Building on Optimism in Prince Rupert

Recent news around Alberta's real estate market has focused on the overdevelopment, higher vacancy rates, rising unemployment, and just overall lesser performance compared to the rest of the country.

But despite sharing those same borders, Alberta's fourth-largest city of Lethbridge presents a much different investment picture.

For one, it's less reliant on oil. "We have a very diverse economy, so there are a number of industries doing well," says Stan Mills, a real estate broker and president of the Lethbridge Real Estate Board. "Any time there might be trouble in one industry, there's so many other industries that help drive the force ahead. We don't get caught up in a recessionary situation too much."

Instead, it's more controlled, moderate growth all the time in Lethbridge.

Another standout feature is that unlike Alberta's vacancy rate of 5.5 per cent, according to the CMHC, Lethbridge is basically zero. A two-bedroom rental apartment in Lethbridge had a vacancy rate of 0.3 per cent last year.

That's been enough to encourage some new building this year, but the demand remains strong as well. One of the key factors is the University of Lethbridge and Lethbridge College, which in recent years have combined enrolments forming about 1/5 of the city's population - slightly over 80,000.

These schools are located to the south and southwest. And in the nearby west, that's where a lot of the new development has been happening, says Mills.

"You'll find more land and developers on the west side, so it's the faster growth side and more moderately priced," he says.

Sales activity is up 23 per cent in the first quarter of 2010 over a year earlier and listings have remained healthy as well. Average sale prices increased about two per cent to about $253,000 in Lethbridge, says Mills, a typically moderate year for the city.

In addition to students, a varied group of immigrants boost the population, as well as the retirement community - both factors in driving the market. The mild, dry climate, is often cited as a big draw.

"That climate is very good for elderly seniors," says Mills. "We can go through a whole year without any snow, although sometimes we have lots. And other than that, it's a safe community, and easy to get around."

There's about every amenity one could need from a city in Lethbridge, says Mills. Investors have also been active lately. A two-bedroom house can rent for $1,500 to $1,600 per month, says Mills. A two-bedroom apartment would rent for $900 to $1,100.

Buying those homes can depend on the age - starter two-bedroom houses under 1,000 square feet can sell for close to $300,000, whereas older homes of the same size go for $250,000-$260,000.

That means rental yields can be about seven per cent for the older homes if rented at the typical rate, whereas newer ones are about six per cent.

"There's a fair amount of investors because those prices are still moderate," says Mills.

The building industry meanwhile has been active constructing a number of senior complexes and condo complexes.

Aside from the more active and affordable west near the university, there's also two other distinct sections of the city.

The south side is where the older, higher-end properties are, says Mills. There aren't many new subdivisions, although one recently opened to sales earlier this year.

On the north side, which is the moving north, is the more moderate to upper moderate homes. It's home to Legacy Ridge and Uplands developments.

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