By: Wesley Gunderson
Regular readers of this column know that Alberta and Edmonton have some of the strongest economic fundamentals in Canada, and the world for that matter. These fundamentals continue to get stronger, with notable improvements in employment, building activity and affordable housing.
On the surface Alberta’s employment has grown 0.4%, or 8,300 jobs in the first quarter of the year. This doesn’t seem like much, but there is something incredible happening behind these stats.
Alberta actually added 25,500 full-time jobs while it lost 17,200 part time jobs. So, in essence, not only is employment growing in number of jobs, but we have effectively replaced part-time positions with full-time positions and increased the hours and pay of Alberta workers. This trickles down in consumer spending and helps bolster our already world class economy.
Rise in Building Permits
Residential permits pulled in Edmonton to the end of April show a 31% rise in the value and a 17% rise in the number of units year over year.
When we look at Edmonton’s total permits – which includes not just residential, but also industrial, institutional and commercial permits – values are up a staggering 60% year to date over the same period last year. A significant factor in this growth is related to a permit pulled for the new arena. Still, building permits translate into more jobs, contracts and materials, which lead to pay cheques, which leads to spending; all improving overall fundamentals.
Similarly, Calgary’s total permit values to the end of April were up 18% over the same time frame last year.
Housing Inventories Support Home Prices
This rise in construction activity is coming at the right time as Darrell Cook, President of the Edmonton Real Estate Board recently commented, “inventory levels … are still below traditional norms and there is a shortage of…single family dwelling inventory.”
This provides a solid foundation to home prices in Edmonton. It is also one of the reasons the average single family dwelling in Edmonton is up 5.35% year over year to the end of April on MLS. Still, Alberta is considered one of the “bright spots” by RBC Economics Housing Trends and Affordability (May 2013) report, with Edmonton being the most affordable major market for detached bungalow, standard two storey or standard condominium.
Solid employment growth, solid construction activity and a bolstered housing market are improvements to our economy that already had strong fundamentals. Buyers can make a housing decision with the confidence that they will have work and that house values are solid.