Real Estate

The question of whether to rent or buy real estate seems to have a different answer for new grads than it did for their parents. Cost of living is higher, people are allocating more net income to housing than ever before, and the volatile economy hasn’t helped matters. Though Calgary is no stranger to boom and bust, oilpatch professionals say it’s a different downturn this time, and the effects are longer lasting. Home prices in Calgary have remained quite stable during the economic downturn, a confusing statistic until you investigate further. Local news sources state the sharp population increase attracted to Alberta was mostly due to incoming workforce.

People rented in order to settle quickly, and to see how their new jobs went. The barrage of layoffs saw more renters leave the market for job prospects elsewhere. So where does that leave those of us pondering whether to rent or own a home? And what does home look like now? We’ve taken these questions to two alumni with two different perspectives. Mark Hawkins, BComm’04, owns Rentfaster.ca, a comprehensive resource for both landlords and tenants serving every demographic. He says the changes over the last year are very noticeable. Rental pricing in Calgary has dropped 25 to 35 per cent, depending on the property type.

“Luxury properties and furnished rentals have been hit the hardest, while apartment-style buildings have fared a bit better. People are searching, renting and moving. Every day I see quality properties renting because they were priced for the market.” This puts the pressure on landlords to present the best possible product while spending wisely in the areas that provide the best return on investment.

Renting makes sense for many reasons, and not just for those starting out in life. The flexibility factor is unbeatable: when job prospects aren’t predictable, when you don’t want to part with a down payment, and when you want to monitor the market for your ideal home, renting can take the pressure off and provide freedom to change your mind.

Whether you travel for work or are now part of the snowbird set, “lock it and leave it” is more realistic when renting an apartment in a larger building since the utilities are usually provided and monitored by property management.

Paul Boskovich, MBA’11, Alberta vice-president of Genstar Development Company, is in the business of creating communities for those who don’t feel at home until their names are on the mortgage. He agrees that owning real estate does bear some risk. It’s not meant for short term; high transaction costs preclude a short stay, job loss might cause foreclosure and the number of days on market required for sale at a proper asking price can take longer than the vendor has.

When asked about the value of purchasing real estate in Calgary at this time, Boskovich points out where value for the dollar is evident. “People take the opportunity to trade up in a down market … to move into a single family or fee-simple semidetached home.

“Civic policy will make the single family home more scarce than the other models, so people gravitate towards (houses) where possible. We’re still seeing fairly strong demand in the entry level housing market, and that’s where most people reside, so generally, the supply is still constrained.” The industry can only respond so quickly to an uptick in housing demand, since the process takes time and quality control.

And where is demand? Boskovich answers. “There’s an attraction to vibrant neighbourhoods, but that doesn’t just exist in the inner city where the tradeoff is a smaller space. Many new outlying areas are vibrant communities; they offer larger square footage homes, amenities within walking distance, and beautiful natural reserve areas. We’ve focused on providing that.”

Starting out and retiring look different today, as do our home choices. When pondering the rent or own dilemma, both Boskovich and Hawkins clearly put quality of life at the forefront. How we define that is up to us.