Sylvan Lake Weekly Market Update – Oct. 14/10

Thu, 14 Oct by Dale Russell

Market Update to Oct. 13/10 – Sylvan Lake & Area

 

Active Listings

Sales

Price Range

Active Today

Pending

Active 1 Year Ago

Sold MTD

Oct. 6/10

Sold MTD

Oct. 13/10

Sold MTD

Oct. 13/09

0 – 100

7

0

2

0

0

0

100 – 150

7

2

3

2

2

0

150 – 200

25

0

11

0

0

0

200 – 225

6

0

6

0

1

1

225 – 250

16

1

9

1

1

0

250 – 275

16

0

19

2

2

2

275 – 300

24

0

21

0

0

0

300 – 350

34

0

29

0

0

1

350 – 400

29

2

24

0

0

0

400 – 450

16

1

20

0

0

0

450 – 500

13

0

14

0

0

2

500 +

63

0

49

1

1

1

Total

256

6

207

6

7

7

Days On Market

90

88

74

66

79

Good News for Alberta Housing Markets – Last week we heard that oil and gas lease sales in Alberta have hit an all time record in 2010 with 5 more land auctions still to come.  That means that oil and gas exploration will follow, maybe not this year, but soon.  It also means an inflow of cash into our provincial government coffers.

 

New oil and gas exploration means new jobs.  New jobs mean population growth.  Population growth means demand for houses.

 

Demand for houses means economic growth and prosperity since the construction industry is one of the engines that drives our economy.

 

Our housing markets in central Alberta have just experienced a slow summer, which was to be expected since the local economy has been slow and we have not experienced much job creation or population growth in the past year.

 

Recent news indicates that net in-migration to Alberta from other provinces increased substantially in the second quarter of 2010 after negative growth in the three previous quarters.  The numbers are not nearly what they were in the boom years, but are a huge improvement.

 

Alberta has always led the rest of the country out of a slow time.  The demand for our exports in the US is still not what it could be, but recent news suggests they are looking at our oil sands as a safe source of energy.  Economic growth in south-east Asia and China is still relatively strong and there will be new demand for our commodities from there.

 

We own the second largest proven reserves of oil in the world.   We know that even in a slow economy the world is consuming vast amounts of oil and gas and eventually the demand will outstrip existing reserves.  Ft. McMurray and the oil sands seem a long way removed from central Alberta, but things are booming up there as companies rush to develop more production capacity.

 

While low natural gas prices have held back much of our energy industry, there are some who are predicting higher prices next year.  That theory would be supported by the sale of those leases previously mentioned.  As an added bonus, a small increase in natural gas prices will have an immediate effect on government revenues which eventually flow into our economy.

 

Alberta is the land of milk and honey.  We have the lowest taxes, the least amount of debt, the largest oil reserves and the most opportunity!  It is the best place in the world to live and work and I am thankful to be here.

Sylvan Lake Weekly Market Update – October 7/10

Thu, 07 Oct by Dale Russell

Market Update to Oct. 6/10 – Sylvan Lake & Area

 

Active Listings

Sales

Price Range

Active Today

Pending

Active 1 Year Ago

Sold MTD

Sept. 30/10

Sold MTD

Oct. 6/10

Sold MTD

Oct. 6/09

0 – 100

7

0

1

0

0

0

100 – 150

9

0

3

0

2

0

150 – 200

24

1

12

0

0

1

200 – 225

7

1

6

1

0

0

225 – 250

16

1

8

1

1

1

250 – 275

15

0

18

1

2

0

275 – 300

22

0

19

1

0

0

300 – 350

34

0

31

2

0

1

350 – 400

28

0

25

4

0

0

400 – 450

15

0

17

0

0

0

450 – 500

13

0

12

0

0

2

500 +

62

0

48

4

1

1

Total

252

3

200

14

6

6

Days On Market

88

88

78

74

70

The Flip Side of Natural Gas Prices – By Will Van’t Veld , ATB Financial

 

During the boom many Albertans complained about the high cost of gas at the pump, but generally people realized that it was a small price to pay for the massive wealth generated by having the black gold located in our borders. Currently persistently low natural gas prices are worrying many in Alberta, however there is a flip side to low natural gas prices as well.

 

The importance of natural gas to a province like Alberta from a revenue perspective is pretty obvious. About $5.8 billion in royalty revenues was derived from natural gas (roughly 17% of total revenues) in fiscal 08/09, but falling prices and production caused revenues to dip to $3.7 billion by fiscal 09/10. Natural gas also drives revenues in the private sector due to exploration, drilling and maintenance expenditures, which feed local manufacturing and service related companies. Employees and corporations also pay taxes and purchase other services. All told, IHS consulting estimates that natural gas contributed about 27.7% of Alberta’s GDP in ‘08.

 

Just as the case with the price of oil, one person’s revenue is another’s expenditure, and the same is true with natural gas. According to the Energy Information Agency (EIA) in the United States, there are five main users of natural gas: electricity producers, industry, residential, commercial and vehicle. This is probably somewhat indicative of how Alberta would breakdown (if the numbers were available) and these groups are probably not shedding tears as a result of the prevailing natural gas prices. While this group is small in relation to the beneficiaries of high gas prices, it’s worth highlighting that they exist.

 

Cold winters and extremely warm summers impact the cost of electricity from the demand side, but there’s also a supply side to the equation.

 

Electricity production in Alberta is split mostly between natural gas fired generators (40%) and coal fired generators (44%). So it shouldn’t come as a huge surprise that electricity rates have fallen. For instance, according to the Alberta Electric System Operator the average electricity pool price in August 2008 was $82.72/MWh and in August 2010 it was $38/MWh. These lower rates then help homeowners and manufacturers that are energy intensive, such as pulp and paper mills or manufacturers of industrial metals.

 

The major industrial users of natural gas in the province are the oil sands operations. According to the sensitivity analysis contained within the second quarter report for Canadian Oil Sands, a $0.50 decline in price for natural gas results in a net profit gain for that company of $17 million per year. That’s just one player. Multiply that by the many companies operating in the region and its clear that natural gas’s demise has been a boon for other players in the energy sector.

 

Vehicle use is currently miniscule, but that could very well change. The longer natural gas prices remain subdued the more attractive it will be to build up the infrastructure for other uses. Many politicians in the US have come out in favour of using public dollars to increase the use of natural gas powered vehicles. This has mostly been due to the fact that it burns cleaner than gas, but the larger the differential between oil and natural gas markets gets the more realistic these proposals become.

 

Low natural gas prices definitely do still hurt Alberta’s economy. But over time low prices will induce producers to switch fuel sources, hopefully correcting the current imbalance. It just takes time and, as the gas isn’t going anywhere in the meantime, it is important to remember that there are some up sides as well.