There’s no denying the fact the Alberta economy has stalled and every Albertan is tightening belts, but the sky is not falling.
The province has been through this turmoil
before and risen, and will do so again.
In a recent meeting, the board of directors of the Canadian Home Builders’ Association-Alberta discussed the economic impact of low energy prices, plus, identified many positives about the economy.
Here are their observations:
- Renters still face low vacancy rates and high rents so they may see this as an opportunity to buy a home.
- The opportunity exists to lock in low and predictable mortgage payments with a five-year fixed rate of 2.79% or better.
- New home prices will inevitably rise because of supplies sourced from the U.S. and paid for with devalued Canadian dollars. Builders are holding the line on prices for now but will not be able to absorb costs in the long term.
- Lower fuel costs will put more money in consumers’ pockets.
- Other sectors of Alberta’s economy are strong, with agriculture, forestry and tourism expecting record years.
- Alberta has been through many slowdowns when oil prices fall but always recovers strongly.
- The impact of lower oil prices on the economy will not be increased by sudden cuts in provincial spending to balance the budget immediately because the premier says that will take until 2017. Changes will be phased in over three years.
- Alberta expects to add another 80,000 people to the population this year, which will be supportive of new home construction.
- The decline in the number of people coming to Alberta has been heaviest in the non-permanent segment of migration totals. Workers were still coming to the province from other provinces and they have a greater potential to put down roots and enter the housing market.
- There is reduced pressure on wages because of lower demand from the energy sector.
- Inflation is generally low and companies will see savings on fuel prices.
- In some locations, land supply was a problem last year. A slowdown may ease those issues in the short term.
- Some players in the oil and gas sector see this as a buying opportunity, indicating the downturn may be short-lived.
- Unlike the 2008/2009 recession, financial markets are not frozen so issues with corporate liquidity and access to capital will not be as extreme.