March 2015 Alberta Economic Fundamentals

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Edmonton mayor says funding for future LRT projects dependent on other orders of government

As one LRT line shows signs of life and another moves into construction, Edmonton council is hoping to keep the ball rolling for future light rail lines.

"Our message is the same but what's new about what we saw today is a preliminary analysis of the city's fiscal capacity over the 15 years from when we would start to wrap up construction on the Valley Line. How do we keep building after the southeast line starts to come online?" explained Mayor Don Iveson.

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Surviving low prices in Canada's oil sands

The operating cost of extracting bitumen from Canada's oil sands tops out at US$37/bbl for in-situ projects and US$40/bbl for mining projects – among the highest globally.

With oil prices having dropped considerably, companies will see oil sands cash flows fall by US$23 billion during 2015 and 2016. As such, we calculate that over US$35 billion of remaining present value will evaporate from the region.

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Realtors Association of Edmonton - Housing Forecast 2015

At the Realtors Association of ‪Edmonton‬‬‬ 2015 housing forecast seminar recently, the sentiment is for muted but continued growth of both sales and ‪real estate‬‬‬ values in 2015.

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ATB Chief Economist Todd Hirsch (Twitter: @ABeconomist) quoted REALTORS® Association of Edmonton expecting 3.5% increase in house prices, and 2.5% for condos in 2015. Expectation by Todd Hirsch of ATB is for $70-75 oil by end of the year. ‪#‎RAEForecast

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Slumping MLS sales in
January felt across Alberta's smaller centers


A sharp drop in MLS sales wasn’t limited to Alberta’s major centres at the beginning of this year as the impact of the oil price collapse began to take hold in the provincial economy.

Data obtained by the Herald from the Canadian Real Estate Association, from real estate boards across the province, show several markets throughout Alberta saw steep year-over-year declines in sales during the first month of 2015.

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To no one's surprise
Calgary and Edmonton housing markets entering "Buyer's Market"
conditions


Calgary and Edmonton housing markets were “hammered” in January, says the Conference Board of Canada.

A report, by senior economist Robin Wiebe, released on Thursday, said the seasonally-adjusted annual rate of sales fell by 23.9 per cent on a monthly basis in Calgary to 20,100 and by 9.8 per cent in Edmonton to 15,372.

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Don't panic: Why Alberta will be fine, despite oil prices

Like throwing a rock into a pond, a decline in the price of oil sends ripples off in every direction, moving in unpredictable ways. While low prices are tough on producers and a nightmare for the Alberta government, they also have unexpected upsides. “One of the real benefits of a slowdown is that it recalibrates cost,” says Todd Hirsch, chief economist at ATB Financial. “Everything returns to something closer to a healthier balance.”

Six months ago, the big issue for oil producers in Alberta was cost of labour and materials, making a lot of projects that may have once been economical at $70-a-barrel for oil uneconomical at $90. “We are going to see an unravelling of cost,” Hirsch says.

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$1.8-billion southeast leg
of the Valley line that will run from Mill Woods to downtown


While the first phase of the Valley LRT line is on time and on budget, the rest of Edmonton's future light rail lines are missing a large chunk of funds.

The city's LRT governance board met Monday for a progress update on the Valley line.

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House prices: Calgary more affordable, Toronto and Vancouver pricier

It's getting a easier to afford a home in Calgary and Regina, but housing is moving out of reach for many buyers in Toronto and Vancouver, according to research by RBC Economics.

The rate cut announced by the Bank of Canada in January helped make housing more affordable in most of Canada, because mortgage costs fell, according to RBC's March report on housing trends and affordability.

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Edmonton economy to see slight growth

Edmonton council heard Tuesday that the local economy may be more resilient than the province is making it sound.

The city's chief economist, John Rose, admitted that the provincial arithmetic that points to a $7 billion budget hole is sound, but it isn't the only number to consider.

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Housing market in Edmonton is looking up for spring

Edmonton's housing market is looking up for spring.

Single family houses in February averaged $430,770 -- up .84% from January and 1.17% over the same month in 2014, say the latest numbers from the Realtors Association of Edmonton.

Condo prices also continued upward with a 1.2% increase over January and 4.7% increase from February 2014.

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Downturn continues in Calgary's housing market

A senior Canadian economist says fear has obviously gripped Calgary’s housing market as MLS sales dipped by more than 34 per cent in February compared with a year ago and average sale prices were off by more than four per cent.

“Oil prices have fallen and that has a lot of people worried . . . When the market turns, either for the good or bad, then it’s really hard to call the top or the bottom,” said Robin Wiebe, senior economist with the Conference Board of Canada. “Fortunes have been made and lost on bets like that.

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Good news for #Southern
Alberta cities and towns as Landlord-tenant dispute resolution service coming


There’s a new resource for southern Albertans facing a landlord-tenant dispute.

The provincial government is extending its phone-based resolution service across the region, nearly a decade after launching it in other parts of Alberta.

“This expansion ensures that all Albertans have access to efficient, fair and affordable dispute resolution as an alternative to the courts,” says Stephen Khan, the minister responsible for Service Alberta.

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Alberta wages almost 25% higher than Canadian average

Springtime is typically oilpatch bonus season. As the grass turns green, car dealerships and upscale stores tend to get busier.

This year is different. Bonuses — if they exist at all — are expected to be small. Wages have been frozen. Oilpatch workers are happy to have a job at all.

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Calgary region housing starts plunge in February

The number of housing starts in the Calgary region plunged in February as new home construction activity slowed in both the single-detached and the multi-family markets.

And year-to-date, new home construction is at its lowest level since 2011.

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February 2015 housing starts in Edmonton

EDMONTON, ALBERTA–(Marketwired – March 9, 2015) - Housing starts in the Edmonton Census Metropolitan Area (CMA) were trending at 18,350 units in February compared to 16,706 in January, according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six month moving average of the monthly seasonally adjusted annual rates (SAAR)[sup](1)[/sup] of total housing starts.

“The trend in housing starts moved higher in February largely due to a stronger pace of production in the multi-family sector. For the second consecutive month, higher apartment starts led the way for multi-family construction,” said Christina Butchart, CMHC’s Senior Market Analyst for Edmonton.

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OPEC's influencing waning, World Bank report suggests

As OPEC’s refusal to curb oil production contributes to a nine-month plunge in prices, a new paper suggests the cartel’s days may be numbered.

The Organization of the Petroleum Exporting Countries has vowed to defend its market share against higher-cost producers such as U.S. shale drillers and companies developing Canada’s oil sands. Its strategy hinges on the odds that an extended period of low prices will lead other producers to scale back output, enabling the group to reassert its influence.

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Alberta hiring confidence slump felt most at small businesses

Alberta is not the employment paradise it was two years ago.

The province’s employers are becoming more particular about hiring new staff and are expected to begin cutting personnel over the next six months, according to a Human Resources Institute of Alberta report.

“It’s evident that while it’s not all doom and gloom, the hiring binge is over,” HRIA chief executive officer Chris McNelly said.

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Alberta's economy set to grow but facing significant downside risks

TORONTO, March 12, 2015 /CNW/ – Alberta’s economy is expected to grow at an anaemic pace in 2015, as persistent energy sector weakness and an unfolding spill over into consumer confidence prompted RBC to revise its 2015 real GDP forecast significantly lower – to 0.6 per cent from 2.8 per cent forecasted in December. According to the latest Provincial Outlook released today, RBC expects growth will pick up slightly to 1.1 per cent in 2016.

“Alberta saw a dramatic turn of events in recent months, as it became clear that the steep drop in crude oil prices since mid 2014 would have profound adverse repercussions for the province’s energy sector,” said Craig Wright, senior vice-president and chief economist, RBC. “The initial position of strength in the economy is likely sufficient to keep the province in growth territory in 2015 though the risks of a recession can’t be dismissed.”

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Calgary secondary suite solution? Or more problems?



The Secondary Suite issue in Calgary continues to be a political hot potato -but is there a solution on the horizon?

Despite all of the doom and gloom that seems to be shadowing the Calgary real estate market – the ongoing discussion on providing affordable and safe rental alternatives in the city still rages on seemingly under the radar now.

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