REAL ESTATE INVESTORS’ BUSINESS UPDATE
How many meetings have you participated in, while thinking, “for goodness sake’s, just give me the bottom line!?”
Real estate investors are generally very busy people. Professionals and Business Owners don’t have time for lengthy, drawn out commentaries. So once a month, we provide an update of the Alberta economic fundamentals, as they pertain to real estate investors. We can all glean valuable information for either our rental housing market, or our physical housing market.
Depending on where you get your GDP numbers, I’ve seen from 5.3% real GDP for Alberta to 5.8% for the 2021 year end. Similarly, predictions for 2022 range from 5.0% through 5.4%, with oil prices being a wild card in the mix. https://www.alberta.ca/economic-outlook.aspx provides a link to the “official” numbers used for the recent Alberta Budget. Bottom line: recovery and growth are expected to continue.
Jobs data just released today shows Alberta jobs rising by approximately 7000 in January, and 8200 in February. Unsurprisingly, Alberta unemployment dropped further this month from 7.2% to 6.8%. Calgary’s unemployment dropped from 8.5% in January to 8.0% in February. AND these numbers were collected before Covid restrictions started easing. We should note that Calgary still has the second highest unemployment among the 34 metropolitan areas that are regularly measured by Stats Can. Bottom line: continuing improvement in the employment numbers, but room for much more improvement. Side line: with lower unemployment rates, that leaves the Bank of Canada with more reasons to continue raising interest rates. Yup, it’s all connected.
Population growth data is currently coming out of the 2021 Canadian census. Over the past 5 years, Calgary only grew by 5.5%. This stat will likely boggle any current realtor’s mind. However, Cochrane grew 24%, Airdrie grew 20% and Canmore grew by 14%. This reflects a current trend for housing and rentals whereby people are moving away from metropolitan centers, and choosing a higher quality of living in the smaller towns. I am not aware of anyone collecting data on vacant homes in Alberta. Bottom line: the current work-from-home trend is reflected in the population growth outside the cities, and definitely away from downtown cores.
What’s happening with rents, rental demand and vacancies? These are often hard figures to track down. In February, CMHC released their latest Rental Market Report: https://www.cmhc-schl.gc.ca/en/professionals/housing-markets-data-and-research/market-reports/rental-market-reports-major-centres. Much of this data is outdated by almost 6 months when the report is released. Regardless, their Canadian vacancy rate was at 3.1%, and the Calgary vacancy rate was at 5.1%. CMHC was reporting that the greater Calgary region continues to have an increasing supply of purpose-built rentals. However, talk to almost any active landlord in Calgary, and they will have a story of multiple strong applications and rising rental rates. Bottom line: rental demand is growing in Calgary, but we expect it will be some time before these numbers are reflected in any “official” reports.
Finally, as we look at real estate demand and property prices, we are in need of some high-quality shades: the glow is very bright so far in 2022! If you’re up for a deep dive into the Calgary stats, check out the CREB report: https://www.creb.com/Housing_Statistics/documents/02_2022_Calgary_Monthly_Stats_Package.pdf. The average price of all residential properties (condo’s through detached) has risen 16% year over year. Detached prices have risen 19% (all price points included) and price gains have been noted in every area of the city. The smallest price gains are in the city centre; the largest price gains are in the north and the south. Airdrie’s prices are up 22% year over year, Cochrane property values are up 21% and Okotoks has seen gains of 15%. Bottom line: tougher to get in, easier to sell, and flips and BRRR strategies are now looking more than possible!
Bottom line: As we gather the intel and connect the dots, we believe we are looking at solid recovery and sustainable momentum.
Meeting adjourned!
