Trying to predict the housing market? Or the Rental housing market? These days it’s not just like using a proverbial crystal ball—that’s a cloudy crystal ball you’re trying to see through! By following key economic and social factors, we attempt to take some of the “guesswork” out of our investing plans. Here’s a little summary of what we know.
- Alberta has a new government that is Open for Business and seeking to actively promote the growth of a variety of businesses in this province
- For 2019, the Canadian GDP predicted rate is now down to 1.5%; for Alberta the GDP is now predicted at 1.2% for 2019, and 2.5% for 2020. Aka, growth is occurring, but slowly.
- Bank of Canada interest rates are very likely to remain low, or lower, into 2020 as the feds try to stimulate the economy. Aka, borrowing money is still relatively inexpensive
- The downtown Calgary office vacancy rate is down slightly to 26.5% from 27.8% at the peak. Aka, moving in the right direction, but slowly.
- Residential taxes are set to rise by 3.45%, or roughly $100 per year for a $450K home. Aka, net operating expenses for our rentals will rise slightly.
- Rents are up in Calgary by 1.4% for a 1 bedroom—if you read rentals.ca, but padmapper shows 1 bedroom rents are down 2.7%. Even the statisticians can’t agree! Aka, at best we can say rents are stable.
- Canadian April unemployment is currently at 5.7%, while Alberta is at 6.7% and Calgary is at 7.6%. Aka, slight improvement in employment.
- Q1 profit reporting also shows a mix of good and bad news: Suncor reports a Q1 profit of $1.47 Billion, Cenovus shows $1Billion adjusted funds flow, and Husky has Q1 earnings up to $328 Million (from $248 Million a year ago). Meanwhile Trident has recently shut down. This is just a small sampling of oil and gas business results. Some companies have adjusted to the “new norm” in Alberta, while other companies have hung on as long as they could (we think there may be more insolvencies through 2019).
- On another side, the numbers are not yet complete, but Calgary Venture Capital funding was approximately 20% higher in 2018 than in 2017. Aka, a small improvement in investor confidence.
- China has thrown up several obstacles to trading from Canada in canola, soybean, peas and pork. Still too soon to say if this will be temporary barriers, or part of a new Chinese government policy.
- Calgary real estate SUPPLY has eased slightly, down to 4.6 months but prices continue to adjust with the detached benchmark price down 5% year over year to $478,700. Aka: buying opportunities will continue to be prevalent, throughout the province, for those who can access funding.
So what conclusions can we draw from such a murky Crystal ball reading? PATIENCE, young grasshoppers! It will take time to bring confidence back to the business and real estate markets. It will take time to grow more jobs and earn the trust of out-of-province business investors. It will take time to build pipelines, or the Lethbridge potato processing plant, or the Sturgeon County petrochemical processing facility. We’re still bouncing along the bottom of the real estate cycle, but there are a growing number of positive signs on the horizon. Wise investors are meeting this weekend to learn about Calgary and Alberta real estate investing options with the Real Estate Intelligence Network (REIN). Contact us anytime for a conversation about our upcoming projects, or to connect with us at a REIN event.
