Will Alberta Real Estate Bring the Rest of Canada Down?

Alberta has been riding high on its horse for awhile now. And really, who can blame the province for its exuberance? When you have the kind of oil they do, and the subequent growth, it's easy to see why Alberta has been the envy of many provinces for some time. Drawing in workers from all parts of Canada and abroad, it's been the fastest growing province per capita over the past ten years, and it still manages to keep its books relatively balanced, at least as far as Canadian provinces go. Though it does have a debt of $7.7 billion, it is nothing compared to Ontario's massive $281 billion debt. These happy times have led to real estate and population booms in both Edmonton and Calgary. Though prices are not as high as here in Toronto, the increases have been huge over the past 20 years in the Prairie provinces.

Of course, the good times have taken a bit of a pause in Alberta with the falling oil prices as of late. Jobs are slipping away, and real estate sales volume is at its lowest point in seven years. Some believe it is in an early stage of a correction.

As we have seen across Canada, a change in the demand for Alberta oil can effect things on a national level. Take, for example, the value of our dollar. Alberta oil has played a large part in bringing the dollar's value down across the country. So, would this mean that a slip in Alberta real estate prices could cause a domino effect in the rest of the Canada's provinces?

I think the short answer, in my humble opinion, is probably not. The fact that the dollar has slipped creates better opportunities for provinces like British Columbia and Ontario. Ontario manufacturing can now sell its products internationally at a lower price making us more competitive.

Of course, it could be a tipping point for the rest of the country if a certain amount of fear gets injected into the national consciousness. Real estate is run on emotion, despite the numbers behind it.

National real estate crashes are possible. Everyone remember the U.S. during the last decade. Prices fell an average of 30% across the country, much higher in states like Nevada and Florida.

Canada could have a correction is real estate, but it would require, in my opinion, a big change in the interest rates or major changes in the world economy. A sharp increase in interest rates would likely pause the real estate market across the country, and in some cases, lead to a fall in price. The thing is, rates will only go up if the economy of the country is undergoing strong growth, but with oil down, that's not the case.

The dropping oil prices in Alberta have had the opposite effect. Interest rates are lower now than they were last year making the interest costs on your mortgage lower this year than last year for the same priced home. Foreign investors are now seeing that Canada's low dollar may be an opportunity to get in on this market while the dollar is down, though some may be waiting for the dollar to bottom out.

The first few months of this year have shown me that the price increases here in Toronto are similar to last year. It's a seller's market for the most part. Our Toronto real estate market is currently affected more by specific local factors than by national ones. There is a shortage of houses in this city. So, house prices, and condo townhomes are increasing in value more than larger condos. Certain emerging neighbourhoods are attracting more buyers who are priced out of established neighbourhoods. Transit, or lack of it, is determining where people will live. A well-built, well-run condo in a well-planned neighbourhood will do better than one that is not.

All in all, the cities of Alberta run a much stronger boom/bust cycle because their economy is tied to the resource sector. Luckily in Toronto, we have a diversifed economy that is not tied too much to one thing, and our steady appeal to immigrants from all over the world will keep the city growing and the real estate market healthy without the massive explosions of growth followed by a bust, like Alberta.

Can You Still Afford to Buy A House Near the Subway?

The winter of 2014 may have marked an end to an era for many first time buyers and savvy investors looking to purchase a Toronto house or investment property.  Slowly but surely, neighbourhoods along the Bloor/Danforth line that were once affordable have been disappearing.  Now, it looks like the last two neighbourhoods of house affordability near the subway are turning over. Up until this year, one neighbourhood in the east and one in the west were still in their early stages of emerging as a revitalized neighbourhood for many buyers who wanted to be near the Bloor subway. The Danforth Village and Wallace-Emerson were the last two areas to go. In the west,  Wallace-Emerson has become a place of bidding wars and steep competition. The local indie businesses have arrived here from Body Harmonics Pilates to The Hub, the new indie coffee shop. Nowadays, some are even throwing around the terms "new Queen West" to describe the influx of hip stores and trendy shops arriving. 

In the east, the Danforth Village from Main Station to Victoria Park has been a growing destination for first time buyers, and investors that continue to roll along the Danforth line to the end of the old Toronto city limits. Though it does not quite have the hip factor as far east as Vic Park yet, this is also a place of competitive bidding wars, strollers, and great transit. Though there are a few spots where a first-time homebuyer can pick something up for under $500K at the moment, even affordable houses in this neighbourhood are becoming as rare as spotting a sasquatch in a tutu downtown.

Of course, buyers who have bought here will be thrilled that they have invested early enough to benefit from the rapid price appreciations of these emerging neighbourhoods on the Bloor-Danforth line. Many blossoming investors and first time buyers may feel a little blue at this news. There may be a sense that they have missed out on a time when buying a house near quick and easy transit was possible. 

Before you release those bitter tears from your sad eyes, and  run off to buy a suburban house in Milton, let me tell you that there is hope. The end, for you, is not nye. You can buy a house or investment property in an emerging neighbourhood near good transit in Toronto in the years to come.  The only problem - it's not built yet.

So, perk up first-time buyers and investors because the Eglinton-Crossway is coming! Maybe you do not spend much time up on Eglinton, but it doesn't matter because this transit plan will transform many neighbourhoods and create quick access to downtown. 

How fast will these trains move? Well,  the expert estimations of Metrolinx have a trip from the far west destination of Mount Dennis to the Kennedy station in Scarborough at 40 mins. Not bad at all. That's 60% faster than the current buses plus there is a good portion of this LRT that will be underground from Keele to Laird and a dedicated lane above ground in all other portions of this line, making it traffic proof. For more detail, check out this map.

Who's going to benefit? In the west of Toronto, you will see neighbourhoods like Mount Dennis, Caledonia, Keelesdale and Weston become much more connected to the downtown, turning them from inaccessible outposts to easy transit hubs. And right now, these neighbourhoods carry some of the most inexpensive real estate in the city. Places like Weston even have some incredible Victorian and heritage homes. Again, you don't have the yoga shops and espresso bars yet, but this is why this place is still inexpensive. Eglinton, from east to west, will see an improvement on its commercial strip, though some businesses may suffer during construction.

The big winner in the central location will be Oakwood. Still undervalued, in my opinion, and soon to be a great access point to the rest of the city.  It will make its northern frontiers much more appealing, in addition to being a spillover neighbourhood from the Wychwood neighbourhood to the south.

 In the east, parts of Scarborough will feel significant improvements, especially in neighbourhoods like Clairlea-Birchmount that will also receive the overflow from the Danforth Village once those homes become too expensive for first time buyers and investors on a budget. 

Maybe you're thinking: Houses are too much work. Condos are where it's at.  If that's the case, this transit line should interest you as well. In many of the neighbourhoods mentioned in the east and west section of the line, there is little or no condo development, and believe me, it will be coming, and those first roundsof condos will be priced lower than the ones to follow.  

Service on the Eglinton Crossway is scheduled to start rolling in 2020.  So, you may need to wait to have a good return on this investment. Still, this is the largest transit expansion in Toronto's history that literally crosses the entire city. There are real opportunities to be had. So, make sure you don't miss the discount house prices near good transit. It won't last forever.