Will Alberta’s Economy Make a Come Back in 2017?
When will the latest economic downturn in Alberta finally come to an end? It’s a question that many people are wondering given our province’s current state of affairs, especially for those who are looking to make a move in real estate.
Unfortunately no one can tell what’s in store for our province, but there have been some positive indicators as of late that Alberta’s economy – and housing market – may just very well be on the up.
#1 – Job numbers slightly improve
Despite the fact that thousands of Albertans who’ve lost their job since 2014 are still unemployed, the latest employment report from Statistics Canada shows a modest improvement in February of 2017.
Approximately 18,000 part-time jobs were lost last month, but that was offset by a gain in 19,300 full-time jobs, showing somewhat of an increase in the quality of work available in the province. Furthermore, the amount of people currently working or looking for work fell by 14,100 in February.
Combine the drop in size of Alberta’s work force with a modest growth in job opportunities and you get an unemployment rate down to 8.3 percent in February from 8.8 percent the previous month.
Statistics Canada’s job report for February shows a potential job-increasing theme that could play out throughout the rest of 2017, although many employers are still hesitant of hiring too many people back onto the workforce just yet.
It is predicted, however, that job opportunities will continue to increase as the year plays out.
#2 – Slight boost in energy prices, new pipeline projects
Lately there’s been a slight increase in energy prices. Oil prices, for example, are expected to remain in the range of 50 to 60 USD$ for the remainder of the year. There’s also been an increased confidence in the idea that pipelines such as Trans Mountain, Line 3 and Keystone XL will get built.
These factors should create investment in new projects and employment opportunities in the energy industry throughout 2017, though at rates expected to be much lower than those seen from 2010 to 2014.
The three pipelines mentioned above will account for the creation of thousands of jobs, not just in Alberta, but throughout Canada if they begin construction.
According to ATB Financial, Alberta’s real GDP is expected to grow by a modest 2.2 percent in 2017 and 2.3 percent in 2018. This suggests that the economic recession spanning from the end of 2014 to the end of 2016 is finally beginning to lift.
#3 – New housing starts slightly improve
New housing starts are a good indicator of consumer confidence and can be used to assess where Alberta sits in its ever-changing economic cycle.
Home builders managed to find more new projects in February of 2017 compared to the previous month, suggesting that Alberta may be beginning to emerge from two years of economic downturn.
Approximately 27,000 homes were started during the month, a substantial 40 percent increase over January and 17 percent gain on a year-over-year basis. These figures are seasonally adjusted and reported at annualized rates, meaning that they reflect the number of homes that would be constructed over a 12 month period if the same pace was kept up for that period of time.
However, it still really is too early to tell if the pace seen in February will keep up for the remainder of the year.
Economic forecasts predict only a modest upturn in the provinces economy throughout 2017 with employment opportunities slow to follow. The same goes for housing starts, which have a long road ahead before they return to higher levels seen before 2014.
#4 – Positive indicators in some of Calgary’s housing sectors
The Calgary Real Estate Board (CREB®) reported some positive numbers in its latest monthly statistics package for February of 2017. They include:
- 3.4 months of general inventory supply, down from 5 months on a year-over-year basis
- 55 percent sales-to-new-listing ratio, a 16 percent increase on a year-over-year basis
- Semi-detached sector beginning to see stability, with 2.4 months of supply
- $501,900 benchmark price for detached homes, slightly higher than in January of 2017 but one percent lower on a year-over-year basis
- North, West and East districts experienced modest detached benchmark price gains on a year-over-year basis
All of Calgary’s residential sectors have responded differently to Alberta’s economic downturn over the past two years. For example, as Calgary’s detached sector begins to move towards more stable conditions, others such as the apartment sector continue to struggle.
Today, the housing sector is deep into buyers territory meaning it’s much more advantageous to be buying right now than selling. You may just find that home or condo you’ve always wanted that’s listed for a much more affordable price today than it would have been a year or two ago.
For now, if you’re looking to buy or sell in Calgary’s residential market, it’s crucial to work with an experienced real estate agent who knows the dynamics of each housing sector and will help guide you through a successful transaction.
A Closing Remark
As Canadians we must focus on making our province and country competitive for investment and job creation. I would encourage all readers to get active and start talking to your MLA and MP regularly.
We need an immediate competitiveness review so we can start to compete globally again for investment in the energy sector. Investment creates jobs and job growth really drives the real estate market.