Last week, Red Deer hosted the Alberta Mortgage Brokers Association’s annual Conference and Trade Show.
The theme was “Under the Big Top”, yes a circus theme!
Even though there were many clowns at the event, the seminar themes were no laughing matter. We were fortunate to have the economic panel that we did; Todd Hirsch SNR economic forecaster from ATB, Lai Sing Louie, CMHC economist, Katherine White from Alberta Finance and Enterprise and King Ralph Klein as moderator.
There were many important topics discussed, such as migration to Alberta, the price of oil, interest rates.
Alberta is Canada’s ATM.
People move to Alberta from many different provinces to make quick money then return home when their wallets are full.
This is a problem for Alberta, as you can’t build many new homes without a population gain. However this isn’t anything new to us.
Since we are an energy dependant economy, many opportunists have come over the decades to Alberta to reap the financial rewards. Many stayed, but many have gone home as well.
During the time between 2004 and 2007, we had one of the largest periods of provincial migration to Alberta whereas we had 40,000 to 50,000 people moving here. Normally we can have a net gain of between 15,000 to 25,000 new people moving to Alberta annually. In 2009, we actually had a net loss of 312 people, meaning our population actually declined.
The panels forecast for 2010 and 2011 migration to Alberta is such that we are going to be returning back to a normal period of population growth, but we have to be able to provide some relatively stable economic opportunities for newcomers so that they stay and buy a home.
One of the questions asked of the panel was, “What is going to drive people to move to Alberta?” The reply was very straightforward, “The oilsands and its service businesses!”
We usually only think of Fort McMurray when we hear about the oilsands, however they create widespread employment to many contractors across the province and create many professional jobs in Calgary and Edmonton.
We’ve recently seen the Bank of Canada (BoC) increase the prime rate.
What many don’t realize is that this is a positive step. It shows that Canada’s global economic footing is stronger than most of the developed world.
To some the increase from the BoC is misunderstood, thinking that this is going to affect the value of housing in a negative manner, however this is not the case.
What is going to bring back some urgency to buyers right now is the super low fixed rates – again! This should increase the demand for the high supply of homes and balance out the housing market to a normalized market from a buyer’s market.
The price of oil is what seems to bring Alberta its ups and downs, and as long as the price per barrel stays $60 and $80 a barrel then we’ll be able to move forward with the housing starts that we require to get to a normalized market.
With all this being said, the panel reminded us that Alberta is an economic powerhouse, and that we are going to go through many times of prosperity and soft spots along the way, and in the long term, Alberta is going to grow!
Jean-Guy Turcotte is an Accredited Mortgage Professional with his partners at Regional Mortgage Corporation and can be reached at 403-343-1125 emailed to email@example.com or texted to 403-391-2552.