Sylvan Lake home sales in November almost kept pace with October sales while the number of active listings fell to 150 for the first time in more than 2 years. Year to date sales in Sylvan are up dramatically (29.6%) in 2012 compared to 2011 while MLS sales in central Alberta are up 12.1%. A good listing inventory in the $200,000 – $300,000 range may explain stronger sales in Sylvan.
The most active market in Sylvan Lake last month was between $200,000 – $300,000 while listings in that range have consistently fallen over the past few months. The sales to listing ratio in that price range is 19%, still a buyer’s market.
The trend to fewer active listings and strong sales has been prevalent across central Alberta this fall. More than 40,000 people have moved to Alberta so far this year. Many of those people are not in a position to purchase a home. Some have an unsold home where they came from. Some can’t buy until they establish credit or job security. Those folks are renters and they are putting pressure on the rental market. The vacancy rate is less than 1% and rents are rising, pushing renters into buying their first homes.
Recent tightening of mortgage financing rules seems to have had a calming effect on the Toronto and Vancouver markets, but not so in central Alberta where that tight rental market is making home ownership attractive and where higher incomes make it possible to buy in spite of tougher mortgage rules.
So what’s in store for the central Alberta real estate market? Predictions are very dangerous, especially now with all the turmoil in the world and even the most respected economists can’t agree on what the future holds.
The United States are headed toward the “fiscal cliff” and if the two political parties can’t come to an agreement by the end of the year, the country could end up back in recession. In spite of their problems, the US has shown signs of recovery this year. Growth has been slow, but the housing market is showing signs of life again and some economic indicators are more positive. 95% of Alberta’s exports go to the US, so their wellbeing is tied directly to ours.
Of course, there are still problems in Europe and the middle-east and the red hot economies of China and south-east Asia have slowed, raising the prospect of a world-wide recession. It seems there is doom and gloom everywhere. There is also much debate about the world oil situation. Some predict that the US will be self-sufficient and not need our oil. Obviously there are difficulties getting our oil to other markets due to a lack of pipelines and the difficulty in getting new ones approved. We are currently selling our oil at a substantial discount to world prices and the existing pipelines are full.
But, there is optimism too. Many experts believe that the shale oil reserves touted to make the US self-sufficient will not produce the huge volumes predicted and the cost of extracting that oil is too high in actual and environmental costs. They also believe the Keystone pipeline will be approved early in 2013 and construction will start shortly after. We will find a way to get our oil to market, whether it is via the west coast or through existing natural gas pipelines to the east coast. The price of natural gas has been creeping back to more normal levels and there are actually some gas wells being drilled again in Alberta this winter.
Obviously, our well-being relies on a strong energy sector, but there are other industries that are doing well contributing to our economy in Alberta. Farmers have had a very good year. Grain prices are high and crops were good. Our forestry industry is also experiencing a good year with demand for our lumber up due to improved construction starts in Canada and the US.
The Alberta economy has been the strongest in Canada this year and will continue that way for the near future. Canada is still a model for the rest of the world when it comes to fiscal management and our banking industry is universally admired. There is no doubt that we are in the best place in the world and the future here is very bright relative to anywhere else. That means that people will continue to move to Alberta which drives demand for new construction, new infrastructure and economic growth. Life in Alberta is good!