Alberta Overview

The recovery of oil prices is providing a welcome boost to the Alberta economy. Provincial crown petroleum and natural gas rights were auctioned at record values in 2010, which will lead to higher drilling and energy exploration in 2011. Investment in oil sands projects will also continue to grow, accelerating economic growth in Alberta. The natural gas industry will continue to be impacted by a low price environment and its contribution to the economy will be muted until prices move higher.

In 2011, employment growth in Alberta will recover and exceed the peak level of employment reached prior to the economic downturn. Improved labour market conditions will move the unemployment rate lower and draw more people to Alberta.

The turnaround of interprovincial migration flows in 2010 should continue over the forecast period, as Alberta’s labour market attracts more migrants in 2011 and 2012. International migration will remain elevated over the forecast period. Total net migration to Alberta is projected at 31,450 in 2011, then rise to 34,100 in 2012. Overall, migration patterns are expected to support housing demand in Alberta.

In Detail

Single Starts: Single-detached builders will remain cautious in early 2011 as they wait for presales to increase before substantially increasing housing starts. Market conditions that currently favour the buyer will transition toward balance in 2011 as new home inventory is depleted and competition from the resale market abates. Single-detached starts will improve as the year progresses, resulting in a higher level of starts in the second half of 2011 to bring the annual total to a similar level achieved in 2010. Balanced market conditions and rising wages will encourage new home buying in 2012, providing a lift to new construction of about eight per cent.

Multiple Starts: The number of complete and unoccupied multi-family units will hold back new multi-family construction in 2011 to allow inventory levels to come down. New projects will be started as the market gains strength but on an annual basis, 2011 production is projected to be less than in 2010. By 2012, rising demand, supported by economic growth, will allow high rise condominium projects to become more active, increasing multi-family starts by a double digit growth rate. Despite the expected gain in 2012, condominium apartment construction will only be at about half the ten-year average.

Resale’s: Buyers’ market conditions in most of Alberta’s resale markets slowed resale transactions during the latter half of 2010 and will linger into the early part of 2011. Market conditions are projected to become more balanced in 2011, as spring demand outpaces supply. A higher level of net migration in 2011 will support demand, as will low mortgage rates. Rising incomes and employment will also encourage home buying, pushing resale transactions to 50,400 units. Expect resale transactions to grow modestly in 2012, as higher mortgage rates temper the impact of continued economic growth.
Prices: Buyers’ market conditions in most Alberta markets will inhibit price gains in early 2011. Month-to-month price gains will occur in 2011 as market conditions firm, but will amount only to