MARKET UPDATE – APRIL 30, 2017

Mon, 08 May by Dale Russell

It feels like the spring market in Red Deer, like the weather, still hasn’t arrived.  The percentage drop in year over year sales at 15.3% is not what most people would have expected this year so far, but we aren’t surprised because we know that a recovery in the real estate market always lags behind an economic recovery by a year or so.  In spite of the year over year decline in sales, the number of active listings is lower than a year ago which has helped push the sales to listings ratio just into balanced territory.

What does the future hold?  As tough as the last two years have been, fortunately, it is looking brighter….

The Alberta Treasury Branch summed up the last two years in Alberta this way – Many Albertans felt it. And the latest numbers confirm it. Alberta’s economy contracted another 3.8 per cent in 2016. This follows a similar decline of 3.7 per cent in 2015.  It was the second consecutive year that real gross domestic product (GDP) contracted, the last time this happened was in 1982 and 1983….

The last couple of years have been tough for Albertans and the provincial economy. But it is expected to get better in 2017. ATB is forecasting real GDP growth this year in the two to three per cent range. This represents an end to two consecutive years of recession and welcomes in an era of modest growth.

MARKET UPDATE – APRIL 15, 2017

Mon, 08 May by Dale Russell

RED DEER Year to date MLS sales of all property types in central Alberta are up 6.7% over the same period last year while year to date sales in Red Deer are down 13.4%  It’s difficult to pinpoint the reason for the discrepancy and it is unusual that Red Deer is down when the rest of the area is up.  It may be that people are being forced into the less expensive small markets by tighter mortgage rules.

The Red Deer market has not started April as well as it did last year.  The number of active listings is up significantly while sales are off slightly compared to the same time last year.  The comments below from ATB suggest that the economy is on the mend and some of our laid off workers are going back on the job.  All good news, but they probably won’t start buying houses right away.  The next few months will be used to catch up, pay bills and get some stability back in their lives.  Buying a home is probably at least a few months away.

That leaves those who have maintained their jobs through the recession.  Those who are thinking about a move would be well advised to do it soon, before those laid off workers get back on their feet.  The situation couldn’t be more perfect to buy – low interest rates with the threat of increases soon, lots of good inventory and a market where supply outweighs demand all spell “opportunity”.

Excerpts from The Owl, by ATB Economics

Manufacturing getting a lift from stronger oil prices ….another in a string of indicators that suggest Alberta is shaking off the recession and heading towards better days in 2017. In February, the value of manufacturing shipments in Alberta rose to $5.7 billion, an increase of 1.4 per cent over January.

The news is even better than that. From its lowest point during the recession in January of 2016, manufacturing shipments in our province have now increased by 15 per cent. That’s not quite enough to get it back to the pre-recession highs, but it has been steadily increasing over the last 12 months.

Production is Up!  While Alberta has oil reserves, it doesn’t mean they will be produced. Massive amounts of investment, expertise, creativity and technology are needed to locate, extract, transport and sell oil. This is a risky business that is subject to complex market forces and public policy.

In addition to those challenges, Alberta is landlocked and the oil trapped in the oil sands is not as easy to extract as conventional crude—factors which put us at a disadvantage when it comes to transforming our oil resources into viable business ventures.
Despite these challenges, Alberta produced 137 per cent more oil in 2015 than it did in 1985. In 2014, Alberta’s total annual production rose above one billion barrels for the first time and reached 1.1 billion barrels (3.1 million barrels per day) in 2015. Production fell in 2016 by 17 per cent as a result of the Fort McMurray forest fires but – barring another natural disaster — should fully recover and increase again in 2017.

MARKET UPDATE – MARCH 30, 2017

Mon, 08 May by Dale Russell

Sales in Red Deer in the first quarter of 2017 were down from the same time in 2016 by 14.5% which is a little surprising considering the Alberta economy is supposed to be on the mend.  There are a couple of facts that will help in understanding this trend.  First, there is more activity in Red Deer than last year, but it hasn’t translated into firm sales yet.  At the end of March, there were a large number of pending sales that should help boost April’s numbers closer to normal.  Second, an improving economy normally doesn’t translate into an active housing market for a while.  The housing market typically lags as much as a year behind the economy.

The number of active listings is down compared to the same time last year, which is a good sign that the market has survived quite well in spite of the economic situation.  One of the reasons the Alberta housing market has survived as well as it has is that in spite of what we’ve been experiencing here, the net population losses have been minimal.  According to ATB’s The Owl, over the last five quarters of recession, we’ve suffered a net population loss of only 11,000 people.

Compare that with the 20 quarters leading up to the 4th quarter of 2015 when Alberta welcomed more than 133,000 net new people to Alberta.  So, in spite of all our recent troubles, Alberta is obviously still a great place to live.

 

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.

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