August 31, 2016 – Market Update

Tue, 20 Sep by Dale Russell

August sales in Red Deer kept pace with July’s and, for the first time this year, were higher than the same month last year.  The number of active listings was down just a little and the market manage to stay just inside the balanced territory.  All in all, a very positive result in a difficult economy.  The strength in the Red Deer market continues to be in the $300-000 – $450,000 price range where supply and demand are in balance.

When the economy slows as it has over the past two years, the housing market is surely going to slow as well.  Sellers have to adjust their expectations when there are fewer buyers and more competition.  Recent sale results provide proof that there are still buyers for competitively priced homes.  Very low interest rates are contributing to better than expect market activity.

In spite of some continuing economic gloom, news of falling supply and increasing demand for oil in the world market provides home that prices will get past the magic US$50 mark for good in the coming months.  Energy companies have become streamlined and more cost efficient and will be able to generate profits at that price and put some of our unemployed workers back on the job.  Ultimately that is what will help get the Alberta economy back on track.

August 15,2016 – Market Update

Tue, 20 Sep by Dale Russell

Red Deer sales in the first two weeks of August were down slightly compared to the first two weeks in July.  The number of active listings is down slightly, so we don’t see anything in this market to be too concerned about.  We will only be concerned when the ratio of sales to listings goes below 10% for an extended period of time.  A slower market is a function of our current economic reality, but as long as supply and demand remain in reasonable sync, it’s just a slower market, not a calamity.

June’s wholesale trade numbers bring some good news, Nick Ford, Economist – ATB Financial

Wholesale activity managed to jump up in June. According to this morning’s wholesale report, June’s sales grew by $181 million, or 3.0 per cent from May (this figure is adjusted to account for seasonal variation). Despite the monthly incline, wholesale trade still remains 7.6 per cent lower than where it was at this point last year.
Wholesale trade is often forgotten, but is crucial to an economy. Wholesalers sell products to governments, institutions and other businesses and can be a strong force that works in conjunction with retailers. Like many sectors in our province, wholesale has had to battle strong economic headwinds.
But, today’s wholesale report does bring some decent economic news. While, virtually all types of wholesalers have seen activity dwindle from last year, sales are beginning to increase again. The value of goods sold from Alberta’s largest wholesale supplier, machinery, equipment and supplies merchants grew 18.0 per cent in June from May. In addition, the value of goods sold by building material and supplies (11.1 per cent) and food and beverage wholesalers (4.0 per cent) were up from May too.
Like June’s monthly Retail Trade Survey, June’s monthly Wholesale Trade Survey added three questions to assess the impact of the Fort McMurray wildfire. In June, about 1,250 companies responded to the additional survey questions. Of these companies, 147 wholesalers indicated that they had been affected by the wildfire, down from 212 wholesalers in May. While the effects of the wildfire were felt across many wholesale subsectors, responses indicated that the machinery, equipment and supplies subsector had the largest share of companies reporting an impact in June, the same as in May. Responses to the supplementary questions also revealed that wholesale establishments in most provinces had been affected, led by those in Alberta, Ontario and British Columbia. Although the responses showed that many had been affected, the overall impact of the wildfire and evacuation on wholesale sales was relatively small.

red-deer-august

Market Update August 1, 2016.

Fri, 12 Aug by Dale Russell

Prices to just over Year to date sales in Red Deer haven’t kept pace with last year.  The year started out slow but rising oil US$50 per barrel for West Texas Crude in the spring gave consumer confidence and we experienced a busy three months in April, May and June.  When the price of oil recently dropped below US$50 on its way to the current level around $42, consumer confidence went with it.  The slower market has also caused inventories to go up slightly, although not as high as might be expected.

The good news for central alberta is, the light at the end of the tunnel is still on.  An August 3rd article in the Financial Post quotes Martin King, vice-president of institutional research at First Energy Capital Corp in Calgary. The gist of the article is that large reductions in capital expenditures in the world energy industry will have a direct impact on the long term supply of oil going forward.  Since the price of oil is driven by the relationship between supply and demand, lower capital investment means lower production that will lessen supply and bring prices back to a more equitable level.

Their prediction is US$60 average in 2017 and US76.50 through 2019. US$60 currently translates to about $78 Canadian which is likely enough to keep our energy industry working. Alberta will survive this latest downturn just like all the others before it.

July 15, 2016 – Market Update

Thu, 21 Jul by Dale Russell

Red Deer – a little slower start to the summer market in Red Deer with sales in the first two weeks of July down from last month as well as last year at the same time. It’s a bit of reversal from the last couple of months when we were seeing positive signs – higher sales and slow inventory growth. Sales do typically slow somewhat as we move into July and the decrease isn’t far off typical.

It seems that history does repeat itself. The number of active listings is creeping up to levels we last saw in 2010 – 2011 while sales for the first half of the year are on par with those in 2009 and 2010. Coincidentally the price of oil was below $50 at the beginning of 2009, and the difference between then and now is that the price did recover back to $US 80+ within just a few months.

The one thing we do know is that the world is still using lots of oil and will do so for many years to come. That means there will be a market for Alberta oil. Left alone, the market will always find balance between the place where consumers are willing to buy it and producers are able to bring it to the market. This time, we don’t expect prices to recover as quickly, but we do expect to see producers become more efficient in order to generate profits even at lower prices.

 Alberta Treasury Branch – Alberta Economic Outlook – Q3 2016

Without question the third quarter of 2016 is going to be difficult for many Albertans and businesses in the province. More layoffs in the energy sector and the setbacks presented by the Ft. McMurray disaster will add strain to an already struggling labour market. Adding to this is the heightened level of volatility in global markets and the questions surrounding the Brexit vote, all of which will continue to grind on optimism.

Yet while the unemployment rate may drift higher over the summer and early fall, there are signs that better days aren’t too far off. Oil prices have stabilized and should rally modestly to the range of $US 55-60 by the end of the year, which will bring stability to Alberta’s petroleum sector and the labour market. And barring any additional turmoil stemming from Europe (such as another major economy threatening to leave the E.U.) financial markets should calm down by the fall. In the meantime, Alberta’s retail, manufacturing, housing and construction sectors will continue to be challenged.

ATB’s economics and research tem are forecasting a contraction of 1.9 per cent this year – the second consecutive year of recession. This will be followed by a modest recovery of 2.0 per cent growth in 2017.

Red Deer July

July 15, 2016 – Market Update

Thu, 21 Jul by Dale Russell

Blackfalds – a decent start to the summer market in Blackfalds with sales in the first two weeks of July on par with last month, and also even when compared to last year at the same time. It’s a continuation of the last couple of months when we’ve been seeing positive signs – higher sales and slower inventory growth. Sales do typically slow somewhat as we move into July but hopefully this good start is a sign of things to come.

The Blackfalds market has defied logic this year with year to date sales up slightly compared to last year, unlike any other central Alberta markets. The number of active listings is down from last month, but up a little when compared to last year at this time. In spite of very active new home construction over the last few years, the active listing count remains relatively stable when conventional wisdom would have expected it to skyrocket when the economy slowed.

Blackfalds July

Market Update – July 1, 2016

Tue, 19 Jul by Dale Russell

Red Deer sales in June fell off a little when compared to a very strong May. The number of active listings dropped slightly as well, helping keep supply and demand in balance. Two months of a balanced market hopefully is the start of a new trend to go along with higher oil prices.

The median sale price for central Alberta recovered a little in the 2nd quarter and is now back to where it was at the peak in 2007. That means that in the 2nd quarter of 2016, when considering all the sales in Red Deer, Sylvan Lake, Lacombe, Ponoka, Blackfalds, Penhold and Innisfail, the sales price with an equal number of sales higher and an equal number lower moved up a little to $312,900 from $308,000 in the 1st quarter of 2016.

Median price is used to define trends only. An upward movement in the median price doesn’t necessarily mean that the price of an individual home went up. It more likely means that there were more sales in the higher price ranges. We have seen strong activity at the high of the price spectrum in some markets this year. It’s not possible to broadly define an exact percentage increase or decrease in prices for the overall market because every price range and every market is a little different based on the supply of active listings relative to the demand. Ask your local RE/MAX Associate for specific market advice about your property.

June 15, 2016 – Market Update

Sat, 25 Jun by Dale Russell

Sales in the first two weeks of June were a little slower than last month as well as the same period last year, but there are two encouraging signs that the market is on the right track.  First, the number of active listings has dropped since last month.  Second, the number of pending sales is still strong, even though recent changes to regulatory policy allows sellers not to report pending sales.  That means that there are likely many more pending sales than actually show in our records.

We consider the overall central Alberta market to be stable considering the economic situation in Alberta.  That stable market can probably be at least partly attributed to the fact that people are staying here rather than leaving, as indicated in the ATB article below.  Apparently the job situation in other parts of Canada isn’t good enough to lure them away and they feel there is a future here.

Crude oil prices have fallen below the magical $50 US mark, which may be having some effect on consumer confidence.  We expect them to fluctuate up and down but most economists are predicting a gradual rise over the next few months and improvement in the Alberta economy starting this summer and fall.

Out-migration from Alberta Holding Steady, Todd Hirsch, ATB Economics – During a typical recession in Alberta, it’s common for people to move to other provinces for work. That trend makes what’s happening in the current downturn a bit surprising: so far the number of people leaving Alberta is relatively low.

The graph below shows the last 50 years of out-migration to other provinces, as a percentage of the population. The thin green line shows quarterly outflows that are subject to significant seasonality—people tend to leave mostly in the third and fourth quarters of the year. The heavy green line shows outflow averaged over four quarters, giving a better perspective of the general population movement.

The outflow was quite high during some of the 1960s and 1970s—more than one percent of the province packed up and left. The outflow gradually ebbed lower over the decades, with only a slight bump higher during the nasty recession of the 1980s.

The percentage of Albertans leaving has been remarkably stable since the mid-1990s at around 0.4 per cent per quarter. There was a slight jump in the 2008 recession to around 0.5 per cent. Despite the severity of the current 2015-16 downturn, out-migration from Alberta has risen only slightly above 0.4 per cent—mostly due to the fact that the job market in other parts of the country is not significantly better than it is in Alberta.

Chart Red Deer June

MARKET UPDATE – June 1, 2016

Mon, 13 Jun by Dale Russell

May sales in Red Deer were very strong, up 22% from April and just slightly below what they were in May of last year. And, the number of active listings actually dropped some from the first of May. The effect of higher sales and a little lower listing count is a market that moved well into balanced territory from a buyer’s market. Sales in May were concentrated in the $250,000 ‐ $500,000 price range showing near normal levels for this time of year. With a sales to listing ratio in the $400,000 to $450,000 range at almost 50%, that part of the market moved well into seller’s market territory.

There is good news for home sellers moving forward. Oil prices climbed over the $50 US mark last week and this week continue to climb. Falling worldwide production combined with higher demand is forecast to push prices higher in coming months. Many economists are suggesting that the Alberta economy is very near bottom and will start to recover going into the second half of the year.

Of course, higher oil prices aren’t necessarily good news for home buyers. Low interest rates and an amply supply of available homes make this a very opportune time for buyers to take advantage of a situation that we don’t normally experience in Alberta, and that likely won’t last ‐ a market where buyers have the advantage.

May 20, 2016- Market Update

Tue, 24 May by Dale Russell

Red Deer sales in the first half of May held up really well in spite of the distraction of the fires in Ft. McMurray The number of active listings kept climbing and that number is now significantly higher than it was a year ago.

We suspect that the Ft. McMurray fires had a hand in the slower market this month for a couple of reasons.  First, there are a lot of people living in central Alberta that work in Ft. McMurray and they certainly weren’t focused on the real estate market.  Second, catastrophic events like the Ft. McMurray fires grab everyone’s attention and limits their ability and desire to go out and make major decisions.  There is no doubt that this event has impacted the psyche of almost every Albertan.

We are already seeing activity levels resume.  It will take a long time for the people who live and work in Ft. McMurray to get back to normal.  If there is a silver lining in all of this, there will be jobs and economic activity generated putting the city back together.   Life in the rest of the province will carry on.

CMHC 2nd Quarter Housing Update – it seems things across Alberta are pretty similar to what we are dealing with here.  Sales are down a little and inventories are up a little which means prices are down a little.  Housing starts are down and net migration is negative, although we still have some net population gains due to international migration and new births.  Unemployment is up over 7%.  The slowdown in the energy industry is starting to impact other areas of the economy, although there are some sectors doing well, especially government.

CMHC is forecasting an improved economy in 2017 as long as oil prices continue to stabilize.  If they don’t, things will likely remain the same.  There is no question that consumer confidence in Alberta is directly tied to oil prices.  The unknown is where they are going.  There seems to be evidence lately that they are headed in the right direction, although no one believes they will get back to where they were.

It’s important to keep things in perspective when it comes to the economy and the housing market.  The media is heavily focused on the negative, but there are plenty of positives if we look for them.  Low interest rates, ample choice when it comes to choosing a home and stable prices are all the good things about our current real estate market.

Why is it that the media reports the “unemployment” rate instead of the employment rate?  One is 7%, the other is 93%.  That means there are still a lot of people working in Alberta.  Those people all need a roof over their heads.  Some of them will want to take advantage of all those positives mentioned earlier and move up.  For those people, it’s a good market.

Red Deer May 2016

May 1, 2016 Market Update

Tue, 10 May by Dale Russell

Market Update:  April sales in Red Deer were up almost 28% over March, but off 15% compared to April 2015. Year to date sales are also down about 15% compared to the same period last year. And, active listings at the beginning of May were up 21% compared to May 1, 2015, moving the market from balanced at this time last year, to a buyer’s market now.

It’s difficult to pinpoint exactly what impact the move to a buyer’s market has had on prices, but there is no doubt there has been some. Higher priced homes have been affected the most while starter and mid‐priced homes have held their value better, a function of different demand to supply ratios in different price ranges.

When the market softens, buyers naturally want to buy when prices are lowest. If you wait another month, prices may be lower, but maybe they won’t. We only know what the bottom is when prices are already on their way back up.

The absolute best time to buy is in a buyer’s market. It’s also not a bad time to sell, if you are going to buy again in the same market. If you are worried that the house you are selling has gone down in price, take comfort in the fact that the one you are buying has also gone down an equivalent amount. The benefit of buying now is there is much more to choose from!