Calgary and most other areas of North America are starting to open up an restrictions are lifting. There has been a unprecedented uptick in sales in Calgary real estate as well as many other markets across the country – many have asked us…why is that?
I have seen recently a number of articles starting to catch up on the trends that industry veterans like us have known for months. The primary reasons this happened in Calgary/Alberta at large was the following
- Low supply – builders stopped building due to lock downs and shut downs mandated by the public health orders.
- Never before seen Savings in Canadian bank accounts. Without spending money on entertainment, eating out, and frankly just about everything for a year in many cases caused an flood of cash into savings accounts and into the equities markets.
- Low interest rates – the central banks across the world dropped interest rates to keep businesses afloat and keep credit accessible to keep the economy moving as much as possible when so much was locked down for many months.
Now, that is what caused the market to move in ways not supported by fundamentals. Let’s face it if you ask anyone in Calgary or Alberta at large if the economy is doing well….you will not get very positive answers. Is it in-migration from other parts of Canada or the US? NOPE We have seen the lowest numbers of net in-migration in years to Alberta.
So I think any industry person would agree that the current state of affairs in real estate would be artificial, (at least in Alberta for certain) some supply and demand factor at play but the above three reasons are the cause.
Now that the world is opening up I have to wonder…what comes next? Will we have a repeat of the roaring 20’s like some have predicted? Which would include a large number of people going back to their old habits, OR will we have a cross section of the population choose to form new habits with a percentage of those savings and INVEST them?
I am not suggesting that anyone not live life and go on vacations (we need those!) or even eat out again and stay cooking at home. What I would suggest is that the families that are eagerly awaiting borders to open up and theme parks to come back online, and all the other discretionary spending that was waiting for the pandemic to end – consider taking a percentage of those funds and invest them using diversification to create wealth.
Creating wealth is a system, and one that the longer you work that system the better the results will be. Real Estate is the most reliable way to create wealth (that is why we love it), but you need diversity in that sector as well as into other sectors such as the equities markets, and business investments that pay you dividend income as well. We have done, and still do, all 3 which is what I like to lovingly call the “3 pillars of wealth”.
Which set of habits will you keep after the world goes back closer to “normal” whatever that means, my hope is that we take the lessons learned during this global event into the future and things are never the same again, in a good way.
Contact us today and let’s book a discovery call to answer any questions you have about real estate, business, or wealth creation – we are here to help.
To your success,
Tim Reid
-Respect The Hustle