Alberta Cities Come in 1st and 2nd for Best Places to Invest in Canadian Real Estate PLUS Edmonton Real Estate Forecast 2009 and 2010 Outlook

According to an article in the Canadian Real Estate Magazine, Edmonton takes first place in the best areas to invest in real estate in Canada. Whether oil is $50 or $100, Edmonton’s underlying economy is poised to be a national leader over the next decade. Calgary followed closely behind. Second in corporate head office locations in the country, lowest in unemployment and highest in average income, Calgary will challenge Edmonton as leader of Canada’s economy. Five Year Cycle: In Canadian real estate investing, you’ve got to be able to hold onto a property. It’s not like buying a stock that you sell a few days later because it went up a few dollars. I use a five year cycle, because that seems to be the time frame when you can trade up or move on. According to the Canadian Real Estate Magazine, the outlook for Alberta real estate is promising: The economy will grow by just 1.2% in 2008, as output has declined in goods-producing industries such as manufacturing, construction and mineral fuels. With these industries expected to rebound, Alberta is forecast to generate real GDP growth of 2.6% in 2009.

Edmonton Real Estate Forecast 2009

According to the Canadian Real Estate Magazine, Edmonton Real Estate forecasts for 2009 are very promising. A growth rate of 4%, according to the Conference Board of Canada, in part due to oilsands development in the northeast parts of Edmonton, construction and infrastructure activity, is making forecasts for Edmonton real estate 2009 a key player for property rental returns. According to Don R. Campbell, president of REIN, Calgary, “With over $200 billion of investment pouring into Northern Alberta in the next vie years we will witness a dramatic growth in jobs, which will attract people from across the country and around the world, each and every one of them requiring housing either rental or purchase in Edmonton real estate 2009.” In addition, the completion of the LRT route from Health Sciences Station to Century Park central Edmonton real estate at the end of 2009 is expected to bump up the 2009 forecasts for Edmonton real estate values by ten to even twenty per cent says REIN. In 2008, the average price of an Edmonton condo was $228,750 according to Royal LePage, which is one the most affordable and undervalued real estate markets in all of Canada. CMHC figures show the average monthly rental income for a two bedroom Edmonton property was sitting at about $1,000 per month. 2009 Edmonton real estate investors forecast such as Bill Briggs, a local realtor for Re/Max Real Estate Central Branch says that property investors in Edmonton tend to purchase mid to lower priced single family homes as well as apartments and condos to achieve good cashflow. The forecast for 2009 in Edmonton real estate values is that cashflow will continue to be a great positive for the markets while property values should stabilize by mid year. “Proximity to the University of Alberta, the Northern Alberta Institute of Technology and Grant MacEwan College provide a huge number of prospective home renters,” he says. Edmonton condo forecast for 2009 might be the best opportunity for cash flow because these units tend to rent faster and are expected to see a 12.2% increase in rent by the end of 2009, according to CMHC.

The 2010 Outlook for Edmonton Real Estate

According to many experts, now is a great time to purchase Edmonton property. There are several factors that result in this conclusion. Firstly, mortgage rates and lending are at all time lows in the history of this country. With BoC lending rate at 1% as of February 2009 and an expected drop by 0.25% to 0.5% in the upcoming Bank of Canada announcements, the variable rate mortgages that are tied to the BoC lending rate to some point, will possibly hit the lowest point ever in the coming month. The 2010 outlook for Edmonton real estate is that the rebound in commodity prices such as oil and gas will have a very positive effect on the Alberta economy in general, with Edmonton property prices in 2010 outlook and forecasting expecting a high single digit gain through the year. Variable rate mortgages are very low right now, and waiting even 6 months may mean a difference in one or two per cent over a course of a five year term. Any drop in Edmonton real estate prices in 2009 or 2010 will be offset by the increase in mortgage interest rates, so there would be no real advantage to wait if you, as a homebuyer, are ready to make a new Edmonton home purchase. Secondly, the Edmonton real estate outlook 2010 and beyond is that with many home buyers waiting it out to see where the market goes this year, and with forecasts for 2009 and 2010 in Edmonton real estate calling for a big dip in sales volume and a small decrease in sales price, there will be many more people looking to buy a home in Edmonton property market in 2010. with an increase in homebuyers, comes competition again, meaning that the new Edmonton home of your dreams may have multiple offers and possibly bidding wars for lower priced houses and condos. Why go through the tense wait of bidding wars when you can submit a single offer in 2009 Edmonton real estate outlook and forecast and end up with a great home that you love. Thirdly, oil and gas make up a big part of the Edmonton economy and is a driving force for the province of Alberta in terms of revenue, infrastructure, business and population growth. As commodity prices are at their all-time lows in the past 20 years and with the rise and growth of both China and India coupled with the insecurity of other gas and oil producing nations, Edmonton real estate forecast for 2010 and 2009 is much better than what most headline news portrays. With a growing demand in these developing nations, it is important for Edmonton to make sure that it gains the respectable relationships with these nations and to promote other clean energy sources for the future of Alberta. With a rebound of oil and gas prices expected in late 2009 and through 2010, the Edmonton real estate outlook and forecast is very good as property prices here have always had a direct relationship to commodities. With more people moving into the Edmonton area in 2010 and with an increase in the number of jobs coupled with a stagnant home building industry for the last two years, there will be a shortage of rental and owner occupied housing in Edmonton real estate in 2010 again. For all of these reasons, Edmonton real estate outlook 2010 and beyond is for a strong and stable market for both buyers and sellers.

RRSP can be use as a tool to invest in Edmonton, Alberta real estate

It’s true that you can also use RSP to as an investment tool to invest in Edmonton properties. I’ll look at the benefits of how to do this in a series of upcoming articles and the best ways to tap into this form of investing versus investing in the traditional stuff such as mutual funds, GIC, stocks, etc.

What is a RRSP?

Investing in Alberta real estate with RSP is easy once you understand the basic. Let first look at what is a RRSP. RRSP is Registered Retirement Savings Plan and is one of the few tax benefits that are still available to individual Canadian taxpayers. I called this a tax benefit because you invest in RRSP with before taxes dollars. This is done by using a special investment account that is registered with CRA (Canada Revenue Agency). The amount invested into RRSP is based on before taxes dollars and allows you at the same time to also reduce your taxes for that year based on the amount that you contributed. This amount is calculated by CRA and can be found in your last year taxes return. If you have not contributed before or have not contributed to your maximum you therefore, have an unused contribution room. In any given year you are entitle to contribute to the maximum that you can afford and reduces your taxes at the same time. You might also borrow money to invest in RSP as well up to your annual contribution limit.

Annual Contribution Limits for RRSPs for your 2008 Alberta’s taxes Return

The maximum one can contribute in a year is called the “RSP deduction limit.” It is also known as the “annual contribution room” or “deduction room.” Your RRSP deduction limit is found on your Notice of Assessment or Notice of Reassessment from CRA. For example your 2008 limit would be on your 2007 Notice of Assessment. The annual limits in a nutshell are as follows:

Annual Contribution Limits
Year RRSPs
2007 $19,000
2008 $20,000
2009 $21,000
2010 $22,000

The Canadian government allow us taxpayer to deduct for example, in this case in your 2008 return $20,000 from your “earned income”. If this number is higher in your 2007 Notice it just mean that you have not contributed to your maximum RSP deduction room from your other previous years and this extra cap room can be use in your 2008 to help you save some money when you do your filings for your Alberta’s tax return by the April 30th deadline.

Why is the Canadian government so generous?

You might asked why is our Canadian government being so generous and giving us a tax break if we invest with them by buying RRSP? This is because the government know that the more people put away the less they will have to pay us down the road when we retired. Also the government might not have enough funding to pay everyone if we all decided to calculate CPP or Canadian pension plan when we retired. Depending on when you retired this money might not be so available by the time you retired as it might be used up by others such as the baby boomers when they retire over the next 10 to 15 years. This is especially the case if you’re just currently entering the workforce. And this is more likely so as Edmontonians have such a young workforce! To give us more incentive the Canadians government have long came up with a plan to allow us to save taxes and at the same time save for our future. This to them is a win-win philosophy and that is why there is always such a big push to put money into RSP around the February 28th taxes deadline times.

An example of Tax Savings using RSPs

For most Canadians investing in RRSPs is an excellent ways to save money for their future rather they retired at age 65 or earlier. Lets use a simple example here of how substantial this taxes savings can be for you in your next 2008 Alberta tax returns. Suppose you are one of those hard working Albertans and make over $100,000 a year and decide to contribute $20,000 to your RSP this year.

Earned Income - $100,000
Less RSSP contribution - (20,000)
New Earned Income or Taxable Income - $80,000

Providing this is your only deduction for your 2008 Alberta’s filing this year, this can equate to a tax savings of $7,800 just base on your contributing your maximum RRSP for 2008. Here is a simple