CMHC released its quarterly housing market report yesterday. Western Canada in general and Alberta specifically is forecast to lead the country in a number of categories.
According to the report, Alberta will continue to experience economic expansion with real GDP growth of 3.4% in 2012 and 3.2% in 2013. Major sectors of the economy are projected to grow this year with some moderation in growth in 2013.
Rising consumer spending is reflected in double-digit growth of retail sales. Investment remains elevated, driven largely by capital investments in the
energy sector. Energy exports will continue to help increase international
trade.
“The economy in Alberta has been improving and is expected to be one of the leaders in economic growth,” said Richard Cho, senior market analyst with CMHC’s prairie division. “That will naturally support the housing market.” Cho said CMHC’s forecast for Alberta hinges on continued job production, international and interprovincial immigration boosting population growth, and the price of oil staying high enough to encourage continued investment in the province’s energy sector.
Alberta’s expanding economy is requiring more workers and employment is projected to increase by nearly 3% in 2012. In 2013, job creation will ease marginally as employment is projected to rise by 61,000. Despite some variation in job markets, the province will experience a lower unemployment rate, which is projected to average below 5% through 2013. With a relatively tight labour market generating employment opportunities, those looking for employment are being drawn to Alberta. First quarter 2012 interprovincial migration was the highest first quarter amount on record going back to 1970. As the local labour market is not meeting all the demand of Alberta’s expanding economy, the province is experiencing an increase in temporary foreign
workers. In total, net migration is projected to reach 57,800 in 2012 and remain elevated at 48,500 in 2013. Migration flows are expected to be a positive factor contributing to housing demand over the forecast period.
Here are some highlights from the report:
- All four western provinces are expected to see growth in housing starts in 2012, with Alberta leading the way at about 23.7% growth.
- The construction of single-detached homes will decrease in half of
Canada’s provinces in 2012. Alberta will see the second strongest growth
in single starts at 15.8%. The differences in the regions generally reflects the stronger economic prospects in Canada’s western provinces – AB, SK & BC will grow, on average, 3.0% in both 2012 and 2013. This compared to 2.1% and 2.2% for Canada as a whole. Western Canada is benefitting from a robust natural resources sector, which is helping to push provincial growth forward. - Alberta will lead the way in multi-family starts with 35.1% growth in 2012.
- On an annual basis, sales of existing homes through the Multiple Listings
Service® are expected to move slightly upwards in both 2012 and 2013 nationally due to moderate employment growth, lowinterest rates and modest personal income growth. Alberta will lead the way at 11.2% growth. - Total net migration was 244,312 in 2011, essentially unchanged from 244,573
in 2010. The Canadian economy continues to outperform many others in the Organisation for Economic Co-operation and Development. Canada’s relatively more attractive labour market will lead to an increase in net migration to 255,000 in 2012 and 263,000 in 2013. These increases will help support Canada’s housing sector. For 2012, Alberta and British Columbia are forecast to have large amounts of net migration, further supporting housing in these regions.
Alberta Housing Starts Forecast – Source, CMHC
According to an article in the Edmonton Journal, Oil has been trading around $90 a barrel since early August after reaching a yearly low of $79.69 in June.
Cho said the market has favoured buyers until recently and should move to a balanced state, boosting price growth in the process. The CMHC’s forecast calls for prices to rise 2.5 per cent this year and 2.8 per cent in 2013 across Alberta, bringing the average home sale to $372,300.
About Sara MacLennan
Sara MacLennan is the Director of Marketing at Liv Real Estate and a licensed Real Estate Associate. The bulk of Sara’s experience and wealth of expertise lies in on-line technology and marketing both for agents and consumers. Sara is the former National Director for Interactive Marketing for Coldwell Banker Canada where she was responsible for an extensive training program traveling to offices across the country training agents and brokers on marketing and technology. Find Sara on Twitter @edmontonblogger.
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There you go, for those who have been calling dooms days. A moderate growth is what some of us have been calling all along.
Yes and moderate growth is worst case as there is still potential for greater than moderate growth in my opinion when the Edmonton economy really catches fire in the near future.
Have to love forecasts….they are right as often as they are not.
Waiting for the next Alberta boom is as silly as cheering for the next bust.
Live slightly below your means, diversify and treat your house as a home, not an ATM and you will be fine.
you are absolutely right…your advice is also very good
As Dr. Phil likes to say…
How’s that renting workin’ out for ya?
And when Europe is back in the news in the fall because no one has really fixed any of the problems yet, fear will rise yet again, equity markets will tumble, oil will loose its steam and we will be back exactly where we started – a shaky global economy that changes on a dime.
realistic 3 year outlook:
Alberta – flat
Vancouver -5-10%
Toronto -5-10%
I don’t see how a Europe problem would propagate to Alberta. Japan’s economy is super large too and it’s been in a recession for the past 20 years and the rest of the world just live on. Alberta doesn’t expect sell Europe any manufacturing products anyway. The only associations I can think of are:
1) Less crude oil demand from Europe, causing the price of oil to fall.
2) More Euros printed for bailouts, causing the price of oil to rise.
(So these two factors pretty much cancel each other out)
3) Consistently low interest rate around the globe.
They wont propagate our economy will remain relatively stable as it has over the past few years hence why I said Alberta = flat
This is good news, but I wonder if it is a little over-optimistic. The price of oil is contingent on a global (or at least American) economic recovery, which may or may not materialize.
While I have no doubt Alberta will do relatively better than most markets, I think the baseline is a little too high.
My prediction, as always, is that the relative strength of the Alberta Economy will have a sort of balancing effect, Construction will stay just ahead of migration, wages will not increase substantially, and housing prices and sales will be tied more than ever to wages.
In other words, Alberta will stand still as everyone else drops.
Couldnt agree more
It is nice to hear that even some who were looking and predicting a housing market drop in Edmonton, calling for 10-20% drops are now of the belief that the market will stay level. When the mind set of this group changes from a negative outlook to neutral it can only mean good things for a housing prices to increase in Edmonton.
When the mind set of this group changes from a negative outlook to neutral it can only mean good things for a housing prices to increase in Edmonton.
omit the “a” above
Well if the CMHC is saying it, it must be true….lol.. Wake up , the only reason CMHC released this forcast is to hopfully calm peoples nerves, the Real Estate market across Canada has already peaked in June, the slow down in sales that we have been experiancing started in the begining of July, exactly the same time as the new mortgage rules came into effect. Many believe that the Canadian market was already on track to correct it’s self on it’s own, now that the government is involved it will only make the situation worse. Yes i know Alberta will fare better than any other province in the next year ,but for those of you that think the only way Edmonton’s market can go is up you should do your own reasearch instead of putting credit into articals such as this from organizations who have a HUGE vested interest in the Canadian home market.
If the mindset of this group could accurately predict the future they would be too busy to be making comments on this or any other blog. Just read back many of the predictions over the last couple of years from some of the same people and you will know this.
Plain and simple. Over supply – lower prices – Under supply – higher prices. With the way the builders are throwing together new projects I don’t think higher prices will be the norm, however if their predictions of buyers are incorrect there will be a lot of inventory being sold at lower prices later next spring. That is bad news for the resale market ………but good news for anyone looking to buy. People will still buy resale but dreams of huge price increases are just that – dreams………..
“Plain and simple. Over supply – lower prices – Under supply – higher prices. With the way the builders are throwing together new projects I don’t think higher prices will be the norm.”
Your statement is not entirely correct in two ways:
1) You only took the housing supply into account and treated money supply as a constant, which is not. If both the US and Euro are going to increase their speed of printing paper money, Canada will have no choice but to follow to keep whatever manufacturing job there is left in Ontario. So yeah, even in a recession, housing price can go up if the currency devaluates fast enough.
2) You didn’t consider the changes in square footage per person. 50 years ago, a family of 5 could happily squeeze in a 1000sf house. And now, it’s usual for a couple to occupy 2000sf. So, when the new contruction figure exceeds the increase in head counts, it doesn’t automatically register as an over supply.
“The economy in Alberta has been improving and is expected to be one of the leaders in economic growth,”
Yeah it can be true but there is no comparison with other provinces. Look at B.C., Ontario.
I agree with wsn, housing prices are not that easily correlated with free market logic. There are many more factors influencing the current trends. For example Vancouver, which is experiencing decreases in housing sales but still maintains the same housing prices.
Residential Activity in the Second Quarter of 2012
Number of Sales – 8,132
Year/Year (%) – -18.8 (from 10,018 )
Number of New Listings – 19,085
Average Price ($) – 724,319
Year/Year (%) – -11.5 (from 818,721 )
(from Vancouver Housing Market)