Sylvan Lake Market Update – September 30/10

Thu, 30 Sep by Dale Russell

Market Update to Sept. 29/10 – Sylvan Lake & Area

 

Active Listings

Sales

Price Range

Active Today

Pending

Active 1 Year Ago

Sold MTD

Sept. 22/10

Sold MTD

Sept. 29/10

Sold MTD

Sept. 29/09

0 – 100

7

0

1

0

0

1

100 – 150

11

2

3

0

0

0

150 – 200

23

1

13

0

0

3

200 – 225

8

1

8

1

1

2

225 – 250

17

2

8

1

3

3

250 – 275

18

2

20

1

1

3

275 – 300

25

0

22

1

1

5

300 – 350

34

0

33

2

2

3

350 – 400

30

0

25

4

5

3

400 – 450

16

0

17

0

0

1

450 – 500

14

0

17

0

0

2

500 +

65

1

56

4

4

1

Total

268

9

223

14

17

27

Days On Market

90

102

78

70

84

Market Update – We have stated in the past that new home construction is only necessary if we have population growth to fill those new homes.  A healthy residential construction industry is one of the engines that drives an economy.

 

The negative growth trend of the past 3 quarters was abruptly reversed in the second quarter of this year and while those numbers don’t suggest a return to the heyday, they are very encouraging and may signal the beginning of better times in Alberta.

 

The effect of this recent growth will most likely be felt in the rental vacancy rates, but when vacancy rates go down, people start to look at moving from rental to ownership and the housing cycle begins.

 

Of course, this growth must continue in order to see long term benefit and that requires jobs.  Jobs bring people to Alberta and the biggest job generator in Alberta has always been the energy industry.  We suspect that the oil sands are the largest contributor to the recent growth which will not have an immediate impact on central Alberta.  But, energy activity anywhere in Alberta contributes to the overall economic health of the whole province

 

Migrants Reverse CourseDan SumnerEconomist, ATB Financial

 

One of the best measures of the relative economic and social health of a region is whether migrants are moving to or from the region. According to Statistics Canada data released this morning, Alberta just experienced its most solid quarter of interprovincial migration in a year.

 

2,820 Canadians moved to Alberta from other provinces during the second quarter of 2010, up from only 312 in the first quarter and net-negative migration in the two quarters before that (see graph). In addition to the positive reading on interprovincial migration, Alberta’s total population grew at the fastest rate in Canada, rising by 0.5% to 3.72 million.

 

The main factor driving Canadians to move between provinces is jobs and job prospects. During the mid-decade unsustainably strong job prospects drove migrants to Alberta from all corners the country, although this trend reversed course quickly during the recession.

 

Statistics Canada also noted that behind Alberta’s lofty population growth rate was a strong level of natural increase (births minus deaths). This is partly due to demographics as Alberta’s population also has the lowest median age at 35.8 (national average = 39.7), and more young people means more babies.

 

The strongest reading on interprovincial migration since the recession began is good news for a province that isn’t used to losing residents to other provinces on a net basis. However, considering the jobs market here is unlikely to return to its pre-recession pace for some time, Canadians are unlikely to flock to Alberta at the rates they did during the boom.

Sylvan Lake Weekly Market Update – September 23/10

Thu, 23 Sep by Dale Russell

Market Update to Sept. 22/10 – Sylvan Lake & Area

 

Active Listings

Sales

Price Range

Active Today

Pending

Active 1 Year Ago

Sold MTD

Sept. 15/10

Sold MTD

Sept. 22/10

Sold MTD

Sept. 22/09

0 – 100

7

0

1

0

0

1

100 – 150

11

0

3

0

0

0

150 – 200

22

1

13

0

0

2

200 – 225

7

0

7

1

1

2

225 – 250

18

3

10

1

1

1

250 – 275

16

0

21

1

1

3

275 – 300

25

0

22

1

1

4

300 – 350

35

0

34

1

2

2

350 – 400

30

0

25

2

4

1

400 – 450

18

0

16

0

0

0

450 – 500

11

0

18

0

0

2

500 +

64

1

61

2

4

0

Total

264

5

231

9

14

18

Days On Market

90

96

66

78

94

Market Update – The news is full of mixed messages about what is happening locally and around the world.  One day the news is good and the next it’s bad.  Economists can’t agree on what has happened in the past, let alone what is going to happen in the future.  (Let’s face it, if they could accurately predict the future, they wouldn’t be writing economic forecasts).  The media happily regurgitate all the stuff they hear from the economists and quite likely don’t get it right a good part of the time.

 

Unfortunately, bad news seems to sell better than good news so we seem to get a larger proportion of the bad.  The problem with continual bad news is it causes consumer confidence to falter.  Think about it.  If the media prints a prediction that house prices are going to drop by 10% next year, consumers will delay buying homes, waiting for those lower prices.  If enough consumers wait to buy, that lower price forecast will almost certainly come true.

 

People sell their homes because they want a new home, because they want to move to a bigger or smaller home, because they need to move for their jobs, or even because they’ve lost their jobs.  People buy homes forthe same reasons.

 

Those who buy and sell trying to predict the highs and lows in the market are almost certain to miss their timing.  Those who wait to sell until the price of their home goes up will pay more for the house they buy.  Those who wait to buy their first home until prices go down, may miss the low in the market because no one knows when we’ve hit low until prices start to go up, and then they may pay a higher interest rate which is exactly the same as a higher price.

 

The moral of the story?  Your home is the place where you live and raise your family.  Real estate values have always kept pace with inflation.  Your home is a great forced savings plan.  You can build equity while you provide a roof over your head.  Make your housing decisions based on your family’s needs, not on some vague prediction for the future.

 

The compelling arguments for buying a home today:

 

Ample supply – we have more homes on the market than at any time in history.  A great opportunity to find just the right home for your family.

 

Low prices – a large supply of homes relative to lower demand has caused very attractive pricing relative to previous years.

 

Low interest rates – interest rates are at historical lows.  Because most home purchases are mortgaged, low interest rates are the equivalent of a large price discount.  A difference of two or three percent in the mortgage rate means thousands in savings over the most interest rate sensitive first five years of ownership.

If you are going to sell and then buy again, current price levels are irrelevant, but low interest rates can still be a huge advantage.

Sylvan Lake Market Update – September 15/10

Thu, 16 Sep by Dale Russell

Market Update to Sept. 15/10 – Sylvan Lake & Area

 

Active Listings

Sales

Price Range

Active Today

Pending

Active 1 Year Ago

Sold MTD

Sept. 8/10

Sold MTD

Sept. 15/10

Sold MTD

Sept. 15/09

0 – 100

6

0

2

0

0

0

100 – 150

7

0

5

0

0

0

150 – 200

23

1

14

0

0

1

200 – 225

7

0

6

1

1

2

225 – 250

20

1

10

0

1

0

250 – 275

17

0

21

0

1

2

275 – 300

25

0

23

1

1

3

300 – 350

35

0

35

1

1

0

350 – 400

34

2

22

0

2

1

400 – 450

22

0

19

0

0

0

450 – 500

11

0

17

0

0

2

500 +

69

3

61

0

2

0

Total

276

7

235

3

9

11

Days On Market

90

94

61

66

102

Natural gas risks worthwhile: Shell CEO – Canada is home to many promising natural gas reserves trapped underground – September 13, 2010, Canadian Press

 

The promising natural-gas industry carries environmental risks as companies work harder than ever to unlock it, a top international oil executive conceded Monday at the World Energy Congress in Montreal.

 

Royal Dutch Shell CEO Peter Voser told delegates at the conference that the world is on the cusp of a natural gas supply boom.

 

He said recent events – like the Gulf of Mexico oil spill – are a reminder that sometimes things can go wrong.  “I realize that there’s some public concern that fracturing could affect fresh water layers in the ground,” Voser said in his keynote speech at the conference.

 

“We take that concern seriously … Whether we like it or not, producing energy and delivering it to billions of customers around the world comes with certain risks.  “Rather than closing our eyes to that reality, we must confront risks and manage them as effectively as we can.”

 

However, Voser strongly defended the potential of natural gas as a clean and abundant energy source that will help countries reduce their overall greenhouse gas emissions. He even called on governments Monday to loosen regulations, and allow natural-gas extraction to reach its full potential.

 

The head of Europe’s largest oil company says the fuel will play a bigger role in the global energy mix in the coming decades.

 

He predicts the world’s annual natural gas demand will increase by 25 per cent by 2020 – and almost 50 per cent by 2030 – as emerging countries like China continue to grow.

 

“A key question is whether the world’s appetite for natural gas will keep pace with supplies,” Voser said.

 

Tapping into deep gas reservoirs is easier than ever with the help of new technology — and Canada is home to many promising reserves trapped underground.

 

Shell owns extraction rights in British Columbia, where the corporation is already producing enough gas to power more than 400,000 homes. Voser used Shell’s operations in B.C. to illustrate Canada’s potential in shale and tight gas, both of which must be extracted from rock deposits.

 

Sylvan Lake Weekly Market Update – Sept 8/10

Tue, 14 Sep by Dale Russell

Market Update to Sept. 8/10 – Sylvan Lake & Area

 

Active Listings

Sales

Price Range

Active Today

Pending

Active 1 Year Ago

Sold MTD

Aug. 31/10

Sold MTD

Sept. 8/10

Sold MTD

Sept. 8/09

0 – 100

7

0

1

1

0

0

100 – 150

6

0

5

1

0

0

150 – 200

26

1

15

2

0

1

200 – 225

7

0

6

1

1

1

225 – 250

16

0

9

1

0

0

250 – 275

18

0

21

3

0

2

275 – 300

25

0

23

1

1

2

300 – 350

31

2

34

1

1

0

350 – 400

43

0

23

1

0

0

400 – 450

23

0

17

1

0

0

450 – 500

14

0

17

1

0

1

500 +

70

4

61

2

0

0

Total

286

7

232

16

3

7

Days On Market

87

93

62

61

126

Bubble Trouble? By Will Van’t Veld – ATB Economics

 

Two opposing reports were released this week on the Canadian housing market that generated a lot of press. Supporting the contention that a housing bubble has formed is a report from the Canadian Centre for Policy Alternatives (CCPA); arguing from the other direction was a report from the CD Howe Institute stating that fears of a bubble are overblown. How do we square these opposing views?

 

The CCPA report defines a housing bubble as a situation where housing prices increase more rapidly than inflation, household incomes and economic growth. The bubble is fueled by low mortgage rates, access to easy credit, strong in-migration and the size of the housing stock. The typical definition of a bubble is a situation in which a price has diverged from its fundamentals, usually as a result of irrational future expectations.

 

Two observations were used by the CCPA to buttress the argument that there is currently in a housing bubble: 1) the fact that the average inflation-adjusted resale home prices shot up starting in 2000, after having been relatively stable over the prior two decades; and 2) that the ratio of the median family income to the median home price had historically been 3 to 4, but currently stands as high as 5 to 11. The CCPA then looked at three prior bubble periods in Canada and Vancouver since 1980 and simulated what a price drop would look like if they adjusted in a similar manor right now.

 

Jim MacGee, writing for the CD Howe Institute, took a different approach to examine the housing market. According to Mr. MacGee the main reason Canada is not in danger of a housing bubble is that Canadian underwriting standards never deteriorated to the same extent as they did in the United States. For instance, in 2006 up to 18% of all US mortgages were interest only and 9 % were negative amortization mortgages.

 

How was it that the standards had become so low in the US? It was attributed largely to US government policy, whereby government supported entities, Fannie Mae and Freddie Mac, stamped their seal of approval on securitized packages of mortgages. Policy in Canada was much different— underwriting standards did begin to slacken but never hit the same lows.

 

Because regulation prevented Canadian banks from following the excesses that occurred in the US, the aggregate amount of risk in the system was reduced. Many people received mortgages who should not have and subsequently defaulted, precipitating the forced selling and collapse in housing values. Mr. MacGee warns, though, that risks ultimately fall on Canadian taxpayers given that it is the government that sets the ultimate underwriting standards in its control of mortgage insurance. He also suggests that taxpayers were somewhat lucky that regulators decided to strengthen underwriting standards when they did.

 

The CCPA report focused mostly on whether consumers were acting irrationally, given traditional affordability measures, while the CD Howe report focused on whether lenders were acting rationally, given the impact poor regulation can have on lending standards. The former assumes the price will revert to its long term mean in relation to family income, whereas the latter focuses on the likelihood that housing prices would drop due to poor lending practices.

 

At the end of the day we see one study stating that a US style meltdown is likely, whereas the other precludes it – so which is it? Neither is really definitive. Housing prices have climbed substantially, but not necessarily irrationally, given affordability measures (which is linked to underwriting standards). Also, underwriting standards were stronger in Canada, but that doesn’t preclude a collapse either. The Toronto property bubble of the late 80s, for example, had underwriting standards that were certainly tighter then than they are today.

 

A catalyst is almost always necessary to precipitate a housing market crash and it’s always presented as truth that there had been a property bubble after the fact. There’s probably some reason for concern given many households are overly indebted currently, but with deflation being the predominate concern of central bankers, a spike in interest rates seems unlikely at this point. Further, the Canadian economy appears to be in a fairly sound position and unemployment is falling. That being the case the odds of any outright ‘collapse’ are slim.

Sylvan Lake Weekly Market Update – August 31/10

Thu, 02 Sep by Dale Russell

Market Update to Aug. 31/10 – Sylvan Lake & Area

 

Active Listings

Sales

Price Range

Active Today

Pending

Active 1 Year Ago

Sold MTD

Aug. 25/10

Sold MTD

Aug. 31/10

Sold MTD

Aug. 31/09

0 – 100

6

0

1

1

1

0

100 – 150

5

0

6

1

1

3

150 – 200

23

1

14

2

2

1

200 – 225

4

0

6

1

1

1

225 – 250

15

0

10

1

1

1

250 – 275

19

0

23

3

3

4

275 – 300

25

1

25

1

1

1

300 – 350

30

0

33

1

1

2

350 – 400

44

2

23

1

1

2

400 – 450

22

0

14

0

1

0

450 – 500

15

0

20

1

1

0

500 +

68

2

61

1

2

6

Total

276

6

236

14

16

21

Days On Market

86

89

62

62

84

Oilpatch hiring again – Harley Richards – Red Deer AdvocatePublished: August 27, 2010 6:43 AM

A year ago, the prospects were pretty bleak for oilpatch workers with a resume in their hand.  No more.   Drilling and service companies are beating the bushes for skilled and even unskilled people as their industry recovers from the economic downturn.   Bonnie Snair, human resources manager at Red Deer’s High Arctic Energy Services, said her company has hired 74 workers over the past two and a half months.  “I anticipate that we’ll be hiring another 50 before the end of the year,” she said.  One of the most popular places for oilpatch companies to seek staff has been the newspaper classifieds. And after a period of absence, corporate logos have returned to that section of the Advocate, said Richard Smalley, the newspaper’s retail advertising manager.

 

“You’ve just got to open up a paper and you’ll see all the oil and gas ads that are running in there.”   Year-over-year, said Smalley, the Advocate’s classified display linage — which consist primarily of employment ads, particularly for the oilpatch — is up 43 per cent.  “That’s a huge jump.”  Charles Strachey, a regional communications manager with Alberta Employment and Immigration, has also observed an increase in job postings at his department’s Labour Market Information Centre in Red Deer.   “There’s been a significant jump in the number of oilfield jobs,” he said, adding that construction has also seen renewed hiring.

 

“Basically, there was almost zero jobs for the oilpatch on the job board last summer.”  As might be expected, this increase in the male-dominated sectors has impacted the ratio of job-seekers visiting the local Labour Market Information Centre.   Six months ago, 75 to 80 per cent were men, said Strachey; now the male-female split is about 50-50.  He added that his department is also now getting more requests for the specialized training typically required for oilpatch jobs.

 

Shane Goacher, operations manager with Bravo Oilfield Safety Services Inc. (B.O.S.S.), said the Grande Prairie-based company’s ads have generated quantity but not quality.  “A lot of people are available but nobody has the experience.”   When the oil and gas sector plummeted, he said, many skilled workers disappeared.  “Some of them ended up going to school, some of them ended up getting (other) jobs.”

 

Nancy Malone, economic analysis manager with the Canadian Association of Oilwell Drilling Contractors, said senior staff on drilling rigs tend to ride out the slow periods.  “They understand the industry, they understand the ups and downs and they work appropriately.”

 

Roger Soucy, president of the Petroleum Services Association of Canada, said the labour crunch is likely hitting some companies harder than others. Those active in horizontal drilling and multi-stage fracturing — increasingly popular methods for pursuing oil and gas — are probably busier than other firms.

 

He and Malone agreed that the situation is not as dire as it was during the boom period several years ago. But if rig activity is high this winter, manpower could become a concern.  “We lost so many people who generally don’t come back to the industry once they’ve left it,” said Soucy.

 

The companies vying for people are already turning to new strategies.  High Arctic has been promoting a snubbing boot camp to entice prospective employees to give the industry a try. Snair said it’s helped her company hire many of its new people.  B.O.S.S. offers employees a travel voucher that they can use for a vacation after working for a period of time. Goacher said such enticements have become commonplace in the industry.

 

Both businesses are tapping into new search methods — High Arctic has turned to Facebook and B.O.S.S. to Kijiji — in their efforts to connect with young prospects.  “I think people just have to get really creative and step out of the box,” said Snair.