A leading indicator of a healthy economy is often the health of the housing market. Factors like new home sales, new home construction and how long homes remain on the market among others often predict new business growth, changes in consumer spending, trends in real estate prices and more. Paying attention to housing market trends in Alberta may be helpful for investors who are trying to time their real estate investments, home buyers who want to purchase real estate at the best time, and others who need to keep a close watch on the general health of the economy. In Alberta, in particular, a growing population and a competitive market point to potential growth in the housing sector.
Home Sales Increase: Quarter Over Quarter
The Canadian Real Estate Association (CREA) reports home sales in Alberta continue to show solid numbers in 2013. In fact, Alberta's home sales, by the end of March, totalled 13,603 units-two per cent more than home sales in 2012, and the best start to any year since 2008.
The total value of home sales in the province totalled approximately $2.2 billion (three per cent higher than the value of home sales in 2012).
With increased home sales and more people moving to Alberta from other provinces to take advantage of the economy, there has also been an increase in mortgage applications from home buyers. With Alberta mortgage rates being so low, this may be a leading factor jump starting home sales.
New and Active Residential Listings: Month Over Month
Both new listings and active listings in the residential sector decreased in March 2013 compared to March 2012. In addition, the length of time listings are staying on the market has also decreased. These statistics, together, suggest a competitive housing market. If homes continue to fly off the market here, it may be safe to assume contractors will look to start building new homes and developments to accommodate a growing population, and a growing demand for housing.
The Average Price of Real Estate
The average price of residential real estate across the entire provincial area was $386,330 in March 2013. The most affordable homes, on average, were in South Central Alberta, with the average home price listed at $203,500. Other affordable homes are available in Lethbridge, Lloydminster, Medicine Hat, and Central Alberta. The most expensive homes are in Fort McMurray, with the average home price listed at $639,802; Calgary real estate was also higher than the average price of real estate in the province.
The Supply of Commercial Real Estate
According to a report issued by the Urban Land Institute, in general the supply of commercial real estate will remain relatively stable in the next year. However, the report identifies one particular commercial real estate emerging trend, and that is in the homebuilding sector. In particular it identifies Edmonton and Calgary as markets to watch.
A central driving force to growth in the Alberta housing market may be the influx of young professionals. Alberta is currently one of the fastest growing provinces in Canada, and more potential home buyers may spur growth in the housing market in 2013.
In his interview with The Calgary Herald, real estate guru Don Campbell noted the importance of Alberta's growing population in regards to the housing market, saying, "Alberta's population is growing substantially, especially with that younger age cohort. They come out here to get a job and make $80,000 instead of $30,000 back home. And once they're here, they discover Alberta is a pretty cool place to live. I'm very bullish on the direction that the market is going to be taking over the next portion of the cycle."
In addition, Alberta reported the lowest inflation rate in the country, according to early 2013 reports-a trend which may draw more people to the area. So far, data from 2012 and 2013 support this idea. Huffington Post Canada reported the population growth in Alberta has reached its highest levels since the 1980's. (Currently, according to the report, the population in the province grows by an average of 367 people per day.)
Paying attention to housing market trends in Alberta is important for many reasons. Housing is a leading market indicator, and many economic analysts regularly pay close attention to the housing sector both in Alberta and across Canada. The housing market currently is vibrant, healthy and balanced, indicating that the current economy may very well be on the mend.