Urbanization, rising immigration rates, an aging population and western Canada’s strong economic growth are all leading to a more sustainable housing industry for the West.

Among speculation of a slowdown of the real estate market in Alberta, the Canada West Foundation released its report, State of the West, Wednesday, which details a huge shift in demographics, economy and immigration as well as interprovincial migration in western Canada.

“Calgary has already seen some of the implications of this shift,” said Brett Gartner, senior economist with the Canada West Foundation. “Interprovincial migration, for example, has been huge. Of course it adds a great deal of demand for housing, and creates quite a hot market.”

Gartner said there were two areas the report focused on that had the biggest impact on the housing market.

“It’s a combination—or, a tie—between strong employment growth and population growth, which are directly connected,” he said. “People moving here, and coming here for jobs, could be either looking to buy homes, or perhaps those working in higher paying jobs are looking to move up to another home.”

The report highlights the fact that rural areas are becoming less populated in the West, contrary to its agricultural-centered past.

Large urban areas now dominate the populations of western provinces. In fact, approximately two-thirds of the population lives in the region’s nine largest urban areas.

Also, most of the growth has occurred, and as the report says, will continue to occur, in Alberta and BC.

Of the corporate head offices located in the West, Calgary has 45% of the share.

Calgary’s head office share outnumbers Edmonton’s by seven to one.

The West’s urbanization means agriculture, once a strong force in the West, continues to decline, at least in the sense of small farms.

The farm population of the West fell by two-thirds between 1931 and 2001. In the same period, the population of western Canada tripled.

However, farms are becoming larger, as corporations, rather than the traditional family, have been becoming more predominant in the farming industry.

Population growth in BC and Alberta has been robust in the past quarter-century, while Saskatchewan and Manitoba remain virtually the same size as they were 25 years ago.

Since 2002, Alberta’s population went from 3,116,332 to 3,473,984. That’s a 11.5% increase.

In the same time period, BC’s population went from 4,115,413 to 4,380,256; a 6.4% change.

Saskatchewan’s population went from 995,886 to 996,869; a 0.1% change.

Manitoba’s population went from 1,155,584 to 1,186,679; a 2.7% change.

The report predicts that by 2031, Alberta will experience another 27.3% to 35.2% increase in population, while BC could see from 29.3% to 39.7% increase.

Saskatchewan is predicted to grow by 2.9% at the most, and Manitoba is predicted to grow by 22.8% at the most.

However, it must be noted that the numbers in the report are current until July 2007. Gartner noted that after that, Saskatchewan started to see some turnaround—Alberta actually started to lose people to Saskatchewan, which could offer them lower house prices and a more affordable cost of living.

Immigration is a huge contributor to the West’s growth, and the growth of its urban centres.

Nearly 90% of immigrants to the West settle in eight of the region’s urban centres. But, immigrants tend to go straight to three cities across the country—Toronto, Montreal and Vancouver. Just under 70% of immigrants who came to Canada in 2006 settled in these cities.

Within the West, Vancouver was the destination for 48% of immigrants to the West in 2006, while Calgary attracted 15.7% and Winnipeg attracted 10.2%.

Immigration will be instrumental to growth in the West, as the natural rate of population increase declines.

Overall, the population of the West continues to grow older. The proportion of the western population under the age of 15 has dropped steadily, from roughly 30% in 1971 to less than 20% in 2007, while the proportion over the age of 65 has increased.

The number of seniors in the West will more than double by 2031.

This poses many challenges, including sustainability of the workforce, pressure on the health care system and much different types of housing needs.

“With a huge group of Baby Boomers retiring, people might be downsizing or looking to retire to a condo. The demand for retirement units will be going up,” Gartner said.

The economy continues to grow at a fast pace, mainly because of the energy industry.

Economic strength has shifted westward, with the West leading the nation in economic growth.

The unemployment rate in the West, specifically in Alberta, continues to experience record lows.

Alberta’s labour force participation rate is the highest in the country, at 74.1%.

With industries such as oil and gas, construction and transportation leading the way in Alberta, the median after-tax income is the highest in the country, surpassing Ontario, which has held this distinction for nearly two decades.

In the West as a whole, falling debt-to-gross domestic product (GDP) ratios show that government debt is becoming less burdensome. This is due primarily to GDP growth, not lower levels of debt, the report says.

Alberta is the exception, as in 2004-05, it eliminated its debt, making it the only debt-free province in the country.

BC’s debt-to-GDP ratio is the second lowest of all provinces, at 17%.

Alberta’s 14 straight budget surpluses are largely due to soaring natural resource revenues.

—Angela Anderson is the Assistant Editor for the Calgary Real Estate News