LISTENING CAREFULLY?
Back in 2015, it was easy to hear the news. Layoffs were everywhere and the media reported every job loss. They were tough times in Alberta.
Today’s news requires a lot more digging. Yes, we have lots of stories about inflation, global uncertainty and interest rate hikes. As real estate investors, we know each of those factors are influencing the market supply and demand, not to mention how much they influence consumer fears!
However, for our monthly update, we are searching for the bigger picture. Have you noticed that big job announcements are an almost daily occurrence? And they are rarely Oil and Gas positions. We are much more likely to hear about airlines, shipping, construction, and tech sector jobs. In contrast, today’s monthly unemployment stats show a mix: Canada’s seasonally adjusted unemployment rate sits at 5.2% (down from 5.4%). Alberta now sits at 5.5% (up from 5.4%). Calgary is up to 5.9% (from 5.6% in August). And Edmonton is now at 5.2% (down from 5.3%). In case anyone is interested in tough places to be an employer, the Lethbridge / Medicine Hat unemployment rate is currently at 3.3% –yikes!
All these jobs mean in-migration for our province. The AB population has now grown for 4 quarters in a row, and we’ve just recently seen the largest net migration since 2014. All these people are finding jobs and affordability. Calgary’s housing affordability currently sits at 38% of total income to support housing costs. (https://royal-bank-of-canada-2124.docs.contently.com/v/housing-trends-and-affordability-september-2022). Our new neighbours are also seeing the benefit of lower taxes and no PST.
So what’s happening to the real estate market? Sales are indeed down 12% year over year. But remember, we’re now comparing to record highs. It is also very interesting that inventory is only at 2.34 months of supply—this is down 10% year over year. Hmmm. Less supply and less demand. Prices are still 10%-15% higher year-over-year, although they are down 3.4% since the peak of March. What does all this mean on the streets? Real estate agents are seeing houses sell under $600,000 and over $1,000,000, BUT buyers have time to be a little picky. Certainly not a bad adjustment to the ever-changing “new normal.”
What if I’m a landlord? According to Rentals.ca https://rentals.ca/national-rent-report: rents in 1 bedrooms in Calgary are up 29.8%, rents for a 2 bedroom are up 19.7%. This is the biggest difference between the Calgary and Edmonton markets in recent months. Calgary seems to be seeing much higher demand, and more significant rent increases.
What if I’m a developer? Well, the game just got a little more interesting for those who are intrigued with building small multi-family to rent. Just this week, Calgary city council approved a new zoning category for the “missing middle;” this is for townhomes, rowhouses, low-rise and semi-detached. The new zoning will be called H-GO, and is intended for inner city. At this point, re-zoning will be on a case by case basis. This means a few brave people will need to go first-at least that’s how we translate it!
What do we think? How do we hear the news?
We don’t see rose-coloured rainbows and unicorns, but we sure see a plethora of long-term opportunities. The people are here, and more are coming. The jobs are here, and more are planned for the very near future. Even the City bylaws are slightly more friendly for builders and developers. Connect with us at any time to chat about real estate opportunities in and around Calgary.
