Alberta Real Estate
Edmonton Real Estate Stats and the Future of Alberta
Below is the weekly update for the real estate market in Edmonton for the month of May (so far). Previous week’s numbers are in brackets.
From the Edmonton Real Estate Board (ereb.com)
According to the figures released by the EREB:
- Residential sales through the Multiple Listing Service® System in April were up 5.3%
- There were 1,713 residential sales in April as compared to the 5-year average of 1,940 sales.
- There were 7,334 residential properties available in inventory at the end of April which is up 7% from last month.
“There is plenty of choice in the market at this time,” said REALTORS® Association of Edmonton President Doug Singleton. “Single family prices have risen slightly each month this year which is encouraging sellers to list their property.” He urged home buyers to remain calm, to confirm their financing arrangements and to study the market with their REALTOR®. “Of course, when your REALTOR® shows you the ideal home you should move decisively to make an offer and begin the home buying process in case another buyer is also interested.”
Great news from REALTORS® Association! Now if we compare April:
- Average1 residential price was up just 0.8% from last month at $337,363.
- The average price of a single family detached home was $382,384, up 0.9% from the previous month.
- The average price of a condominium in April was $235,036, up 1.3% from March.
- Duplex and row-house properties sold on average for $329,025; a 3.6% rise from the previous month. Residential prices were also up when compared to a year ago:
So in to summarize, given the report we see:
- Single family up 0.4%
- Condominium up 1.1%
- Duplex/Row house up 8.9%
- All residential up 2.99%
Now here’s an interesting article I came across that speaks to the growing population of Edmonton and Alberta at large.
Over the course of the coming year, Alberta Venture will produce a series of six stories addressing big, bold ideas, things along the lines of, “What if Alberta decided to ensure that every child graduates from high school?” and “What if we brought government, industry and academia together to become a global leader in geothermal energy?”
What would this province would look like if we decided we wanted a population of 10 million. What would that do for our economy, the environment and our influence in Ottawa? Should we attempt it, and how would we go about it? Watch for other stories in the series in upcoming issues, and let me know what you think in the comments.
If someone told you there was a way to simultaneously grow the Albertan economy, help the environment, cut taxes, boost social program spending and increase the province’s political influence in Ottawa, you’d probably write him off as a kook. After all, in a world where an opportunity never comes without its costs, that kind of win-win-win-win-win scenario sounds too good to be possible. And if it were feasible, it’s hard to imagine that we could find the political will to pursue it in an age where game-changing ideas have been replaced by half measures. But it’s time to think big.
Right now, there are 3.75 million people living in Alberta. By 2050, official government projections have that growing to between five and 7.5 million, depending on factors like the provincial birth rate and the number of immigrants the province attracts. But if Alberta wants to maintain its current level of prosperity, if it wants more influence on the national stage and if it wants to become a truly global economic player, it needs to have more people living within its borders by then – a lot more. Say, 10 million.
Why now? The better question might be, why not? A deliberate decision to aggressively grow the province’s population would cement the westward shift in economic power already underway in this country, one that would see Calgary take Toronto’s place as the economic hub of the country just as Toronto replaced Montreal in that role a couple of generations ago. “Every additional person that moves here is additional economic power for Western Canada,” says Todd Hirsch, the senior economist for ATB Financial.
The increase in political power would be nearly as important. Right now, there are 28 federal ridings in Alberta out of a total of 308 in the country, or less than 10 per cent. If Alberta’s population were to grow to 10 million while the rate of population growth in the rest of Canada remained at the muted levels demographers expect, Alberta’s proportionate share of seats in the House of Commons could more than double to almost 24 per cent. If that were to happen, the days of Canadian politicians ignoring Western Canadian interests would be well and truly over, regardless of who held power.
Adam Legge, the president of the Calgary Chamber of Commerce, thinks a policy of population expansion would also be beneficial for the province’s business community. “You’d have more critical mass, which means more business opportunities, more customers, more clients and probably a greater level of competition.” Hirsch shares Legge’s enthusiasm for the economic potential associated with more people. “I’m a big advocate of population growth,” he says. “The more people you add to the mix, you get more than a proportionate increase in the number of creative ideas that come out of that. Adding to the population mix, especially if they’re in an industry that encourages conversation and collaboration, increases the economic opportunities and ideas that come out of that.”
Simon Farbrother, Edmonton’s city manager, also sees potential benefits. “If you envisage Edmonton with three to four million people, there are probably some significant opportunities that come with that intensification,” he says. “One is that some of your larger systems like transit become more efficient.
Secondly, people create activity and so, from an economic development point of view, it supports a much higher scale of business. And on the arts and culture side, having a large resident population makes the delivery of a wide range of cultural opportunities much more viable.”
An aggressive policy of population expansion would also serve as insurance on the costs associated with an aging population. That bill hasn’t come in yet, but preliminary estimates show it might break the bank. In 2009, there were 383,516 seniors aged 65 or over in Alberta, which constituted over 10 per cent of the total population. By 2035, that figure is projected to increase to more than one million, and by 2050, it could hit 1.6 million, or 26.2 per cent of the total population. As a result, the age-dependency ratio – the number of persons aged 65 years and older per 100 persons aged 15 to 64 – would rise from 15 in 2009 to almost 40 by 2050. That will mean far greater demands on health care and other social programs and fewer working taxpayers to fund them, a combination that will almost certainly result in higher taxes, both for those unfortunate enough to still be working and for the businesses that employ them.
Legge worries that Alberta, like the rest of Canada, isn’t doing nearly enough to prepare for this demographic squeeze. “We’ve all been talking about it for a decade and we’re not making progress at the rate we need to in order to solve these problems in time,” he says. “We don’t have enough workers to meet the needs of our companies. We don’t have enough taxpayers to meet the needs of our aging population. This is something that we’re not moving on fast enough.”
Alberta businesses are already starting to feel the pinch associated with fewer available workers. According to Legge, the competition for potential employees creates wage inflation, something that’s particularly dangerous to smaller businesses. “It’s great that good people are getting paid more and money’s being spent, but for the company that has narrow margins and a small client base, they can’t compete. You force those kinds of businesses and entrepreneurs out of the community.”
This is reason enough to pursue a policy of aggressive population growth. But what takes a vision of Alberta with 10 million people from the realm of good ideas to that of truly great ones is that it could help create the kind of dense and diverse cities that drive economic activity and productivity. After all, if Alberta were to increase its population to 10 million, most of that growth would have to take place in Calgary and Edmonton. “We’re not going to be spreading these 10 million people uniformly across the province,” Hirsch says. “They’re going to be concentrated in Edmonton and Calgary. Density would have to increase, urban transportation would have to increase, housing density would have to increase – all of those things would add efficiency.” Edmonton’s Farbrother agrees. “In order to support a population of three to four million [in Edmonton], you have to go up – you can’t just go out.”
That growth could be a potent economic driver for Alberta’s major urban centres. According to Ryan Avent, a writer with The Economist, two decades of economic research suggest that if you put two workers of similar skill in cities of different densities, the one in the denser place will be more productive. “Economists studying cities routinely find that after controlling for other variables, workers in denser places earn higher wages and are more productive,” he wrote in a New York Times opinion piece in September. David Thompson, the Edmonton-based director of sustainable communities for Sustainable Prosperity, an Ottawa-based research institute, thinks that it could even be the key to solving Alberta’s longstanding quest for economic diversification. If nothing else, he says, it’s better than the government trying to pick winners by attracting particular companies or sectors to Alberta through tax breaks and incentives. “The government doesn’t know, and the private sector doesn’t know, what the next big thing is going to be, so throwing money at something like that is a bit of a gamble,” he says.
Doing nothing might be an even bigger gamble, though. Right now, when it comes to population density, Edmonton and Calgary have a long way to go. At 1,250 people per square kilometre, Calgary ranks 139th, ahead of Nice, France, and below Salt Lake City, when it comes to density in the world’s biggest cities. With just 900 people per square kilometre, Edmonton fares even worse, landing just ahead of Oklahoma City at 178th. Phoenix, by way of comparison, ranks ahead of both cities with 1,400 people per square kilometer.
This isn’t by design. The challenge facing urban planners in Edmonton and Calgary isn’t one of finding the will to fight sprawl – they have that already – but the tools to discourage it. While they might like to promote more efficient land-use practices, there are neither geographic constraints on outward sprawl nor economic disincentives towards pursuing it. For now, at least, it’s cheaper to grow out than up. “Calgary is a city where there are very limited barriers to further expansion,” says Legge. “It doesn’t force the decisions that other cities have to face. Vancouver has mountains on one side and an ocean on another – it doesn’t have a lot of room to grow. Calgary and Edmonton have nothing but room.”
That room may prove costly. According to a report prepared by the City of Edmonton, the ever-expanding suburban neighbourhoods that surround the city aren’t likely to pay for themselves – ever – in the form of property taxes or user fees. Thompson notes that according to a recent City of Edmonton report that studied 17 new or developing neighbourhoods in and around the city, sprawl is set to cost taxpayers a lot of money. In the first 30 years, those new neighbourhoods will cost $500 million to support, an average of $60 every year from every house in Edmonton. And it gets worse: after those first 30 years the annual net cost will increase as aging infrastructure needs replacement, driving the city’s bill up to around $3 billion, or an average of $300 per year, per household. And remember – this is just for 17 neighbourhoods.
It’s the same story in Calgary. Geoff Ghitter, who teaches geography at the University of Calgary, points to estimates that an emphasis on increasing urban density would save the City of Calgary $11 billion in capital costs over the next 60 years and another $130 million annually in maintenance. Legge of Calgary’s Chamber of Commerce agrees. “We need to make wiser land-pattern choices,” he says, “not necessarily from a sustainability perspective but from the perspective of not being able to afford developing land the way we do right now. It will bankrupt future generations.”
An Alberta with 10 million people would mean more opportunities for business, a lower municipal tax burden for citizens, an insurance policy against the declining number of workers in the province and a boost in the province’s pull in Ottawa. There’s just one problem: getting there. Alberta Finance’s projections estimate that even with increased immigration and an uptick in the birth rate, Alberta will top out at 7.5 million people by 2050. Getting to 10 million in that same time frame – 33 per cent higher than Alberta Finance’s high-end projection – would not be easy.
Alberta won’t get there through an increase in the birth rate. “To get to 10 million people, we’d need our birth rate to go up to five kids for every woman, and that’s not going to happen,” says Hirsch. “The only way you do it is through immigration.”
That would require a deliberate effort on the part of the provincial government to attract and integrate immigrants from around the world, one that we haven’t seen in this country since the days of Confederation. “We’re not going to be a four-million city by inviting people from Saskatchewan and Newfoundland to come to Calgary,” says Legge. “It’s going to be an international effort.” And that effort wouldn’t be without risk. “If you aren’t there with the right social integration strategies and the infrastructure and employment framework to get people working in the jobs they’re trained to do, it could be disastrous,” Legge says. “You just have to look at the U.K. and France and the riots that happened there. Doing it wrong is probably worse than not doing it at all.”
Herbert Grubel, a senior fellow at The Fraser Institute, professor emeritus at Simon Fraser University and a co-author of a May 2011 study that focused on the financial costs of immigration, agrees. And he thinks we’ve been doing it wrong for some time now. “We have been brainwashed in Canada on the idea that immigrants are good [for the economy],” he says, pointing to his study’s conclusion that an increase in the number of low-skilled immigrants that have arrived in Canada since the late 1980s has resulted in thousands of dollars being transferred each year to the average immigrant at the expense of Canadian taxpayers. And, Grubel says, those low-skilled immigrants have also allowed Canadian firms to avoid making the kinds of capital investments that would improve their productivity, which has in turn driven down wages in certain sectors of the economy. “One of the reasons why our productivity has lagged behind that of the United States over the last 20 or 30 years, when for a long time they moved together, is because we have so many more immigrants,” Grubel says. “Therefore, the ability of employers to pay higher wages due to higher productivity is stymied because we don’t introduce new technologies and capital. It’s very destructive.”
Grubel isn’t opposed to immigration per se, but he believes that policies must be adjusted to attract only those immigrants that can pay their own way, so to speak. “Let Alberta bring in as many immigrants as they want to, but meet the government requirement that the pay that they’re offered in their contract is at least equal to the average incomes of Albertans,” he says. “This way, you would avoid the problem of having low-income immigrants who don’t pay enough taxes but get all these benefits.”
Grubel’s concerns are a preview of the kind of debate that would have to take place alongside a meaningful increase to the level of immigration in Alberta. “You’d have to have everyone onside,” Hirsch says. “Otherwise, it’s going to cause some resentment. If Alberta is going to triple in population, and 90 per cent of that is going to come from migration, there are going to be some wild debates.”
One of those debates would probably revolve around the familiar idea that a substantial increase in immigration would pose a direct threat to the economic interests of current Albertans. Hirsch doesn’t buy that argument, though. “People will say, ‘If you let immigrants in, they’ll take our jobs,’” he says. “But they don’t think about them also creating jobs or creating a market for their kid’s company.”
In fact, he thinks a substantial increase in the number of immigrants coming to Alberta would reinvigorate the spirit of entrepreneurialism. “It would very quickly energize what it means to be an entrepreneur, because I think we’ve lost a lot of that in Canada. Most of us come from immigrant stock but we haven’t been immigrants ourselves. We haven’t really had to start from scratch. We haven’t learned how to roll up our sleeves and create something from nothing, and that’s what the entrepreneurial class of immigrants is really good at doing.”
A political skeptic might suggest that Alberta’s elected officials would instinctively run from that kind of debate in search of something more palatable, like a root canal or a forensic audit. But they might be wrong. In early September, former Progressive Conservative leadership candidate Doug Horner called on the provincial government to pursue an agreement with Ottawa that would give Alberta more control over immigration policy. Such an agreement, perhaps like the accord the federal government inked with Quebec in 1991 that allows it to manage the selection and settlement of new immigrants, would go a long way towards making a province with 10 million people a realistic objective. A deal allowing it to set the number of immigrants it receives each year would go even further.
If that happens, it could help Alberta move beyond the unavoidable cycles of boom and bust that stem from depending so heavily on natural resources for economic growth. It might even put the province on the path to meaningful economic diversification, something it has been chasing with varying degrees of commitment for a generation. “If we want to have something other than a hydrocarbon economy,” says David Thompson of Sustainable Prosperity, “we have to make the cities work.”
If we don’t, the so-called “Alberta Advantage” may one day be replaced by a collective disadvantage. “We might be hitting a tipping point where we’re going to start to suffer from having sprawling cities that make it difficult for firms to hook with each other and their employees,” says Thompson. “We can try to put a transportation band-aid on that, but you want to get the agglomeration effects.” And if Alberta doesn’t move to embrace the economic benefits of density, he warns, other jurisdictions will. “If you look at Saskatchewan and B.C., they’re both developing their hydrocarbon resources, and they have a chance to do it right, to build out their cities in a proper way. If we don’t get on it, they might get on it, and they’ll have an easier time diversifying their economies.”
The good news, Thompson says, is that cities have already figured out the importance of density. “If you look at what Mayor Nenshi is doing in Calgary with changing the development cost charges to try to reflect the relative cost of urban versus suburban and exurban development, that’s a good sign as well. People are waking up to it.”
Ironically, the very factor that encouraged sprawl in Edmonton and Calgary may end up curtailing it. As the City of Edmonton’s report revealed, it’s much more cost-effective to have people living closer together. “I think the attraction was that people believed that it was paying for itself, and then some,” Thompson says. “What we’ve seen from the city’s report is that it doesn’t pay for itself. We need to stop subsidizing something that’s costing us money, and start subsidizing something that’s going to improve our economy.” – Article Source here
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