Edmonton Still No 1 for real-estate investing, author says Economic slump seen as temporary setback
It was last August when real estate author and consultant Don Campbell crowned Edmonton the best place in North America to invest in residential real estate.
Since then, the price of oil has plunged, the Alberta government has predicted a billion-dollar deficit and the city’s housing market has seen starts, prices and sales fall.
So is Edmonton still the best place to invest in residential real estate?
“Absolutely, it is,” he said Monday during a visit to Edmonton from Vancouver. “There’s no way the world can continue to afford $30 and $40 oil. … Eventually, within 18 or 24 months, we’re going to see the market come back to something that’s more normal.” Campbell is author of Real Estate Investing in Canada 2.0 and president of the Real Estate Investment Network (REIN), a business that offers training to its members on real estate investing.
Last summer, a REIN report ranked Edmonton as the best place to invest in residential real estate, followed by Calgary, Red Deer, St. Albert and Grande Prairie. Devon placed ninth and Sturgeon and Strathcona counties tied at 10th. The list was compiled from a survey of statistical and demographic data from Statistics Canada, Canada Mortgage and Housing Corp., Multiple Listing Service and other sources.
“That being said, we were so superhot here that the pendulum moved so quickly and has gone too far the other way. Like all economic pendulums, it comes back towards the norm and we’ll start to see that pendulum start to swing a little bit more for Edmonton’s sake. Right now, if you’re focusing on yields, it’s still the best place.”
He said that Edmonton will top the list for the next five to 10 years, and with mortgage rates “ridiculously low” and likely to drop further, savvy investors could look like geniuses several years from now.
Campbell cautioned against trying to predict when the market will hit bottom “because you’ll never hit it,” especially when he’s predicting up to two years of roller-coaster economic news.
He said investors should realize that certain parts of Edmonton’s housing market will do better than others because of improvements to transportation.
Homes in areas that will benefit from the ongoing extension to the LRT line along 111th Street could outperform the market by 10 to 20 per cent, he said.
In other studies, Campbell said, values rose for properties within 800 metres of new rapid-transit stations or access to major highway improvements.
Plans to extend the Anthony Henday ring road will also improve the demand for nearby homes, he said. Another REIN report lists Parkallen, Belgravia, McKernan, Twin Brooks, Ermineskin and Sky Rattler as neighbourhoods that will gain the most — both from the LRT extension and from the Henday. But other areas also stand to benefit in the future, Campbell said.
“We’ve seen what (the Anthony Henday) has done in the southwest. We’ve started to see what it’s done in the southeast and it’s now starting up northwest — and that’s going to positively affect St. Albert and Castle Downs.”
For investors with a 10-year window, Campbell says the northeast quadrant is “going to be the biggest winner” from the ring road because prices in that area are relatively low.
“Once the ring road opens, the demand will increase, and even if one of those upgraders goes ahead in the Fort Saskatchewan region, that’s equivalent to the number of jobs that it took to build the Hoover Dam and we saw what that did to the southwest United States during the Depression.”
In a note of caution, Campbell said condo buyers should be wary of rushing to buy a piece of undeveloped property.
“We need to be cognizant that there are an awful lot of new condos coming onto the market, not just in Edmonton, but in Calgary and Vancouver.
“Please don’t line up to buy a piece of property,” Campbell said.