Here’s Why Alberta’s Housing Market Has Taken Off In The Past:

Here’s Why Alberta’s Housing Market Has Taken Off In The Past:

1. Industry.  Industry will drive the economy with …
   
   
2. Jobs.  With industry leading the initiative in the economy, this creates jobs.  And that creates …
   
   
3. Wage growth.  With more jobs than people, companies need to lure people with higher wages.  Once people hear of this happening there is …
   
   
4. Net migration.  People move to the areas where there are good prospects of employment and higher wages.  This gives them …
   
   
5. Consumer confidence.  With a positive outlook on future earning potential, people feel confident to spend on big ticket items which means …
   
   
6. People purchase homes.  This absorbs housing supply, stabilizing the market, even pushing prices higher. 

I started this all off with industry.  It’s like the first bit of snow falling in a point-release avalanche.  

There is a new (budding) industry in Alberta that is trying it’s best to pick up some economic slack: Cannabis.

Here is a chart of employment in the Cannabis industry:

The truth is, Alberta’s oil and gas sector is the main driver of industry development.  No secret here.  

(This might be a secret to different parts of Canada, which is a lesson they might be wise to learn?)

I think the opportunity in this kind of cyclical industry is it creates space for people, great people, to explore employment is other industries.

Long term I think this diversifies our economy, employment, and limits our exposure to sever peaks-and-valleys in the economic cycle.  

That all said, let’s take a look at recently released jobs and wage growth data from Statistics Canada.  

This matters to you because it’s a piece of Canada’s large economic puzzle AND data our Central Bankers consider when deciding on interest rate policy. 

JOBS:

• Alberta added 24,000 full time jobs in November.  Most of these jobs cam from Health Care and Social Assistance.  I think this is helpful to spur consumer spending. 
  
  
• Alberta has added 59,000 full time jobs in the last 12 months. 
  
  
• Alberta unemployment fell to 6.3% (down 1%).  Calgary’s unemployment rate is 7.5% (up 0.1% y/y). 
  
  
• Alberta’s labour participation rate fell by 0.2 which is a factor in measuring unemployment.  
  
  People not actively looking for work (participating) are not factored into the total unemployment numbers. 

WAGES:

• National wage growth of permanent full time employees grew by 1.2% y/y.
  
  
• National wage growth month-over-month fell 1.5% for the sixth month in a row. 
  
  
• The most recent AB wage data I could source was from August which was up 3% y-o-y. 

Conclusion:

On a National level, there is positive employment news with 94,000 full time permanent jobs created (over expectations).  And our National unemployment rate is also at a 40 year low of 5.6%.  

Current market consensus for a January 9th Bank of Canada interest rate hike is about 24% (low).

Thank you again for reading as I hope these macroeconomic data points are helpful to you in relating back to demand for Calgary Real Estate. 

I also hope having awareness in anticipation of future Bank of Canada interest rate policy decisions, with relevant data, is useful to you. 

Thank you again for reading,

Chad Moore