Sometimes real estate investing is like a great mystery novel. The plot twists and turns, the characters become suspects, or victims, or both! In the real estate investing mystery, we are the protagonist: constantly sleuthing for the best information in our pursuit of the next best step to take. Today we’re reviewing some of Calgary’s latest numbers in an attempt to cut through the distracting media headlines.
GDP: We’ve seen lots of headlines this week about the downgraded expectations for GDP growth for the country. GDP was humming along at approx. 2.0% in the 3rd quarter of 2018, but dropped to 0.4% in the 4th quarter—these are nationwide statistics. The March RBC Economic Outlook was still reporting higher numbers. This report shows a 1.7% GDP growth for Alberta in 2018, and predicts a 1.3% GDP growth for 2019. What becomes intriguing is that Alberta’s GDP growth is expected to lead the country in 2020, based on a presumed improvement of market access for our oil. I’m certain we’ll see many changes to these predictions over the next 48 months!
EMPLOYMENT: In Alberta, we had 7.8% overall unemployment in 2017, down to 6.6% in 2018, and now resting around 6.9% for the province. In Calgary those numbers were 8.4% in 2017, 7.6% in 2018, and resting at 7.4% for February 2019 for this city.
HOUSING MARKET: The Calgary Real Estate Board (CREB) is reporting the detached benchmark price of $475,600, which is 5% below last February. Detached sales are 13% below last year, and a whopping 30% below the long-term average. And the inventory of detached homes is up 25% compared to last year. In the Okotoks market alone, CREB is reporting approximately 10 months of supply on the market! What I hear? There are and will continue to be a lot of motivated home-sellers out there, willing or forced to negotiate on prices.
RENTAL MARKET: Padmapper (a popular rental website) kindly produces statistics about rents across Canada. Calgary is currently sitting at 13 out of the top 20 in terms of 1 bedroom median rent prices. This website suggests that Calgary rent prices have shown minimal changes in price in recent months (aka winter, February polar vortex—need we say more?). However, Rentfaster, another popular rental website, has some different statistics; they show numbers reflecting year over year changes, rather than monthly changes. Rentfaster is suggesting that rental listings are down approx. 1.6% to the end of February 2019, while average price appears to be up 8% year over year! Average Days on Market for rental suites/homes is also down to 52 from 73 days on market.
Clearly there are many other clues that can be examined: international market uncertainty, the effects of the Canadian dollar on our economy, the unknown effects of changes in federal or provincial governments, etc…. All good investigators take the best information at hand, and continue to move forward to “solve” their mystery. Our strategy in the current real estate market remains focused on continuing to acquire well-priced properties. Let us know when you’re ready to join us, or if we can assist your journey in any way.
