MARKET UPDATE – MARCH 15, 2017

Tue, 21 Mar by Dale Russell

Mid month sales in March were down a little in Red Deer when compared to last month. We would like to blame that slower market on the weather, but that wouldn’t explain why sales are even or up in our other central Alberta markets compared to this time last month.

The number of active listings is up across all of central Alberta, which is normal for this time of year, although recent optimism about the economy may have encouraged a few more sellers to test the water. Year to date sales for all of central Alberta are up 8.8% when compared to the same time last year, a sign that the market is finally turning.

Moving into the third year of an exceptionally tough economic slowdown, the market has survived remarkably well. However, buyers still have the advantage, and probably will for much of the year. Anyone that is able to buy now should give serious consideration to the fact that interest rates are predicted to rise and if the market recovers, prices will as well.

No one can identify the bottom of the market exactly, but there is some evidence we are very close. Anyone looking to take advantage should do so soon.

February Job Numbers Show Signs of Improvement, ATB Financial

Even though the job situation for thousands of Albertans is still difficult, Statistics Canada’s latest employment report shows a slight improvement in February.

Between January and February, Alberta’s labour market gained approximately 1,300 jobs. Despite shedding 18,000 part-time jobs last month, the good news for Alberta’s economy is that this decrease was offset by 19,300 full-time jobs, suggesting a generous increase in the quality of available work.

The size of Alberta’s labour force (i.e., the number of people actively working or looking for work) fell by 14,100 people in February. The decline in the labour force may indicate that those in search of work are starting to feel discouraged. That said, the drop in the size of Alberta’s labour force and the net gain to employment was enough to nudge the provincial unemployment rate down from 8.8 per cent in January to 8.3 per cent in February.

February’s job report has shown early promise and potentially set a theme of modest growth for this year. Still, employers may remain reluctant to start hiring back too many workers which suggests Alberta job seekers could experience a few more difficult months. However, with stability in various sectors and overall business confidence improving, the job market will continue to show positive progress, in moderation.

Red Deer March 2017

MARKET UPDATE – March 1, 2017

Thu, 09 Mar by Dale Russell

February sales in Red Deer were up slightly from January while the active listing count was also up, keeping the market attractive for buyers.  Year to date sales are down 11% when compared to the same time last year, but the good news is that the economy seems to be turning around and hopefully we’ll see things improve moving into the spring market.

The just released ATB Economic Update states that “Alberta’s economy is emerging from the worst downturn it has experienced in three decades.  Yet even as green shoots of optimism appear, the path forward remains unclear.  The global economy continues down an uneasy road…  but, Canada’s economy is picking up momentum, especially around job growth…

After suffering two consecutive years of contraction, Alberta’s economy has turned the corner and can expect modest improvements in 2017.  The greatest improvements have come within the all-important energy sector – higher prices and pipeline approvals (though construction is not assured) have lifted confidence.  Other industries such as agriculture and tourism are showing strength, while construction, forestry and housing remain fragile.

ATB is forecasting real GDP growth of 2.2 percent this year and 2.3 per cent on 2018.

February 15, 2017 – Market Update

Fri, 24 Feb by Dale Russell

February was off to a much better start than January in most of the seven central Alberta markets we track. Sales were as good or better than the first two weeks of last month. The number of active listings is up slightly in most of those markets, but not enough to be concerning.

Consumer confidence is certainly better up with oil prices staying above $50US and the news that some people are going back to work. We are seeing more oil company vehicles on the road and there is a sense that the economy is finally starting to turn. That is translating into more sales and listing activity.

The real estate market always lags behind the economy, usually by a year or two. We are at the very beginning of a recovery and we believe it’s too early to see prices moving up. If things continue to improve and the supply of homes doesn’t get too high, prices should hold where they are. The housing market is still being impacted by the mortgage rule changes that make it harder for buyers to qualify, which will temper the market somewhat.

Alberta Sees a Surge in Population – ATB Economics

The topic of immigration has been all over the news. For Alberta, immigration has helped Calgary and Edmonton become the fastest growing cities in the nation. According to 2016 census data released by Statistics Canada, Calgary remains Canada’s fastest-growing city, even amid the current economic conditions. Calgary’s metropolitan area grew 14.6 per cent between 2011 and 2016. That follows 12.6 per cent growth recorded from 2006 to 2011. Additionally, Calgary overtook Ottawa-Gatineau as Canada’s fourth-largest metro area.

Edmonton’s metropolitan area ranks as the second-fastest growing area in the nation. Alberta’s capital city grew 13.9 per cent during this census period, compared with 12.1 per cent during the last census. Trends are starting to suggest Edmonton will outgrow the rest of the province’s cities within the next five years and could become the fifth largest CMA. At 11.6 per cent, Alberta continued to have the highest growth rate of all the provinces, up from 10.8 per cent in 2011 and nearly seven per cent higher than the national average.

Statistics Canada notes that in the coming years, population growth in Canada is projected to be increasingly linked to migratory increase rather than natural increase, mainly because of low fertility and an aging population. Between 2011 and 2016, about two-thirds of Canada’s population growth was the result of migratory increases (the difference between the number of immigrants and emigrants).

The increase in immigration promises good news for Alberta, especially the construction sector. Even though Alberta’s energy industry isn’t expected to grow like it did between 2010 and 2014, increased immigration should at least keep Alberta’s homebuilders and construction companies working hard in the coming years.

Red Deer Feb 2017

January 30, 2017 – Market Update

Thu, 16 Feb by Dale Russell

The Red Deer market started the year the same way we started 2016.  While sales were slightly lower than last year, the good news is that inventory levels are relatively low keeping the market reasonably close to balance.  Better yet, January sales in all of central Alberta were up a promising 12.8% compared to January 2016.

The difference between this January and last is that the price of West Texas crude is $25US higher and because of that, there are more oil rigs working.  There’s been a US presidential election, three pipeline announcements, a provincial carbon tax enacted and federal carbon tax announcement, and all kinds of excitement on the Alberta political front.

Of course, no one can predict the future, but it seems the Alberta economy is trending in the right direction.  Some of those things that have happened over the past year will create jobs and grow the economy in the future, but not necessarily in the next few months.  The thing that may carry the economy until that growth becomes real is confidence.  Confidence is a powerful force – it encourages people to invest, to spend, to hire and grow their businesses.  All by itself, It is an engine of the economy and what we really need to carry us through.

January 15, 2017 – Market Update

Thu, 26 Jan by Dale Russell

The housing market in central Alberta is off to a slower start, very similar to what we experienced in 2010, a little less than two years after the September 2008 economic crisis.  The general consensus in Alberta economic circles is that we are starting to turn the corner, and things should improve this year, but a little slower than the last recovery.

The housing market generally lags behind an economic recovery by at least a year, so we don’t expect 2017 to be a boom year for sales or prices.  We do expect to see a marginal improvement as the economy continues that slower climb back to wellness.

What does this mean for home sellers?  It means they will have to be reasonable around their price expectations.  Price is determined by the relationship between Supply and Demand.  While the Supply of available homes is lower than it’s been for a couple of years, it’s still too high in most central Alberta markets to get them close to balance.  The homes that show the best and are priced competitively will sell and the rest won’t.

What does this mean for home buyers?  The first thing home buyers need to understand is that prices come down very slowly.  While the housing market is slower, the vast majority of home sellers are not forced to sell, and won’t unless they receive a price they deem fair.  Offers that are substantially lower than market value won’t fly.  The huge advantage home buyers still have, are historically low interest rates and a good supply of homes to choose from.  It’s a great time to invest in a home.

What does this mean for both buyers and sellers?  We are not in a crisis.  Home values have softened some, but Supply and Demand are not so far out of balance that Sellers should expect to give their property away and buyers should expect more moderate prices, but not a fire sale.

For those consumers selling and buying in the Alberta market, it’s important to remember that the whole province is floating in the same real estate pond.  To a large degree, the level of that pond rises and falls at the same rate.  If you are selling at a price that you perceive to be low, you should also be able to buy at a price that is relatively the same, therefore there is no loss or gain, other than you are now living in a home that suits your needs better.

Owning a home is much more than an economic endeavor.  In Alberta, our homes are necessary to keep us warm and out of the elements, but they are also the place where we live and raise our families.  The housing market in Alberta will survive and thrive in spite of economic ups and downs.

At RE/MAX real estate central alberta, we want to be consultants for our clients, providing sound information, good advice and a competent guiding hand through the increasingly complex process of buying or selling your home.  Call us first!

Red Deer Jan 2017

December 31, 2016 – Market Update

Thu, 26 Jan by Dale Russell

Red Deer sales in December were down almost 50% when compared with November, and on par with December of 2015.  The number of active listing also came down again to levels we haven’t seen since last January, although not enough to keep the market in balance after being there for the last several months.

Total sales in Red Deer in 2016 were down only 8.3% compared to 2015 after a 17% drop from 2014 to 2015 and were the lowest total since 2010.  The overall central Alberta market fared slightly worse than Red Deer in 2016 with sales down 12.6% from 2015.

A struggling energy industry was the biggest contributor to a slower market in 2016, but provincial government initiatives including minimum wage legislation and the new carbon tax also had an effect on business and consumer confidence.  When business and consumers are unsure how government policies will affect them, business is reluctant to invest and consumers are unlikely to make large buying decisions.  The federal government’s new mortgage rules also contributed by making it more difficult to qualify for a mortgage.  All these factors may combine to offset what could have been substantial gains in 2017.  Instead, we expect the 2017 housing market to be only slightly better than 2016 assuming oil prices stay above $50US.

MARKET UPDATE – December 15, 2016

Mon, 19 Dec by Dale Russell

Sales in Red Deer in the first two weeks of December dropped by almost 50% compared to the first twoweeks in November. The number of active listings also dropped, back to levels we saw last year at this time and well below the peak reached in the spring of this year.

Last year at this time oil prices were headed into the $US28 range and optimism was not very high. The outlook is much better this year, but we are now being impacted by the federal government’s tougher rules for mortgage qualifying that have reduced the average buyer’s ability to finance their home purchase. It is an effort to curb rising prices in Toronto and Vancouver, but unfortunately, their country wide tinkering is negatively affecting Albertans who can least afford it.

Other than the new Alberta Carbon Tax, there has been lots of good news lately in addition to strengthening oil prices. Two pipeline approvals, increased 2017 budgets on the part of several major oil companies, oil patch workers being called back and one of the most visible signs of all – oil company truck convoys on the highways. Natural gas prices are also up, as indicated in the ATB article below.

Natural Gas Prices Jump Up …… Quietly by ATB Financial Economics

In case you missed it, natural gas prices have climbed to levels not seen for about two and a half years. As of yesterday, the Canadian benchmark’s (AECO) spot price closed around C$3.40/MMBtu while the North American benchmark, Henry Hub settled around $3.50/MMBtu.

The reason? Supply and demand.

First, let’s start with supply. Natural gas is required by oil producers for upgrading purposes and to run oilsands operations. As these businesses start to piece things back together and pick up the pace, they have been forced to draw a bit more natural gas from inventories thereby reducing supply. But, it’s not just businesses drawing down stockpiles, it’s us, the consumers too!

With temperatures dipping around -30*C, this cold snap that has covered much of the province has caused many Albertans to crank the temperature on their thermostats. Doing so has increased the amount of natural gas required to heat our homes and run Alberta’s businesses which has also caused a drawdown on storage supplies.

Collectively, these draws on natural gas inventories have boosted demand and caused the price to rise. Of course, as supply diminishes, demand bumps up and causes the price of natural gas to increase.

Both Canadian and North American gas prices are likely to stay at higher levels, at least as long as these cooler temperatures continue to stick around. AECO’s price is expected to float around C$3.40/MMBtu for the next couple of months while Henry Hub is expected to bounce around $3.50/MMBtu.

red-deer-december

MARKET UPDATE – December 1 2016

Mon, 19 Dec by Dale Russell

November sales in Red Deer were average compared to last year at this time, and were down from last month, which is normal for this time of year.  The number of active listings is down to last year’s levels.  There is no doubt many listings have come off the market recently as a result of slower activity, with the intention to come back on in the spring.

Two recent developments will almost certainly impact our local economy in the coming year.  First, OPEC announced an agreement with its member states to reduce oil production by 1.2 million barrels per day starting in January.  It’s difficult to predict whether the participants will actually live up to their promises, but oil prices immediately moved above the magic $US50 mark and are predicted to move higher with some predictions as high as $US70 by the end of 2017.

Second, the federal government approved two pipelines, one to the US and the Kinder Morgan expansion to Vancouver.  When complete, the Kinder Morgan expansion allows 600,000 additional barrels of oil per day to flow to Asian markets where it will receive world prices rather than the discounted prices we get from the US.  These two announcements will undoubtedly boost consumer confidence and generate some desperately needed jobs for Albertans.

 

MARKET UPDATE – November 15, 2016

Mon, 21 Nov by Dale Russell

Strong sales in Red Deer in the first half of November compared to the same time last year continue to support our theory that we may be on the road to recovery.  That theory is further supported by the lower number of active listings compared to last month.  In a normal market we expect to see lower inventories as we move into winter, but high inventory levels are a symptom of a slower market, that we might expect in spite of the season, if the market was still in decline.

Anyone paying attention to the news will undoubtedly be wondering where our economy is heading.  Oil prices briefly went over US$50 but are back down to the mid $45 range again.  The future of oil prices will be decided by foreign oil producer’s (OPEC and Russia’s) ability to agree on lower production levels going forward.  It is impossible to predict how that will play out, but common sense suggests that those countries are suffering the same as we are and production cuts are the answer.

The US election may provide some relief for Alberta as there is now optimism that the Keystone pipeline will be approved soon.  That likelihood is putting pressure on our federal government to approve the Kinder Morgan expansion to Burnaby.  So, there is some hope that we are now at the bottom of this economic slowdown.  But, the recovery will be slower and it is likely that we will see similar real estate markets as we’ve experienced in 2016 well into 2017 at least.  That is not the end of the world.  Our local markets have fared reasonably well.  Yes prices are off a little from their most recent highs reached in 2014, but are not down significantly except possibly at the high end of the price spectrum.

Recent Alberta Treasury Branch economic updates are reporting some good news in various sectors – vehicle sales in Alberta in September were up a little, manufacturing shipments from Alberta are only down 5% this year and were up a little in August and September, travelers to Alberta are experiencing lower accommodation prices which should encourage more travel here and the economic gain that accompanies that, the new home price index in Alberta is unchanged over the last two years, and there has been a lot of positive news about added activity in the energy sector.

We don’t believe there is a boom in our near future, although approval of two pipelines would give a tremendous boost to our confidence and the economy.  Let’s hope common sense prevails on both sides of the border.

red-deernov2016

MARKET UPDATE – October 31, 2016

Tue, 08 Nov by Dale Russell

Red Deer sales in October were down slightly compared to September’s, but were slightly higher than last October.  The number of active listings fell dramatically which helped keep the market in balance with a sale to listing ratio of 21.5%.  Year to date sales in Red Deer are down only 9% compared with the same time last year, a good indication that the market is slowly recovering. The most active price range by a large margin last month was the $300,000 – $350,000 range where the number of active listings also dropped.

Largely due to a recovery in oil prices to around US$50, the ATB is predicting a modest rebound for Alberta of 2.1% growth after a contraction of 2.6% in 2016.  It’s not a boom for sure, but it is a move in the right direction.  The contraction in our economy has been longer and more pronounced and there is no doubt it will take longer to recover.

In addition to rising oil prices, strong agriculture, tourism and high tech industries and the rebuilding of Ft. McMurray will contribute to a stronger Alberta economy in 2017.  While the recovery will be slower, we are confident Alberta is still a great place to live and invest.