Midwest Minute- April 20/16- "First Flower of Spring"

Published 19 April 16 10:08 AM | Vern McClelland 

First Flower of Spring

For me personally I don’t believe spring has really arrived until I see the crocuses poke their heads above ground. One of our pastures has a steep hillside of undisturbed native grass that faces southeast and the little flowers cover it like a blanket. There is equal pleasure in watching our five year old granddaughter dancing around picking a handful of the best for a table display back home!

Spring is almost always the busiest season of the year in real estate. Sellers want their homes and acreages on the market. Buyers are out and about prospecting for newer houses or lake lots to park their recreational vehicle on.

This year the warmer weather has unfortunately not generated the usual enthusiasm that comes with renewed activity in the oil patch following break up. The energy companies are pinching pennies and production activity has slowed significantly. Many families are barely holding on. Mike and I spend hours every day with clients helping them think through their options.

Although there are literally thousands of square feet of commercial or industrial shop space available to rent in or near the City, it is encouraging to see prospective investors not shying away from looking for opportunities to purchase buildings, particularly those with tenants in place.

These buyers have strong balance sheets, been active in western Canada for years, and know that the economy will eventually rebound. When it does, their capital investment now will later increase by double digits; at which point they will probably sell and go looking for other opportunities.

The same principle applies to multi-family housing. Yes, the landlord may be experiencing some vacancy in their units at the moment but for veteran owners this is a time to refresh the empty apartments using their own talent combined with skilled tradespeople willing to work at reduced rates.

The old saying is true: “money makes money”.

In the farmland arena, on the Alberta side of our region it appears that land values have plateaued somewhat after years of steady, but significant, increases. The Saskatchewan side of the Midwest is still too volatile to predict in my opinion. It comes down to “willing seller, willing buyer.” A location convenient to present holdings is still a prime motivator.

I have often wondered when the day would come that Saskatchewan lands of equal productive value to the cousins across the border will command similar prices. The progression started several years ago with the lease rates on both cropland and pasture. Now it appears to settling in somewhat on the capital side.

However, if you look deep into these groundbreaking prices you will find buyers who have little or no fixed term debt, are still actively farming therefore can easily assimilate a few more acres into their operation, and see land as a stable investment in a world of uncertainty.

In fact, they may not even farm it themselves rather hold it as part of a portfolio like the urban dweller does with their pension plan. Not a bad strategy, as today it returns double what a guaranteed income certificate does and like the commercial buyer, if history is a reliable predictor they can expect a future increase in capital value as well. The Creator isnt making any more land.

Vern McClelland is an associate broker with RE/MAX of Lloydminster and a partner with the Midwest Group. He can be reached at (780) 808-2700, through www.wesellmidwest.ca, or follow the team on Facebook at Midwest Group Lloydminster. 

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