GRATEFUL ALBERTA INVESTORS
Wow, Mother Nature sure has been generous this weekend! If you’re anywhere in Southern Alberta, I hope you enjoyed a little time to soak up the sun, warmth, and feast of colours! Oh yes, and Happy Thanksgiving too!
We’re a bit tardy this week, but grateful to be returning to the land of healthy people. Real Estate Investors in and around Calgary have plenty to be grateful for too: here’s our monthly update.
Canada’s GDP is flirting along neutral lines for the past few months: May saw a GDP rise of 0.2%, June saw a drop of 0.2%, and July saw a small increase in GDP of 0.1%. Predictions suggest August is likely to come in around 0.1% as well. That seems significantly lower than the last Bank of Canada prediction that we saw of around 1.5% growth. Hmmm. Alberta currently has real GDP predictions guesstimated at 3.0% (https://www.alberta.ca/economic-outlook).
So overall economic and business growth still seems strong in Alberta, what about jobs? Canada saw unemployment rates hold steady at 5.5%, while Alberta overall also saw no change between August and September at 5.7%. Calgary was up slightly from 5.8% to 5.9%, Edmonton was down slightly from 6.1% to 6.0%. Even Lethbridge was mostly stable at 5.6% in September, from 5.5% in August. But somehow, Alberta lost 38,000 jobs in September, while Canada overall gained 63,800 jobs. Stranger still, the stats would suggest that construction jobs were down in Alberta. Umm … where? Not around Calgary, just sayin’. Of note, wages still appear to be rising around 5%.
The employment numbers are very interestingly stable, considering tremendous growth in overall population and in “labour force” (people looking for work). Canada’s and Alberta’s population growth numbers have been big news so far in 2023. It doesn’t matter who is or isn’t being counted, all of the numbers are up. One source for more information about Alberta’s population is https://www.atb.com/company/insights/the-owl/atb-economics-weekly-wrap-september-29-2023/. The gist of it is that Canada’s population has grown by 3.0% in just a year, while Alberta’s population is up 4.1%.
So business appears resilient, jobs are somehow stable, and population is rising. In a land where bond rates and interest rates are rising faster than mortgage applications can even be processed, relative affordability has value in the marketplace! Don’t be fooled by the headline in this article, scroll down to see the Calgary story: https://thoughtleadership.rbc.com/more-sellers-fewer-buyers-take-pressure-off-housing-prices-in-canada/. And for more big picture thinking about the interplay between affordability and population growth, https://www.atb.com/company/insights/the-owl/atb-economics-weekly-wrap-october-6-2023/ (also scroll down).
It will be no surprise then that Calgary’s real estate market continues to hum along nicely. Supply is still the big story, with only 1.38 months overall. Benchmark price in Calgary is now at $570,300 overall; that’s up 8.7% year over year which certainly isn’t out of control considering the demand. The city is seeing record high apartment and condo sales, and Okotoks has their lowest inventory in 20 years! Sales are up year over year (Septembers), but down overall for 2023 related to incredibly low inventory.
The BIG news in Calgary was City Council’s decision on September 16 to change default zoning from R-C1 (single family) to RCG (low density or also sometimes referred to as the “missing middle”). This change won’t be fully in effect until sometime in 2024, but when the new zoning rules are blessed – it’s a game changer for the entire city.
What does all of this mean for Calgary and area real estate investors? Sharpen those pencils! It’s the equivalent of “start the car” for Ikea shoppers! Cashflow and proforma’s will start looking different next year, exit strategies just multiplied, and permit-palooza is about to begin! Are you ready?
