Alberta is an outlier in the country's housing market, says RBC report

ALMOST A YEAR IN POWER AND KENNEY AND UCP

 HAVE DONE NOTHING TO HALT THE ECONOMIC DECLINE IN ALBERTA
RATHER THEY HAVE MADE IT WORSE WITH TAX CUTS TO BIG OIL AND 
ATTACKS ON PUBLIC SERVICES AND PUBLIC SECTOR WORKERS 

EDMONTON JOURNAL 

Updated: February 14, 2020

Home prices are up, and sellers are in the driver’s seat. If that doesn’t sound like Alberta’s housing market, it isn’t.

It’s the year-end performance for all of Canada’s real estate market, and Alberta is an outlier in the bunch.

“Alberta’s economy and its housing market are largely out of synch with the rest of Canada,” says Robert Hogue, a senior economist with RBC Economics.

RBC Economics released its Monthly Housing Market Update last month, showing the nation’s housing market had moved into sellers’ territory with prices jumping more than three per cent in December year over year. The hottest markets are in Ottawa, Montreal and British Columbia, it noted.

Ottawa led the nation in price gains with a 12.5 per cent gain, and Montreal saw prices rise more than nine per cent year over year.

Despite prices continuing to fall in both Edmonton and Calgary, the report found both cities’ price declines were not as steep as previous years. Calgary’s fell 1.4 per cent, the report showed. It did not provide data for Edmonton, but Realtors Association of Edmonton data show the average price fell about 2.3 per cent year over year.

“The big correction (in home prices) that we saw followed the crash in oil prices back in 2014, and the recovery has been a work in progress for a very long time,” Hogue says.

Recent positive news on the Trans Mountain pipeline, however, could boost consumer confidence, he adds. In turn that can help increase activity in the province’s housing market. “I think a lot of Albertans have been thinking, ‘We’ll believe it when we see it as far as pipelines are concerned.’ ”

Hogue adds more good news on that front is needed to have a more profound effect on the market. “The economy is partly based on perception, and Alberta suffers from low confidence for businesses and households.”

This sentiment translates into lower housing demand — an issue for more than five years now. At the same time supply has been increasing.

“One of the parallels between Edmonton and Calgary is both have faced high inventory levels.”

He notes housing supply has come down somewhat, but levels are still elevated historically. What’s more, RBC had forecasted that 2019 would be a strong year for housing in both cities.

“But they really moved sideways instead.”

Despite no clear indication the key problem ailing the economy — a lack of pipeline access — will be solved soon, Hogue notes Albertans have reason for optimism.

“Population growth is picking up again in Alberta and that’s good news for both Calgary and Edmonton, because that will help reduce inventories.”

Last year population growth in Alberta was 1.7 per cent up from 1.4 per cent the year before.

“That is now stronger than it is in Canada overall, where it’s 1.5 per cent.”

Hogue further adds both cities have seen rising sales on the resale market and falling inventories in recent months.

Coupled with steady economic growth and more good news on the pipeline front, Alberta’s real estate market could join other parts of the country with positive price growth this year.

“I think for the second half of this year we might to see inventories come down with stabilization in prices, and at that point, we might to see the confidence turn around.”