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Real estate forecasting is as much art as it is science. It involves so many facts and figures and it's dosed with a healthy bit of just good old prognosticating.
And those people who follow the housing market, like real estate brokers or investors, constantly want to know how it’s doing and where it’s going.
A TD Economics Provincial Outlook released this past Thursday provided some interesting data on Alberta’s very recently recovering housing market.
The forecast painted a pretty rosy picture for Alberta for 2012 stating, "... the vast majority of signals on the economic dashboard are sending the same message: things are good. Wages, already the highest in Canada, are rising, retail sales are growing fast thanks to an expanding population, and the housing market shows little sign of overvaluation relative to other large provinces in Canada." Sounds pretty good, right?
Then you get to the last page with the statistics on whole the housing market. Both the resale and new construction markets are pretty rosy for 2012.
For the resale housing market, this outlook forecast that the average sale price of an existing home in the province would be $361,300 this year followed by $364,900 in 2013 and $355,500 in 2014. That represents an annual increase of 2.2 per cent this year and 1.0 per cent next year but a decline of 2.6 per cent in 2014. Those aren't big numbers, but the trend is truly concerning.
Existing home sales are expected to follow a similar pattern with a forecast of 60,400 transactions in Alberta in 2012, followed by 61,100 next year and 58,700 in 2014. That represents an annual increase of 12.3 per cent in 2012 and 1.1 per cent in 2013 but a dip of 3.8 per cent in 2014.
For the resale housing market, we have been well below the 10-year average for the amount of activity in the Calgary area for quite some time and are just starting to recover. There were indications that prices might also recover. However, these forecasted trends are surely not good signs for the residential resale market, given the number of people currently moving to Calgary and Alberta.
The numbers for new home starts are almost identical. Great numbers for 2012 and falling off over the next two years.
I wonder, "Are the majority of these people going to be renting homes? Or are we going to see another out-migration situation similar to the one we had in 2009-2010?"
A slowing residential housing market (both resale and new construction) is usually followed with a slowing economy! And that's not good!
What are your thoughts?