July 15 2015 – Market Update

Mon, 27 Jul by Dale Russell

Sylvan Lake Market Update – sales in the first two weeks of July were down 40% from the same period in June, but
almost on part with the first two weeks of July 2014. Slower sales in July and August is normal for central Alberta when
folks are making the most of a warm summer.
The number of active listings is up slightly over last month, moving the market further into buyer’s territory. Lots of
inventory combined with very low interest rates makes this an ideal time for first time homebuyers or those moving up.
The Bank of Canada dropped its lending rate this week by another 0.25% to 0.5% which put downward pressure on the
Canadian dollar. In the meantime, the US Government brokered a deal with Iran that would see some of their financial
sanctions eased and allow them to start producing and selling more oil into the world market. That agreement was
probably at least partly responsible for oil prices dipping very close to the $50 mark.
It seems the economy was adjusting well to $60 oil. $50 may not be high enough to keep oil companies investing in new
projects. Many of the workers laid off in January have been trickling back to work, but a protracted spell of much lower oil
prices could put them back on the sidelines. There is still much good news out there however. The Treasury Branch
article below provides proof that the Alberta economy is not solely dependent on oil prices.
Construction activity holding up – Todd Hirsch, Alberta Treasury Branch
Despite the economic downturn, the roar of bulldozers, jackhammers and cement mixers was just as loud over the second
quarter as it’s ever been in Alberta. The total value of non-residential spending was $2.73 billion from April to June,
essentially unchanged from the first quarter. Compared to the second quarter of last year, spending is actually up five per
Commercial projects—one of three non-residential building construction categories—slipped to $1.86 billion. That’s down
from previous quarters, but not dramatically so. Commercial building projects include office towers, hotels and shopping
centres, and account for the largest share of total non-residential spending. Given the current pace of construction in
downtown Edmonton and Calgary, it’s not surprising that spending on commercial projects has yet to see much pullback.
Government and institutional spending rose slightly to $512 million, the highest level since early 2011. Industrial projects
were essentially unchanged at $359 million.
While non-residential building activity has held up remarkably well during the current economic downturn, it is expected to
slip further as the year progresses. Many of these projects, particularly the large commercial office towers, were planned
and started well before oil prices started to fall a year ago. Once started, construction spending generally continues until
the project is completed—which sometimes takes several years.
Even with more pullback expected in the coming quarters, spending on commercial projects is likely to hold up reasonably
well—especially compared to the much sharper downturn in 2009.July SL Graph

July 5 2015 – Market Update

Mon, 13 Jul by Dale Russell

The Sylvan Lake market remained resilient in June. Sales kept pace with last month but were off slightly from June of last year.
Year to date sales are down almost 29% from last year, but that statistic is a little misleading. 2014 was the most active market
we’ve experienced since 2007. If we compare this year’s 185 sales in the first 6 months with the previous 5 year average of 192,
2015 is a “normal” year. The overall sales to listing ratio suggests a “buyer’s market”, but when listings and sales over $500,000 are
taken out of the equation, that ratio moves into “balanced” territory.
The relationship between Supply and Demand determines price. When Supply is high and Demand low, prices will go down. When
Supply is low and Demand is strong, prices will go up. An ideal market occurs when Supply and Demand are in balance ‐ enough
choices for buyers and enough buyers to satisfy serious sellers. A slower economy could push the market into buyer’s territory,
but unless it’s flooded with inventory because of a catastrophe, we aren’t overly concerned.
There are plenty of opinions about where the economy is heading. We do know a few things ‐ 94.5% of Albertans are still working
and need homes to live in, and oil companies are still drilling for oil and selling it for a profit, even though that profit isn’t as high as
it once was.