LOOKING FORWARD?
If you owned a magical pair of binoculars, how far forward would you look into the future? Imagine what that kind of sneak-peak (pun intended) would do to your choices and actions today!
We are noticing that some of our investor colleagues are getting caught up in the drama of today. Media outlets are only too happy to create outrageous headlines to try to grab our attention, and save their livelihoods. But some of our friends and family are trying to look for “where the puck is going” and not just in the playoffs!
In the worlds of economics and real estate investing, we all look back to try to predict what comes next. And then the Universe laughs, sends a wildcard on a random Tuesday afternoon, and we all adapt. We recognize the limitations of backward glances, but there is still some value in tracking where we are today, and how far we’ve come since the Black Swan event of 2020.
Our monthly review begins with GDP (Gross Domestic Product) information that was released this week. https://www.atb.com/company/insights/the-owl/canadian-gdp-february-2024/. February’s GDP is reported to be 0.2%; this compares to January’s GDP of 0.5%, and March’s expected GDP of 0.0%. When the math wizards project outward, that would suggest an annualized rate of 2.5%. Now for even more perspective, we can compare that to 2023’s real GDP numbers: https://www150.statcan.gc.ca/n1/daily-quotidien/240501/g-a001-eng.htm, showing an annual rate for Canada of 1.2%.
Why does the hiker climb to the top of the hill? For a better view, or if they’re a bit lost, for a better perspective of their surroundings. The OECD (Organization for Economic Development) is officially an international organization that works to build better policies that can benefit market-based and democratic economies. But for our purposes, they also do an astonishing amount of data collection and analysis. Perfect, right?! Us little guys don’t have time for that. They just released their first of 2 economic outlook reports for 2024, https://www.oecd-ilibrary.org/economics/oecd-economic-outlook_16097408. These folks are predicting global growth for 3.1% in 2024, similar to 2023, then 3.2% in 2025. And while that looks like some stability amongst world economies, they also acknowledge that significant uncertainty lingers. Oh, and we should note, their forecast for Canada is not as rosy; OECD suggest an annual real GDP of about 1% in 2024, followed by 1.8% in 2025 (for this beautiful country).
Bottom line for real estate investors? As we look outside of our Alberta borders, we see humble growth both nationally and for our global village.
The view in Alberta is definitely a bit more sparkly –pardon our use of completely non-technical terms here. Calgary’s real estate market continues to sizzle with the benchmark price now sitting at $603,700, up 9.9% year over year. https://www.creb.com/News/CREBNow/2024/May/Price_growth_persists_in_Calgary_as_sellers_market_prevails/. And did we mention that inventory is ridiculous: under a month! Buyers (or perhaps just their bankers) continue to favour more affordable homes. Then as we look at the situation for rental housing, we see that Canada’s rent overall is up 8.8% year over year (although some markets are finally seeing plateau’s or drops) https://rentals.ca/national-rent-report. From this data, it looks like Calgary’s rents are up 8.8% year over year, while Edmonton’s rents are up 14.4% year over year (for a 2 bedroom).
For Calgary and Alberta real estate investors, we’re still seeing green lights and a beautiful view in the near future. But we don’t wear rose-coloured glasses. If you want to follow along with the news we pay attention to, check us out on FB@MtnEdgeDevelops. As much as we’re enjoying the journey, we often try to peek forward a little bit to adapt as necessary.
