September sales are off to a slower start than we saw in August, but 17 pending sales in the pipeline suggests we may finish the month strong. The number of active listings continues to shrink which could put Sylvan Lake into balance for the first time in 5 years if we have that strong finish to the month. A balanced market is ideal in that there are buyers for those who want to sell, and adequate choice for those who want to buy.
Sales activity so far this month is concentrated in the middle price ranges ($250,000 – $450,000). Higher priced homes are a little slower to move, likely because much of the demand for higher priced homes is being satisfied by Sylvan’s many home builders. People who have the ability to buy those homes often want “new” and “current” and are willing to pay a premium to get it.
There are a lot of reasons why our market will continue the current trend – viable oil and natural gas prices, strong migration to Alberta, and low interest rates will keep the market active. When people move into a market they typically need rental accommodation first. Vacancy rates go down, rents go up and existing tenants are pushed into home ownership, which allows starter home owners to move up… and the cycle continues.
A lot of swinging hammers – Todd Hirsch • Chief Economist, Alberta Treasury Branch
While building sites can often be noisy and messy to look at, there’s no denying the positive contribution that construction activity has on Alberta’s economy. Judging by the most recent statistics on building permits, it appears that our province can anticipate strong construction activity in the coming months.
This morning, Statistics Canada released its monthly report of building permits issued by municipalities across the country. In Alberta, the value of permits issued in July of this year reached $1.63 billion—an increase of 19.1 per cent over the previous month. Taking a longer-term view, building permits over the last 12 months are up 19.6 per cent compared to the previous 12-month period.
July’s soaring building permits were driven mostly by non-residential projects, which jumped to $816 million. On a month-to-month basis, non-residential projects tend to display more volatility than residential permits simply because of the size and scale of certain projects. Commercial construction projects—such as office buildings and shopping centres—made up nearly all of the non-residential permits in July, increasing from $350 million in June to $626 million in July.
But residential building is charging steadily higher in Alberta as well. Despite warning bells in other parts of Canada about over-valued real estate, Alberta’s home builders are in a more balanced position. House prices are rising, but not out of line with higher demand driven by in-migration and rising wages. That’s encouraging home builders to offer more choices onto the market for potential home buyers.