Return to Boom? No…Not Yet.
While boom barometers for Alberta are still far from the extremes seen in 2006 & 2007, BMO says there are signs they are clearly moving in that direction.
- Average hourly wage growth is at 2.9% y/y, versus 8% y/y at the height of the last boom
- Office vacancy was at 6.1% in Q1, still well above the prior extreme of less than 1%.
Is Calgary’s real estate market poised for relaunch? BMO writes:
Residential housing is also much better supplied this time around given the legacy of booming construction just prior to the downturn.
Rent growth in the province is positive again (+0.9% y/y), but well below the torrid 7%-plus pace seen in late 2007.
Indeed, one key difference with the mid-2000s boom is the behaviour of the housing market. While many other Canadian cities have been dealing with rapidly rising prices and a potentially overheating market, housing costs have been remarkably tranquil in Calgary and Edmonton in recent years.
True, this followed an enormous spike in prices in both cities in the middle of the prior decade, which left prices at a relatively high plateau. But, after a mid-course correction, those markets appear to have achieved a perfect soft landing, with prices holding almost steady over the past few years.
The risk now, though, is for prices to start marching higher again, with large population inflows re-emerging and affordability relatively reasonable (compared to Vancouver or Toronto).
Note that Calgary home sales flared 30% above year-ago levels in April, hinting that the market is gathering steam, in contrast to much of the rest of the country.
You can read the report here