PROPERTIES ARE LIKE EASTER EGGS
Stay with me for a minute here. What is an egg? Basically it’s a “tiny home” for a baby chick (or other creatures that lay eggs). Eggs themselves come in a wide variety of sizes. Then add in some Easter, and those eggs transform into an endless variety of colours, shapes and sizes.
As real estate investors, we are on a perpetual “hunt” for our eggs=properties. Condo’s, single family or multi-family. Rehabs, resales or brand new. There are real estate investment properties out there to suit every style of investor.
To assist your search, our FFF at the beginning of any month is simply a review of Calgary and Alberta fundamentals.
We begin with Canada’s GDP rising 0.5% in January, and a predicted rise of 0.3% in February. Some will say, “great! No recession!” And some will say, “uh oh, will the Bank of Canada raise interest rates again?” Stay tuned, only time will tell. For now, these are the simple facts.
Canada added 34,700 jobs in March. Remarkably 13,700 were in Alberta (a little over 1/3 of the new jobs in Canada!). Unemployment rates were basically steady from February to March for Canada (5.0%), Alberta (5.7% from 5.8% in Feb), Calgary (6.6%), and Edmonton (5.4%). Nationally, the stats are reporting a loss in construction jobs. From an Alberta perspective: you have got to be kidding! I don’t know how long it will take the stats to show it, but renovations and construction are very busy industries in our neck of the woods!
The most recent population numbers show Canada’s overall population growing by over 1,000,000 people in 2022, with international migration accounting for 95.9% of the growth! Astonishing numbers (dare we even bring back that word “unprecedented?”). Alberta’s population grew by a humble 11,534 people in Q4 of 2022. This is down from Q3, but honestly, who moves just in time for the deep freeze? I’m just suggesting that a little perspective for the time of year might be helpful.
So all those people need to live somewhere, right? We follow rentals.ca quite closely. It’s not perfect, but their statistics are the most up-to-date information we can access regarding rental markets. For Calgary, the average 1 bedroom is currently renting at $1526, this is up 19.2% year over year. Still in Calgary, the average 2 bedroom is currently renting at $1894, up 21.7% from the previous year. Anecdotally, rentals are quite easy to fill these days.
That brings us to the housing market itself. Calgary is currently reporting the lowest inventory since 2006. Even apartments are doing well again (if you live here, or follow the Calgary markets, you know it’s been “a minute” since we could say that). Interestingly, even the benchmark price continues to tip-toe upward 0.8% year over year. Why is that notable? Well, many other markets in Canada are not seeing increases in benchmark prices, AND last year was record-breaking in Calgary. Oh, and we should mention that this is just the beginning of the major spring market season. Should be an interesting one!
What about those pesky “influencers?” Inflation rates for February were 5.2% in Canada, 3.6% in Alberta, and 3.9% in Calgary. Yes, really. To put that into perspective, the USA is currently experiencing a 6.0% inflation rate, and the European area shows an average of 8.5% from February (although the UK and Germany remain in double digits). Hmmm. Maybe we shouldn’t be complaining so much?
The other influencer we are still watching is Consumer Confidence and Small Business Confidence. We understand the limits of trying to estimate feelings, based on survey results. However, we’re watching the trends more than the actual “data.” Every marketer knows that the average consumer buys on emotion, then attempts to justify that purchase with some kind of logic. Real estate is no different, in our opinion. Consumer confidence has been noticeably low for about 5 months now, and showed a slight decrease in the latest numbers. Small business confidence is also struggling, but in contrast shows a slight improvement. The biggest worry for 45% of small businesses in Alberta continues to be the shortage of skilled labour.
All these numbers, all of the real estate fundamentals, combine to form the current “basket” that we’re collecting our properties into. Some people will collect as many “eggs” as they can, as fast as they can. Some investors will “sample” their treasures and refine their search along the way. Whatever your style, happy hunting!
For reference articles = aka where do we get our data, check out the posts on our FB page @mtnedgedevelops
