Edmonton Real Estate Market Forecast 2021 - Part 2

A Sense Of Hope

With the trajectory of the Covid-19 understandably dictating people’s comfort level when it comes to entering a stranger’s home, not to mention the effect it has on their work, this winter has, unsurprisingly, slowed things down a bit with the current rise in virus cases, but this slow-down will not last, Benjamin Tal, CIBC World Markets’ Deputy Chief Economist suggested during his presentation for the Realtor’s Association of Edmonton’s 2021 housing forecast. 

“There is reason to believe that the situation will improve,” Tal said, “In fact, it might improve much faster than people expect, and it will be stronger than people expect.” 

Some of the things that give us an advantage during this phase of lockdowns is that most companies now have the kinks of the work-from-home-if-you-can policies worked out. They have found the streaming platforms and software that works best for them, and they have educated their employees on how to operate the given software. No more hunting for the mute button or spending an entire meeting as a set of initials instead of a face because you forgot to turn your camera on. Most of us, even our children, can navigate a remote scenario with much more efficiency than any of us were able to handle last spring. This allows for a higher level of productivity during this wave than the first wave of Covid-19 at this time last year, which is much better for businesses that had to send their employees home to work. 

Some businesses and investors are even taking that good news to the next level and taking risks by “betting on post-covid life,” as Tal puts it, which is something he says we weren’t seeing much of last year.

canadian-household-recessionary-income-gainAnother factor keeping us in more of an economic slow-down and less of a full-blown recession like we saw in 2008 is that Canada has continued to encourage its own economy with fiscal policies that saw the government spending 3.5% for every 1% decline of GDP, which Tal says is the one of the highest in the world and has helped to give our economy a much-needed boost. Due to these policies, we see the average household income actually rising in the midst of this recession, making it the first recession to ever see a rise in household income.

Not only has there been an income increase, but also a spending decline because of restrictions around entertainment that we as Canadians usually spend our money on; like movies, restaurants, and travel. 

“Canadians are sitting on a mountain of cash,” said Tal. 

Tal suggests that this pent-up demand Canadians have for something to spend their income on will happen as soon as they are given the “green-light” in the form of a widely-provided vaccine. This, he feels, will also boost the struggling service industry; the most likely place where this income surplus will be spent. 

“This is a very unique recession,” Tal said, “It is very very deep, but also very narrow. The industries and individuals [who] are impacted feel the pain very deeply. It’s significant. But it is also very narrow, in the sense that the number of industries that are negatively impacted [are] much lower than what we see in any other recession.”

This was a service-oriented recession, Tal explained. The previous recessions the world has experienced have been goods-producing recessions, but this time goods are up, which can make it much easier to re-open a service-based business. In a recession like this, the turn-around can be much faster because there are fewer other industries effected.

Some of the predictions Tal made for 2021 include:

-       A return to a more traditional in-person office work environment for most.

-       A decrease in online shopping in favour of offline shopping as a source of entertainment where quality will dictate sales.

-       An increase in online services in the fields of medicine, education, and banking.

-       Leisure travel not yet returning to normal levels until closer to 2023. 

-       Business travel returning somewhat, but not entirely. 

-       Restaurants booming with line-ups to get in. 

-       The trend towards deglobalization will continue to accelerate. 

As far as what we should expect locally, Tal believes that the growth and stability we have seen in Alberta despite the recession and pandemic is sustainable. 

Some of the improvement, he admits, will be because the numbers were not great before so when there is some improvement from a negative market then that is still an improvement, but he believes that this year will see a strong spring and summer market as we see a continued trend of people moving out of the condominium market and into single-family homes in the short-term. 

“I believe that, when it comes to Alberta, the worst is over,” Tal said.

Posted by Corey Sylvester on


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