Ben Rabidoux: Will Calgary Continue To Buck The National Trend?

Ben Rabidoux’s  latest blog post: 10 Canadian Housing and Economic Trends to Watch in 2013  sets the stage for the new year.

Below are his thoughts on the Calgary market, but be sure to read his entire post to see how he thinks other cities will perform in 2013.


Bottom line: Low inventory, low units under construction, strong sales, strong population growth all means that Calgary is lacking any sort of meaningful trigger for price weakness in the near term.

That’s not to say that Calgary is poised to return to its “glory years” in 06-07 where prices were rising +40% y/y.  Far from it.  And it’s not to say that house prices are anywhere near their long-term norms relative to underlying fundamentals (they’re not), but if any market could theoretically pull off a “soft landing”, this is it.

But for that to happen, Alberta will need continued strong growth in its resource sector.  On this front, econo-geeks will want to watch the price gap between Western Canada Select oil (from the tar sands) and the often-quoted West Texas Intermediate oil.  There is now a +$30 gap between the two, with the Canadian oil trading at a substantial discount and well below the $70-$80/barrel break-even price for new oil sand projects.  Should this trend persist, it’s not difficult to see investment in the oil sands slow, and perhaps significantly.

Needless to say, this would have serious implications for the economy and labour market in the province, at least over the longer term.  Alberta has always been notoriously boom/bust.  Oil prices well below the point at which new projects are economical is one development worth watching closely.

Read Ben Rabidoux’s entire post here

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