June 2007 Volume 3, Number 6
In This Issue
· Saskatchewan Part II
·
Investment versus Speculation
·
In Closing
Real Estate Links
Stef Lukas, our Realtor
Richard Anderson, our Mortgage Broker
The Real Estate Investment Network
An Online Listing Service
Another Online Listing Service
The Multiple Listing Service
Contact Us
Bill Biko
President/Investor Relations
403-870-4663
In This Issue
· Saskatchewan Part II
· Investment versus Speculation
·
Real Estate Links
Stef Lukas, our Realtor
Richard Anderson, our Mortgage Broker
The Real Estate Investment Network
An Online Listing Service
Another Online Listing Service
The Multiple Listing Service
Contact Us
Bill Biko
President/Investor Relations
403-870-4663
Saskatchewan Part II
So one month after writing about Saskatchewan, out comes an article from CIBC World Markets showing Saskatoon having the best job market and resale housing market in the country. Wow talk about egg on my face. Of course if we dig a little deeper we find out a bit more information.
This same article also shows Calgary is leading the country in economic momentum and using their unique scale that takes into account employment, housing and bankruptcies Calgary has a score of 33.2. This is just slightly ahead of Edmonton at 31.4. For comparison, Saskatoon comes in at only 17.7 and Regina at 16.3 which are both great scores, but when you compare it to what is going on with Calgary and Edmonton, they are left in the dust.
The important part to take from this is while Saskatoon and Regina are on an up surge; the true economic growth is still going on in Alberta. This will help to keep vacancy rates down, rents up and property values increasing for an extended time period. As the saying goes, sometimes we cannot see the forest for the trees.
One other tidbit I came across with my research is that 2007 was the first year that Saskatchewan had a positive population growth rate in many years. It was a whopping .12%, one of the keys for Real Estate values increasing is an increase in population putting pressure on demand. An increase of .12% is not very much pressure, especially compared to Alberta's 3.27%.
The whole article can be found at the CIBC World Market Web site, or simply follow this link, Metro Monitor Report, while the population growth information can be found here, Saskatchewan April Report.
Investment versus Speculation
For most of us, we only have a limited amount of money to invest, a certain time horizon in which it needs to grow or a combination of both. No one wants to take too large a risk with their hard earned money, so it becomes even more important to know what the difference between an Investment and a Speculation.
Most commonly these two terms come up when dealing with the stock market and as such they are explained in the following manner. An Investor is someone who looks at a longer term picture and purchases stocks in a company for the potential for growth over time. Warren Buffett, the legendary stock investor comes to mind as someone who buys companies based on their long term potential and almost never sells his stocks which generates wealth. A speculator is someone who is looking for a quick turn on a stock, usually through catching the market unaware, fluctuations in the market or just fast timings on some trades. This usually fits the description of a day trader (of which no famous day traders come to mind, coincidence?).
In Real Estate an example of an Investor would be someone who purchases a property in an area with a potential for growth over a longer time period creating wealth in the process. A Speculator would be someone who purchases a property, renovates it and resells it hoping to make a fast profit. Another example of a Speculator is someone who purchases a property, without doing their diligence, in an area that has no long term upside and hopes they can rent it out and resell it for more. They are simply speculating they will make money without doing the necessary homework or diligence required.
Now many people can make money through speculating, and many can make money through investing, the speculators are the ones who garner the most attention. Why? The lure of a quick buck is one of the items that come to mind, in the stock market world speculation is exciting, and fast paced and could even be labeled exhilarating. There is nothing thrilling, or heady or sexy about buying a property for five years to rent out.
This is why you hear all the stories about people who made a ton of money off stocks, some quick investment or perhaps currency trading. Talk around the local water cooler at work rarely gets some one spellbound when you are talking about how much principal you are paying off in the 35th month of your 36 month mortgage. Yet when you talk to the truly wealthy people out there, they usually have investments in Real Estate which are either helping to extend their wealth or growing their wealth.
If you look back to last month's article regarding dominant thinking,
there is a definite tie in. The masses get excited about speculating and
the opportunity to make fast money, while the wealthy get bored by investing
and creating wealth. Now we do both flips (speculating) and long term
holds (investing), but we use the flips to help finance ourselves into
more long term holds (see we really do have a plan!). Yes we have done
quite well with buying and reselling properties, but this doesn't even
compare to the amount of wealth we have currently created and are continuing
to create through buying and holding onto property in the booming economic
situation in Alberta.
In hindsight if we could have held onto every property we ever bought and resold we would even happier right now. Our first property we ever flipped in 2003 we sold for $307,000. Current City assessment is now $503,000. Our second flip we sold for $260,000, current City assessment, sigh, $449,000. Well it seemed like a good idea selling them at the time!
In Closing
We are almost half way through 2007 and we have had quite the year so far. We realize we have to slow down a bit as we simply cannot keep up the pace, and this is the same effect you will see with the Real Estate Market.
So when you see the reports in the paper about the markets dropping off, remember what they are comparing it against. 2006 was a record setting year in multiple categories, 2007 has already had some record setting sales numbers and more to come. So when you see the headline talking about new home sales or resale homes dropping 10%, we are still looking at 90% of a record year and still some of the best numbers in the country if not the continent!
Summer is just days away, so don't forget to take some time out for yourself and
fit some rest and relaxation time in. I'm always eager to answer any questions you may have so please continue to send them in.
Regards,
Bill &
Karen Biko
Kat
www.housez.ca
Calgary, Alberta
Tel: 403.870.4663
Fax: 403.203.1753
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