MAKE SURE WHAT YOU’RE COMPARING MAKES SENSE
“Facts are stubborn things, but statistics are pliable.” – Mark Twain
2023 is shaping up to be yet another strange year for statistics. If 2020 was the year of “unprecedented,” and 2021 was the year of “supply chain problems,” and 2022 was the year of “skyrocketing inflation,” dare we ask what 2023 will be?
As real estate investors we try to stay rational, grounded in the facts. Ah, but there’s the rub. Many of the facts we’re using are statistics. Any stat is just a snapshot—a glimpse of the conditions at that precise moment in time. The real value with statistics for us investors is in the trends.
But wait, even trends are a complicated story so far in this decade. Today’s unemployment numbers are a classic example. Employment in Alberta in January 2023* increased by 0.9% or about 20,700 positions compared to December 2022—the fourth monthly increase in a row. (from ATB Owl, February 10, 2023). However, all of those new positions were not enough to offset some job losses, so Alberta’s unemployment rose to 6.0% in January, 2023. What’s happening in the job market in Calgary and Alberta? Well, the answer is “it’s complicated.” Private businesses are doing the bulk of the hiring, with professional, scientific and tech jobs showing the biggest growth. Wholesale and retail also posted good job gains; on the other hand, jobs in natural resources declined.
Digging deeper into the job numbers gives us a better perspective on ideal clients (tenants) for our rental housing. But with one stat up, and another down, some independent thought processes are clearly required.
Another example is the price of condo’s in Calgary. Overall, condo prices rose 1% from December, 2022 to January, 2023. That’s also a price gain of 10% year over year. Yahoo! But wait! Did you know that today’s condo prices still have not recovered from their peak in 2014? Honestly, go look it up. That is 0% appreciation (technically a bit less) over 9 years. Huh. That Mark Twain fellow was ahead of his time!
Calgary real estate broke all kinds of records in 2022. But just like the condo story, we need the bigger picture to really put things into perspective.
Oh yes, and did I mention that it’s an election year in Alberta? We haven’t even considered that possible mayhem, and the possible effects on real estate pricing – nevermind business investment in this province.
So what’s a rental housing provider to do?
We are still excited about buying good properties in good locations. We’re even more excited about building and creating new opportunities for quality rental properties. We share a lot of the stats and trends that we keep track of, FB@mtnedgedevelops. But we caution our friends to go beyond the headlines, dig deeper, and really think about each measure as it relates to the bigger picture.
Analysis paralysis will drive anyone bonkers (my technical term). But in a world of click-bait, spin doctors, and weird reference points since Covid, real estate investors will benefit from a little caution. Does X really compare well to Y, or should we compare it to Z instead?
