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How the Flooding in Calgary could Affect Your Private Mortgage Investments

28 June 2013

If you’re a private investor investing in private mortgages, and you like to pick and choose where those mortgages are, then there may be more you need to know about the flooding Calgary has seen this past week.

Calgary has seen one of, if not the biggest housing boom in the past year or more, and mortgages here have been in high demand. Calgarians have been willing to pay a lot for mortgages, and there’s been money to be made for those lending that money through private loans. But now, the city has been decimated by water; and it’s been said that it will cost billions and up to ten years before a full recovery will be seen.

What does that mean for the real estate market?

For the short-term, it will mean that there will be fewer properties on the market, and fewer deals to be made. Ann-Marie Lurie, chief economist at the Calgary Real Estate Board, says that there are currently about 700 MLS listings in areas that were affected by floods but right now, it’s impossible to determine how many of those were actually hit, and hit hardest, by them.

It does probably mean however, that interest in those areas, and that supply of sell-able homes in those areas will most likely taper off.

“We would expect in the short term you’re going to see some listings drop, especially in areas that were impacted,” says Lurie. “As far as demand goes, it can actually shift demand to other areas as the listings drop off. People might start considering other communities.”

And as buyers start considering those other communities, private investors might want to shift their lending focus there as well. Especially those that like to invest in the West. And it’s not just investors who are looking to invest in the coming months, but this will be a trend that’s going to continue for the next year or so, says Don Campbell, senior analyst and founding partner of the Real Estate Investment Network.

“Following this,” he says, “we should see a shift to higher ground. After a traumatic event such as this, many will sit back and evaluate their lives, their housing choices. Most will choose to remain in the same region but there will be a larger than average cohort who will make the decision to move from flood-risk areas. The impact of these decisions won’t be felt all at once in the market however, there will probably be an increase over the average, of listings in these areas in the following twelve months.”

That means for the next year or so, investors might want to turn from the once super hot Calgary market, to areas of “higher ground” surrounding it, as more are driven to these areas.

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