HIDING IN PLAIN SIGHT
Albertans, and specifically Calgarians, have a secret. Except it’s not. The secret is there for anyone to uncover. Follow us as we reveal some of the clues to our latest economic update.
In its latest update, the Royal Bank of Canada gave a broad overview of the Canadian economy, and some specific predictions for Gross Domestic Product (GDP). Saskatchewan and Alberta are predicted to lead the country in economic growth in 2022, with Saskatchewan seeing a 6.0% rise in GDP, and Alberta seeing a 5.7% rise. Yes, these provinces had farther to recover. https://thoughtleadership.rbc.com/western-provincial-economies-shining-more-brightly-in-2022/?_ga=2.129923599.247064842.1654898078-1812030971.1651172430 ATB (Alberta Treasury Branches = Alberta’s bank with a local finger on the pulse of Alberta’s economy) suggests that Alberta will reach pre-pandemic levels of GDP in 2023. In any other year, we would celebrate a growth rate of 5.7%, without any “buts.”
Jobs are another bright clue! The unemployment rate has come down, yet again, in May—for Canada, Alberta, Edmonton and Calgary. Overall, Alberta’s unemployment rate is now 5.3%, down from 5.9% just a month ago. Pretty much any teenager with a pulse can get a job! And many employers are fighting to attract more skilled workers. As entrepreneurs ourselves, we see and hear these stories every day. With high inflation, we are seeing an interesting side effect that people really want and need to work.
There is limited information yet available for immigration into Alberta, or the big cities. But a simple drive on any major street will reveal the plethora of out-of-province license plates. We’re pretty sure they’re not all here a month early for Stampede—even with Kevin Costner as the parade Marshall!
Increased rental demand is all over the news media – from the perspective of the tenants. Rentals.ca collects data and reports on national rent changes on a monthly basis. The May report can be found here: https://rentals.ca/national-rent-report Year over year, rents are up 13.88 % for a one bedroom, and 13.85 % for a 2 bedroom in Calgary. We notice that rent increases are quite different between Edmonton and Calgary. Recently, one property management company, Hope Street, reported that single detached homes now have a vacancy rate of 0.24%!!! Obviously we could dig much deeper into vacancy and rent rates by area, by property type, etc… — but most of you would fall asleep. You get the idea: generally rents are up and vacancy is down, by A LOT.
So how is this all impacting property prices and real estate demand? The headlines read “Calgary home sales down 10% month over month.” Wait, what? When we dig a little deeper, this is still 6% higher than sales last May, and the best May of all time for sales. Hmm, where was the good news in that headline? Compare Calgary sales to Vancouver sales, that were also down 10% month over month? Well, Vancouver sales were down 32% year over year. Huh. As for value, the Calgary benchmark price is now at $546,000, up 14% year over year, and 3% month over month. This is less growth than January through March—which were crazy intense months for sales and prices. Growth is good; we don’t believe it has to be astronomical growth for real estate investors to be making fantastic returns on their investments.
So what’s the great secret that these clues reveal? All of the ingredients are sitting on the counter, ready to bake a successful real estate investment. Many people will believe the fearmongers and the naysayers. Many people will be distracted by rising interest rates –that are still lower than long term average interest rates. And many people will miss the opportunities that Albertan and Calgarian investors can already see. So today, we’re revealing the secret and inviting our close friends to join us on a journey to Financial Freedom.
