Thursday, October 11, 2007

From Comment To Post

I got this comment on my blog a few days ago.

"....That aside, I don't know how you can suggest that Edmonton is going to have massive price increases. Considering there is already loads of inventory, concerns about low gas prices, lack of affordability, wages have not kept up with house price increase, rent vs. buy economics are in favour of renting and brutal investor rental property P/E ratios. Really, why should someone buy? Come on and quit lying to us about further price increases.

By the way, Calgary house prices have NOT lifted out of a plateau. They have declined for past three months losing about $33,000 from their peak. Stats are at

This is more like 1984 than 2004 with real estate agents STILL claiming massive price gains. The economic climate has changed as mentioned in my previous post. So quit equivocating what happened in 2004 to what is going to happen in the next year."

I think it is a common question/fear people have. My reply turned into a 4 page simple outlook of the Edmonton and Calgary's real estate markets and Alberta's economy.

Hello Dustin,

Thanks for sharing. In summary what I'd say is that, without a doubt the Edmonton and Calgary markets will continue to rise steadily overall in the next 5 years plus. Yes, there may be months when the prices dip and months when they climb quickly up. A healthy market has these peaks and valleys.

Look at the graph for Calgary below, it's not a straight line up... nor is it a straight line down. With over $173B+ of projects already underway or committed for the next decade- you bet the growth will continue, Alberta has a population of only has 3.4 Million people and the highest growth rate, youngest population in Canada. Did you know that Alberta is estimated to grow by 80,000 people per year for the next decade?

Check out this link at the UOA regarding population.

Are people leaving Alberta for sunnier shores? Yes, well you got me there... A whopping 800 people left Alberta for Saskatchewan this year. (At least those Saskatchewan billboards paid off)

The housing market it strong and that strength is based on the economy: the long-term view of it.

Alberta Job & Economic Fundamentals Updates:

The construction jobs are a coming!
The forecast for construction jobs in 2010 for proposed capital projects are 37,000.
Current project construction jobs now are at approximately 17,000. This is an increase of more than
100%, over the next 3- 5 years, and currently the Alberta labor market is already the tightest in Canada.
This is a good indication of the housing demand, as more people are coming to Alberta for work. Each
of these people will require a place to live and rent.
To top things off Alberta still has the lowest unemployment rate in the country.

Alberta Industrial Heartland:

o Alberta has the 2nd highest reserves of recoverable oil in the world.
o Currently $173 Billion of capital projects are scheduled for Alberta.
o The proposed peak expenditure is scheduled for 2010 – 2012, and this timeline is potentially moving
out further, due to the current shortages of labor.
o Pipeline and Oil upgrader projects are numerous and will attract multi billion dollar investments.
o Currently there are at least 7 oil upgraders proposed on the books and each one of these is forecasted
to have at least 3,000 – 5,000 jobs. To put this in perspective, building the Hoover Dam in Nevada
required approximately 4,500 construction jobs. Currently there are over 7 ‘Hoover Dam sized’
projects forecasted to be built just outside of Edmonton.

US Subprime Mortgage Collapse

In the news you have been hearing a lot about the US sub-prime mortgage collapse and how that is affecting
the stock market.

Comparing the US and Canada mortgage markets are like comparing apples to oranges, for

US- sub-prime (high risk) market represents over 20% of all mortgages.
US- interest only mortgages (high risk)are a high percent of subprime mortgages.
Canada’s Subprime mortgages are still below 4% of all mortgages.
Canada’s interest only mortgages are below 2% of total mortgages.

All of these economic fundamentals (just a few of many I could have included) indicate that people
are coming to Alberta and the fundamentals are all pointing towards strong long term demand for
Real Estate.

Hope this helps!

Calgary Real Estate Market Overview


Calgary’s total MLS® month end inventory for the month of August 2007 was 9,634, showing the highest level recorded this year, according to figures released by the Calgary Real Estate Board (CREB®).

Single family Calgary metro new listings added for the month of August totaled, 2,837, a 9.75 per cent increase over the 2,585 new listings added in August 2006. This is an increase of 11.34 per cent over the 2,548 new listings added in July 2007.

Single family Calgary metro properties changing hands in August were 1,314, a decrease of 2.01 per cent from the 1,341 recorded in August 2006 and a decrease of 12.10 per cent from the 1,495 sales recorded last month.

The median price of a single family Calgary metro home in August 2007 was $430,000 showing an 11.40 per cent increase over August 2006, when the median price was $386,000 and showing a 1.15 per cent decrease from last month when the median price was $435,000. All Calgary Metro MLS® statistics include properties listed and sold only within Calgary’s City limits.

The Calgary metro condominium market showed a slight decline in August with new listings added totaling 1,186, an increase of 22.65 per cent from August 2006, when the new listings added were 967. This is a 6.18 per cent increase from last month when new listings added were 1,117. Calgary metro condominium sales in August 2007 were 598; a decrease of 11.93 per cent from August 2006, when the sales were recorded as 679 and a 0.83 per cent decrease form last month’s sales of 603.

“Our inventory has remained high through August; however, total MLS® sales have stayed fairly constant with a drop of only 4.2% from July. The market has shifted slightly to out of town properties and although the average sale price of single family homes in Calgary has dropped by about 3.9% from July, the median price has eased only 1.1% from July. Together it’s an excellent market for buyers and sellers, with sellers getting good prices for their homes and buyers having an excellent selection to choose from”, says Ron Stanners, President of the Calgary Real Estate Board.

The average price of a single family Calgary metro home in August 2007 was $485,914, and the average price of a metro condominium was $320,790. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differentials between geographical areas.

Source: Calgary Real Estate Board

Calgary real estate price increases:

Average Calgary Real Estate Prices for last 13 months

Average Calgary Real Estate Yearly Prices for 1985 to 2007 YTD

Please note - statistics reporting changed in May 2007 - comparing present data to data from before May 2007 is not accurate for the 2 graphs directly above.


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