### 3 Thoughts on Affordable Housing in Calgary ### Today, as we drove to Strathmore for a vet visit, an ad came on the radio for a real estate investment seminar that will teach you “how to get rich”. Since I recently read some of the debate on affordable housing, this ad triggered a few thoughts. Here they are: 1) DEMAND. What we have in Calgary is an oasis of prosperity due to the oil and gas industry. This, in turn has spurred production of O&G education programs which continue to spew out engineers, technicians, accountants, oil rig workers and so forth - which then go straight into Oil and Gas because you get paid a lot of money. A lot more than you would in the same role elsewhere. So, now we have 20 and 30-somethings that are making $100k plus a year each. Put a couple together, and you have an average household income of $200+ / year. With higher disposable income, the appetite for luxury (Bentley Calgary), bigger homes and MORE STUFF grows. So, now we have a condo development in East Village where a condo price STARTS at $1.4 Million (Riverhouse), while the average single-family home in Calgary averages $527,634 (stat from CREB). 2) SUPPLY. Since there is obvious opulence in the city, and people are more than happy to spend (at least those who can afford it) - the developers jump to action and start developing. So, on top of places like Riverhouse, we also have Avli on Atlantic (which is higher than Inglewood’s maximum height allowance, yet sales office is already under construction - without council’s approval). While I couldn’t find the prices on these condos - I can guarantee you they won’t be under $300k for a one bedroom apartment. Gentrification of older, well positioned neighbourhoods is driving existing residents out (imagine being on a fixed income, while your taxes and house insurance skyrockets). The developments being built are not being built for the “average” family holding down two regular jobs and maybe raising a child or two. They are being built for the most profitable market. Developers are not in the game of doing what is right for the city, or for average people - they are in the game of making money. Which is why we see so few affordable housing projects. You want affordable housing? You have a choice of “sketchy” neighbourhoods, or moving to the boonies where you’ll spend 2 hours a day in traffic or transit, unless you happen to work from home or in the general area (few do). 3) REAL ESTATE INVESTORS Seminars and coaching for real estate investing seem to be all the rage. Ads on TV, papers, radio and social media telling you to “get rich quick”. Most of these are pure garbage made to squeeze a few dollars from desperate people. However, a certain percentage will make it work, get serious about it and start building a property portfolio. Few think about the downside of this practice. If you buy an undervalued home in a good neighbourhood in order to renovate it and sell it for $50,000 to $100,000 more than the original price - you just made it that much more expensive for a family who would like to live in a nicer neighbourhood, but maybe can’t afford that area’s average price. So, their options are now even more limited — to above mentioned areas. Unless they can make do in a closed-sized apartment. — There will never be enough affordable housing as long as decisions being made are motivated by profit (which seems to be the case for most). Developers will make $1M homes, City likes their property taxes and young money likes their luxuries. This is my highly subjective opinion, and for once I would love to be wrong.
Posted on: Sat, 01 Nov 2014 23:23:35 +0000
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