As reported in a couple of the Edmonton Sun columns by their token Left Winger (wink, wink) Neil Waugh, inflation in Alberta was up again. The sharp jump in wages was almost matched with a 4.5% increase in consumer prices.
But it was not due to wages increasing nope, it was due to the over heated housing market, which keeps going up.
The continued strength of Alberta's energy-based economy resulted in Edmonton's housing market outperforming expectations, making it the hottest market in Canada in the quarter. During the first quarter, the price for a standard two-story house rose 54.4 percent in Edmonton and 27.4 percent in Calgary, Alberta, while the average national rise was 11.8 percent.
And considering the price of the mythical single-family dwelling has increased 16.5% in the first three months of 2007 - and now stands at $398,476 - that's either good news or bad news, depending on what side of the deal you're on.
If you'd bought or sold a year ago, the price you would have to pay has increased by an incredible 55.6% since then. Needless to say, it's a year-to-year record, as are all the other March stats the EREB keeps.
So far in 2007, board realtors have cleared $2.14 billion in sales, which is 80% higher than last year's pace. And that was hardly a recession year either.In fact the "threat" of another huge spike in house prices has "sparked an early rush for new and resale houses," the ComFree monthly report cautioned.
Earlier this week the Calgary Real Estate Board revealed 3,939 combined residential sales in March (a new record) and the average sales price inched up 5.6% from February.
But that's a 27% year-to-year increase from last March. CREB president Ed Jensen called it an "interesting" month. No kidding, Ed.
But he also reported a 32% jump in listings over last year, which may mean that folks are trying to cash in on their windfall equity before it disappears like campfire smoke.
ComFree reports its average house price also bumped up 8% in March to $350,300.
And of course inflation is caused by those who exploit this hot housing market. Now usually when inflation increases workers wages are blamed and you can expect interest rates to climb or bosses to fight for claw backs. But when it comes to inflation caused by housing costs, well no one yet has implemented the solution; Rent controls.
Meanwhile the average Albertan even with a good paying job cannot afford to buy a home,Especially when Alberta NDP leader Brian Mason grilled Premier Ed Stelmach over when the PCs' affordable housing report will finally be released. It contains recommendations to put a clamp on soaring rental rates.
One of the province's biggest landlords, Boardwalk Real Estate Income Trust, recently gave the opposition more ammo when CEO Sam Kolias revealed in his year-end report to unit holders how he "maximized return" by responding to what he called "exceptionally strong market fundamentals.
"As occupancy tracked upward due to positive supply and demand forces," Kolias beamed, "rental rates followed suit, resulting in strong revenue growth."
And with 52% of his property portfolio right here in Boom-berta, he predicted his "proactive operating policies" would result in even greater revenue growth in 2007.
Unless, of course, the PCs implement their own report and slap on rent controls.
Most Albertans think this is a bad time to buy a house -- but a good time to buy major household items. Leger Marketing surveyed 900 Alberta consumers for PricewaterhouseCoopers, in February, asking about the economy.Leger's report noted "the relatively pessimistic sentiment regarding interest rates, combined with the fact that the housing market in Alberta has boomed over the last two years."
So who is doing all the buying? Why speculators of course hoping to flip the house in the market to make money.
See:
Condos The Problem
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