Len 00:02
Welcome. My name is Len Lane, and I am the founder and president of Brokers for Life Inc., and we are Dominion Lending Centers in Western Canada. The topic of our podcast will be about what we consider to be Real Life Mortgage Solutions.

Len 00:19
Welcome back. Today, we’re going to talk about appraisals. That one thing that in probably 50% I guess, of the deals that go through our office actually require an appraisal because they’re more than 20% down payment. So they’re what’s called unconventional. My guest today is Gerhardt Klann. He is the president and founder of Northern Lights Real Estate Consulting, which is all we’ll talk a little bit more than because you’re obviously doing more than just appraisals. So maybe give us a little background and welcome to the show.

Gerhardt 00:52
Yeah, thanks so much for having me. Len, appreciate it. Yeah. So well. Depends how far back you want to go, but so I believe you and I first met at REIN?. Yes, lovely. So that may have been even preceding my days as an appraiser. So that’s that’s pretty much my background started with with real estate investing, and I was lucky enough, fortunate enough to have had some opportunities when I was in university, I wanted to move out. A whole bunch of things fell together. And basically, instead of paying rent somewhere else, my dad convinced me and my brother that, you know, if you guys buy a place and you put a suite in, look, you’d be paying the same amount of rent, and you’d be building something towards your future. And so that’s kind of where it all started. That was 1997. We bought a house together. It was very small, 700 square feet, had a one bedroom basement suite. And I was lucky again, because my dad had had construction experience. His dad was a builder, so we renovated it ourselves. We the only thing we outsourced that I recall, was the electrical. We had to upgrade the panel and the electrical, but everything else, like I my dad showed us, he showed us how to do copper plumbing, how to bend the bend the pipes. And a funny side story to that is that the Eco Center gives away free paint. I don’t know if you knew that. If you take all shades of paint, I’m talking like pink, mint green, doesn’t matter, you name it, and mix them all together in a big, like 10 gallon bucket with one of those mixers, you get beige. And once we discovered that we’re, you know, I mean, we were all about trying to do things for as low a cost and make it look good as we could. So, so that’s ultimately my background. You know, we kind of did that. Then we stumbled upon REIN. A friend of ours had recommended that we take the Quick Start Program, and it was actually cassette tapes that’s, so early, 2000.

Len 03:02
For those born after 2000 those were little…

Gerhardt 03:07
Yeah, exactly right, way before podcasts. But that’s what got us going and then, yeah, fast forward. You know, I don’t want to, don’t want to go into too much detail, but I was looking for something that would, you know, complement my real estate investing. And actually had an appraiser come to one of our rental properties to appraise it, because we were trying to do equity takeout, and I was in the process of just talking to everyone in real estate about what they did and so he said, Oh, why are you interested? I was like, well, I’d like to know more. So we we sat down for coffee and ended up working for him and becoming an appraiser. So that’s kind of how things started for me in the appraisal world. Then we had the financial meltdown in 2008. I recall my mentor at the time basically saying, you know, in a kind way, fend for yourselves, everyone, because it was that bad, yeah, and you, I’m sure you remember that there was just, you know, and it wasn’t what was happening in the world, in the States was really bad. But I’d say the period that we went through in Canada was much shorter, but it was long enough that it made businesses pause and go, I don’t know what we’re doing here. And so that’s basically when I that’s when I started Northern Lights, because I was newly married and needed to, it was either that or find something else. And I was still very committed to real estate. And so I decided to, you know, go out and try to find some clients on my own and so we started, it was just me, and that worked pretty well, except for that, if you’re on your own, you know you’re only as good as you are, which at times, you know it leads to problems, because there’s things A) that I’m not as good at, and areas I’m not an expert in, and B) you can’t take time off ever, so,

Len 05:04
Yes, that, that we do understand.

Gerhardt 05:06
So, slowly grew, added to the team, added pieces, and as need was there, and that’s ultimately how it’s come to be,so…

Len 05:17
Yeah, it’s been self employed and or on commission for probably 30 years. Probably, right? So no home sales before, before mortgages, right? So every time I had a salary job, I hated it and went back to working on commission. So, and yes and yes, my, like yourself, my wife is my business partner as well, right? So, it’s a market does all the back end of the company, with the licensing and all of the payroll and all of that good stuff, right? So, and she does a great job of it, in case she’s actually listening to one of these, but it’s, yeah, a day off is, is we often say a weekend is a state of mind around our house, right? So if Thursday, it looks like it’s gonna be really dead or something’s not gonna happen, which is pretty rare. But, you know, that’s that becomes the day off. Todaay is my birthday. I’m actually working today as well. So,

Gerhardt 06:11
Oh, happy birthday Len.

Len 06:12
Thanks. So, you’re, you’re a man of many letters. You have several designations. I’m taking those designations behind your name, DAR, DAC, DPR. How does the public differentiate between those and I there’s a there’s other ones, I believe as well, right?

Gerhardt 06:32
Yeah, there are, for sure. Well, kind of boil it down, I guess. Firstly, I can just quickly talk about the designations I have. So typically, a path to become an appraiser. Often appraisers will become a residential appraiser first, and that for me, that’s the DAR there’s two associations in Canada that govern appraisers and do education. I happen to belong to, to one called the Canadian National Association of Real Estate Appraisers. So those are their designations. And then there’s also the Appraisal Institute of Canada. I have both appraiser both in our office, but you basically choose one or the other. And so the DAR is the residential and that’s equivalent to a CRA. And then there’s the DAC, which is a commercial designation, so that allows me to appraise basically anything on the residential side, if you think about, like, apartment buildings, you know, anything over four Plex, you, for both associations, you need to have a commercial designation. But, yeah, I do a lot of agricultural work. You know, it’s, it’s very, it’s quite wide. I mean, there’s, there’s work that I don’t do, because I don’t, I’m not an expert in that area, but yeah, in terms of what you can do with the designation, once you get a commercial designation, it’s quite a lot. And then the last one was a DRP that is called the designated reserve fund planner. So that’s for condominium corporations or stratas. They are all required to have a reserve fund, and then they must have a reserve fund plan for that. So that’s a designation that I, you know, I took the education for, and actually, as it turns out, you know, that’s one of those things that I haven’t decided to pursue. I do insurance replacement cost appraisals for the buildings, but the reserve fund plan side of things, it’s just, you know, it’s its own beast. It’s, you have to become very engrossed in that. And so if that’s something I don’t actually actively do, maybe I will, if I get bored.

Len 08:38
Retirement. No, no it’s, and it’s interesting, because it’s, yeah, reserve funds studies didn’t exist probably 20 years ago or 15 years ago, maybe for that matter, but now it’s so detailed that we live in a condo. So we’ve owned several of them over the years, but it’s like people condo boards get in deep trouble if they don’t actually pay attention to, you know, making sure that the reserve is, is where it should be, right? So I guess it’s a good thing, I guess, because there’s many of them over the years that pretty much almost bankrupt themselves, right? Trying to, trying to fix things, so.

Gerhardt 09:14
Yeah, I mean, it’s basically, you know, ultimately, it’s a very important document, and it, it’s the business plan, right, that you’re that you’re trying to work from you have a group. I mean, condo boards are, I’ve been on a condo board. I, like you, own condominiums, so I’m very aware of the adverse influences and effects when you know when bad stuff happens. But usually they’re well meaning people, right? And and they’re volunteers and people trying to do the best they can. But like you said, if A) if they don’t, aren’t adhering to the plan, or B) if the plan is bad, I mean, I’ve seen some pretty bad reserve fund plans out there, so you know it, I know they’re trying to tighten up that industry, and I hope, sincerely that they do, because it really impacts, it ultimately impacts the consumer, and that that’s what really bothers me. And I feel like there’s a lot of, there’s a lot of people in that industry that are taking advantage of of, you know, of people and that that’s not right, you know, that really needs to get cleaned up.

Len 10:22
Yeah, that’s a whole nother podcast, I think, and I just..

Gerhardt 10:23
Sure is, yeah, right.

Len 10:26
Brian Fisher just went through my brain going, now, Brian’s gonna do a podcast with me now. So, market values, I’ve often heard them said to be opinions, I guess, if you want, of the appraiser. So, but how does that all come about?

Gerhardt 10:42
Yeah, so kind of to boil it into a nutshell. I mean market value, the definition, right? Basically, one of the most common definitions is what most buyers would pay for something. So it’s not what some buyers would pay, or one buyer would pay, it’s what most buyers would pay, and that’s where market value and cost become… at times are in line, and then times are at not at all in line. And I can give some really clear examples, but to me, this is a really important thing for any home buyer, you know, person who’s even thinking of buying, selling, renovating. They need to be aware of this. Because, first of all, you know, somebody selling you a product is always going to tell you something to try to sell you the product. And the number of products I see out there where they say, oh, you know, this is going to increase the value of your home by X. And as an appraiser, I go, oh, yeah, that’s that’s really hard for to prove to kind of boil it down and simplify it. First of all, I’d say that the things that evoke emotion out of a buyer. You remember as an appraiser, we are modeling what buyers, their preferences in a market. Okay, so it’s not just as simple as saying, Well, my renovation is $50,000 you said My house was worth $500,000, so, I did $50,000 so now my house is worth $550 I mean, if that was how easy it was, I would hey, life would be easy as an appraiser, but if the appraiser actually knows what they’re doing, they have to actually dive into that. And here’s where it gets complicated. So first of all, like not everything has the same payback, and it very much depends on the property itself. So let’s get that out of the way. Doing epoxy-coated flooring on a garage on a townhouse might not add any value, sorry, it’s a preference, right? But I’ve had people, you know, read our Google reviews. You’ll have fun with that, you know, well, but I spent $10,000 on epoxy coating my garage floor, yeah, but it’s a townhouse, and the buyer is not going to pay you an extra 10 grand because you made that choice. And so it’s really important for people to be aware of that. So again, coming back to what evokes emotion, well, really simply, you know, the wow factor. You know things like, if you’re looking at, let’s just talk about, like a house that you know, has all original finishing, maybe built in 1970 or something. If you were to go and spend $15,000 or $20,000 let’s, let’s give them a bigger budget, $20,000 and you replace the hot water tank, the furnace and the main floor windows, something like that, right? Maybe the budget’s going to have to be more. But anyways, let’s just, let’s just say that that’s what they’re spending. And you took the same amount of money and you left those things in place because they’re functional, and you updated all the flooring on the main floor, the kitchen and the bathroom, and you painted it. You’re not going to get the same market value out of those two decisions, the market tells us that it’s, it’s clear as day, and so that’s where you get now, would I like to have a new furnace when I buy a home? Absolutely, but the market does, or new windows, but the market shows us that you don’t get the same payback out of those decisions. And so that’s, that’s is, that’s kind of the simplest I can boil it down, is that first of all to for buyers, to other homeowners to understand that difference and that they should consult. I mean, they should talk to a knowledgeable realtor or talk to an appraiser. I’d so much rather have a conversation with someone before they make that decision than after, you know, worst case scenario is I’m going in, and then they’re going, well, why isn’t it, you know? So I’m gonna give you a second example. Is if you remove something that had value, because you have a different choice preference, again, you’re not going to get the full amount of the investment. So, like, there was a fully functional and relatively new kitchen in a property I remember this. There’s one example I can remember specifically. The home was only like eight years old. The condition, the cabinets were in amazing shape, but the buyer or homeowner wanted to change to, you know, a different look. So they invested $40 or $50,000 into their kitchen, expecting that they’re going to get that bump in value. But the challenge there is, they replace something that most buyers would look at and go, I’m fine with that. That’s okay. So did the value go up? Yes, but did it go 50 grand? Not even close, right? So we have to understand is, as all of us homeowners, at what point am I making that decision because I personally want to, and I’m okay with it, that’s fine do what you want, right? But it’s when you’re going, Yeah, but I need the financing for that. I need, right? And that’s where the bank comes back to the appraiser and says, Okay, now, once they’ve done this work, now what’s it worth? And it’s like, if you replaced something that was already fine, you’re not going to get the full amount, so now you’ve got to come up with the difference? So do you have any questions on that, or thoughts?

Len 16:28
Well, and that, we’ve seen it many times, right? Like you said, the kitchen, if you listen to HGTV, everybody should replace their bathroom and their kitchen, right? So, but again, you’re right. If there’s no equity in the home already, like you’re going to get some maybe for it, but, yeah, $50,000 is not hard to do on a kitchen these days, right? And that’s interesting, because now the government has come out with this program where it says you can refinance your house back up to 90% as long as you and you can to build a legal suite and or carriage home on the back lane in some cities. I don’t know, whatever Vancouver does that a lot, I guess so. The question I had for the, we were just at a conference yesterday, actually. So question to the lenders are, is two things, you know, you’re going to have to see quite a bit of value difference, but they’re not going to give you the value without the work being done. So it’s going to be 90% of what the house is worth now. So the house is worth 100,000 you’re going to get refinanced back to 90 and then do the work, right? And the other problem they had with that is we’re not going to be able to use rental incomes on something that doesn’t exist, right? So it was interesting. So, you know, you start to factor in that little offset for the basement rental or carriage home or whatever in the back, the work has to, are they going to make enough difference in houses to, you know, to A) get the equity out to do that work, right? Is going to be the next question we’ll see in January, so. Y

Gerhardt 18:06
Yeah. And, I mean, yeah. I mean, to that point, sometimes those are, you know, government start with a plan, and then hopefully, hopefully industry comes back and says, Hey, that’s, I see where you’re going with that. That’s a good idea. But then in, you know, in reality, these are the steps that would have to make for it to be practical, right? Like, because, like you said, if you can’t use rental offset, well, you know, it’s chicken or egg, right? You kind of get to the point where you if the person can’t do the rental, because you can’t get the equity out, you know, yeah, that’s tricky, for sure. So, and obviously that’s always an area of of interest, is the legal suite situation, and we’re in our market here. We’re actually really lucky with that, to be totally honest. We in terms of the resources that are out there and just the process, you know, it’s come a long way since, since I started doing it.

Len 18:58
So, and interesting enough. And segue into this one as well, because so lots of suites that are not legal, there was a change in how you could deal with those not that long ago, I believe, right?

Gerhardt 19:14
Yeah, and that, that is that actually, so you’re talking about, like, for market rent, or for us as appraisers. So that depends on, yeah, that that is really an interesting one, and that is where actually the two different appraisal associations took a different stance on it. So, and I can only speak to, I know, at least from, from my best understanding from what the AIC was doing on that, was that they were basically saying, Hey, listen, if it’s not legal, like you you the appraiser needs to, you know, go to the point of, of basically getting the permits, that sort of thing, which, you know, again, like from a big picture. Would that be the best way to do it? Probably. But the challenge is that, depending on your market, that can be really challenging to do, and there’s all kinds of implications that make that complicated. Scenario’s stance on that has been somewhat different, in fact, quite different, in that they say, listen, if the zoning permits a basement suite,
and you can’t get that information readily, we don’t really think that it’s within the scope of work for the appraiser to go start digging for permits. You know, you get to a point where, like, listen, like, we want to do a job for the client, the end user, but it has to be, be able to be done in a, you know, a time efficient manner. Like, often these things, they want them back the same day or next day. And try reaching out to a municipality to find out if a place has a permit, you’ll be lucky if you find out in two weeks. That’s my experience.

Len 20:46
Sounds about right?

Gerhardt 20:47
And some of them, like I said, some of them are getting better. They have really good like the city of Edmonton, City of Calgary, they do have good databases. But again, you come into a problem when what if the suite just got approved two weeks ago? It’s not on the database. So, so again, these are all little problems. So what? What Scenario said is, hey, listen, if the zoning permits it and you can’t verify, then you use an extraordinary assumption, and you say, Hey, listen, the zoning shows it’s allowable. I don’t know if it’s legal or not, but if it were, here’s what the rent it could get. So, I think that’s a decent solution for the problem. I you know again, we’ll see what the if there’s unintended consequences of it, but it’s a, in the interim, it’s a good solution.

Len 21:39
Something, something to go with, right? Everybody’s renting out their basement now, because you can get probably $1,500 easily for at least for one bedroom.

Gerhardt 21:49
Well, and you’re getting to markets. I mean, really, when you look at Toronto or Vancouver, you know, and now even Calgary, you’re getting to a point where that makes the difference between some maybe, you know, this is being able to qualify for the mortgage or not, right? And that it’s so important, especially in those markets, for things to continue. Otherwise, you’re getting to, like, who can afford to buy a house in, you know, Vancouver.

Len 22:20
Really not, not many we see, and that’s why we’re seeing a lot of the tradesmen coming here, right? Young guy ran into a couple months ago, and he was, he was a framer working in Vancouver, wife and two kids, living in a two bedroom apartment, and, you know, rented shot up to over $3,000 and he said, it just, you just can’t do it, right? So they had backed up and they moved Alberta, which, yeah, which is happening, yeah. Speaking of that, you cover the whole province. I see you have agents in Calgary as well. Is that? Is that…?

Gerhardt 22:49
That’s right. Yeah. So we don’t cover the whole province, but we’re, we’re centered, Edmonton centric and region. We have some appraisers that live kind of, you know, Camrose,Morinville, that sort of thing. So kind of within 100 kilometer radius of Edmonton, right? And then we have several appraisers in Calgary as well. So we have, those are the two major markets. And then, like I said, the smaller some of the towns, the rural acreage stuff around, yeah, yeah.

Len 23:18
So, so what kind of differences are you seeing happening in the province then, so you have a little bit of insight into both the major populations. But yeah, I know prices here have continued to climb, as far as I can tell, so.

Gerhardt 23:34
Really, I mean, this is my most enjoyable part of what I do. It’s one of the reasons why I became an appraiser was because I was so interested in the market, what was happening, why it was happening? Not to say I fully understand the whys necessarily. I mean the whole COVID thing, I was predicting a very, very different outcome. I did not see a real estate boom coming. And I would say most people were probably on board with that. But let’s, I guess before we talk about the market here, I think the first thing I always like to talk about is a message that that you and I heard back in our REIN days, and I’ve always that was, it was very well said at the time, is that you need to take the news that you hear with a grain of salt. You always have to ask the question A) what’s the source and who’s their audience? And I think Alberta, as much as listen, I’m an Albertan. I love Alberta. We’re small fish in the big picture of Canada, and Canada is small fish in the big picture of the world. So, I mean, most of our news media is when we hear stuff Bank of Canada, when we hear, you know, housing is doing this well which housing? And where? And so I always just want to make sure that people are thinking that way, first off, because the housing market in Canada is so varied, and we saw that through COVID. I mean, we literally saw, actually, the rest of Canada, except for basically Alberta, go through incredible, incredible climbs in value. And it was, and for whatever reason, wasn’t happening here. And now we’re seeing the opposite, the rest of the country, really. And again, I’m, I’m now I’m doing it generalizing, but let’s talk about most of the rest of Canada is their in their markets are suffering. They’re, you know, they have affordability issues, they have too much inventory, etc. So now what’s happening with Alberta and why is it happening? I mean, in a nutshell, the rest of the country basically went up. In some cases, I mean close to, I mean incredible gains. Some markets almost doubled with the COVID Bump. And, you know, we saw some increases here, you know, 5-10%, you know, here, there. So what happened is this massive affordability difference, and where Alberta was actually already affordable, we became, so vastly cheaper in rent, everything, and everything falls with it. So, you know, that started to and then with interest rates going up, we started to see this mass migration to Alberta. And it’s very interesting, what I’ve heard some economists, actually, the economist from Calgary Real Estate Board was was highlighting this. She said, you know, what a difference between this and previous migrations to Alberta is that our employment or unemployment rate is not significantly different than the rest of Canada. You know, in the booms back in mid 2000s I mean, our employment unemployment rate was like, it’s basically like, if you have a pulse, you can get a job and and that was what was holding our economy back. And that’s not really the case this time, you know, maybe in some industries, but as a whole, our unemployment rate is still relatively high, and yet we still had this mass in migration. And well, why is that? And I think the biggest factor is, is affordability. And the other thing is, if you look at our average incomes, M and J and Calgary were right in step with Toronto, Vancouver. But the average house price is less than half, so, you know. And I do chuckle a bit when even I mean, I saw some, I saw some reports saying, Oh, the housing affordability, you know, the Alberta advantage is over. And I’m like, What are you talking about? It’s like, even with the price increases, you’re still looking at half. So how is the affordability over? Yeah, prices have gone up, but, you know, not as much. So, so that’s kind of the bigger picture that was happening Alberta. Now, the biggest migrations were initially happening into Calgary. They had higher numbers. And so their their rental market and their resale market got super tight, and so they saw a larger increase, let’s say, starting in 2022, 2023, I mean, you know, we, our guys down there are as busy as they could be, they could not. You know, we’re just turning away files constantly, and there’s just nothing we could do about it. You can only do what you can do in a day, right? It’s but that was the sign of the market. And now so, Edmonton. And then Edmonton was kind of and the gap, the gap between Edmonton, Calgary, this is the interesting part is, for me, is that we’ve always hovered, at least since I’ve been doing this, somewhere in around about $100,000 difference between Edmonton, Calgary on single family and, you know, that’s fluctuated, of course, but relatively speaking, that’s been a fairly consistent, you know, up and down as we go up and down. Now the gap is actually double that. It’s about, you know, on a single family, it’s over $200,000, so now you have the same scenario that we were talking about for the rest of Canada actually unfolding within the province, where families are going, Wait a minute so I can make the same amount of money in Edmonton, but it would cost me $200,000 more for a house? And it just doesn’t make sense. So then they go, well, so you got this again, you kind of have, it’s almost like mini Gold Rush, you know, it coming in and looking for cheap real estate, which it is, like I said, comparably. And so now we’ve actually seen the numbers. The latest numbers show that the migration to Edmonton is now surpassed Calgary, and that’s, that’s the first time. And so what’s that doing? Well, it’s, as you know, it’s, it’s driving our market. We’re, so we’re still seeing price gains. Normally. We see a seasonal fluctuation every year, you know, every normal year, let’s call it. We have a real estate market that. I call it the seasonal fluctuation. You know, basically, in the spring, house prices go up a bit. And then, you know, as we get into these months, usually we get, I’m less busy. I’m doing less we’re doing less purchases. You know, people aren’t doing renovations. They’re not wanting to move, etc. Same thing with on the rental side, I can speak to that owning rental properties, oh, man, I would hate having a vacancy now, November 1 vacancy. Who’s going to want to move? That’s not the problem, right now, right? I posted a townhouse. You know, the rent is significantly increased from what it was, I was probably under market rent because I had a great tenant and didn’t increase the rent, but once they chose to move out, well, I’m going to market right, I’m going to put it at market rent. Rented right away. November 1, no problem. Yeah, in the past, that would have caused me some grief. I would have been sitting on that thing for two months. So I would say that’s kind of where we’re headed. I think that we’re we’re going to have a busy winter, probably the busiest we’ve seen, and coupled with that, our interest rate drops. So not only do you have people moving here, not only do you have that sort of activity, but now you’ve got interest rate drops, which drives, refinances, drives, you know, businesses that have been sitting on the sidelines, or buyers sitting on the sidelines, going, yeah, we’ve got the down payment. Or we’re thinking of upgrading to, you know, the four bedroom hosts because of our family size or whatever. But we hear that interest rates are going to drop. Well, now they’re dropping. They have dropped, you know, likely going to continue, and that impact on the on on a ready, heated market, is going to be really interesting. And like I said, keeping in mind, we’re small beans. You know, Alberta, our population, the Bank of Canada, is not looking at Alberta real estate and going, oh boy, wow, we might really heat up Alberta. I shouldn’t say they’re not looking at it, you know, I’m sure they’re considering it, but it, it’s a minor factor. Yeah, right.

Len 32:37
So, that that’s we’ve seen it. I just, I don’t forget the report from Calvert every month that they do as well, right? Where we were up only 10% over year over year, right? So we haven’t had the big gains here in Edmonton, Calgary, you know, 23-24% in some cases, a couple of the months, right? So it’s and it’s interesting with interest rates, right? So Bank of Canada has come down. Probably going to come down a quarter, at least in December, maybe a half. But the bond market, which, because of the Trump election, Trump win, the fixed rate mortgages have actually gone back up this morning. So it’s like we’re following a bouncing ball, and it really has nothing to do with Canada, so to speak. It has what’s going on in Europe, what’s going on in China, what’s you know, what’s going on the US has effect on on that market, and people are so driven by that announcement from the Bank of Canada that they don’t understand why, why their fixed rate didn’t come down. The variable rate may come does come down with that. But you know, all of the fixed rate markets have have jumped up here again in in the last three, four weeks, right? So, it’s just one of those markets where, yeah, thing that’s been good, and we’ve lived through a lot of different cycles. I actually moved. I actually owned my first house in about ‘82 I think it was so what I paid $125,000, for, then probably sells for about $400,000 now, right? But, you know. So if you’re at it long enough, I guess it makes a difference. But again, my daughter bought in 2006, townhouse, one of those ranchers up and downs on Saddleback road, right? And she, she hasn’t even got back to anywhere close to what she paid. And she may never with that one, I think, but, but it is, yeah.

Gerhardt 34:23
And that’s, that’s an interesting one. For sure, I’m in the same boat. I understand that pain, but I would, I honestly think that we are in. All I mean, of course, like prognostications and predictions are there, like you just mentioned, we just had an election, we had global events. We’ve got conflicts. The world continues to change and have things happen. So all of that aside, because we can’t predict any of that, but the signs, the indicators. And I actually said this at the start of this year, I said Edmonton is, I haven’t seen it like this since, since like mid like, 2004-2005. I think that’s kind of we’re somewhere in there. Now, is it going to play out the same way? Well, you and I, we don’t know, but, there’s so many factors that, like I said, the affordability of Edmonton is such a huge factor. When you look at the other costs that families have now, I mean, groceries are not going back down. They the inflation may stop, but that doesn’t mean we’re going to get prices coming back. And I look at where my how far my dollar goes compared to five years ago. Man, it is tough. I got three kids, you know. And so I go, if you’re looking as a family, like honestly, I don’t know why. There isn’t, aren’t more people moving here, frankly, but it’s a big move right to move a family. But I think we’re in for a continued, sustained growth. And I, yes, there are a whole bunch of factors that could push that off course. And, you know, I could be wrong, but I’ve never, I haven’t seen things lining up the way that they’ve lined up now. And like we said, interest rates, they’re just, that’s just adding some fuel to the fire, but that’s not, that’s not the cost, right? That’s not the root cause of what’s happening, and neither is employment, which is really fascinating, so we’ll see. But I really think that Edmonton is poised to continue on something similar, like, like, if we’re looking like 10 to 15%. I would imagine that that will continue.

Len 36:43
Yeah, and that’s kind of projections from yesterday’s meetings as well. Was like, we’re on the around the bottom of a fairly steep climb, I think, in Alberta, which is, which is always good to see. We’ve increased the team to 38 agents right now so that we have have some more boots on the on the street, so to say, right? But, and plan to be at 50 agents by the end of next year, just because there is so much going to happen, I think that there’s tons of opportunity for for just about everybody, right? So,

Gerhardt 37:13
Yeah, and I really, sincerely hope for those people who bought, you know, peak and, like, I could put my hand up about 10 times for that, you know. And that’s the thing, is, when you’re in a boom, you never know when it’s gonna when it’s gonna bust.

Len 37:31
Otherwise, we’d have a lot more money.

Gerhardt 37:33
Those, like you mentioned, those properties, like those, the condominiums, apartment condominiums, yeah. I mean, it’s, it’s, it’s been tough for so long, it’s hard to even imagine that it’s going to come back. But the truth is, at some point it is because it’s so affordable that you just go, well, you can’t buy that product anywhere else in Canada. You cannot, like, I mean, they just laugh. I go to Toronto and I’m like, Yeah, you can get, like, a two bedroom condo downtown Edmonton or Calgary, you know, at the time, this was, you know, yeah, you could something actually decent for like, $250-$300,000.

Len 38:10
Just, just, like, what? Yeah, I just, you know, we just did that. Actually. We were, we were in Wedgwood for quite a few years, sold it two years ago, bought a townhouse in Rosenthal, and kind of started to look at the market. They had gone up about $40 or $50,000 right? And we always looked at the apartment building beside Louis Estate golf course, The Lodge, I think it’s called, oh, yeah, so we’d looked at it, right, and so, but there was a two bedroom, 1200 square feet, almost for $270,000, I can see the first tea box and the putting green and the clubhouse from my balcony, right? And so what was going to be a five-year plan became, let’s look at this this year, and sure, as it would have it, we paid $270, Mikey’s probably going to spend $30,000 on it, but they’re already selling at $310, $315, you can see it on that part of the market. So a higher end apartment building, obviously. But you know the stuff downtown that’s $110,000
people are snapping those up just because they’re going to double, absolutely, easily, going to double, probably in the next two to three years, right?

Gerhardt 39:20
So well, and the replacement cost on these units is so much substantially higher that again, the disparity between resale market and when I say resale, I mean basically used. Let’s think of them as used houses versus new. Well, the new builder, they can only build at what they can at their real cost. And we were talking about cost and market value before. Right now, there’s a massive disparity still in new cost to build, especially on apartment, condos, townhouses, that starting to go away. But there’s still some deals out there where I just go, man, if you’re, I mean, if you were an investor or somebody, think forward-thinking, yeah, like the time is it. It’s a good time to be looking because you I don’t think you’d regret it, you know, because I yeah, it can’t stick around, because at some point people just go, Yeah, I know the building’s 30 years old, but if I can get it for $150 grand less, like you just said, I can go do my renos, do everything I want. And I’m still laughing, right?

Len 40:24
So anyways, I thank you for your time today. That was great. It’s, I know you’re a busy guy, so I’ll
let you go for today. So thanks again for taking some time to come out and talk to us today.

Gerhardt 40:38
Well, thanks for the opportunity. Len, anytime.

Len 40:37
Thanks for listening today. I hope you found the information that we provided to be useful in your mortgage journey, and remember you can always find our associates at www.brokersforlife.ca/associates. Have a great day.