What’s the best film trilogy of all time?
Many of you are going to say Lord of The Rings, and that’s fair, although I consider that to be the same movie divided into three. And that’s unfair of me to say, since I only saw the first film (and didn’t like it), and I also don’t support the “fantasy” genre.
Star Wars comes to mind, but that was a trilogy until they made three prequels, then George Lucas sold his company, and they’ve since made countless sequels and prequels.
Most people will say The Godfather, and since Godfather II won “Best Picture,” I can see this trilogy as a real candidate, even though Part III was poor.
Any Clint Eastwood fans? First, there was “A Fistful of Dollars,” followed by “For a Few Dollars More,” and then finally, “The Good, The Bad, and The Ugly.”
Indiana Jones, perhaps?
The Matrix? Although, they’re releasing a new movie as we speak, so is this a true “trilogy” anymore?
When I think about my favourite movie trilogy of all time, I don’t really need to think because it’s already etched in my brain.
The long-time TRB readers already know.
Heck, even the newer readers should know.
I have a t-shirt that says, “SAVE THE CLOCK TOWER” because I love this series so much.
My wife and I briefly considered the name “Emmett” for our son, because of the character, Doc “Emmett” Brown, in the film.
I love to joke about Delorians. And talk about getting my car up to 88 miles per hour. Not to mention, any discussion about a “flux capacitor” must have me present.
In case it’s not obvious by now, my favourite movie trilogy ever is “Back To The Future.”
I was raised on the first film in that series. We had a dubbed copy on Beta-Max that we watched religiously. We had so many parts of that movie all wrong. We thought “The Libyans” were “The Idiots,” as an example. I was 5-years-old. How the hell was I supposed to know who a Libyan was?
I know every line from that movie by heart. Part II doesn’t get much love, but I was obsessed with the notion of “the future” during my childhood, and it’s for that reason that I’m disappointed we don’t have flying cars and hoverboards in 2022, let alone 2015.
The Die Hard series is a distant runner-up, and not just because we watched the first “Die Hard” on Laser-Disc every Christmas Eve in the Fleming household in the 1990’s, but also because I love John McLaine. Who doesn’t?
It should come as no surprise that I love writing blog posts in trilogies.
Last week’s epic breakdown of the Ontario Housing Task Force’s report consisted of three parts, not quite on par with the three Austin Powers movies, but I enjoyed them more than the Iron Man trilogy because I don’t enjoy watching movies entirely comprised of C.G.I.
My beginning-of-year posts are always at least two-parts, often trilogies, as are my end-of-year themes.
Back in yesteryear, I loved to write posts and divide them into three parts, but nowadays I simply post some gargantuan 5,000-word monstrosity all at once, much to the chagrin of some of my readers who apparently have seven minutes to read TRB in the morning but not eleven.
So with that said, when a reader asked on Tuesday if I could take a look at the investment boom in Calgary, I’d be lying if I didn’t admit that I was already thinking that post was destined for a sequel. I just didn’t know where that sequel would take us.
Last month, one of my clients was emailing me pre-construction projects in Georgetown, Ontario, as we both lamented the ridiculous prices in the GTA, and he dropped this knowledge bomb on me:
And this is why a lot of us pre-con specialists in TO have skipped the last two years here and have gone balls deep in Calgary. 5% down, rental guarantees, property management and no closing costs (whereas here new pre-con closings costs are like 8% of purchase price).
I got a 3+1 townhouse with heated garage in Calgary (25 mins outside the core, but walkable to LRT, so this would be like something in Etobicoke here) for $400K all in, completes in 2024. Meanwhile a resale townhouse in Oshawa, $1.2M. I know it’s the Toronto Realty Blog but watch out here comes Canada’s sunniest city (aka Calgary).
But what the heck do I know about what prices “should” be in Calgary?
In January of 2022, the average sale price in Calgary was $510,701.
If you recall Tuesday’s blog, you’ll note that the average price in The Yukon in November of 2021 was $656,800.
What sort of conclusion can we draw here?
Oh, wait, you’re not ready to draw any conclusions about prices? You’re still fixated on the comments from the Yukoners?
It’s really, really hard to pick a favourite, but I think they had me at “STAY THE FUCK OUT OF YUKON!”
There were a lot to choose from, and picking my favourite comment would be like choosing my favourite child; it’s just not fair.
But maybe I don’t blame these presumably-pleasant Yukoners. I would be very defensive about my hometown if I lived there and watched the city folk roll in.
How do residents of Prince Edward County feel after watching Torontonians invade over the past decade?
Growing up, my father and his friends owned a house in Park City, Utah, and I was fortunate enough to ski there from 1988 onwards. Despite being a well-known ski destination and former Olympic Games host, back in 1988, nobody had ever heard of Utah, let alone skied there. Park City was untouched. It was unknown. Main Street was nothing but pizza parlours and t-shirt shops. But by 2004, the last time I went there, Main Street was flogging jewelry, furs, and timeshares. I can’t fathom what it looks like today.
Many of us have our “own little slice of Heaven.”
Some might call it our “own private Idaho.”
Except for my family actually has a house in Victor, Idaho. So what would we call it?
As far as Yukon housing prices go, it seems like they’re being bought up faster than just about anywhere in the country, and whether the buyers are investors or end-users remains to be seen. I don’t take the comment from Tuesday’s blog personally, and on the contrary, it’s only heightened my interest in purchasing a property there so I can head up with my buddies to go ice-fishing, draped in Toronto Maple Leafs gear from head-to-toe.
As far as Calgary housing prices go, let’s get to it.
I want to run a quick experiment, first and foremost. It’s non-scientific, but if we go to www.buzzbuzzhome.com and simply type “Calgary,” we find 291 “new developments.”
As of 2021, the metro population of greater Calgary is 1,481,806.
Greater Toronto, on the other hand, had a 2021 population of 6,712,341, making it 4.53 times the size of Calgary.
If we multiplied the 291 developments in Calgary by 4.53, we’d expect, based on population, to find 1,318 new developments in Toronto.
However, BuzzBuzzHome shows a mere 566 new developments in Toronto at the moment!
Again, this is hardly scientific, but it shows you that despite believing Toronto to be “full of cranes in the sky,” it’s Calgary that, relatively speaking, is experiencing a real estate development boom.
Let’s take a look at resale first and foremost.
Just like Toronto, there are all kinds of different pockets of the downtown core, some higher in price than others. Then at the same time, there are buildings that are more or less popular, newer/older, and the prices can vary.
But for this experiment, I called a good friend who relocated out there for work two years ago and he’s pointed me in the right direction.
Here’s a listing for a 2-bed, 2-bath, over 1,000 square feet, in a condo built in 2015:
$549,900. Or somewhere around $540 per square foot.
That’s about half of what the same condo would cost in downtown Toronto.
Browse Realtor.ca and you’ll find lower-cost options, but as with Toronto, anything that looks too good to be true, probably is.
So what’s all this talk about “investment opportunities” in Calgary then?
Well, as my client alluded to above, the market works differently out there than in Toronto.
First and foremost, only a 5% deposit is required with many of these developments. In Toronto, it’s usually a minimum of 15%, but 20% is most common, and some developments want 25% in total over the course of a year or more. Being able to purchase with a mere 5% down means that the investor can either commit less capital to the investment or, potentially buy four properties with the same investment that he or she would commit to a Toronto investment.
Secondly, as my client noted, the closing costs in Toronto can be upwards of 8% of the purchase price. Whether that’s levies and fees from the developer (much of which goes to the municipality and province) or whether that’s land transfer tax, it’s pricey to close on a Toronto pre-con! In Calgary, if we’re talking low closing costs from the builder combined with non-existent land transfer tax (they have a “property registration fee” that is a few hundred dollars), then you can see where the savings exist right off the bat.
So, do you want to see a current example?
A project called “Skyview North” was launched this week, and here is their price list:
$299,900 is a price point I haven’t seen in Toronto since about 2010.
And at 664 square feet, that’s a paltry $451 per square foot.
Not only that, how about this little ditty:
One parking spot included with every unit.
I’ll bet you didn’t see that coming!
In Toronto, investors, er, buyers, can only purchase parking spaces if the unit meets a certain size or price threshold, usually a 2-bed, 2-bath, for example. And parking spaces are running about $70,000 on average, by my estimation.
In Calgary, a parking space is essentially free.
In this particular project, they want a 5% deposit upon signing and 5% in 90 days. That’s it. That’s 10% in total until closing in 2025.
Here’s the floor plan:
So what does the return on investment look like, you ask?
Well, I’ll be honest: I’m not going to break it down for you.
But that’s only because it’s already been done for me!
The developer sends out a detailed financial analysis with their launches, which is something we don’t see here in Toronto (or if we do, it’s complete bullshit).
Check this out:
Feel free to poke holes in the numbers above, if you’d like.
But there’s no land transfer tax out there.
Rents are guaranteed for the first two years.
“Repairs and maintenance” will likely be more than $0, but I guess that depends on what type of landlord you want to be.
Of course, they are basing their $144/month positive cash flow on a 20% down payment, and I noted that you can buy into this project with 10% down, but remember that the CMHC mandates a 20% down payment for all investment properties, so those 5% or 10% deposits are merely the monies paid to get your foot in the door. You have to finance the condo once you actually own it.
Now, the financial analysis is really driven home with this:
A 186.8% return on your initial investment, inside of five years.
Call this a fabrication if you want, or poke more holes. Be my guest!
But this is what’s driving the real estate boom out in Calgary, or the “investment frenzy” as blog reader JF007 commented on Tuesday.
Now, would you like to hear my client’s take on all of this?
She or he was all geared up…
The Case For Calgary (Go West, Young Man!)
I’ve bought 6 properties in Calgary (5 condos and 1 townhouse) for a total present value of $2.2M, on only $130K down (not a typo). The properties will be delivered in 2023 to 2025.
Calgary prices need to rise by at least 60% in a few years in order to maintain the Calgary-GTA price gap. Otherwise, prices in the GTA will be 4x that of Calgary, which is impossible, long term.
Back to the math: 60% increase by 2028 (likely sooner), portfolio is now worth $3.52M ($1.32M gain) off my $130K investment. Voila, 10 bagger!
Bonus: not only has my net worth increased by $1.3M, but I keep all the properties long term as they pay for themselves and I get an annual mortgage principal pay down of $60K a year which is basically the average salary in Toronto.
Factor in a modest 3% appreciation over the years (let’s face it, it’ll be higher!) and the number becomes so big I’ve lost count.
If I am wrong (I won’t be), who cares? I am controlling an 8-figure portfolio here in Toronto. This is as asymmetric a bet one will ever find in real estate.
One more thing: did you know there was once a time when the average price in Calgary was higher than Toronto? That was 2006. Oil was $100/barrel then. It will be $100/barrel this year. I’m not sayig that Calgary is going to overtake TO any time soon (or ever for that matter) but there is no way this city can remain this cheap for long. Yeehaw!
Well, there you have it, folks!
Calgary is exploding! And it’s being driven by that all-too-familiar culprit: investment dollars.
Shall we start the bubble talk, or is that premature?
Speaking of premature, blog reader Derek and I shouldn’t have chartered that plane to Whitehorse just yet. Don’t get me wrong, it isn’t because we’ve decided not to go, but rather, we had booked a 40-seater and now I think we’ll need 200+…
Have a great weekend, folks!