WINTER HUSTLE
Technically, it’s freezing out there! But with all the hustle and bustle in the real estate industry, you’d hardly know it! Here’s our slightly delayed review of some of the real estate investing fundamentals.
Nationally, the Gross Domestic Product (GDP) is underwhelming, to be polite. But like so many things in this beautiful country, it depends on where you live. https://thoughtleadership.rbc.com/canadian-gdp/. Nationally, GDP rose only 0.1% in September, and is forecast to rise another 0.1% in October. Per capita GDP is down for the 6th consecutive quarter (that’s quite a run!). Based on the data, GDP rose 1.0% annualized in the third quarter, but this was not enough to keep up with population growth. Did you see the comments from Stephen Poloz last week? https://www.wealthprofessional.ca/news/industry-news/former-boc-governor-says-were-in-a-recession-and-not-even-a-technical-one/387775. Alberta’s GDP is predicted to be different (you’re shocked, we know!); Alberta’s economy is predicted to be approximately 2.5% over 2024 https://www.atb.com/company/news/releases/albertas-economy-heading-into-2025/.
Population growth is both a known and an uncertain fundamental these days. We are certain that our population continues to grow, both nationally and in Alberta. For example, the latest stats show that the labour force grew by approximately 137,800 people in November 2024, https://www.atb.com/company/insights/the-twenty-four/labour-force-survey-november-2024/. The wildcard in the mix is of course President Elect Trump and his “largest deportation program in American history.” How will this impact Canada? How many people will claim asylum in Canada? How on earth will the courts process all these claims when they’re already so backed up (3 years is a rough estimate we’ve seen in several articles).
Employment numbers are always interesting, aren’t they?! Luckily, the folks at ATB examine and then explain in regular-human language what they mean.
It’s like they were reading my mind: “How do you explain this? Calgary’s job growth has been red hot since 2022, yet the unemployment rate has been on the rise.” https://www.atb.com/company/insights/the-twenty-four/atb-economics-the-seven-december-6-2024/ Fact: “Employment is up 3.7% over the last 12 months in the Calgary CMA, far outpacing the national (1.6%) and provincial (2.7%) increase.” So then why is our unemployment rate continuing to rise? The answer is, “Employment is rising, but not at the pace people are coming to the city in search of work.” I have to admit, I love a simple answer in plain English. Now I can understand, even while we wait for Calgary and Alberta’s population growth statistics to be published. For more employment details, see https://www150.statcan.gc.ca/n1/daily-quotidien/241206/dq241206a-eng.htm. We’ll just point out that Canada overall added 50,500 jobs, but Alberta added 24,300 jobs –for November. No wonder people are moving here for work!
So what’s happening in the rental market? https://rentals.ca/national-rent-report. Nationally, overall rents went down for the first time since July 2021. In Calgary we are seeing a rise in supply, causing 1 bedroom rents to decrease by 4.3% and 2 bedroom rents to decrease by 7.0% year-over-year. In addition, this seems to be supported by the fall rental survey, which shows renters completing their search for a new home in Alberta, Saskatchewan and Manitoba in under a week. https://rentals.ca/blog/renter-preference-survey-fall-update-2024 Our personal opinion is that the documented vacancy rates for Calgary are now out of date (aka inaccurate).
As for homes trading on the open market? Supply is on the rise; this is normal for late fall/early winter. The stats show that the Benchmark price is up year-over-year to $587,900, but eagle eyes will notice that the Benchmark price is down from October. Anyone else think January could be very busy (after anticipated rate decreases)? For anyone watching affordability indexes, Calgary’s median home values require approximately 44.8% of a Calgarian’s median income. For comparison, Edmonton is at 32%, Toronto is 78.4% and Vancouver is an astonishing 92.3%, thanks for the math National Bank. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf.
Bottom line: many real estate investors are finding opportunities in Alberta, despite the chaos and uncertainties. Cheers to the hustle!
