MARKET UPDATE – June 15, 2017

Tue, 27 Jun by Dale Russell

The central Alberta real estate market has been following similar trends for many years – slower in the winter, strong in the spring, a little slower in the summer and busy again in the fall.  There are some reasons for those trends.  The spring market probably has been the strongest because that’s when oil workers came home at break-up and had some extra time to look at houses and make a move before going back to work.

December and January are slow for obvious reasons – most people don’t have time to move during the Christmas season and many don’t like to move in the winter.

The last half of June and the summer months are also times when many people have other things on their minds – the end of the school year, summer holidays etc.

September, October and November can be quite busy, although rarely as busy as the spring market.

This year, the spring market has not reached levels seen when oil prices were high and the economy was booming.  We have now experienced two and a half years of low oil prices and a slower economy and it shows in the real estate market.  Sales are lower and the number of active listings is higher, which leads to softer prices.

There is evidence that the economy is turning.  Alberta is projected to lead all Canadian provinces in growth this year with GDP predicted to increase by 3%.

So, when can we expect to see a stronger real estate market?  Obviously it depends on oil prices to a large degree, but the real estate market in the last few downturns has always taken at least a year to recover.

That would mean that we could see a return to more normal sales numbers in the spring of 2018.  In the meantime, we expect to see sales and the listing count keep pace with last year and maybe even do a little better.

Again, the good news for those buying and selling in our market – sell low, buy low.  If the house you are selling goes up, the one you buy will go up as well.  Now is the time to take advantage of the large inventory of homes and the vast choices available as well as very favorable interest rates.

Real estate has always been a great investment.  It provides a place to live while growing in value and best of all, the profit at the end is realized TAX FREE!  There just isn’t a better place to put your money.

MARKET UPDATE – May 30, 2017

Tue, 27 Jun by Dale Russell

May sales in Sylvan Lake edged up slightly compared to April but were down a little compared to May of last year.  The number of active listings is up substantially from last month and is also higher than last year at this time.  Sellers who are wondering why their properties aren’t selling only need to look at the 10% sales to listing ratio.  That means only one out of ten properties for sale on MLS sold last month.

The price of real estate is dictated by the relationship between Supply and Demand just like the price of oil or lumber.  When there is only one buyer for every 10 homes on the market, the buyer will naturally turn to the one that offers the most value for the money.

No amount of slick or aggressive marketing can overcome a price that is obviously too high when the property is compared with others on the market.  It is understandable that homeowners expect their property to be worth more than they paid for it, but unfortunately that isn’t always the case.  The one thing to remember is that prices in a local market are almost always relative – if you sell low, you will also buy low.

MARKET UPDATE – May 15, 2017

Tue, 27 Jun by Dale Russell

Sylvan Lake sales in the first two weeks in May were up from the same time in April, and much better than the first two weeks of May 2016. Sylvan Lake year to date sales have contributed to the increase in overall central Alberta sales which are up 7.5% year over year.

There have been many reports that the Alberta economy is improving after two years of recession. Several leading economic indicators are referenced in support of that theory. Oil prices have spent most of 2017 hovering over US$50, just recently dropping under that magic mark. Ramped up production in the US and Canada has increased supplies again, driving prices down. Recent news that OPEC has stated they are willing to do whatever it takes to keep prices stable has pushed the price back closer to US$50 in the last few days.

No matter what the politicians tell us, the strength of the Alberta economy is still heavily reliant on energy. There is no doubt that higher prices have increased activity in our energy sector, and more economic activity in any sector helps boost all the other sectors. But to assume that will change the housing market overnight would be a bit of a stretch.

Many people employed by the energy industry are back at work, but at reduced incomes. Energy company profits are still thin, but those still in business have become much more efficient and able to survive in the new lower price reality. It will take some time for their employees to get back on their feet and start thinking about investing money in new homes.

In the meantime, the housing market has survived based on activity by those not as affected by energy prices. Those families have an amazing opportunity to take advantage of more choice, less competition, lower prices and very low interest rates. Those with 20% down payments are in the best position to take advantage.

Buyers with less than 20% down require their mortgages to be insured and the federal government made that much more difficult with rules that require buyers to qualify at a high artificial rate as opposed to the actual rate they can borrow at.

The purpose of that program was to slow down heated markets in Toronto and Vancouver. Unfortunately the policy was applied across Canada and has had a very negative effect on markets already affected by low energy prices.

In a nutshell, the central Alberta real estate market has survived and will continue to do so. Ample supply and low demand in virtually every price range have moved prices off their highs reached in 2014. Smart buyers will take advantage now if they can. It is difficult to go against the flow and easy to think that prices may still go lower, but once those economic indicators start to turn, it is likely real estate prices aren’t too far behind.