Housing doesn’t reflect Alberta’s population boom
If you’re looking for a job in Newfoundland and Labrador, good luck. You’ll need plenty of it.
For every job opening, there were 16 job seekers in December, according to recent StatsCan data. In New Brunswick, the ratio was a still-stratospheric 10.5-to-one.
The odds of landing a job were only marginally better in Ontario, where eight applicants fought over every vacancy.
Here in Alberta? It’s a completely different story. For each unfilled job there were fewer than two people unemployed in December. No wonder newcomers continue to beat a path to Wild Rose country. Despite worries that discounted crude prices may prompt a slowdown in the oilpatch, the stampede shows no signs of abating.
Nearly 86,000 migrants adopted Alberta as their home in 2012, the highest level on record. The tally included nearly 46,000 Canadians from other provinces — just a hair below the levels seen at the peak of the last boom in 2006.
Combined with natural population growth and a rising share of international migrants, Alberta’s population expanded by nearly 116,000 residents or 3.04 per cent in 2012, according to Alberta Finance data.
That was almost triple the national growth rate.
During the fourth quarter alone, Alberta’s population rose by 24,500, with new arrivals from other countries accounting for nearly half the total. That contrasts with the picture in British Columbia, where sky-high house prices, lower average incomes and a jobless rate of 6.7 per cent has prompted many to flee to Alberta. The result: B.C.’s population growth in the final quarter of 2012 was the lowest in more than 40 years.
For economists like Richard Goatcher and John Rose, one of the most perplexing questions is why Alberta’s explosive population growth has yet to trigger the hefty gains in house prices witnessed in previous cycles.
Although Calgary and Edmonton are modestly outperforming most major metro markets in Canada — the average price of a single-detached home in Edmonton was nearly $401,000 in February, up 4.3 per cent from a year earlier, while the national average slid one per cent to about $369,000 — local price gains have been surprisingly modest thus far.
Moreover, the local average remains well below the May 2007 peak of $424,400. Meanwhile, average prices in Toronto and Vancouver hit record highs long after the 20082009 recession ended.
“The great mystery here is that we’ve had phenomenal employment growth, very strong income growth, very strong net in-migration, and yet it hasn’t poured over into the housing market yet,” says Rose, chief economist for the City of Edmonton.
“We’ve got an (apartment) vacancy rate that’s down below two per cent, so it’s not as if these people can go into the rental market. So why aren’t people out there buying?” he wonders. “My only conclusion is that consumer confidence just hasn’t come back the way one would have expected, and people are looking at what’s going on in places like Toronto and Vancouver and saying, ‘Hmm, maybe I need to hold back on this a bit.’ ”
Goatcher, economic analyst with the Canadian Home Builders’ Association-Alberta, offers a similar perspective.
“These are unprecedented levels of in-migration into the province, so (the relative stability in house prices) has kind of mystified us,” he says.
“We’ve been watching these phenomenal migration numbers for a good six months, and the last time we had these kinds of volumes of people moving here, housing markets across the province were totally overheating,” Goatcher recalls.
“We saw huge price growth, big spikes in rents and all kinds of imprudent behaviour by investors and speculators. But now, our housing market is just running along at a pretty nice pace. So you wonder what’s going on here.”
Just to be clear, neither Rose or Goatcher are hoping to see a repeat of the rampant speculation and sharp price spikes that occurred in 2007.
But they are wondering why price gains aren’t a bit more robust, at least thus far.
Goatcher suspects that the deluge of stories in the national media about a possible housing bust have made local buyers unduly nervous.
That’s despite the fact that Edmonton remains the most affordable major housing market in Canada, with average prices that are sharply below those in cities like Vancouver or Toronto.
“It’s something that we find a bit distressing. The guys writing housing stories (for the national newspapers) live in Toronto. So what they see outside their windows is what they know best, and that’s where the headlines get written,” he says.