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Discussion Starter #1 (Edited)
I have a one bedroom condo that I currently live in that I purchased pre-construction a few years ago.

The goal pre oil collapse was to have it as a rental property. Since the economy softened and it affected the rental market, I decided to live in it.

I’m now getting a work transfer to Vancouver and weighing my options on whether to rent the condo out or sell it. The good news is the estimated market value is about 10% higher than I bought it for (before mortgage penalties/commissions/etc).I also have a good group of friends that I can lean on for help in terms of managing it if I rent it out.

My question is really on speculation on the real estate market in Calgary? For those that are close to it, do you think it has a chance of going up considering what’s happening in the energy industry?

Thanks
 

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There could be an economic recovery of sorts when one or more pipelines go into service in 2 years (line 3 will make a little difference but not much), but the recovery will be very selective and it won't really add many jobs. Alberta is still shedding jobs and that slide has not yet bottomed. I think Albertans are going to be rather disappointed on the muted recovery.

There is nothing that is going to help the gas side until LNG starts to flow and there is no way for more conventional oil to pick up without a price increase. All is to say..... don't expect a surge in in-migration nor an appreciable increase in wages within the next few years. My view would be....to get out and focus your attention elsewhere.
 

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The momentum is still down. It will take a bit for Kenny to convince the rest of Albertan businesses not to leave for the USA.
 

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Discussion Starter #4
There could be an economic recovery of sorts when one or more pipelines go into service in 2 years (line 3 will make a little difference but not much), but the recovery will be very selective and it won't really add many jobs. Alberta is still shedding jobs and that slide has not yet bottomed. I think Albertans are going to be rather disappointed on the muted recovery.

There is nothing that is going to help the gas side until LNG starts to flow and there is no way for more conventional oil to pick up without a price increase. All is to say..... don't expect a surge in in-migration nor an appreciable increase in wages within the next few years. My view would be....to get out and focus your attention elsewhere.
This is somewhat my fear especially when you consider that the Teck mine project is also in jeopardy. I think that the rejection of this project will have investors heading for the hills.

On the bright side, In my line of work, I have the opportunity to meet many small and medium sized business and many of them in the oil services sector (especially in the Edmonton area) are bullish on pipeline work and future projects in that area.
 

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Albertans have gotten too entrenched in their views of the world. They should already know there is going to be no material uplift in either oil volume growth or price, and that means no return to boom times. It will be an average recovery. Time for many of them to look for different business opportunities.
 

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When I lived in Calgary in the mid 60s, I soon came to see that the economy of Alberta followed a boom-bust cycle roughly every 7 years. Nothing I have seen has changed my view since then.

That makes it a bad province to invest in real estate unless you are sure you will be able to ride out the bust years and wait for the next boom years to come along. Best bet, invest elsewhere.

As for having friends who could help manage your condo as a rental. You might want to think about how long they will remain friends if you lean on them like that after you have left town.

My advice is to sell if you can still make a small profit over your purchase price and rack it up to experience and lesson learned. I remember when I lived there and the bust came, people were not only selling at a loss but were just skipping town and leaving the bank holding the mortgage. Negative equity.
 

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Discussion Starter #7
When I lived in Calgary in the mid 60s, I soon came to see that the economy of Alberta followed a boom-bust cycle roughly every 7 years. Nothing I have seen has changed my view since then.

That makes it a bad province to invest in real estate unless you are sure you will be able to ride out the bust years and wait for the next boom years to come along. Best bet, invest elsewhere.

As for having friends who could help manage your condo as a rental. You might want to think about how long they will remain friends if you lean on them like that after you have left town.

My advice is to sell if you can still make a small profit over your purchase price and rack it up to experience and lesson learned. I remember when I lived there and the bust came, people were not only selling at a loss but were just skipping town and leaving the bank holding the mortgage. Negative equity.
Ah, the old jingle mail fiasco. The difference now is borrowers are much more careful as it hits your credit rating. As for riding out the bust, I have no problem doing that.

If like you said, history repeats itself, we are midway through the bust cycle so hopefully things start to pickup within a couple of years.

The big uncertainly though is environmental and government pressure may make heavy oil more difficult to grow in today’s world.
 

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It does remain to be seen how much of a price boost can change AB oil field economics. If the new pipelines reduce discount by $10/bbl and world oil price settles in about $65/bbl, there definitely will be a rebound of some degree in oil field activity. If nothing else, the current pessimism will turn to optimism at some level. Sometimes psychology is more important than hard facts. The key will be getting TMX into operation. It will likely have the single most impact of all 3 pipeline projects. That still does not change the natural gas bust that does not get talked about much. It will take LNG production to make any difference in natural gas production activity.

Like LTA suggests, I'd take my minor price appreciation and run. One does not need the distraction of a potential leaky ship.
 

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ludetuner...you may want to read Garth's blog today...another consideration affecting your decision

https://www.greaterfool.ca/

"If more condo buyers knew what they are buying into, many would freak. They’d bolt. And so they should. A liability disaster may be unfolding."
 

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Discussion Starter #10
ludetuner...you may want to read Garth's blog today...another consideration affecting your decision

https://www.greaterfool.ca/

"If more condo buyers knew what they are buying into, many would freak. They’d bolt. And so they should. A liability disaster may be unfolding."
Thanks for sharing. While I agree that there are risks in condo ownership, especially with increases in Air BnB Rentals, special assessments/etc., this article seems a bit overboard as it’s essentially saying not to buy a condo anywhere, not just Alberta.
 

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The Garth Turner post is mostly about skyrocketing insurance rates on condos due to climate change risk.

People who think climate change doesn't have a cost should read Turner's post.

The main issue seems to be that insurance companies want nothing to do with insuring a $100 million dollar condo building.

If condo buildings can't secure insurance, mortgage companies won't lend to potential buyers, so the condos won't sell and their values will drop.

Catastrophic loss events like the 2016 Fort Mac fire, the blazes in central and northern BC or the 2013 Calgary flooding combined with climate change projections, changing weather patterns, escalating building and replacement costs and inflated real estate values (thanks to demographic demand and the mortgage stress test) have seriously goosed condo values, and lie at the heart of a liability crisis. Insurers are backing off. Risk has exploded. Most have no idea what may be coming.
 

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Anyway the communal aspect of owning a condo would remove them from my things I want to own list.
 

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Thanks for sharing. While I agree that there are risks in condo ownership, especially with increases in Air BnB Rentals, special assessments/etc., this article seems a bit overboard as it’s essentially saying not to buy a condo anywhere, not just Alberta.
That's Garth's style. But there's usually some truth behind the hyperbole. I don't see how it is specific to condos, we've seen the same here with houses in flood prone areas. Insurance premiums go up, if you can insure at all for water damage. Values go down. Selling becomes harder. Homeowners cry on tv. It's nothing new, except perhaps that condo owners tend to be less aware of such things. All they think about is the monthly payment.
 

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I believe the Calgary market will remain relatively flat for two-three years at least.

There is a lot of condo junk on the market...at all ends of the spectrum. We rented a higher end condo four four years. Owner was assessed several times. Work was starting on several buildings as we left. Looked like building envelope issues to me. Never made a dime in four years on that rental and the value decreased. A fair amount of litigation going on as well. Some builders have a terrible reputation.
 
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