WHAT’S NEW AT THE ZOO?
Calgary-and-area kids are lucky! They have an opportunity to visit an incredibly well-run zoo to learn about a variety of beautiful creatures. Our kids loved the zoo! How many field trips did we do there? What’s new at the zoo these days? I’m looking forward to the new polar bears, Baffin and Siku, and I still haven’t seen the little gorilla that just turned 1 year old, Okabe.
Just for fun today, we’re comparing the real estate investing ecosystem to the zoo. For anyone renting, buying/selling or building—I’m sure you get it! I wonder which animal personality is evident in each of the economic fundamentals this month?
Canadian GDP rose by 1.7% (annualized) in the first quarter. Sub-optimal, to be polite, but the bigger issue is that the per-capita GDP has now declined for 6 out of the last 7 quarters. https://thoughtleadership.rbc.com/wp-content/uploads/Canadian_per-capita_GDP.pdf. In comparison, for 2023, Canada’s GDP rose 1.2% overall, while Alberta’s GDP was up 1.5% overall. https://economicdashboard.alberta.ca/topics/gdp/. “Alberta’s GDP per capita is highest among Canadian provinces,” but even with that bragging right, we were down 2.7% year-over-year.
Much has been said and written about population growth lately. Just a quick recap: Calgary’s population grew by about 96,000 people last year, for an annual population growth rate of 6.0%. The average of the previous 10 years was closer to 2.0%! https://www.atb.com/company/insights/the-owl/atb-economics-weekly-wrap-may-31-2024/. And Alberta overall grew by slightly over 202,000 people, for a growth rate of 4.4%. https://www.alberta.ca/population-statistics. It’s entirely understandable that we’re experiencing some growing pains—in our opinion.
If you follow REIN (The Real Estate Investment Network), you’ll know about “the arrow” and you’ll know that jobs are supposed to precede population growth. In our opinion, Canadians are playing catch-up. We’re trying to create enough jobs to support all of the people moving into our country, provinces and cities. And we think that is clearly reflected in today’s employment data. Calgary’s unemployment in May was up to 8.1%, from 7.7% in April. Canada’s unemployment is slightly changed at 6.2% in May, from 6.1% in April. Alberta’s unemployment is also up to 7.2% in May, from 7.0% in April. And for comparison, Edmonton’s unemployment is up to 6.6% in May, from 6.4% in April. https://www150.statcan.gc.ca/n1/daily-quotidien/240607/dq240607a-eng.htm. Canada only added 27,000 jobs overall (while the labour force shows an increase of 54,500), and Alberta actually dropped 20,000 jobs. https://www.atb.com/company/insights/the-owl/atb-economics-weekly-wrap-june-7-2024/.
But could anyone explain to us how the statistics show a large drop in construction jobs? That just makes no sense. Maybe those stats people need to look up from their computers? Or go outside and walk almost any street?
Rent numbers also came out today. Nationally rent has hit yet another all-time high of $2202 on average, for all property types. I don’t think we should be bragging or celebrating these numbers. But we all need to deal with it. Calgary’s rental rates haven’t plateaued just yet, but we are rising more slowly at 6.2% for a 1Bedroom, and 6.0% for a 2Bedroom. https://rentals.ca/national-rent-report.
Real estate is unsurprising in Calgary these days. The overall Benchmark price now sits at $605,300, which is up 9.5% year-over-year. There is just over 1 month of supply, and average Days on Market is 19 (a 20% drop since last year). https://www.creb.com/News/CREBNow/2024/June/May_housing_stats/.
As for influencers? Those not-so-little rascals that like to throw their weight around? Well, it was pretty big news that the Bank of Canada dropped their rate from 5% down to 4.75%. We noticed, but it didn’t make any significant changes yet. Also, for those in the building biz, there’s a bit of extra chaos with the new Alberta Building Codes coming into effect as of May 1, 2024. Our sympathies go out to the Safety Codes Officers, permitting office workers, engineers, architects and especially those businesses that provide truss and flooring packages. It will all settle down again in a couple of months when we’re all aware of the little nuances of the changes.
Our last influencer for today is government regulations. Prime Minister Trudeau is actually in Calgary this week for The Big City Mayor’s Caucus. Fancy title, but it really matters. They’re discussing infrastructure funding. We think it’s painfully appropriate that a huge-and-aging watermain just broke—as if to add an exclamation mark to the begging from the municipalities. Canada’s growing population desperately needs a better funding model for infrastructure—maybe one that is less than a century old?
And so it goes in the zoo! For the humans still pursuing their real estate investing goals, good luck with all the wild animals out there!
