2010 housing forecast seminar
The annual housing forecast seminar is hosted by the Realtors association of Edmonton for Realtors and other interested industry members.
Speakers this year where:
Larry Pollock, President, Canadian Western Bank
Ron Gilbertson, President and CEO, Edmonton Economic Development Corp
Guy St. Germain, President, Canadian Home Builders’ Association
J. Angus Watt, Managing Director, Individual Investor Services, National Bank Financial
Richard Goatcher, Senior Market Analyst, Canada Mortgage and Housing Corporation
Larry Westergard, President, REALTORS® Association of Edmonton
While they all the presenters had differing perspectives the general overall feeling was that 2010 will be a good year.
Ron Gilbertson told us that technically the recession is over in most parts of the world but the pace of recovery is tentative. Corporations and governments entered into the recession in better shape than in past downturns. Interest rates and inflation will remain low for some time. Concern about growing consumer debt continues.
Edmonton’s GDP per capita growth remains among the highest in Canada higher than both Calgary and Toronto but they are catching up. Retail sales in Edmonton fell in 2009 but still remained second in the country only behind Calgary.
Office vacancy rates are lower downtown than other major Canadian cities and right on the average for Canada in suburban areas. However in the near future Calgary will be developing more office space this combined with more attractive air service makes Calgary a potentially more attractive corporate option.
The expectation of oil prices remaining in the $65 to$85 dollar a barrel range makes it financially viable for oil companies to continue with already scheduled projects and re start those sidelined by the falling price of oil. On the other hand the price of natural gas is expected to stay low this has a bigger impact on Calgary as they are more dependent on this resource for their financial growth. With diminishing oil production, increasing demand and the full potential of the oil sands unknown the outlook for the petroleum industry, in Alberta, is good and better if the full value of bitumen production is realized. All these factors come together to make Edmonton the Third most prosperous city in the world, according to the conference board of Canada, behind Calgary and Dallas.
Guy St.Germain agreed that the road to recovery would be slow. His concerns where: that the labour market remains weak and debt to disposable income has climbed to 145% while personal income growth has stalled.
He also gave us some insight into what design trends will be hot in 2010. The move is back to wood flooring with preference going to wide boards. Grey is the new neutral color. Wallpaper is making a comeback as are glass tiles. The trend is towards a more hi tech open kitchens, even at the expense of cabinet space. Computer controls and workstations are also making their way in to kitchens. The European colors of bronze and brass are the new stainless steel in both kitchens as well as bathrooms. As we become predominantly city dwellers even the dog is gaining his own shower.
Angus Watt explained that governments in the U.S, and around the world, have used monetary incentives to try and jump start economies, and minimize damage done by the global recession. With the U.S. printing money at an astounding rate this may in fact cause the devaluation of the U.S. dollar hurting our balance of trade. The continuing growth of the world’s population at the rate of 70 million per year becoming richer and more urbanized raises concerns. As more of the world’s population moves to cities personal spending and debt grow. At the end of 2009 and beginning of 2010 50% of the world’s population were city dwellers. It is predicted that by 2050 that number will increase to 70%.
Asia’s emerging nations are leading the way out of the recession, already producing more than ever before and well above that of the world and industrialized economies and growing faster. Demand for oil has rebounded in 2009 partially due to Asia’s rate of economic growth. Oil is expected to reach near peak demand levels in 2010.
Comparing the U.S. and Canadian housing prices, using the year 2000 as the starting point, we see that before the start of the price decline south of the border prices had more than doubled while Canadian prices only increased by a little more than 90%. After the bubble burst south of the border and prices levelled they only held on to 40% of the gains they made since 2000, by contrast when the big drop came to us about 18 months later the Canadian market retained 80% of the gains made after 2000.
Edmonton remains one of the most affordable major cities in which to buy a home beating Calgary, Vancouver and Toronto with higher than average incomes and lower than average home prices.
Canada mortgage and housing corporations Richard Goatcher is predicting employment growth of a little more than 5,000 jobs, unemployment to decrease to a little more than 7% and migration to Edmonton to increase reversing the trend through 2009. Carrying costs will (the principal and interest portion of a mortgage) will only increase slightly through 2010 as interest rates stay low. Predictions of 10% growth in residential sales and 4% residential prices this compares well with predictions from the Edmonton Realtors association.
Housing starts will increase in 2010 for both single family and multifamily. Apartment vacancy rates will fall but will only marginally affect rental rates.
Larry Westergard and the Realtors association predicted that we will see an increase from 19,139 total residential sales in 2009 to 21,000 in 2010 with a 5% price increase in single family homes from $366,761 in December 2009 to $385,000 in December 2010. Condominium prices are expected to remain flat at $244,000 through the year.
I came away from this feeling positive and optimistic for the future. I think that the economic downturn is over and we in Edmonton have returned to a stable and predictable course. We are fortunate to have one of the best banking systems in the world, while we often complain about the highly regulated and controlled banking industry; it worked well when we needed it most Canadians and Edmontioians can be assured that it protected us from the worst effects of the global rescission. We don’t have to look far to see the consequences of a lack of controls.
Just a thought to leave you with: Before the recession the U.S. had over 2000 banks Canada had 8.
It was time very well spent and I came away with a lot of new information and a lot to think about. These are my interpretations of the presentations made, for specific information or confirmation of material presented please contact the presenter directly.
Dave Dry
Licence Realtor in the province of Alberta
Re/Max Real estate
www.davedry.ca
www.davedryhomes.com
info@davedryhomes.com