Thanks very much to "itchy" one of our frequent commenters who pointed out this article from Finance Alberta which shows that Alberta experienced strong in-migration in the second quarter of 2008.
"Alberta’s population growth continued to be the highest among all provinces in the midyear of 2008, though slower than the previous twelve months. During the second quarter of 2008, Alberta had strong net inflows of people in both interprovincial and international migration, and a substantial influx of non-permanent residents."
I put together a little chart, to show the trend over the years:
The report states that Alberta’s population increased by 74,300 people between July 07 and July 08 – a growth rate of 2.11% which is 80% higher than the national average (BC and SK were next at 1.65% and 1.63%).
Alberta gained 6,370 residents through inter-provincial migration in the second quarter, compared to 4,680 in Q2 07.
"The bigger interprovincial gain in this quarter was primarily attributed to the higher net inflow of migrants from Ontario (3,860) and Quebec (2,160), and at the same time the net outflow of Albertans to Saskatchewan (540) and British Columbia (160) was slowing down."
Of interest, the total annual interprovincial net-migration for Alberta for the past five years:
| 2004 | 20,877 |
| 2005 | 43,418 |
| 2006 | 46,239 |
| 2007 | 9,921 |
| 2008 | 9,491 |
In other words, there have been almost as many people move to Alberta in the first half of this year, as there were all of last year.
So, how did all this affect real estate in Edmonton? The relationship is between net migration and inventory, and prices is very strong. First, when prices became too high, the net-migration dropped extremely quickly (the rose coloured line), and immediately after inventory began it’s rise:
Having a look at inventory, sales and net-migration, you can see the direct correlation between dropping net-migration and rising inventory:
Keep in mind the above migration numbers are for the entire province, while the real estate stats are for Edmonton only.
Great stuff. I always appreciate the studies and stats. The only thing missing from the picture is the rental vacancy rate. Demand was forced upward as the rate declined. A study of the past few years would no doubt show this. I imagine the home builders would be watching these particular stats like hawks.
I would like to see housing starts put in that mix, between net-migration and inventory, to see how the builders, with their market insight, research resources and dependency on market conditions, respond in relationship to those factors.
I suspect they didn’t anticipate the big drop off in sales, as affordability reached beyond a certain threshold, since they were caught with a large spec inventory. So, I wonder if, and when, they feel they should start to ramp up housing starts to meet increasing demand and lowering inventories. Would housing starts be a leading indicator to decreased inventory, higher sales and rising prices? And, a lagging indicator to a market downturn?
The world’s biggest consumer and our biggest trading partner is in a freefall. The world financial markets are tanking, 800 point drops in the TSE are getting to be an almost daily occurence. Commodity prices have gone off a cliff and you think Alberta real estate is a safe bet? Man O man, you people are living in total dreamland.
http://www.financialpost.com/story.html?id=863854
Brent… here’s a bit of a different take on your thoughts.
Today, the US dollar climbed like a space shuttle against the Euro. This really doesn’t make a lot of sense until you look at what happened in Europe over the weekend. Everyone is extremely concerned about the US economy, but there is a massive influx of traders buying US currency because it is a SAFER bet than the Euro. Both suck, but this is a relative game, not absolute.
Same with the real estate market. Edmonton is no where near as hot as it was, but when you look at job markets in other areas of Canada, it may be the ‘safer’ bet for a LOT of people, and we may see a large amount of people moving here from places where the financial crisis hit harder.
Everything is relative, no investments are absolute.
I still wouldn’t touch real estate with a ten foot pole, even in Alberta. Canada and Alberta is in for a rude awakening despite what Harper constantly spews.
Oil is $88 a barrel today, who would have thought that only two months ago.
When your making the biggest investment of your life, investing 100′s of thousands of dollars in a house. It’s best to wait until that falling knife found the floor or you could get cut bad.
Just a comment about your population graphs and overlaying them on the other graphs.
I noticed that the 2 largest peaks on the original migration graph were in Q4-2005 and Q3-2006 and the biggest dip is in Q3-2007.
However, when you look at the other 2 graphs where the line has been overlayed, the peaks occur in Q2-2006 and Q1-2007 and the biggest dip is in Q4-2007 in the second graph and Q1-2008 in the third.
It doesn’t perfectly add up, however I would like to note that the trend is clearly there.
Hey Brent, I was just reading your post and …..zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz.
Hey car, don’t be falling a sleep at the wheel now. You still have 39 years of mortgage left to pay.
nice article
So, I wonder if, and when, they feel they should start to ramp up housing starts to meet increasing demand and lowering inventories.
99% of the comments do not have anything to do with the title of this post… Why write the same comments over and over in many different posts… It is seriously getting redundant!
!
so what does it mean?
More people come in, more rentals fill up, more sales for the 250-400k range, more traffic ? ? ? ? ?
Could Alberta be in another job rush? With all the problems manufacturing is having in the east of Canada are all these people coming to Alberta?
Does this mean prices could creep back up in the middle of a global market meltdown? Can that happen?
finnkc,
That’s exactly, what’s going to happen!
Actually, it has started already in September.
First, you have to move properties around, like it happened and than
price increase will follow.
At $95 a barrel, the price of oil is just a tad over the $90-a-barrel marginal cost of new production in Alberta’s oil-sands region, so companies are suspending new projects there. (MSNBC)
All agree that a slide in commodity prices bodes ill for the Canadian economy, which is heavily dependent on the production and export of oil and gas, metals and minerals.
Drops in oil and metals prices have hit the already teetering TSX hard.
Bank of Montreal economist Doug Porter said prices will continue to take a beating over the next year, dragging Western Canada’s formerly booming economy, in particular, down with them.
“You’re going to be seeing Western Canada come back down to the rest of us with a thud”,
(Economic Club of Canada Top Five Bank Economists)
Wouldn’t be so sure about that job rush coming to Alberat with a commodity meltdown rushing our way instead.
Settle down, Josh.
http://www.theglobeandmail.com/servlet/story/RTGAM.20081006.wroil07/BNStory/energy/?page=rss&id=RTGAM.20081006.wroil07
Bottom line, there is not enough cheap oil around to satisfy the long term demand. Demand will push the price up to the point that it is economical to produce unconventional oil. You can’t produce oil where it doesn’t exist. We still sit on the largest reserves in one of the most stable regions of the world. It ain’t rocket science.
Economists from Canada’s Big Five banks… warning yesterday that the domestic economy’s current gloom will deepen into something worse than a recession.
I guess you’re smarter then these guys Gus, being a Rocket Scientist and all..
Now, take your ‘PEAK OIL’ Demand/Supply curve and then extend it out about 10 years Gus. Hope you can hold your breath that long.
You did say longggg term didn’t you…
“You’re going to be seeing Western Canada come back down to the rest of us with a thud”,
(Economic Club of Canada Top Five Bank Economists)
These are probably the same economists that predicted ther price of a barrel to reach the $200 mark before the end of the year!
I didn’t say that I was a rocket scientist, Josh. I implied that it does not take one to see the fundamental force of supply and demand at work. You let me know when you find a new cheap and reliable form of energy and I’ll consider changing my mind.
With the amount of demand destruction for oil in the US and abroad, I would not be surprised to see oil go below $70.
It isn’t just the fact that the US is consuming less oil domestically. There is also the fact that the countries who manufacture goods that require oil for energy and materials have the US as their biggest client.
So there is OPEC who may try to curtail production to keep a floor under $80, but that won’t work out so well since curtailing production is like asking guys in a union to work less overtime; fundamentally it is their agreement, but everyone thinks of themselves in the end. And so the oil will flow…
brent, brent! Your back, I so missed your comments! So now we all know is not the time to buy houses, but was there ever a time in your life…you know…when you bought a house? You must at least know someone who bought a house, maybe one for, I don’t know 950K! Oh and I got my large popcorn, and I’ve been watching and watching and I think, without knowing, (like virtually every comment on this board), that the earth is starting to wobble just a little bit more to the left. Or maybe that’s just Canada with the upcoming election. Seriously though brent, I missed you these last few days. I only read the comments here to see what entertaining hyperbole you’ll type for the day. Man, you crack me up.
Ian,
You are a true soldier of Real Estate. I find it odd that you focus your anger so directly on Brent.
If things haven’t gotten better for you by December, you may want to get some help. This type of anger can ruin relationships as well as Christmas.
The world probably isn’t ending, but when almost everything is depreciating, what makes you think Real Estate in Edmonton is any different?
To have this much faith in Edmonton, Alberta, or even Canada would make you a true Patriot!
We need more people like you Ian. After all, money is needed for wealth destruction, so it may as well be yours
I can’t fault Brent for feeling he has to warn people about making bad choices, like purchasing a home right now.
After all, people like Brent cannot influence a market by themselves, let alone cause a 10 year old credit bubble to burst. Maybe he just likes to be correct?
Either way Ian, people should be looking to get out of debt today, rather than taking on more. It is just good, simple advice.
There was only a few oil sands projects which were delayed but most of them are thinking long term, not short term…so their investing for the future when markets will go back up again and the oil prices will climb to $200 a barrel or more.
I read that oil should be at $80 or more to make a good profit at current costs.
Most articles I read say Alberta will feel the affects of the global crisis but will squeak by with healthy economic conditions.
You really think oil prices will fall further? With the growing appetite of China and India…I don’t think so.
In general I would love it if one of these guys posted their credentials for all to see and, actually backed their posts with something more then some obscure link from some website no one has seen before.
Then on the other hand, I guess no one cares what they say, unless it is actually informative;
“To have this much faith in Edmonton, Alberta, or even Canada would make you a true Patriot!”
O_o which that is not. Thanks for coming out.
As of 5 minutes ago Oil was/is at $87. Alberta has the biggest drop in new construction permits in Canada (Calgary 20%). Many people are seeing their retirement set back years because of the markets. Our company has been told to brace for layoffs (Tech industry) because of the global climate. Global oil demand (including India/China) is down. Was out West the other day in Copperwood, there are duplexes (newest area) upon duplexes with for sale signs. And the city is talking about raising property taxes by as much as 17% next year. By the way, aren’t we hearing interest rates are going up?
I’m thinking the Rose is just starting to wilt, hope it doesn’t but we would be silly to think we are not going to be affected in a big way if this world economy stays the same (or gets worse) any longer.
I don’t believe that Oil demand from China and India are currently growing. They will again some day, but for now demand is falling globally.
As for credentials, I have none! That is why it is a shame that so many people subscribe to such herd-like misconceptions. I would like to know what you define as informative? If you can read, the information is available from many sources, and I’m not talking about hockey scores.
No obscure links required here.
If banks are struggling with lending amongst one another, what do you think that will do for lending to consumers eventually?
Set aside the 0/40 being out the window in a few days, look at the bigger picture. There are serious, historic events happening in economies all around the world, and it isn’t going to stop abruptly at the AB border.
It’s going to take a little while for us to feel the effects, but we will.
None of the downside we see is permanent, but it probably won’t turn around any time soon. There is more downside to be had, and the effects for consumers will be lagging the events.
Credentials finnkc? It’s pretty clear who those still cheerleading $200 oil and “Chindia” or peak oil theories are working for. RE or Tarsands.
I can’t believe this hype is being played over and over like a broken record:
- Oil “should” be $200 now and forever and boom bust cycles are a thing of the past because… China needs the oil.
- The “country” of Alberta will be the only country not affected while the global economy goes into the drink
- Invest in Edmonton RE now, because prices are bound to go up in the short term. Syncrude and Suncor are not going to pipe all that black goo State-side where it can be refined for 1/2 the cost of doing it here. They’re going to build super-expensive upgraders while Alberta trades and supply companies name their price so they too can afford the Alberta Advantage.
- Despite massive demand destruction, we still don’t have enough oil. This current little “correction” is just a bump in the road on the way to peak oil doomsday.
- Alberta has diversified a great deal. Look at all of the construction material supply companies, staffing companies, service industries, restaurants, strip malls, and shopping centers. Yep. Once we figure out where the jobs and money will come from to keep these industries alive after the boom years, we’ll be fine.
This cheerleading now sounds more like a desperate prayer. But that’s okay. I think praying right now is a fine idea.
Cheers,
E-town
I’m so honoured you look forward to reading my posts Ian. I must say they do stand out from the perma bull norm that this board congregates.
Cheers,
Brent
CMHC posted housing starts for September.
Although we are significantly down, year-to-year, in the Edmonton region, compared to August 2008, the worm is turning.
August 2008: 425 units started
September 208: 428 units started.
While that’s pretty flat, things look better for single detached homes, which are up from 184 to 235 (+28%).
Multiples are down from 241 to 193 units (-20%).
The real big news is that the September re-sale of homes in the USA is up 8.8%. Why is the big news, because the basis of this current credit crisis stems from easy mortgage lending practices in the USA, to where borrowers couldn’t meet mortgage renewals obligations after initial introductory or teaser rate expired, (monthly payment increases from 600 to 2,200 was an example used). So a massive number of foreclosures put the re-sale market and valuation for homes into free fall, then lenders couldn’t put valuations on homes to assess the market risk of the mortgages, or the derivatives applied to mortgages, thus causing credit to freeze. But now that buyers are getting back into the re-sale housing market in the USA, perhaps the free fall has stopped and now valuations can be set on these lending instruments so that lenders can know what their security from the borrower is worth.
Is the bottom in sight??? Let’s hope so, but that doesn’t mean the turn around in consumer spending and commodity consumption will happen tomorrow.
Im by far no real estate expert, but as a prospective buyer i do a lot of researching on new home prices. What has become quite clear is that many new home projects have halted construction and the sales of completed projects have slowed almost to a stand still. prices, in turn, are starting to come within my reach as far as affordability.
This of course can change at any time and all a smart prospective home buyer can do is stop listening to analysts and agents who clearly have their own vested interest in maintaining an allusion of sustainability in order to keep a steady flow in their own pockets.
As responsible consumers we must stay on top of our own current market by constantly reviewing prices and monitoring new and on going construction (or lack there of).
To think that Edmonton will not be affected by a global recession is pure ignorance. Too many people have been living in the ‘albertan bubble’ and its going to burst real quick. First,It really doesnt matter how much oil we are sitting on if we have no one to sell it to…. i can ramble forever but im sure you can figure it out. Has anyone heard of the butterfly effect?
Secondly, dwindling housing prices are bitter sweet as our family and many others rely on the oil industry for income. hard to buy a house if production slows and you become unemployed.
I am glad that my husband and i decided to avoid the burden of a 40year morgage and to save the 20% down. Clearly, entering into the market last year would have been financial suicide.
Melanie
I think I can hear the sound of that ‘aberta bubble’ straining to burst…
“NEW YORK (AP) – Oil prices fell Wednesday, touching their lowest level this year,—as the government reported a huge spike in crude inventories while giving more evidence of dwindling demand. “
Michael, or can I call you Mikey since you apparently think you know me so well (like I say, lots of thinking on this board not a lot of knowing). We could give each other nicknames, and join a MMPORPG together.
Boy you must have been indignant when you read my comment regarding brent, cue the victorious trumpet as you, the hero, crest the hill to valiantly drive me away from poor embattled brent (I think he holds up pretty well on his own though). Your pessimistic outlook for me, my family and my Christmas has decimated both my self-esteem and my my self-worth; as I reflect on it the only thing that comes to mind is, “the horror the horror!” I will be sending you my psychologists bill.
Anyway my comments directed to brent have no animosity in them at all, I enjoy his comments. They are infused with a certain sort of simple, naive, and exaggerated certainty that I find amusing;”I still wouldn’t touch real estate with a ten foot pole, even in Alberta.” Really, so you’d turn down an opportunity to purchase a house in a reasonably stable neighbourhood, say around the University of Toronto that was say selling at a price where extremely conservative rental demand in the area still left you with a tidy profit of say three hundred dollars at the end of the month after principle interest, taxes, insurance, and maintanance had all been factored in? Come on, even brent would buy that. Eventually once the PI payment is reduced to zero the monthly profit becomes substantial. And if you do sell for less than you bought, factor in the fact that the capital loss will offset other income taxes and if you sell for more than your initial down payment, well your up. Another example of his outrageous hyperbole that I like so much. brent, “Let me rephrase that, ‘places that were the hind end of the earth since the beginning of time.’” [a reference to Canadian real estate and possibly Alberta real estate]. Gee, since there is usually only one hind-end to anything, I could think of a few better places that might qualify for the hind-end of the earth. Where the criteria isn’t the unfortunate loss of investment capital by greedy overconfident speculators. Maybe war torn countries like Somalia, or places with heart-breaking poverty like the slums of Mumbai, or soul crushing regimes like that in Pyong Yang. But apparently a place like Canada where poverty is RELATIVELY unheard of, and freedom means most people can achieve their potential can become the hind-end over the lack of opportunities to turn a fast buck speculating in real estate. So again I say, I have no animosity, I just find his overstatements bring a smile to my face and put things in perspective. I’m not a bull on real estate at all, but I’ve never been a speculator. And as with all investmens careful assessment (man I never know where double letters go) of the risks and rewards associated with each individual investment needs to be considered WITHIN the prevailing market conditions. But you seem to understand that, judging from your post at 9:59am.
And there are good real estate buys in Toronto, and Alberta and Winnipeg and Vancouver right now, just like not every stock on the TSX is a loser, right now.
Currently though, for those believing all the talk of the world heading to hell in a handbasket I would like to suggest the following investments:
gold, ammunition, beans and a chunk of land in the middle of nowhere.
And I’m not angry at brent, he’s right prices for real estate will continue to slide. I couldn’t care less, thats not how I invest. Wealth is relative and temporal. AND I’M NOT ANGRY I’M A MISANTHROPIST! >;)
And don’t call me a patriot…that really got under my skin!
Cheers as well brent,
But careful, people are fragile…they may take you too seriously and times like this call for a little brevity. Look forward to your posts.
Best Regards Ian
The largest amount of population growth came in the second quarter when the population grew by .78 percent for the quarter..this is a very huge population growth. We are starting to receive a large no of foreign immigrants on top of the in migration numbers.
Central banks around the world are printing massive amounts of money…with trillions of dollars being floated, I think they can get a handle on this crisis of confidence.
Printing money can be very inflationary and oil prices could shoot up.
Canadian dollar has fallen around 16 percent from its peak, which makes our exports fairly cheap for the U.S, and bodes well for our economy.
Oil prices have gone down partially because the US dollar gained against other currencies.
If oil goes to 90 u.s dollars it will be approximately 100 Canadian dollars per barrell and the cost of production is mostly in Canadian dollars.
For these reasons I think that Alberta Real Estate will stay stable.
The banks will soon drop the interest rates and housing will become more affordable.
Brevity means short in duration which I am not. Man, my brain doesn’t work often. I was looking for a word meaning humor I think it might have been levity.
Ian
Ian,
I guess I misinterpreted your post. Please accept my apologies for upsetting you. It was also rude for me to assume that you celebrated Christmas when I don’t even know you.
Your last post still seems angry. Read it back to yourself and see if you can do it without clenched fists?
I’m sorry, that was rude as well.
I clearly need to focus on something else like early shopping for ‘December 25th – mas’…this post is sure to get me kicked off this blog, argghhh.
There is one good news in today’s market and one bad.
The good news is that when stocks go bust, poeople invest in Real Estate.
They do not trust stocks for awhile.
The bad news is that Real estate is on decline, prices going down in the U.S and here in Canada to some extent.
I think most people will turn to real estate as an investment.
Stocks are just too dangerous.
Dow Jones and the TSX lost 4000 points in a big hurry.
Losses at the $3 trillion range.
When you invest in RE, at least you end up with your piece of land and a shoebox on it.
At least you can go and see it every day or go and touch it every day,feel it every day, rent it, live in it…do you know, what I mean??
I am no investor or market professional, and I do like to visit sites like these and see what others are saying about the stats.
If people are spending more time attacking each other for whatever insecure reasons they have. Then people like me and the generous people who run this site get nothing out of it.
Anyway …
if and I do say if, we have a large influx of people coming to Alberta looking for work would that not drive up the demand for housing? Thus eating our inventory down, causing prices to creep up again?
Edmonton alone could grow by a good margin. Look at all the road work being done and the new LRT line. See all those piles of dirt on side of the Anthony Henday? Those are going to be overpasses some day. All the river bridges, they are going to have to be beefed up in the next 10 years. There is a ton of work to be done in Edmonton, and none of it has anything to do with oil production.
what do you think?
With peoples occupations and investments riding so heavily on recent developments i can understand why topics discussed on this site get so heated. It is unfortunate that there has been alot of shady people involved in the inflation of the market especially when the market was on the rise. I have been looking at buying for quite sometime and have tried to research the real estate market so i dont make a lifelong regrettable decision. During this time i have met some GREAT realtors who have been very honest and not tried manipulate stats in order to make a buck and then I have met some from the other side that might as well be working a booth at the carnival grifting kids at a ring toss game. I think the current situation in alberta will eventually balance itself out but unfortunately there are going to be victims along the way. This current talk of a rise in provincial migration should be taken with caution. A lot of people who are coming to this province wont be selling a home in a depreciated market and all of of a sudden buy in an inflated market. A lot of these individuals will be chasin a buck with eyes on returning back home. Now I know real estate investors may say different so they dont lose there shirts but it is not all doom and gloom because i think there will be an increase of renters in this case so that will help some speculaters meet there monthly nut. However if people out there want to start singing inventory is falling and you need to act quick or get priced out they should be ashamed of themselves. You have entire neighborhoods completely stalled in terms of construction, builders were forced to back fill there predug foundations and entire condo projects have completley stopped and when they have been completed half of the units have gone up for sale indicating a high number of speculators in the market and not new albertans. So even when numbers start to decline there are a lot of units on the verge of being completed that will be going on the market right away. I think these issues need to be evaluated by any buyer so they make a smart decision that affects there finacial future. Thanks for creating this site i think it is an excellent tool for people to use.
Bravo, MCC, Bravo! Great post.
I too have met some realtors that have given me terrific advice over the years. They’re not the kind that are in the RE biz for a quick buck – these people are in RE for life, and they know if they give you sound advice and build trust with you, you’re going to call them when you need them, and refer them to other people.
Not every RE agent is out there pushing Zero/Forty mortgages, but clearly some have recently acquired a skewed perception of what “affordability” is for the average working Albertan. They also speak of homes that are a “great value” that were flipped time and time again – that will cost a new home buyer $2000/mo to mortgage and $50K just to fix.
There are also two KINDS of working Albertans right now – some are in tar, oil or construction, and the rest are in “everything else”.
Just hang on to your objectivity – it will serve you well.
Cheers,
E-town
“This current talk of a rise in provincial migration should be taken with caution. A lot of people who are coming to this province wont be selling a home in a depreciated market and all of of a sudden buy in an inflated market. A lot of these individuals will be chasin a buck with eyes on returning back home.”
That is a good point, I never really considered “who” was coming out here. And I can relate, personally I don’t plan on being in Alberta for very long myself and most people I talk to in day to day life are in the same boat.
Work while there is work and when you can’t take it anymore pack up for home. Hopefully you come out with some cash in your pocket, and some new friends. It’s a shame Alberta can’t retain people like other provinces do … but I blame Alberta mostly for that.
thanks MMC and E-Town