Edmonton Real Estate Market

[IanO]

It's only about a generation or so back that secondary or even tertiary 'income properties' really became a widespread thing that many jumped on and led to this mess. Housing as an asset class for the masses and a large percentage of folks becoming landlords or property managers at the expense of those who need housing and want to build some equity has really changed the positioning of the market and project positioning. It's going to be very interesting to see how this all shakes out in the next few years with government intervention, interest rates being what they are and mortgages coming up for renewal.

 

[archited]

you're finally starting to see the picture after giddily defending what was ruining Vancouver and Toronto.

 

[IanO]

Being an attractive market for capital, investment and a destination for many is different than supporting assets for the masses at the expense, let me reiterate, the expense of market housing.

 

[archited]

It's good to see the worm turning is all that I am saying. Now be a good worm and own up to your own folly.

 

[David A]

It's only about a generation or so back that secondary or even tertiary 'income properties' really became a widespread thing that many jumped on and led to this mess. Housing as an asset class for the masses and a large percentage of folks becoming landlords or property managers at the expense of those who need housing and want to build some equity has really changed the positioning of the market and project positioning. It's going to be very interesting to see how this all shakes out in the next few years with government intervention, interest rates being what they are and mortgages coming up for renewal.

That model really only works well with low interest rates and rising housing prices. We have had the former for the last decade and in many places the latter too, but I don't see either as much in the next 5 to 10 years.

So we may start to see some of those investors sell off their properties over the next few years, ongoing operating losses without the potential of much capital appreciation are not very attractive.

 

[Yeggy]

That model really only works well with low interest rates and rising housing prices. We have had the former for the last decade and in many places the latter too, but I don't see either as much in the next 5 to 10 years.

So we may start to see some of those investors sell off their properties over the next few years, ongoing operating losses without the potential of much capital appreciation are not very attractive.

not going to see, we are seeing. Most private income properties are no longer able to carry their costs.

There are 2-3 of those 1970’s duplex (often turned 4 plex) up for sale in Bonnie Doon at this moment.

 

[stevester]

The flipside to all of this is rents are up ~9% y/y in Edmonton: https://rentals.ca/national-rent-report

So landlords to some degree are just downloading their increased costs onto the tenants to the degree that the market allows, and we'll likely see this trend for rental prices continue upwards as more mortgages come up for renewal.

 

[David A]

Yes, some investor landlords who have owned longer or don't have big mortgages coming up for renewal soon will be able to continue and pass on costs, not all or most will be selling soon.

However, there will be more selling over the next few years and fewer getting into it, so investor owned residential properites will diminish somewhat. To the extent that those who buy make these properties are owner occupied instead, that could be healthier and a good thing.

 

[Yeggy]

Yes, some investor landlords who have owned longer or don't have big mortgages coming up for renewal soon will be able to continue and pass on costs, not all or most will be selling soon.

However, there will be more selling over the next few years and fewer getting into it, so investor owned residential properites will diminish somewhat. To the extent that those who buy make these properties are owner occupied instead, that could be healthier and a good thing.

I would like to add to your point the term “small or private investor” as we are seeing a real concentration of large corporate rental holdings. Personally I am largely ok with this as these Reit’s have invested in and modernized a number of properties that prior owners let disintegrate.

Sometimes it takes a corporate mindset and timeline to be able to get the required investment.

 

[David A]

I really go back and forth on whether small private investors or large corporate REITs are better and come to the conclusion there are pluses and minuses to each.

Small private investors tend to often go for condo's or duplexes, which are not as suitable or stable in being a long term rental supply, whereas the corporate ones go more for purpose built rental buildings.

However, the latter can be more selective in tenants, rigid in opearations and more aggressive in hiking rents,. But being inflexible and greedy is not just limited to large entities.

 

[Yeggy]

I really go back and forth on whether small private investors or large corporate REITs are better and come to the conclusion there are pluses and minuses to each.

Small private investors tend to often go for condo's or duplexes, which are not as suitable or stable in being a long term rental supply, whereas the corporate ones go more for purpose built rental buildings.

However, the latter can be more selective in tenants, rigid in opearations and more aggressive in hiking rents,. But being inflexible and greedy is not just limited to large entities.

Fair.. but which one has the capital to actually fully rejuvenate buildings and have the time lines needed to realize the gains of those deep investments.

 

[David A]

Many people might prefer to live in a newer rented condo unit rather than a rejuvenated old rental building, but some might not. Like I said, back and forth.

 

[ChazYEG]

Many people might prefer to live in a newer rented condo unit rather than a rejuvenated old rental building, but some might not. Like I said, back and forth.

That goes even for condos and houses, too. Anecdotally, I have a friend who absolutely REFUSES to buy a house where someone else has lived in (her reasons are silly to me, as they have zero "technical" reasoning, but doesn't change the fact).
On the other hand, I have a very strong preference for renovated older buildings, be it a condo, apartment or house. Particularly in Oliver and DT, these older condos and apartments are a lot bigger, and are generally better built, than a lot of the newer ones. On a funny note: as much as I don't like the idea of living in a house, I do have a soft spot for mid-century/modern bungalows, and I think the neighborhoods where these are prevalent are some of the most pleasant in the city.

 

[Stevey_G]

Different strokes for different folks.

I prefer lot size for a home and garage over all else. So older places in lower income communities.

Most of my friends prefer brand new builds on the south side for reasons like quality of insulation and modern aesthetics.

 

[ChazYEG]

modern aesthetics.

Different strokes for different folks, indeed, but these "modern aesthetics" lately are resumed in a big-ass garage door in the front, with a humungous concrete pad, no trees whatsoever... My brain CANNOT COMPREHEND how someone thinks this looks good.