One major market is expected to enjoy a significant housing boom and not the type caused by a bubble, according to one leading economist.
“Alberta’s (and more specifically, Calgary’s) housing market is quickly heating up again,” Douglas Porter, chief economist for BMO Capital Markets said in his latest economic report. “Barring a sudden drop in oil markets, home prices have further to run and homebuilders will get busier in the year ahead, but a throwback to 2006/07 is still a stretch. For policymakers, this is clearly a case of superior economicand demographic fundamentals at work, not a bubble rearing its head.”
The report -- entitled “Alberta bound… for another boom” -- focuses on emerging trends in the housing market and assures that a bubble will not be the cause of the boom.
“Amazingly, after what now seems like years of batting back the bubble mongers in these pages, even one of the country’s national newspapers admitted this week that, yes, maybe some of the bears had it wrong,” Porter wrote. “This affords us a chance to look past that nagging issue and into some other emerging themes in Canada’s housing market.”
Alberta’s forecasted boom is expected to come as a result of a number of positive economic factors, including job growth and Canada’s highest average wages drawing many Canadians and migrants to the booming prairie province.
“The stark economic outperformance is magnified by the pull it is having on population from other regions of the country,” Porter wrote. “Population growth in the province has surged to 3.5 per cent year-over-year, the fastest pace in more than 30 years, with nearly 50,000 interprovincial migrants flocking to the province in the latest year, or a hefty 1.2% of the population.”