Keeping it Real, Edmonton, episode 3

Hello everyone!

Welcome back to ‘Keeping it Real, Edmonton’, where we have on Real Guests to talk all about Real Estate.

In today’s post, we are talking with local real estate expert Calvin Hexter to discuss the single-family property market, the ‘Boom or Bust’ cycle, and informed predictions for the remainder of 2024 and beyond!

**Please note, there is a brief glossary at the bottom of this post which describes certain real estate ‘insider’ language! If you’re lost, please use it as reference.

Q: How long have you been specializing in the single family market?

[Calvin Hexter]: “So I’ve been focusing on that, really since the beginning of getting [my license], which is 2018. […] We’re looking at about six years total, yeah. And then before that, I was an investor [beginning in] 2013. I bought a property, didn’t know what I was doing, and found a way to make it work and got smarter and then realized that, hey, I can help other people avoid many of the mistakes I once made. [Doing] that probably requires me to get my license. So guess what? I’m going to go ahead and get my real estate license.”

Q: So, when you’re working with single family or multi-family residences, what type of properties do you typical deal with?

[Calvin Hexter]: “I would say, predominantly, [we deal with] single family detached. In many cases, the home would have a secondary suite, whether it’s considered a ‘mother-in-law’ or legal. In many of their cases, you know, things like side by side duplexes would also be very common with suites. But I would definitely say that single family detached are probably 75%.”

Q: Do you find that’s true for most of the area? That it’s single-family detached? Or is that your specialization specifically?

[Calvin Hexter]: “It would be more myself specifically. There’s definitely some realtors that would specialize more in the condo market and so on, but for myself that’s just always been the bulk of business.”

Q: Alberta has a real estate cycle some refer to as ‘Boom or Bust’. Can you tell me about what the impacts of this cycle are with regards to vacancy rates and how they’ve changed over the last few years?

[Calvin Hexter]: “Absolutely. So, we’re in a position right now where we haven’t seen numbers like we are seeing today in Edmonton. What we’re seeing right now is housing prices have seen a big jump. Last year we saw a huge increase – and traditionally, whenever housing prices go up, it’s not too long afterwards that we tend to see [jumps] when it comes to vacancy as well.

Right now, we probably have some of the lowest numbers and vacancy that we’ve seen in a very, very long time. And I know because of the low vacancy, it’s also really pushed our rent prices up. I’ve never seen rent prices as high as they are today. When I talk to other investors that have been in this way longer than me […] they would also second that. [High rent prices] are one of the leading factors which [result in] lower vacancy. There’s just not enough options right now.

One thing that the city of Edmonton has enforced, as of January this year, which is really exciting, is a lot greater density within the inner city to allow more affordable living to help battle with the lower vacancy. We’re already seeing some really positive changes with it.”

Q: In our conversations with other local experts on this blog, we’ve heard that there’s lots of areas where there have been developments in reinvesting in local infrastructure. As this continues, do you feel this will have a positive impact on lowering vacancy rates? Or are they going to continue to remain high?

[Calvin Hexter]: “I can’t imagine that rents are going to be jumping that much higher than they currently are. I do feel like the amount of housing starts and density that’s happening in Edmonton is going to help with being able to bring more families, especially [in the] inner city.

If I had a prediction, and I put it in a bottle, and we were going to uncover it in the next five years, my prediction is that we’re going to see an absolute peak this year. I do think that we’re going to slowly start to see a decline in rent numbers, or they’re not going to be as high as they are today. I don’t think we’re going to see any kind of steady drop, but I do think that we are going to see something very, very gradual.

In the next five years, we will probably see another jump. I would bet that this is the height of what we’re going to see in 2024.”

Q: Within the areas that Edmonton has to offer, do you feel that there are any areas over/underpriced relative to the local economy and, if so, why?

[Calvin Hexter]: “Good question. I do think that some of the surrounding municipalities are seeing some pretty strong pricing. In areas like Saint Albert & Sherwood Park, demand has always been very high there and because there is such a lack of inventory made available, you know, comps – for anyone reading, comps are just comparables that you use as reference to help steer you in an understanding of what value is being interpreted in today’s market by buyers – and a lot of [these] comps, like from last month, won’t even be accurate to this month based on the steady increase of demand. If you’re in a municipality that has far less options, it’s just going to drive pricing that much higher, especially when you get into those emotional bidding wars.

There’s definitely some pockets of the city inside Edmonton that would be experiencing more of that. Certain communities, [like] UofA, have always been of high demand – there’s just not a ton of options. One area that we’ve seen the largest increase in demand is lots, lots that hold a size similar or close to 50 by 150 – that’s parcel size that I’m speaking in. Those lots have gone up drastically, likely because of the demand and the excitement across building high density buildings in the inner city.

For example, West Jasper is the biggest bag of marbles you’ll ever see with respect to property ages. You’ll have properties here from the 60s [all the way to] the 2020s. There’s no other community I can think of in Edmonton that has such a variety of builds, and that community has seen some of the biggest jumps in high density and even pricing as well. You know, people were thinking that a corner lot in West Jasper that was 50 by 150 was overpriced at 330, and now they’re selling for 380. That’s a massive jump, […] it’s very interesting to see. There’s just so much excitement around it.

Do the numbers really make sense at 380? I think in many cases, not. But I do think that there’s that level of excitement and FOMO that people who want to get into the market [have], and they just take action without doing proper due diligence. […] At the end of the day, it’s an interesting ride to see.”

Q: As of the last couple of years, all eyes have been on Alberta with regards to investing in real estate, and with the recent decreases in the interest rates from the Bank of Canada, many people would say that the market is in a state of flux. What would you say to new investors who are finding it hard to make the decision to ‘jump’?

[Calvin Hexter]: “I think it’s always important to keep it simple and focus on the fundamentals. Why are you investing in the first place, and what are the variables that we have? As a Realtor, it’s not just about trying to find you a property. It’s understanding why, you know, why are you getting into investment real estate? What kind of resources do you have available? Resources, time, energy, money? What’s your experience like? Then, we can make sure you walk away with a product or a business that’s going to feed you exactly the results you’re looking for.

So, I think if it’s someone that’s looking for cash flow or appreciation or just a property that’s always tenated, the outlook and areas of the city and even type of property we would recommend would change. So when it comes to something that I can offer a beginner or an intermediate investor when it comes to the right timing in the market, I don’t think there’s ever perfect timing. […] No-one has the crystal ball. […] If your main goal is cash flow, does that asset and does that area that you’re purchasing in, is it going to yield the results you’re looking for? If not, we need to pivot to something that makes more sense.

That’s another reason like you mentioned, you know, Alberta being such a hot topic. Edmonton specifically has always been known as a ‘cash flow’ city. [It’s] more challenging now because the interest rates are higher, but the rental rate are also massively higher than they used to be. It’s helping mitigate any type of losses that our investors are seeing, but I do think that there are some pivots that we can take to ensure that you’re successful. So stick to the fundamentals. Let’s understand why you’re getting into real estate. If the numbers make sense, let’s do it. If they don’t then let’s look at other options or be patient.”

Q: What are some predictions that you have for the rest of the year, specifically for the Edmonton area?

[Calvin Hexter]: “My prediction for the rest of the year is that I do think that we’re going to see a little bit of slowdown in August like we historically do, as parents get their kids ready for school and vacations. I do think that September, middle September, is going to be a good, busy month. Leading to the beginning of November, we tend to see a slowdown again.

I do think that, I mean if I were to guess what’s going to be happening with interest rates, I think that they’re very, very slowly going to be on the decline. I don’t know if we’re going to see another rate adjustment. I don’t have a crystal ball, but I do feel like [for] the next one, they might keep things as is. There’s so many factors that they’re looking to see whether we’re going to be on a constant drop – I don’t see us dropping as fast as we increased. I also don’t think that we’re ever going to see interest rates as low as they once were, but I do think they’re probably going to start stabilize closer to 3% or 4%, which I know a lot of people are going to be very, very happy about pricing-wise.

I don’t know if we’re going to be seeing much more of a hike outside of September – I do think that [in] September we’re going to see a big jump, a good relative jump. Then, in winter time, we tend to see a lot less activity. [Nobody] wants to move in the wintertime when it’s -30. We actually had a team member move in the coldest day of the year last year, and she said it was the worst thing she’s ever done. So, if you’re [reading] this, try and avoid moving in the wintertime. It is not enjoyable.

Q: What’s one single piece of advice you would give to families who are not just looking at the rental market, but who are looking to purchase their first home?

[Calvin Hexter]: “Team up with the right people. It’ll make the heavy lifting a lot easier for you. Don’t feel like you’re in this alone. Find the right professional when it comes to a realtor, lawyer, mortgage broker, contractor, or property manager. Find the right Realtor that has a power team they can connect you to, because there’s a good chance that everyone on that team, or most of them, are going to have a high level of credibility. Meet with them over Zoom, over coffee, and you can very quickly tell if they have your best interests at heart. But use that opportunity to ask questions and gain insight before jumping in.

Q: Where can our readers find you?

[Calvin Hexter]: “calvinrealty.ca is probably the easiest. You can sign up for our investor deals if you go to the ‘invest’ page. So we send out off and on market hand-selected deals: everything from ‘fix and flips’ to BRRRRs to multi-family properties on a regular basis. It’s one of the best resources for finding and locating deals. If anybody wants to come into Edmonton for September 21st and 22nd, we have what’s called ReCon – which is Edmonton’s largest real estate investor event – and maybe we’ll see you there! We’re going to have some of the biggest names across Canada speaking on stage in a collaborative effort to give you the best information of what to do when it comes to investing and how people are making the most money in real estate.”

Calvin Hexter is an award-winning realtor with several years of experience working in Edmonton. Here’s an excerpt from his website, calvinrealty.ca, where you can find him and his team:

“Real Estate started as a hobby for me, starting as a young investor coming from a background with ZERO Real Estate knowledge. Grew into a business where I am now completing 100+ Real Estate transactions a year, and winning awards such as 2019 Rookie Of The Year award, Exp Icons award, Chairmans Excellence Awards – Double Diamond. My passion shines through on a day to day basis with all clients I work with, and if you are reading this, I look forward to working with you!”

- [Calvin Hexter – CalvinRealty.ca, About Calvin, https://calvinrealty.ca/about-calvin/]

Interested in investing? Reach out to Brandy or Tom today [email protected] or 1 866 736 5767

Glossary:

BRRRRs – An investing strategy that stands for ‘buy, rehab, rent, refinance, repeat’.

Parcel – In real estate, this simply refers to a specific piece of land that has been measured and bounded as part of a larger area. [Source]

Comps/Comparables – A ‘comp’ is an abbreviation for comparable, specifically in relation to the characteristics of a similar house in a set area. [Source]