partner with me :)

I will still continue moving forward with my plan, perhaps not as fast, to secure rental properties that have a lot of safety margin of cash flow.  $200 per property per month, even in this environment, is not worth it and very risky should you have to lower rents even more.  My recent property of last year cash flows $800 right now and I think I can sit out the current storm.

Sherrylyn, are you wholesaling in Calgary?

I have seen lots of ads on kijijiji and on light posts that look like wholesaling ads, but have not met any wholesales in Calgary?  Are you one of them or do you know any?

Hello Steeve, sorry just opened my BP discussion thread today. Actually I'm not wholesaling in Calgary. We have a sfh rental property in Calgary. I'm actually trying to edit that in my profile, it seems like it's a default when I first created my BP profile :)

Originally posted by @Steve R. :

I will still continue moving forward with my plan, perhaps not as fast, to secure rental properties that have a lot of safety margin of cash flow.  $200 per property per month, even in this environment, is not worth it and very risky should you have to lower rents even more.  My recent property of last year cash flows $800 right now and I think I can sit out the current storm.

Sherrylyn, are you wholesaling in Calgary?

I have seen lots of ads on kijijiji and on light posts that look like wholesaling ads, but have not met any wholesales in Calgary?  Are you one of them or do you know any?

HI, Steve, we are investors in Calgary and we know a couple of wholesalers in Calgary - John & Donna Gatschuff. If you are still interested, please let me know and  I will find their contact info for you. Have a good one,
Veronica Pepin