SUMMER BLISS
Wherever you are this Heritage Day Long Weekend, we hope you are enjoying your version of summer bliss!
For those of us with an eye to fall real estate investing plans, here’s our monthly rundown of economic fundamentals, and a few influencers thrown in for good measure.
- The Canadian economy showed 0.3% Month-Month GDP growth in May, with June estimates at -0.2%. Sadly the construction sector is down 0.8% Month-Month, at a time when we need it the most. And digging even further, residential construction was -1.8%, nationally. https://economics.td.com/ca-real-gdp We’re not sure these numbers would be similar in Calgary, or Alberta. That data will take a while to be released.
- Employment continues to be a double-edged sword as the Bank of Canada seeks to slow the economy and tame inflation. Unemployment nationally currently sits at 5.5%, which is the highest since January of 2022, https://calgary.ctvnews.ca/alberta-s-unemployment-rises-in-july-as-calgary-edmonton-remain-stable. Average hourly wage growth continues at around the 5% mark –unsurprising, considering the plethora of strikes these days. Alberta has an unemployment rate of 6.1%, up from 5.7%. Calgary is currently in a plateau, at 6.3%. Edmonton’s unemployment is now 6.0%, down slightly from 6.1%. When we look at actual job gains, Alberta saw 11,800 new jobs created. Job growth in Alberta is up 3.5% year-over-year, while nationally job growth is up 2.2%. https://www.atb.com/company/insights/the-owl/atb-economics-weekly-wrap-august-4-2023/. Also interesting is that job growth is concentrated in the private sector in Alberta.
- For in-migration, today we are simply reviewing a dramatic rise in temporary foreign workers in Alberta. “Temporary foreign workers are an important part of Alberta’s labour force with about 45,000 permit holders coming to the province in 2022. This was a 62% increase over the number of arrivals in 2021.” As for 2023, we are on track to blow those numbers out of the water again, with a predicted 77,000 new foreign worker permits expected by the end of the year. https://www.atb.com/company/insights/the-owl/temporary-foreign-workers-in-alberta/.
- What can we say about rental demand and vacancy rate? Oh my goodness. No references here. Just talk to any landlord, or any tenant. The most recent news story we saw was about people desperately giving up their beloved pets, in an attempt to secure a roof over their heads before winter! Rental demand is off the charts; we don’t think even the statisticians can document it accurately.
- As for housing and the real estate market – it’s hot!! July saw record sales in Calgary, yes, ever. Inventory sits at 1.3 months. Although our Ontario friends laugh at a benchmark price increase of “only” 5.7%, Calgary’s now has a new record there too. And yet it remains relatively affordable.
https://www.creb.com/…/July_sees_seventh_consecutive…/.
- Here’s where we have a little fun with the analytical brains out there, and talk about feelings. What? Yup! Consumer confidence in Canada was down noticeably for July 2023: https://tradingeconomics.com/canada/consumer-confidence. As for small business confidence, it is up for a long term view (a year), and down for the short-term view (3 months) for Alberta small businesses, as measured by the Canadian Federation of Independent Business (CFIB): The long-term optimism index* is based on how businesses expect to be performing in 12 months while the short-term optimism index is based on a 3-month outlook.*
- Canada’s inflation rate dropped to 2.8% in June –yay!!
- And banking rules and interest rates continue to change faster than we can type! Dare to dream that prime will stabilize? We’ll soon see.
So what’s a real estate investor to do? We’ll let you draw your own conclusions: hopefully in a beautiful summer getaway, with some delicious food & bev, and great company! Looking forward to connecting with our colleagues IRL in the fall!
