With Calgary’s GDP growth forecasted to be just shy of 4% and with population growth in 2013 at 18,000 and next year's growth forecasted to be around 15,000 what can one wish more? Oh, the unemployment rate is 4.5% or so.
So you want to make a whopping 10% in the stock market next year? Hmmm Let’s do some math. Take the 2013 median apartment price at $250,000; property taxes are around $1200; landlord insurance $230 per year; condo fees around $325 per month or $4200 per year. Hmmm repairs? Only inside the unit (the condo corporation takes care of the rest): $500. Rents are: $1400 with vacancy rates 1.2% Yahoo!
Based on those numbers. Net Operating Income (NOI) per year is $10,768 or a capitalization rate of 10,768/250,000 = 4.3%. Add to that the annual appreciation forecasted by CREB of 5.8% and your total return on investment is 10.1%. These returns were calculated with the same spreadsheet as shown below using a Loan-to-value ration = 0 (no debt).
Now, if you paid down 50% of the purchase price and borrowed the remainder using a 25 year, 5 year term mortgage at an 3.25% interest rate, then the spreadsheet below would calculate a return on your down payment (investment) after financing costs of 16.9%. Now with returns like that, who does need a stock market or for that matter a 5 year GIC that returns you barely 2% per year?