In this three-part series we will look at why NOW is a great time buy a new home in Edmonton. Part 1 of this series explored what rising interest rates look like for home buyers. In this article we look at how an improving economy make NOW a great time to buy.
PART 2: IMPROVING ECONOMIC OUTLOOK
If you are looking to purchase a home and you see that where you are buying has an improving economy, it may be time to act quickly and capture potential profits. Improving economies are a good indication (but not a guarantee) that real estate prices will appreciate. If you believe prices are going to go up NOW is a great time to buy and lock in those potential profits.
When we look to Alberta’s economic outlook it may surprise you to learn that many economists are predicting Alberta to lead Canada in economic growth in 2017. The most recent forecast for Alberta’s Gross Domestic Product (GDP) growth from Canada’s major banks look like this:
|BANK||2017 AB GDP FORECAST||2018 AB GDP FORECAST|
|Royal Bank of Canada||2.9%||3.4%|
|Bank of Montreal||3.2%||2.2%|
This is in line with a survey of economist conducted by Bloomberg that saw 2.9% GDP growth for Alberta in 2017 and 2.4% in 2018.
In a nutshell, economic theory for real estate goes something like this: GDP growth is people, governments and businesses spending money. When that spending is increasing it is typically creating jobs. Jobs drive real estate prices by giving people money to afford the home they want, and drive population growth by pulling people from places where the economics are worse. This puts pressure on housing and rental stock, and typically causes home prices and rental costs to go up.
If the growth forecasted by economists comes true, it is also likely true that real estate price will have appreciated. If you wait for the recovery to come you may lose an opportunity to reap the rewards on an improving economy. If you believe prices are going up then NOW is a great time to buy and a great time to lock in a price.
In our next article in this series we will look at how market condition in Edmonton make NOW a great time to buy!