Every year the Alberta Mortgage Brokers Association has a conference that gathers mortgage professionals from across Canada.
The days are packed full of speakers and there’s also a tradeshow for all of the lenders and industry partners to show off their wares and speak with the membership. My favourite part of the event is the economist panel and they come prepared with loads of information and statistics to help give us an idea as to where the global, Canadian and most specifically Alberta’s economy is headed.
Todd Hirsch, senior economist with ATB, Katherine White, VP of Alberta Finance and Enterprise and Lai Sing Louie, senior economist for the prairie’s region with CMHC headed our panel.
The discussion began with questions regarding the international economic health and there’s a lot of uncertainty there, but the panel felt that the pains to come won’t shock the economy as badly as it had in the fall of 2008 mainly because a lot of companies are hoarding cash.
This causes a slight problem because the companies aren’t hiring to get the economy going as they are uncertain as to what’s coming so instead of hiring they sit and wait on the sidelines, but this in itself creates a dysfunction as there aren’t as many consumers to buy their products.
But it’s not all a corporate problem.
U.S. Federal Reserve Chairman Ben Bernanke recently stated that the House of Congress is the largest reason for the recent market tumble and uncertainty as they fought over the U.S. debt ceiling increase.
This event showed just how fragile the global economy actually is and we may not see an actual recession, but the economy may be very sluggish for the foreseeable future.
Since the great recession in the U.S. began in 2008, they’ve lost a global distinction and that is that Europe has taken over to be China’s largest importer of goods.
So the global economy no longer just rests on the U.S. consumer. If the EU countries slow their consuming as well, this will have a softening effect on commodity prices, meaning the price of oil may contract. To what extent, well that truly depends on the confidence of consumers.
Then there’s Alberta, our economy is growing at a steady rate of 3% annually, which leads all of the provinces and territories for growth. Our fortunate growth comes from our oil exports, and since the price of oil has somewhat stabilized in the $80 to $100/barrel range, the future looks pretty rosy.
When oil tumbled to under $40/barrel shortly after the fall of 2008 over $60 billion worth of projects in Alberta were shelved and over $45 billion of projects have already returned and with long term prospects of oil to be in the $80-plus range these projects will likely grow from here as oil execs are more comfortable with where the global prospects are.
With these projects comes jobs and wage increases and with those two leading the way we then get migration back to Alberta namely interprovincial migration.
In 2009 migration to Alberta nearly disappeared, in 2010 Alberta had 21,000 people move here and 29,000 are expected to move to Alberta in 2011, while the forecast for 2012 is to have another 32,000 new Albertans.
While that is very positive news for Alberta, expect to see a more normalized growth period in Alberta as the boom years brought almost 70,000 people per year for three to four years. All that being said, Alberta is currently in a buyer’s market (except for Fort McMurray) with house prices being mostly flat- which is good thing compared to the rest of the world – and interest rates extremely low.
We currently have about a five-month supply of houses in Alberta, when this dwindles down to a three-month supply this will turn our market to a more balanced market and provide some home value increases.
If you’ve been to the mall lately likely you’ve had a challenge finding a parking stall as there’s nothing more resilient than the Alberta shopper but our global friends aren’t feeling as confident as we are.
The global economy might be shaken up a little lately, but the forecast isn’t for a global recession and Alberta’s economy will continue to grow, but if the U.S. sneezes again, we may catch a slight cold.
Jean-Guy Turcotte is an Accredited Mortgage Professional with Dominion Lending Centres-Regional Mortgage Group and can be contacted for appointments at 403-343-1125. texted to 403-391-2552 or emailed to email@example.com.