QUOTE (thomasbeyer2000 @ Nov 24 2008, 09:01 PM) indeed .. they WILL affect the province .. BUT: it is much better here than in most other 1st world jurisdictions like: UK, France, Germany, Japan, TX, SC, CA, WA, OR, Florida, SK, BC, ON, NFL, or certainly better than emerging economies like: Romania, China, S-Korea, Ukraine ..
so where else would YOU move for better opportunities ???
It is all relative ?
I agree Thomas. There isn`t too many markets when the fundamentals as good as they are in Alberta. The real downside I see in Alberta isn`t the long term economics, it`s the price of admission as a function of revenue. Almost every property for sale and every joint venture I see bank on appreciation to give any sort of decent return. True cash flow is very hard to come by.
I am really concerned about future appreciation potential in Alberta. We are not geographically limited here like they are in Vancouver, New York or LA for example. Developers can build houses from Calgary through to Winnepeg. What makes me cautious is when I look at markets like Dallas/Fort Worth. DFW has strong fundamentals and employment opportunites with inmigration that is higher than Alberta. Their housing market is and has been flat for 20 years, yet it scores out great on the goldmine score card. From talking with investors in that market they say that the developers have become so efficent and competative at putting in housing that they have held the prices steady.
Sure people are moving to that market to chase the opportunity, but that opportunity is attracting home builders as well. Even though the demand for housing is high they have been able to meet the demand and keep the prices in check.
It seems possible to me that builders may be able to meet the demand in Alberta, therefore keeping prices in line. This is especially true with the downturn in Central Canada. Now there are plumbers, electricians, drywallers, etc. that will be coming out here looking for work.
My point is we can`t bank on appreciation in the short term ie. 5 years or less. 10 years or more yes things will definately be worth more.
Most cash flow calculations I see don`t take in to account real world expenses. With a 5 year plus holding period real world expenses will rear their head. That furnace will need to be replaced, tenants may damage a suite beyond what the damage deposit will cover,etc.
Is it wise to carry a property with negative cash flow in the hopes that our fundamentals will force appreciation in the coming years? Edmonton and Calgary are top ten towns based on fundamentals, but they aren`t very investor friendly at their current price levels.
Would it be smarter to look at markets where the fundaments aren`t as strong, but true cash flow is readily available. At the end of the day it`s not about investing in "cool" markets, it`s about investing where we get the best return.
Neil
