Sylvan Lake Market Update

Fri, 20 May by Dale Russell

May 18, 2010

Market Update to May 18/11 – Sylvan Lake & Area
Active Listings Sales
Price Range Active Today Pending Active 1 Year Ago Sold MTD
May 11/11 Sold MTD
May 18/11 Sold MTD
May 18/10
0 – 100 6 0 2 1 1 0
100 – 150 8 1 6 0 0 0
150 – 200 20 0 15 2 2 1
200 – 225 11 0 9 0 0 2
225 – 250 21 0 13 3 3 0
250 – 275 21 3 21 3 3 2
275 – 300 31 3 30 0 1 4
300 – 350 38 1 38 1 2 4
350 – 400 26 1 25 2 2 1
400 – 450 13 0 26 0 0 2
450 – 500 17 0 17 0 1 0
500 + 58 1 68 1 2 1
Total 270
10
270
13
17
17

Days On Market 69 67 53 54 41

We All Want the Value of Our Homes to Rise, but that’s not always a good thing. Remember the heady days of spring 2007 when house prices were inflating $10,000 a month. It seemed like a financial windfall at the time, but the long term results suggest otherwise.

When prices inflate rapidly, those folks forced to buy at the high point of the market will be hurt when prices normalize. Alberta is currently experiencing the highest level of mortgages in arrears in Canada as some of those who purchased at the peak find themselves “under water”. In other words, the value of their homes is less than their mortgage. Any of these people wanting to move are in a very difficult position and those who experience any short term financial difficulty are not in a position to ease the situation by selling their homes.

Quite simply, the value of residential real estate cannot increase faster than the consumer’s ability to pay for it, or our market will suffer. If prices increase back to the levels we experienced in 2007, we could price ourselves out of the market. It would make it more difficult to attract new people to move here and fill those job vacancies we are expecting in the next few years. It will create slowdowns for local construction companies and therefore less employment in one of our most important industries.

In other words, be careful what you wish for. A healthy economy and housing market are characterized by balance in supply and demand and prices that will attract people to Alberta who can afford to buy homes and not have to spend the majority of their incomes on housing.

New Housing Prices Flat in Alberta – Alberta Treasury Branches – Weekly Economic Update – May 13, 2011

The cost of a new home continued to move sideways in Alberta’s two main cities in March 2011. In month-over-month terms, the price of new home dipped by 0.1% in Calgary and by 0.2% in Edmon-ton; compared to a year ago the average cost of a new home was unchanged in Calgary (-0.1%) and up slightly in Edmonton (+1.2%).

After surging during the boom, as resale housing prices jumped, new housing prices plateaued in Edmonton in 2007 and in Calgary in late 2008. Since then the average cost of a new home is down roughly 15% in Edmonton and 8% in Calgary. Furthermore, prices have been un-changed in Edmonton since early 2009, and in Calgary since early 2010 (see graph).

Moving forward, it is unlikely that new home prices in either city are going to make a major move either upwards or downwards. A typical trend in housing prices is that after a boom period prices move sideways for a long time.

Over the next couple years, rising interest rates will dampen demand for homes, putting downward pres-sure on prices, but a buoyant economy will support prices. Overall, these forces may roughly counteract each other making a major move in either direction unlikely.