October 22, 2009
Calgary cma Economic and rental market outlook
Richard Cho Senior market analyst Prairie and Territories
Ytd Sept 2009, down 16,800 full-time & up 13,500 part-time jobs
ytd average yr/yr employment growth
Calgary CMA – FT vs. PT Job Growth
Full-Time Part-Time
55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 -5,000 -10,000 -15,000 2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: Statistics Canada
Calgary CMA – Employment
Employment gaining ground
number of people employed
725,000 700,000 675,000 650,000 625,000 600,000 575,000 550,000 525,000 500,000 2002
Source: Statistics Canada
Employment actual Seasonally Adjusted
2003
2004
2005
2006
2007
2008
2009
Sept 2009 Calgary CMA unemployment rate 7.1%
actual unemployment rate (%)
Unemployment Rates
10 9 8 7 6 5 4 3 2 1 0 2001 2002 2003 2004 2005 2006
Canada Calgary CMA Alberta
2007
2008
2009
Source: Statistics Canada
Calgary CMA – Average Weekly Earnings
Ytd September 2009, $974 per week and 3.8% higher
increase % wage $ $1,000 $800 $600 4.0% 2.0% 0.0% -2.0% -4.0% 2001 $200 $0 2002 2003 2004 2005 2006 2007 2008 2009 $400
ytd yr/yr growth ytd average weekly wage
14.0% 12.0% 10.0% 8.0% 6.0%
$1,200
Source: Statistics Canada
Calgary CMA – Employment Growth
Employment growth expected to rebound in 2010
employment growth (%) 9.0
8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0 -2.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009f 2010f
Source: Statistics Canada, CMHC forecast
Calgary CMA - Non-Residential Bld. Construction
Investment at $1.1 billion in 2009 Q3, 12% lower yr/yr
% investment growth non-residential construction 85% 80% 75% % change yr/yr 70% $ amount 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15%
04
amount in $’000
$1,400,000 $1,300,000 $1,200,000 $1,100,000 $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0
Source: Statistics Canada
20 Q1 04 20 Q2 04 20 Q3 04 20 Q4 05 20 Q1 05 20 Q2 05 20 Q3 05 20 Q4 06 20 Q1 06 20 Q2 06 20 Q3 06 20 Q4 07 20 Q1 07 20 Q2 07 20 Q3 07 20 Q4 08 20 Q1 08 20 Q2 08 20 Q3 08 20 Q4 09 20 Q1 09 20 Q2 09 Q 3
20
Calgary CMA - Non-Residential Bld. Construction
Government & institutional investment up 55% YTD
amount in $’000
$1,100,000 $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Commercial Industrial Institutional & Government
Source: Statistics Canada
20
0 20 3Q1 0 20 3Q2 0 20 3Q3 0 20 3Q4 0 20 4Q1 0 20 4Q2 0 20 4Q3 0 20 4Q4 0 20 5Q1 0 20 5Q2 05 20 Q3 0 20 5Q4 0 20 6Q1 0 20 6Q2 0 20 6Q3 0 20 6Q4 0 20 7Q1 0 20 7Q2 0 20 7Q3 0 20 7Q4 0 20 8Q1 0 20 8Q2 0 20 8Q3 0 20 8Q4 0 20 9Q1 0 20 9Q2 09 Q 3
Calgary CMA – Total $ Building Permits
Government & institutional building intentions up 139%
amount in $’000 (ytd Aug)
$5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 Residential
Source: Statistics Canada
2007
2008
2009
Commerical
Industrial
Instit. & Govt
Low mortgage rates support homeownership
per cent 10
9 8 7 6 5 4 3 2 1 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Prime Rate 5-year posted mortgage rate Government of Canada Benchmark Bond Yield, 5-year
Interest Rates
Source: Bank of Canada
Stock Indices – Leading Indicator
Recovery being experienced
monthly average of daily closing value
15,000 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2000
S&P TSX
Dow Jones
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: Statistics Canada
Alberta – Change in Total Net Migration
Weaker growth will temper rental demand
quarterly year/year net change
10,000
5,000
0
-5,000
-10,000
-15,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: Statistics Canada, 2009 Q2
October 22, 2009
Rental Market: Alberta & calgary
Alberta – Apartment Vacancy Rate
Vacancy rate at elevated levels
per cent vacant
5.0 4.0 3.0
2.0 1.0 0.0 Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Apr- Oct- Apr- Oct- Apr97 98 99 00 01 02 03 04 05 06 07 07 08 08 09
Source: CMHC
Alberta Urban Centres – Total Apartment Vacancy Rates
Rental Apartment Vacancy Rate (October 2008)
Fort McMurray Grande Prairie Edmonton Red Deer Calgary Medicine Hat Lethbridge
Rental Apartment Vacancy Rate (April 2009) 6.9% 3.1% 4.3% 4.3% 3.9% 4.7% 8.5% 4.6%
Wood Buffalo/Fort McMurray Lethbridge Medicine Hat Calgary Red Deer Edmonton Grande Prairie Alberta All Urban Centres
0.5% 1.8% 4.5% 2.1% 4.4% 2.4% 8.5% 2.5%
Source: CMHC Rental Market Survey, October 2008 and April 2009
Alberta Urban Centres – Total Apartment Rental Rates
Apartment Rental Rate (October 2008)
Fort McMurray Grande Prairie Edmonton Red Deer Calgary Medicine Hat Lethbridge
Apartment Rental Rate (April 2009) $2,088 $784 $654 $1,006 $799 $928 $914 $962
Wood Buffalo/Fort McMurray Lethbridge Medicine Hat Calgary Red Deer Edmonton Grande Prairie Alberta All Urban Centres
$2,190 $775 $644 $1,031 $818 $930 $933 $975
Source: CMHC Rental Market Survey, October 2008 and April 2009
Calgary CMA – Apartment Vacancy Rate
Vacancy rate to peak in 2009
per cent
5.0 4.4
4.0
4.3
4.0 3.5
3.0 2.9 2.0 1.6 1.2 0.5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009f 1.5 2.1 1.3
1.0
0.0
2010f
Source: CMHC, CMHC forecast (f), October Survey
Calgary Cost of Owning vs. Renting
Homeowner affordability improved in the spring of 2009
monthly carrying cost*, rent
$2,200 $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$217
Average Two-Bedroom Rent (Oct) Average Two-Bedroom Rent (Apr) Resale Condo
$688
$962 $326
* assumption: 10% down payment, average 5-year fixed discounted mortgage rates Source: CREB, Bank of Canada, CMHC
Calgary CMA – Average Rents
Average rent levelling as vacancy rate rises
average 2-bedroom apartment rent ($)
$1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 2000 2001 2002 2003 2004 2005 2006 2007
$1,148
$1,075
$1,100
2008
2009f
2010f
Source: CMHC, CMHC forecast (f), October Survey
Calgary CMA – Turnover Rate Survey
Turnover was 39 per cent in 2008
Same Tenant Turnover
apartment units sampled 12,000
11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2005 2006
36%
41%
38%
2007
39%
2008
Source: Calgary Apartment Association, CMHC
Calgary CMA – Reasons for Turnover
Home purchase remained primary reason
2005 2006 2007 Reasons #1 #2 #3 2008
Condo/House Condo/House Condo/House Condo/House Purchase Purchase Purchase Purchase Job Relocation • Pregnant • Divorce • Home • Not like area Job Relocation • Personal • Rent default • Not like area Job Relocation • Rent increase financial Job Relocation •Eviction
Source: Calgary Apartment Association , CMHC
Condominium Conversions vs. Rental Starts
Conversion activity drops & zero rental starts so far
conversions from rental to condominium 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Apr YTD
conversions rental starts
Source: CMHC
Calgary CMA - Rental Universe
October 2008 survey, purpose built rental 43% of market
Secondary Suites 8%
Semi detached Row & Duplex 21%
Apartment Rental 39%
Single-detached 22%
Row & Townhouse Rental Condo 4% Apartment 6%
Source: CMHC October 2008 Rental Market Survey
Calgary CMA Economy
5-Year Mortgage Rate Employment Growth Net Migration
2006
2007
2008
2009f
6.66% 8.1% 29,164
7.07% 3.9% 17,905
7.06% 3.5% 25,000
5.72% -1.8% 16,000
Rental Market
Apartment Vacancy Rate October Two-Bedroom Rent 0.5% $960 1.5% $1,089 2.1% $1,148 4.0% $1,075
Source: CMHC, CMHC Forecast
October 22, 2009
Thank you!
Richard Cho Senior market analyst Prairie and Territories 403.515.2996