The growing wealth gap in Canada's largest cities could spur a boom in the Prairies

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Not everyone wants to move to the United States , even if there are better-paying employment opportunities, cheaper housing and lower taxes. But there is another option for people who are tired of the expense of living in cities such as Vancouver, Toronto and Montreal, and it’s one that many took advantage of in the early 1900s.

© Provided by Financial Post Buying an average starter home can become a reality in a place like Calgary.

Back then, the wealth gap between the rich and the poor widened so much in places such as Ontario and Quebec that the only chance for a family starting out to improve their overall financial position was to hop on a train and head west. That certainly was the case for my grandfather, who moved to north of Edmonton from Montreal in 1905.

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This trend could be just starting to gain momentum, and is being made easier by the rocketing housing markets in some Canadian cities. The COVID-19 lockdowns have also meant there’s greater acceptance of working from home and/or remotely. On my many weekend trips to Canmore, Banff or Lake Louise in Alberta, I’ve recently met a number of people who have moved to Alberta from the Greater Toronto Area. They aren’t just retirees, either, but business owners, investment advisers, bankers, service-sector workers and even those in the tech sector.

Such a move certainly makes a lot of sense for someone who is retired, since they can sell their home in Toronto and buy an equivalent home in Calgary for half the price, with more than enough left over to buy a second home in a warmer location such as the beautiful Okanagan Valley in British Columbia or further south in places such as Palm Springs in California or Cabo San Lucas in Mexico.

For those who are still working, buying an average starter home can become a reality in a place like Calgary. A family can buy an entire detached home with a view of the mountains for the equivalent cost of a 500-square-foot, one-bedroom condo in Toronto.

It also helps that the other costs of living are noticeably cheaper in Alberta, including lower private and specialized school tuition fees, lower property and income taxes, and there isn’t a provincial sales tax. Recreational activity is also inexpensive: the Rocky Mountains are within a 45-minute drive of downtown Calgary, so people can access great biking, skiing, hiking and camping for the cost of an annual park pass.

Of course, you’ll need a job if you’re not retired and there is no doubt that the Prairies are still too focused on oil and gas extraction. But that is quickly changing, since the industry is working hard to clean up its act. Industry consolidation has created tremendous synergies and operating efficiencies, resulting in much stronger free cash flow and profitability, even when oil and gas prices are lower.

Due to current capital constraints, many energy companies are paying off debt, undertaking share buybacks and increasing dividends, instead of deploying money into new projects. But the industry is also launching environmental initiatives, including carbon-capture technologies, improving overall energy efficiencies, exploring carbonate fuel cell research and development, and even investing in renewable projects such as wind farms. This means there will be significant demand for people who have experience in clean technologies.

All these activities won’t yield the kind of euphoric economic benefits they did in the past — perhaps that’s a good thing — but oil prices of $70 and higher will still generate material tax benefits, which can be used for diversification investments. This dynamic is already starting to take root, given the many news announcements from technology companies choosing to take advantage of Calgary’s cheaper grade A office space, which can be had for a quarter of the price as in other Canadian cities.

Making investing and other important decisions that impact your family’s wealth means taking some risks. Sometimes you have to move outside your comfort zone to go where positive changes are expected to occur and to capitalize on existing ways to improve you and your family’s lives. Instead of just complaining about the unaffordability within some regions, it seems many may already have had enough to do something about it.

Martin Pelletier, CFA, is a portfolio manager at Wellington-Altus Private Counsel Inc. (formerly TriVest Wealth Counsel Ltd.), a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax and estate planning.


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