CALGARY UNDER THE MAGNIFYING GLASS
How often does anyone get a “do over?” Once we’re adults, it is very rare. Imagine the real estate investors from Vancouver: many would love to go back to the early 2000’s and plan their investments a little differently. Or imagine the Toronto real estate investors –10 years of hindsight would make a huge difference in their current portfolios.
Now imagine the Calgary investors of 2022-23. No wait! We don’t need to imagine. We are living right here, right now. We are investing right here, right now! The key economic and social drivers are already growing despite inflation and interest rates. Let’s review the fundamentals from the October stats.
GDP GROWTH
This is always a fun one to measure (wink-wink). The Conference Board of Canada suggest that our national GDP will grow 1.2% for 2023; Calgary is predicted to grow 3.8% for 2023. In this week’s fiscal update, Finance Minister Chrystia Freeland suggested that Canada’s GDP forecast for 2023 would 0.7%. The Royal Bank of Canada is predicting a recession in early 2023. And the International Monetary Fund predicts Canada’s GDP will grow 1.5% in 2023. So that narrows the national numbers down to a range of relatively small recession to relatively small growth for 2023. Calgary looks to be an outlier.
JOB GROWTH
Today Stats Can released the October Jobs numbers. While we recognize that there are many factors involved in measuring employment, we will keep this section overly-simplified to the bottom lines. Canada’s unemployment figure is unchanged from September 5.2% to October 5.2%. Alberta’s unemployment has dropped from 5.5% in September to 5.2% in October. Calgary shows a slight increase from 5.2% to 5.3% from September to October. And Edmonton also shows an increase from 4.8% in September to 5.2% in October. These are all month-to-month changes. When we take a higher viewpoint, over 103,000 jobs have been created over the past year for Alberta. In Calgary, in September alone, over 2600 new jobs were announced – these jobs are coming, and are well-paid; it will be very interesting to watch Calgary’s employment numbers in 2023!
POPULATION GROWTH
By now, almost everyone has read the crazy statistic. From April to June 2022, Alberta saw a net IN-migration that was up over 3000% from the previous year. The U-haul’s are coming!
RENTAL DEMAND
Jobs, a diversifying economy and increased population are all driving rental demand. For more details, see https://rentals.ca/national-rent-report. After too many years of no rental increases, rental housing providers are now seeing rents rise on average 20% to 30%. Despite this, Calgary and Alberta still have relatively low rents compared to other parts of the country. With no PST (lower cost of living), and average weekly wages still amongst the highest in the country, rental demand is expected to continue or increase. Also, with higher interest rates, this will prevent some renters from moving into home ownership – but the influence of interest rates on rental demand will occur across the country (nothing special about Alberta or Calgary with that factor).
PROPERTY PRICING/DEMAND
As November rolls in, and the deep cold/snow enter daily living, we would usually expect the real estate demand to decrease. Sales are in fact down, 15% year over year. Wait what?! It was all roses up to here! For clarity, last October was the highest October EVER for sales. And the current number of homes that were sold, was 15% above the Long Term Average. Context is everything sometimes! Inventory for Calgary is down 20% from last year, and 31% below the long-term average. Of special note, the lower price points are highly competitive right now, with condo sales dramatically increasing 60% year-over-year. When was the last time we said that in Calgary? Maybe 2014? And price—where’s the appreciation (in investor-speak)? Average prices were down about $3500 from September to October 2022. And prices are down 4% from the inferno of the March-April markets. BUT, prices are still up 9.65% year over year.
This final detail about real estate pricing is why we’re talking about a do-over. How many of us wished that we bought in the spring of 2022? Well, interest rates are not the same, but prices are approaching very similar dollar values (depends on your property type). Strategic investors will have the chance to buy throughout the winter, but with accurate cashflow analysis based on today’s financing requirements. Today’s magnifying glasses highlight the strength of Calgary’s and Alberta’s fundamentals. Tomorrow’s sunglasses are ready for positive AND realistic opportunities. Reach out to us anytime to chat local about Calgary investment properties. @mtnedgedevelops @mtnedgerenovate
