Berkow said that a large part of what drove his decision to purchase a Calgary property is the estimated $15,000 profit a year after purchasing a $300,000 condo. What he didn’t anticipate, however, was the sharp decrease in purchasing power among Calgarians in the wake of a massive oil price crash.
“I was forced to sell for a loss when I moved back to my hometown of Toronto last month,” Berkow shared.
“But it wasn’t just the collapse of $100 crude that caused the collapse of Calgary’s home price growth. Overbuilding, dramatic bidding wars and an overwhelming sense of boundless price growth all contributed as well -- and all those factors are continuing to drive the market down now that low oil prices have largely taken their toll,” Berkow added.
Upon moving back to Toronto, where he is now based, Berkow started sharing a rented duplex with his fiancé. However, while he is contemplating on cashing out after a few years and making a profit, he admitted that it would be unlikely in the face of market analysts’ predictions that massive price increases cannot continue.
Berkow cited experts’ remarks that extremely active markets like Toronto and Vancouver are at significant risk of major price corrections, especially if overseas buyers decide to invest somewhere else. Berkow noted that the current situation in Toronto has a lot of similarities with Calgary 2013, and that buyers are still subscribing to the same purchasing patterns that would lead to them ending up with massive debts.
In conclusion, Berkow said that it’s highly likely that interest rates will rise within five years, and that, ultimately, “There is no such thing as free money in real estate.”
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Jameson Berkow, who served as the Western Bureau Chief of BNN, was based in Calgary from 2012 to October 2015. In a report posted in BNN’s web edition on November 11, Berkow shared the events that transpired after making his first real estate investment in downtown Calgary back in early 2014.