Well 2013, here you are looking all happy and cheerful because you just kicked 2012’s butt!
Well if you are a regular follower of my column, you’ll likely notice that I’m an eternal optimist and this year will be no different. I expect that we will be going through another year similar to those of the past few.
Our Alberta economy is one that will still be humming along and our housing market will follow suite with the price of oil. A few oil companies in 2012 halted their research/drilling budgets, but we will see a renewed optimism this year as those budgets come back online. Regardless of those few oil companies, last year was still a big year for oil with its price averaging in the $90/barrel range. Without any super catastrophes or new wars we should see the same price ranges for oil. It would be nice to see a resurgence of the price of natural gas, but on the flipside, it is cheap to heat the house.
Depending on the economist that you speak with, Canada’s economy is forecasted to grow between 2.6%-2.9%, which is stronger than most of the G20 countries. Alberta is one of the leading factors of that target and we are expected to clock in at economic growth above the 3.5% level. In 2012, we led the country with a growth rate of 3.4% while the rest of Canada had growth of only 1.8%.
According to RBC index, Albertans currently enjoy the best housing affordability in Canada and are expected to see much of the same going forward. The average new home buyer in Canada uses an average of 34% of their household income to make the housing payments will in Alberta we used just 28%, and with many of my clients I see many that are well below the Alberta average.
With regards to home values, economists are expecting a rise of 2% in Alberta, but also said that there will be pockets of larger value gains in more popular areas. The Alberta population grew by 65,000 people in 2012, which is more than double what was anticipated. These new folks are creating a lot of opportunities for revenue property owners as rental vacancies hit extreme lows. These folks want to buy homes, but just aren’t able to just yet as they don’t qualify as they don’t have the job stability required to qualify for a new home just yet.
The biggest unanswerable question yet again has to do with the government’s stance on the housing market. They’ve changed the mortgage rules so much in the past few years that there really isn’t much more that they can do. And yet, at the beginning of December, there were some rumblings of even more changes, but who knows what else they can do. I can say this for a fact, they won’t increase the minimum down payment structure from 5% to 10% as that will eliminate 100,000 Canadian jobs pretty quickly. Our current conservative government, as much as they are tightening the belt of the Canadian economy to ensure it doesn’t head the way of a Greek collapse, won’t let themselves be the cause of a recession either. In simpler terms, they would never want to be known as the conservative government that killed the economy, as dead economies aren’t good for re-elections.
The year 2013 in Alberta is going to be strong going forward, we’ve had the worst behind us back at the end of 2008 early 2009, but all things considered, we are pretty sheltered here as long as the price of oil stays above $75/barrel.
Jean-Guy Turcotte is an Accredited Mortgage Professional with Dominion Lending Centres-Regional Mortgage Group.
