housing market update - microsoft...edmonton – supply gains weigh on prices • full-time...
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Housing Market UpdateIs this the new normal?
New pattern of growth
-1%
0%
1%
2%
3%
4%
5%
6%
Alberta BritishColumbia
Saskatchewan Manitoba Ontario Quebec Nova Scotia New Brunswick Newfoundland& Labrador
PEI Canada
Real GDP Growth
2017 YTD - 2018
Signs of improvement
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
-10,000
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Alberta Components of Population Change
Natural Increase Net Provincial Migration Net International Migration Total Population Growth Rate (y/y %)
Forecast
Job market is improving
0
2
4
6
8
10
12
-150,000
-100,000
-50,000
0
50,000
100,000
150,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Unemployment RateEmployment
Y/Y Full-Time Y/Y Part-Time Unemployment Rate Source: Statistics Canada
Housing activity struggling?
Changes in the lending market
5.34%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Lending Rates
Overnight-Target Prime Business Rate Minimum Qualification RateSource: Bank of Canada,
Royal Bank of Canada Forecast
2%
Recovery in employment but…
(15,000) (10,000) (5,000) - 5,000 10,000 15,000
Primary and UtilitiesConstruction
ManufacturingInformation and Cultural Industries
Finance, Insurance and Real EstateTechnical and Professional Services
Transportation and WarehousingWholesale Trade
Retail TradeHealthcare and Social Assistance
Educational ServicesAccommodation and Food Services
Arts and EntertainmentOther Services
Public Administration
ALBERTA EMPLOYMENT BY INDUSTRY
2017 YTD - 2018
Year
Source: Statistics Canada
Supply matters
Vacancy rates near historical highs
0
1
2
3
4
5
6
7
8
9
1990October
1991October
1992October
1993October
1994October
1995October
1996October
1997October
1998October
1999October
2000October
2001October
2002October
2003October
2004October
2005October
2006October
2007October
2008October
2009October
2010October
2011October
2012October
2013October
2014October
2015October
2016October
2017October
Alberta Vacancy Rate %
Source: CMHC
Inventories at historical highs
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Alberta new home inventory
Single Semi-Detached Row Apartment
Oversupply is impacting prices
Location Matters
Year-to-date Sales Growth Average Price Growth
Y/Y% Y/Y %Grande Prairie 21.11% 3.49%Fort McMurray 16.28% -7.43%Central Alberta 2.05% -5.79%Edmonton Region -4.07% -1.66%Alberta West -3.19% -1.97%
Lloydminster -0.30% -5.20%
Calgary Region -13.14% -1.08%South Central -6.76% 0.14%Lethbridge -2.71% -3.76%Medicine Hat -9.81% 0.30%Alberta -6.04% -2.72%
Wood Buffalo-Cold Lake
Banff – Jasper -Rocky Mountain House – Athabasca -Grande Prairie -Peace River
Camrose -Drumheller
Edmonton
Red Deer
Calgary
Lethbridge –Medicine Hat
6.07%
Q3 – Unemployment rate
5.70%
6.40%
6.50%
4.70%
8.10%
4.87%
Alberta – 6.80%Canada – 5.90%
Grande Prairie – move to balance
• Improving job market• Strongest sales since 2014• Resale inventory trending down• New home under construction
reaching new highs• Starts trending up• Supporting price recovery
$304,000 YTD vs $324,000
Sales
Fort McMurray – amount of oversupply easing
• Recent job loss, continued concerns in the energy sector
• Improving sales but still weak
• New listings and inventories easing, but still oversupplied
• Prices trending down
• Starts easing following spike from rebuilding
Red Deer – persistent oversupply weighs on prices
• Recent improvements in employment• Supply has not adjusted to sales activity• Prices trending down • YTD $294,000 – 6% decline • New home inventories weigh on market• Starts easing
Lethbridge – Trends are different
• Driven by agricultural and food processing.• Some pullback in employment last year
spilling into the first quarter• Concerns with trade negotiations• YTD Sales decline 3%• New listings rose 11%, inventory gains• New home starts slowing, inventories
remain slightly elevated, down from 2011 peaks
Sales
Medicine Hat - new listings growth outpace sales
• Power / Gas advantage
• 2018 surge in starts
• Resale sales ease below 10-year
• Inventories slightly higher than last year – well below 2008-2012 high levels
• Price growth slowing, but moving to recovery
• YTD average price of $276,000, one of the lowest in province
Edmonton – supply gains weigh on prices
• Full-time employment growth• Unemployment levels trending down 6.4%• Growth in Education, Healthcare, Public
Administration, manufacturing construction, Information and Cultural industries
• Sales easing, 6% below long term levels• Problem lies with rising supply both resale
and new• Record high New home inventories, starts
easing• Prices trending down
Calgary – declining sales, rising supply, price easing
• Recent job losses in the past two quarters• Unemployment levels highest in the province, remaining above 8 per cent• Job recovery not across all industries
Future Prospects?
