Mon, 21 Nov
Average sales again in Sylvan Lake in the first half of November continue to support our theory that we may be on the recovery road. That theory is further supported by the lower number of active listings compared to last month. In a normal market we expect to see lower inventories as we move into winter, but higher inventory levels would be a symptom of a slower market, that we might expect in spite of the season, if the market was still in decline.
While sales are slightly lower than this time last year and inventories are slightly higher, we are seeing progress and that’s encouraging.
Anyone paying attention to the news will undoubtedly be wondering where our economy is heading. Oil prices briefly went over US$50 but are back down to the mid $45 range again. The future of oil prices will be decided by foreign oil producer’s (OPEC and Russia’s) ability to agree on lower production levels going forward. It is impossible to predict how that will play out, but common sense suggests that those countries are suffering the same as we are and production cuts are the answer.
The US election may provide some relief for Alberta as there is now optimism that the Keystone pipeline will be approved soon. That likelihood is putting pressure on our federal government to approve the Kinder Morgan expansion to Burnaby. So, there is some hope that we are now at the bottom of this economic slowdown. But, the recovery will be slower and it is likely that we will see similar real estate markets as we’ve experienced in 2016 well into 2017 at least. That is not the end of the world. Our local markets have fared reasonably well. Yes prices are off a little from their most recent highs reached in 2014, but are not down significantly except possibly at the high end of the price spectrum.
Recent Alberta Treasury Branch economic updates are reporting some good news in various sectors – vehicle sales in Alberta in September were up a little, manufacturing shipments from Alberta are only down 5% this year and were up a little in August and September, travelers to Alberta are experiencing lower accommodation prices which should encourage more travel here and the economic gain that accompanies that, the new home price index in Alberta is unchanged over the last two years, and there has been a lot of positive news about added activity in the energy sector.
We don’t believe there is a boom in our near future, although approval of two pipelines would give a tremendous boost to our confidence and the economy. Let’s hope common sense prevails on both sides of the border.
Tue, 08 Nov
Sales in Sylvan Lake in October slowed compared to September, which is typical for this time of year. The drop this year wasn’t as dramatic as last year which is a positive sign. The number of active listings is down again, close to levels we saw at this time last year. The 7.5% sales to listing ratio means buyers are still in the driver’s seat with ample choices and competitive prices. Without question, this is the perfect time to buy assuming we have seen the worst of the economic slowdown. The Alberta Treasury Branch has just released its latest economic report which seems to support that theory.
Largely due to a recovery in oil prices to around US$50, the ATB is predicting a modest rebound for Alberta of 2.1% growth after a contraction of 2.6% in 2016. It’s not a boom for sure, but it is a move in the right direction. The contraction in our economy has been longer and more pronounced and there is no doubt it will take longer to recover.
In addition to rising oil prices, strong agriculture, tourism and high tech industries and the rebuilding of Ft. McMurray will contribute to a stronger Alberta economy in 2017. While the recovery will be slower, we are confident Alberta is still a great place to live and invest.
Tue, 08 Nov
The number of active listings is down again, a very good sign that the economy and housing market are heading in the right direction. Sales were down in the first two weeks of October compared to the same time in September, but September got off to an exceptional start. October sales so far are back to normal for this time of year.
The most active market continues to be between $300,000 and $400,000, which also has the highest number of active listings. A good balance between supply and demand in that price range means buyers will continue to have lots of choices while serious sellers will continue to have buyers for their homes.
Housing Starts Rebound – Todd Hirsch, Chief Economist, ATB Financial
Shiny new condominium projects and charming new subdivisions have become familiar sights in Alberta, but there’s no question that the pace of new home construction has been slowed by the recession. However, new data from the Canada Mortgage and Housing Corporation are more positive.
After hitting a multi-year low in August, housing starts in Alberta roared back in September. Builders began construction on nearly 29,000 units last month, up from less than 20,000 the month prior. (The figures are seasonally adjusted to take into account regular and predictable fluctuations that occur each month; they are also presented at annualized rates, meaning the number of homes that would be built in an entire year if the same pace of activity was maintained for 12 months).
There are few economic statistics that are better indicators of consumer sentiment than housing starts. The drop in new home building activity over the last two years—illustrated clearly in the graph below—suggests Albertans have become a bit more hesitant to make a major purchase like a new home. It also reflects weaker demand as fewer people have been moving to Alberta. Over the last 12 months, total starts are down 32 per cent compared to the previous 12 months.
The good news is that home builders are pulling back on supply in reaction to softer demand—and that has helped keep the residential real estate market in reasonably good balance. New home prices have been virtually unchanged in Alberta’s two major cities throughout the downturn.