Alberta Fundamentals Looking Strong

March 16, 2022 | Posted by: Harold Hagen

The Canadian housing market is certainly outperforming previous estimates and topping the charts when it comes to year-over-year growth. For example, Home sales in Toronto posted the largest monthly increase on record at 6.5% m/m, and an absurd 4% monthly gain over the past six months, which represents an increase in value of $354,000 for a typical home. 


The real story, I believe, is in Calgary. Calgary monthly sales are up 81% year-over-year which shows a strong start to 2022.

We did also see New Listings surge in Calgary by a massive 63% (y/y) last month, which is further indication that this spring may see a deluge of listings across the country. That said,  inventory overall remains very low. 

Where things get really interesting is when we look at what's happening in new construction. Home sales are at record levels by a wide margin, but under-construction inventory in Calgary is nowhere near levels seen in prior booms in 2004 -07 and 2015. This is perhaps the most bullish market we’ve see and is one of the main reasons I think this market has still plenty of room to grow. 

Ultimately, the fundamentals are looking good for Alberta. Capital expenditures in the oil sector are no longer declining and may actually significantly rise from here. GDP is a rate of change measure, which means that when something like oil investment simply stops falling and flips to a positive contribution to GDP, it can really move the needle on economic growth in the province. 

For most of the past 20 years, house prices in Calgary traded at a premium to the national average. They now trade at a 40% discount. That previous long term trend may just reverse sharply in coming years.  

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