Sunday, February 15, 2009

The real estate boom and Alberta Avenue

This post will look back near the peak of the Edmonton real estate market. These articles discuss how rising prices will cause a troubled neighborhood to "gentrify" but not acknowledge the risks involved. Also note how this neighborhood is sold in these articles as a normal alternative for potential homebuyers.

Consider the CBC article from March 13, 2007 Home buyers making over Alberta Avenue
Edmonton's housing boom is transforming an area around 118th Avenue in the northeast that has long been one of the poorer parts of the city.


Real estate agent Tom Gariano has sold homes in the Alberta Avenue area for 30 years. He says it's one of the few areas in Edmonton where you can still buy a house for under $300,000.

"It's becoming more and more owner occupied rather than rental. People are starting to buy and fix them."

Typical of the time the risks were not mentioned and instead the article relied on misguided optimism. We should not forget that the boom in Alberta real estate was a rare period of time that is unlikely to occur again in the near future.

Another article from Sept 3, 2007 featured a couple who bought a Alberta Avenue home in 2006 to fix and flip. Young homebuyers eye older neighborhoods.

They’ve also become part of a trend during Alberta’s insatiable housing boom, as young home buyers and older neighbourhoods have been finding each other.

A realtor took them to a rickety two-storey house with boarded-up windows, no bathroom and the lingering smell of human waste. Needles were scattered all over the basement floor and there were remnants of a grow-op.

The place had one big advantage, though — they could afford it.


Tom Gariano, who has been selling homes in the area for 32 years, says it’s mostly young, first-time buyers who are moving in.

“Even though the average price (of Edmonton homes) has increased drastically, it’s still one of the most affordable areas in the city.”

As a result, Gariano says, the neighbourhood is experiencing a renaissance as people settle in with families. “People are starting to look after each other.”

They plan to “upgrade” next month and buy a $450,000 home, hostel and campground near a ski resort in British Columbia.

Polley and Feddes, who admit they knew almost nothing about real estate before they bought their fixer-upper, say time is of the essence if they want their labour to pay off. For them, this means selling and moving on.

Polley confesses that although the mountain property they plan to buy is gorgeous, relatively inexpensive and an ideal location for their outdoorsy dispositions, she can’t help but think about its profit potential.

“You start to think of it more as investment.”

I am not against informed risk taking and revitilizing neighboorhoods. However this type of activity is far from a sure thing and only in the environment of the past boom would this be considered normal for first time buyers.

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