March 15, 2013 – Market Update

Fri, 22 Mar by Dale Russell

Spring has arrived in central Alberta, at least in the real estate market.  While the weather still says “winter”, new listings are coming on the market and buyers are busy snapping the good ones up almost as quickly as they come on.  While changes to the mortgage rules seemed to slow the market last summer and fall, interest rates as low as 2.89% for a five year mortgage term are probably helping buyers offset those changes.

The changes to the mortgage rules still seem to be creating some difficulty for first time buyers while low interest rates are benefitting move up buyers.  There is the possibility that some first time buyers were frightened out of the market and haven’t figured out the interest rate advantage yet.  It’s time they checked again while there are still adequate starter homes available. 

Home building in balance – Todd Hirsch, Senior Economist, ATB Financial

There are many words used to describe the Canadian housing sector at the moment, including “bubble,” “overheated” and “dangerous.” Most of those worrisome terms are in reference to residential markets in Toronto and Vancouver. But here in Alberta, the best word to describe the housing market is: balanced.

In February, home builders started construction on 33,337 new houses throughout our province. This figure is seasonally adjusted and reported at annualized rates (i.e., the number of homes that would be built in one calendar year if the current pace continues for 12 months). That’s up from the 29,300 total in January, and mostly on par with activity over the last year.

But over the last five years in Alberta, home builders have been on a bit of a rollercoaster ride. With starts peaking above 50,000 during the heady days of 2008, too many new homes were being placed on the market.

When the economic slowdown came the following year, housing starts tumbled sharply—as did the selling price for both new and existing homes. There was an excess of real estate that caused the much dreaded bubble.

Since that time, things have improved. Even though 2011 was another boom year for Alberta’s economy, home builders showed a bit more constraint— housing starts climbed their way back to the 5-year average, but never spiked too much higher than that.

This time around, builders have avoided a glut of inventory on the market. As a result, Alberta’s housing market enters 2013 in excellent balance.

February 28, 2013 – Market Update

Mon, 11 Mar by Dale Russell

Sylvan Lake sales are pretty much keeping pace with last year while the number of active listings is down from last winter especially in the $200,000 – $350,000 price range.  That’s a dramatic change from two years ago when there were lots of choices for buyers.  The trend in Sylvan Lake is definitely swinging to the seller’s advantage which could put pressure on prices this spring.

The Red Deer market seems to be firing on all cylinders and heavily favoured sellers in February.  Sales in Lacombe are keeping pace with last year but the number of listings is down.  Ponoka sales are down from last year and listing inventories are higher, which may cause some Lacombe buyers to consider Ponoka as an option.

It’s hard to define why all central Alberta markets are not on an even pace except that historically it seems that the smaller markets follow behind the larger Red Deer market.  As inventories shrink and prices start to firm in Red Deer, the surrounding markets will become a more attractive option.

At first glance, the article below is a little frightening, but if you read to the end, you will notice that Alberta seems to be the one place escaping the reality of the rest of the world’s economic doldrums.  That quite likely makes Alberta an attractive destination, which creates more demand for housing, which creates jobs and economic activity and so on, and so on.

Canada’s economy tumbles in December – Todd Hirsch, Senior Economist, ATB Financial

Economic growth in Canada was already on an established downward trend in 2012, but by the final month of the year the overall GDP slipped into contraction.

In December, the value of total goods and services produced in Canada fell by 0.2 per cent compared to November. That followed a surprisingly strong month of growth in November (+0.3 per cent), and was only the third month in the year in which the economy slid into reverse. On a quarterly basis, the fourth quarter of 2012 saw a small expansion of 0.2 per cent, matching the gain in the third quarter.

For the entire year, Canada’s real GDP expanded by 1.8 per cent in 2012 after growing by 2.6 per cent in 2011.

The monthly dip in economic activity was due to particular softness in a couple of key industries. According to Statistics Canada’s media release this morning: “Manufacturing and, to a lesser extent, retail trade and utilities were the main sources of the December decline. Wholesale trade, transportation and warehousing, as well as the arts and entertainment sector also decreased.”

There were a few bright spots in December, however, including mining, oil and gas extraction.  Nationally, it advanced 0.3 per cent over the previous month. This morning’s data do not provide breakdowns provincially, but given that Alberta accounts for about 70 per cent of Canada’s oil and gas industry, the numbers suggest Alberta’s economy was still expanding at a healthier rate than was the rest of the country.