FORECASTING SEASON OR FORTUNE TELLING?
Remember when Covid seemed like a huge black swan event? Back in 2020 it seemed like the future was full of uncertainty. Now in 2025, Covid almost seems like small potatoes compared to the “flock of black swans” in our midst (this is a recent quote from Gordon Pape, https://apple.news/AzvxF_hlnRhq96Gxah53wLA). So, what’s a real estate investor to do? We are listening to all the forecasting (by people much smarter than us!), but we are maintaining a healthy curiosity/skepticism as if we were visiting a fortune teller. And while we wait for the future to unfold and reveal more certainty, we continue to pay close attention to any facts we can find.
The economic fundamentals for real estate investors always begin with Gross Domestic Product (GDP) –the big picture of economic data. Our latest Canadian data was released Dec 23, showing that our GDP was up 0.3% in October 2024. https://www.canadianmortgagetrends.com/2024/12/statistics-canada-reports-real-gdp-grew-0-3-in-october/. However, the early predictions for November suggest a contraction of -0.1%. And then, of course, there is the incoming wild card of tariffs—which we expect could throw all predictions completely out the window. The best Alberta-based information can be found in ATB’s Quarterly Outlook, released December 18, with suggested and possible expectations for GDP in 2025. https://www.atb.com/company/insights/alberta-economic-outlook/. “Alberta is expected to lead provinces in growth in 2024 with a 2.5% real GDP gain.”
Our next fundamental is jobs data, which was released this morning, https://www150.statcan.gc.ca/n1/daily-quotidien/250110/dq250110a-eng.htm. Canada’s unemployment rate is down slightly to 6.7% in December, from 6.8% in November. 91,000 jobs were created, with 35,000 of those jobs coming from Alberta. Interesting that Alberta’s unemployment rate dropped significantly from 7.5% in November to 6.7% in December! That’s not normal! For more details and implications, see https://www.atb.com/company/insights/the-twenty-four/labour-force-survey-to-December-2024/. Calgary’s unemployment rate was 7.8% in December, down from 7.9% in November. Edmonton made great improvements from 8.3% in November to 7.4% in December. And Lethbridge is always a strong performer, going from 5.7% in November to 5.5% in December. Looking forward, recent news is suggesting a rise in oil and gas production for 2025 as well, (you can google Enbridge oil and gas production increase for a shorter version, or check out this video) https://www.youtube.com/watch?v=iVd8m612Ud0.
Population? Who will stay? Who will go? Who’s coming into the country or province? Personally, we don’t think the data here will be clear until it has already happened. The bottom line for intelligent Canadians and newcomers, is that housing remains relatively affordable in Alberta. Check out (and scroll down) https://economicdashboard.alberta.ca/dashboard/population-quarterly# . Their population data is taken from Stats Can information released December 17, 2024; we are seeing clear signs that population growth is slowing, but no decreases, yet. The City of Calgary usually updates their population data in late spring (June-ish).
So what’s happening to rental demand? https://rentals.ca/national-rent-report. Calgary had the biggest decrease in rental rates over 2024, with prices dropping 7.2%. We should put that in perspective, because rents across Canada are down 3.2% over 2024, for a 17 month low. In contrast, Edmonton saw rents rise 2.7% in 2024. For Calgary, anecdotal evidence suggests a significant increase in supply of rental housing throughout 2024.
Housing data is always easy to find, and very detailed. https://www.creb.com/News/CREBNow/2025/January/Dec_2024_stats/ . Calgary has seen a slow but steady decline in overall prices and sales volume since approximately the middle of 2024. Is this good or bad? Well, it depends, of course. Benchmark pricing is almost back to where it was last year at this time—creating a do-over opportunity for buyers. Supply and DOM are currently up, but interest rates are down considerably since last year at this time; this means we are seeing opportunities! The experts are suggesting Calgary is currently in a balanced market—which is our favourite buying scenario! We have time for diligence and the ability to negotiate if that inspection turns up some “uh oh’s.”
For those who follow the Real Estate Investment Network, y’all know that the fundamentals are only part of the discussion. These days the “influencers” are running amok a bit! Especially politics. Canada, the USA and Calgary will form new governments in 2025. We’ll avoid the ginormous elephant in the room (ahem, Trump and Tariffs) because at this particular moment, it is a giant unknown.
What does this all mean for investors? Well, we think many will stay on the sidelines until there is clarity. However, our perspective is that this creates some astonishing opportunities, with less competition. For any of our colleagues who are interested in following our renovations and building, check out: https://www.facebook.com/MtnEdgeRenovate/, or you can find us on IG as well. We have a number of accessory dwelling units coming up in 2025. And for our investor colleagues who just want to keep up-to-date with Calgary and area news, we share information on https://www.facebook.com/MtnEdgeDevelops/. Cheers to your 2025 goals!!
