While the nationwide economic picture still looks pretty grim, Alberta’s economy experienced relatively strong growth of about 4% in 2010, and is expected to enjoy modest growth through 2011, according to Troy Media.
Recovering crude oil prices seem to be driving most of this
growth, which would be even higher were it not for sluggish natural gas prices.
Still, in the shadow of the Great Recession and the biggest economic freefall
since the 1920s, 4% growth – heck, 1%
growth – is a good news story; especially when we note that other parts of
the country are still struggling mightily to right their local and regional
How the “Modestly Growing” Alberta Economy Impacts Home Buyers and Sellers
As I’ve blogged about a few times – and will surely blog about again – the real estate market is influenced in many ways by the overall health and stability of the prevailing economic picture.
For starters, a stable, growing economy bodes well for job growth, which will put some upward pressure on housing demand – which, in turn, will reduce the supply available. Depending on the intensity of both of these forces, housing prices should continue climbing upwards here in Alberta (a prediction that has been verified by other experts and observers).
However – and this is where things get even more complicated – interest rates are likely to remain at very low levels. Though I don’t think we’ll see the Bank of Canada rate going down to the .5% levels we saw early last year (because the overall Canadian economy is still struggling to pick up steam), it’s unlikely that we’ll see any severe rate increases throughout 2011. That’s because the higher the rate, the more expensive it is for Canadians to borrow, which means they spend less – which doesn’t help the economy.
For Edmonton buyers and current home owners, this likely means a couple of things: variable rates will probably start to rise, while fixed rates hover around their current levels. So if you have a mortgage or are looking to get one, it’s important to understand the bottom-line costs of variable vs. fixed mortgages in this economic climate. If you need help understanding the ins and outs, please call me and I’ll be happy to connect you with the right information.
For Edmonton sellers and those thinking of selling, this is a very good time to list – because while it’s expected that average home prices will modestly increase over the year, so will interest rates – which means it’ll be more expensive for potential owners to do a deal. In other words: it may not be to your advantage to wait several months to see a (possible) 2-3% rise in home prices, if it means that fewer people can afford the home – which means less competition, and possibly a lower offer being received.
Indeed, this is all interesting – and a little bit complicated – stuff! My advice to both Edmonton buyers and sellers (especially first timers) is not to get lost in the economic data, but to call me so that we can build a clear and concrete plan that fits YOUR unique goals. When you do that, you have much more control over how to position yourself in the market – and increase your chances of a successful, satisfying and stress-free transaction.
Call me at 780-709-0811 – I’m here to help!