September 30, 2016 – Market Update

Thu, 06 Oct by Dale Russell

Sales in Sylvan Lake in September kept pace with July and August’s, a sign that there is optimism in the residential market.  The number of active listings dropped which typically happens in September as vacation properties come off the market for the winter.  The number of active listings is slightly lower than it was a year ago, a sign that inventories are holding steady.

Year to date sales in Sylvan Lake are down almost 28% when compared with the same time last year.  That is the highest percentage drop in the central Alberta markets we serve.  Part of the reason may be that Sylvan Lake has historically been an alternative option to Red Deer when supplies get tight there.  In the past several months, there has been ample supply in Red Deer at competitive prices, making the commute to Sylvan as less attractive alternative.

There are positive signs for energy prices in the months to come. OPEC has finally made an effort to work to manage oil supply suggesting that higher prices may be in the future. Oil prices over the $50US mark would definitely help some of our struggling oil companies while bolstering consumer confidence.  Recent activity in the central Alberta real estate market seems to support that idea.

 

September 15, 2016 – Market Update

Thu, 06 Oct by Dale Russell

Sales in the first two weeks of September are up slightly compared to the same time in August, but well behind the same time a year ago.  The number of active listings is down from last month and only slightly higher than they were a year ago, suggesting we are heading in the right direction when it comes to balancing supply and demand.

The most active price range again was between $350,000 and $400,000 although there was activity across the price spectrum, even two sales in the $1,000,000+ price range.  It is an encouraging sign that there is still confidence in the local market when people are investing large amounts into recreation properties at the lake.

A sign of confidence in the Alberta housing market is evidenced in the article below.  Albertans are spending money at a record pace, renovating their existing homes even if they aren’t buying new homes.

Home renovations holding up well Todd Hirsch, Chief Economist, Alberta Treasury Branches

As THE OWL reported yesterday, the slow economy may be wearing on new housing starts in Alberta.  But it doesn’t seem to be tempering the enthusiasm for renovating existing homes.  In fact, the most recent numbers suggest spending on residential renovations are near an all-time high.

In the second quarter of the year, home owners spent $1.56 billion on expansions or improvements to their properties.  The data include renovations on primary residence as well as cottages or recreational properties.  And because the survey captures only major renovations (i.e., those which must be done with a municipal building permit) it probably underestimates the total value of renovations—minor, unreported renovations such as new flooring, paint or lighting are not captured.

Renovation spending in the second quarter would, in fact, be a new record high if it was not for the spending that was registered in late 2013 and early 2014.  The renovation spending during these quarters were elevated by the southern Alberta flood in June of 2013 when millions of dollars were spent restoring houses that were devastated by the rising water.

The recent enthusiasm for renovation is a good sign that many Albertans are still investing money in their homes.  They may not be snapping up new properties to the same extent as they were a few years ago.  But they’re still finding the cash to put into their existing properties, creating homes and cottages that are larger, more modern and perhaps more energy efficient.atb-graph

sl-september

August 15, 2016 – Market Update

Tue, 20 Sep by Dale Russell

Sylvan Lake sales in the first two weeks of August were very good compared to the first two weeks in July. The number of active listings is up, but only slightly, so we don’t see anything in this market to be too concerned about. We will only be concerned when the ratio of sales to listings goes below 10% for an extended period of time. A slower market is a function of our current economic reality, but as long as supply and demand remain in reasonable sync, it’s just a slower market, not a calamity.

June’s wholesale trade numbers bring some good news, Nick Ford, Economist – ATB Financial

Wholesale activity managed to jump up in June. According to this morning’s wholesale report, June’s sales grew by $181 million, or 3.0 per cent from May (this figure is adjusted to account for seasonal variation). Despite the monthly incline, wholesale trade still remains 7.6 per cent lower than where it was at this point last year.

Wholesale trade is often forgotten, but is crucial to an economy. Wholesalers sell products to governments, institutions and other businesses and can be a strong force that works in conjunction with retailers. Like many sectors in our province, wholesale has had to battle strong economic headwinds.

But, today’s wholesale report does bring some decent economic news. While, virtually all types of wholesalers have seen activity dwindle from last year, sales are beginning to increase again. The value of goods sold from Alberta’s largest wholesale supplier, machinery, equipment and supplies merchants grew 18.0 per cent in June from May. In addition, the value of goods sold by building material and supplies (11.1 per cent) and food and beverage wholesalers (4.0 per cent) were up from May too.

Like June’s monthly Retail Trade Survey, June’s monthly Wholesale Trade Survey added three questions to assess the impact of the Fort McMurray wildfire. In June, about 1,250 companies responded to the additional survey questions. Of these companies, 147 wholesalers indicated that they had been affected by the wildfire, down from 212 wholesalers in May.

While the effects of the wildfire were felt across many wholesale subsectors, responses indicated that the machinery, equipment and supplies subsector had the largest share of companies reporting an impact in June, the same as in May Responses to the supplementary questions also revealed that wholesale establishments in most provinces had been affected, led by those in Alberta, Ontario and British Columbia. Although the responses showed that many had been affected, the overall impact of the wildfire and evacuation on wholesale sales was relatively small.

sylvan-lake-august

March 15, 2014 – Market Update

Mon, 07 Apr by Dale Russell

Spring is here.  At least in the Sylvan Lake housing market.  Strong sales in the first two weeks of March have us off to a great spring start, well ahead of last month and the first two weeks of March 2013.  There has been a nice increase in the number of active listings in the last two weeks, but they are still well down from a year ago.

Red Deer and Blackfalds inventories are low as well which is likely to cause prices to firm up as buyers across central Alberta face ever growing shortages.

All the good news in Alberta, especially when it comes to job creation, will almost certainly keep attracting large numbers of people to come here from the rest of Canada.  Population growth fuels the housing market like nothing else.

Alberta’s Job Market Revs UpTodd Hirsch, Chief Economist, ATB Financial – February’s job report puts to rest any lingering notions that Alberta’s labour market is shifting into lower gear. If anything, it may sound the alarm that the economy is galloping ahead too quickly. Last month, Alberta saw an increase of 18,800 new jobs (adjusted for seasonality)—the highest pace of monthly job creation in nearly three years, and well above the average gain of about 6,000 since the end of the 2009 recession.

The unemployment rate also dropped three-tenths of a percentage point to 4.3 per cent. The extraordinary performance in February brings the 12-month increase up 3.8 per cent to 82,300. Alberta now accounts for 87 per cent of all the jobs created in the entire country since February of last year.

Most of the new jobs in Alberta were in construction (+23,300), retail and wholesale trade (+7,300), and oil and gas (+6,800). These gains were partially offset by a drop in professional, scientific and technical occupations (-15,200), and health care and social assistance (-10,600). Three months ago, Alberta saw a one-month drop of nearly 10,000 jobs. That led to some concern about an economic slowdown. The longer term trend points to anything but.  With a falling unemployment rate and employment rising more quickly than the pool of available workers, the true worry could be that more Alberta employers will feel the pinch of labour shortages.

Trade deal good news for AlbertaTodd Hirsch, Chief Economist, ATB Financial – Canada’s new free trade deal with South Korea could be hugely beneficial to exporters, including those from Alberta. Prime Minister Stephen Harper signed the deal earlier this week.

With a population of more than 50 million, South Korea is nearly 50 per cent larger than Canada (population 35 million). Alberta has exported $2.9 billion in products to South Korea over the last five years—a miniscule amount when you consider total global exports over that period equalled $443.9 billion. But Koreans are becoming increasingly affluent and sophisticated, presenting Alberta exporters with lucrative opportunities.

The largest category of exports over the most recent five year period was natural resource products, notably coal and wood pulp (see graph). Machinery and mechanical appliances also made up a sizable portion (16.6 per cent). The big winners to come from the trade deal are Canadian farmers. Wheat and cereal grains make up more than 12 per cent of exports. Meat products account for another six per cent. Up until now, meat has faced high tariffs going into South Korea. With those trade barriers removed, Alberta farmers will be able to increase the volume of meat and other agricultural products they export overseas.

sylvanlake

August 15, 2013 – Market Update

Wed, 28 Aug by Dale Russell

Sales to the middle of August are on pace, both with last month’s and the same period in 2012.  The only difference appears to be a slight reduction in the number of active listings.  The number of listings with pending sales has jumped this month, suggesting a very strong finish to the summer.

While sales have been relatively strong this year, the listing inventory remains strong as well, and the market continues to favour buyers.  The sales to listing ratio is hovering in the 20% range, and prices won’t increase until that ratio reaches almost 30%.

That strong inventory level suggest that local builders are very busy and so far able to produce enough new homes to offset the strong population growth we have been experiencing all over Alberta as indicated in the ATB article below.

Interest rates are on the rise, but they are still very low compared to the last 30 years.  Any rate increase will have a negative impact on prices though.  It will be interesting to watch how high they go and what impact they will have on price over the rest of the year.

Weather Cool, But Job Market Hot – Todd Hirsch, Senior Economist, ATB Financial 

Alberta may be experiencing a cold, damp summer—but its’ job market is anything but.  In July, Alberta gained 16,600 new jobs, bringing the seasonally adjusted total employment to 2.217 million workers. The June flood may have played a part: while the provincial unemployment rate fell to 4.5 per cent, it actually ticked higher in Calgary to 5.3 per cent.

Canada’s job picture was not as rosy this morning. A loss of 39,000 jobs surprised economists who had, in a consensus forecast, predicted a modest gain of 6,000 jobs. The national unemployment rate ticked up a tenth of a percentage point to 7.2 per cent—now only slightly below the 7.4 per cent rate in the United States.

Alberta and Saskatchewan remain the hot job markets of the Canadian economy with employment growing by 3.0 and 3.9 per cent, respectively, over the last twelve months. Nationally employment has grown by a much more sluggish 1.3 per cent.

The sectors creating the most jobs in Alberta are not, however, the traditionally strongest sectors. Indeed, the oil and gas sector has shed 9,500 jobs (year-over year), as has the construction sector (-4,900). The strongest gains have come on the service side of the economy—professional, scientific and technical services (+28,200), retail and wholesale trade (+17,600) and information, culture and recreation (+13,700) showed the largest annual gains.

The surging employment has also been marked by good quality jobs. Nearly 89 per cent of the new positions created over the last twelve months are fulltime. That has helped boost consumer confidence, retail sales and the housing market throughout the province.

sylvan

January 15, 2013 – Market Update

Tue, 22 Jan by Dale Russell

January MLS sales in central Alberta are following last year’s trend.  One difference is the number of pending sales in Red Deer at 41 which is significantly higher than it was last January 15th.  Activity after the Christmas lull typically starts out slow in January and builds to a peak in April or May.  That high pending sales count may be a sign that the strong spring market has come early.

The article below certainly explains why activity is already strong.  Lots of people are moving to Alberta where there are more jobs and better wages.  It’s difficult to predict how busy things will get, but if the world economy doesn’t get any worse and the US economy continues its gradual recovery, there will be lots of demand for our oil and natural gas.  Strong demand for those commodities means stable prices which means continued exploration and drilling.

At the risk of being repetitive, a strong energy sector means a strong central Alberta economy and all the benefits that accrue from it.  As mentioned below, new construction seems to be keeping pace, but there is the potential for some strain, which could lead to price inflation. 

Accommodating the Alberta bound – by Will van’t Veld, Economist, ATB Financial 

There’s a reason why Calgary’s C-Train has been feeling more congested lately: people have been flocking to Alberta. Not since the boom years have so many people arrived in our province—and if the pace keeps up it will have important implications for the local economy.

That people are coming to Alberta shouldn’t be a surprise. In fact, it’s slightly more surprising that it took until the first quarter of 2012 to see the numbers really spike. The unemployment rate is not only well below the national average, but wages have been steadily climbing. In fact, the average weekly wage in Alberta is now $156 higher than in Ontario.

While migrants from other provinces have recently shown more interest in our province, the upward trend in international migration has been occurring since the recession hit. Alberta gained about six thousand migrants due to international migration in the first quarter, almost double what the province was recording just five years ago.

The tremendous influx of people during the boom years caused a severe shortage of housing and other social services. So far, Alberta’s infrastructure and housing stock appears more prepared to accommodate the growing population.  There’s a good reason for this, as housing starts, for instance, might have dipped during the past couple years, they didn’t fall off of a cliff either. Major infrastructure projects also continued to go ahead.

With companies actively recruiting out of province workers, both nationally and internationally, and the prosperity gap still heavily in Alberta’s favour, there’s a good chance more people will be Alberta bound in the coming quarters. At a certain point it may strain our ability to accommodate them, but so far so good. 

August 7, 2012 – Market Update

Tue, 07 Aug by Dale Russell

The number of residential sales in Sylvan Lake and area in July were exactly the same as July 2011.  In fact the current market looks very similar to the market last year on the active listing count as well with only slightly lower inventory levels.  The good news is that year to date sales are up 28% thanks to a strong spring market.

The sales to active listings ratio for July 2012 was 11.3%.  With just slightly more than 1 buyer for every 10 homes on the market, good choices and competitive prices make this still a great time to buy.

The article below suggests that more people are moving to Alberta than ever and if that’s the case, the buyer advantage will  diminish as more folks compete for those available homes.

 Accommodating the Alberta bound – Will Van’t Veld , Economist, ATB Financial

There’s a reason why Calgary’s CTrain has been feeling more congested lately: people have been flocking to Alberta. Not since the boom years have so many people arrived in our province—and if the pace keeps up it will have important implications for the local economy.

That people are coming to Alberta shouldn’t be a surprise.  In fact, it’s slightly more surprising that it took until the first quarter of 2012 to see the numbers really spike. The unemployment rate is not only well below the national average, but wages have been steadily climbing. In fact, the average weekly wage in Alberta is now $156 higher than in Ontario.

While migrants from other provinces have recently shown more interest in our province, the upward trend in international migration has been occurring since the recession hit. Alberta gained about six thousand migrants due to international migration in the first quarter, almost double what the province was recording just five years ago.

The tremendous influx of people during the boom years caused a severe shortage of housing and other social services. So far, Alberta’s infrastructure and housing stock appears more prepared to accommodate the growing population. There’s a good reason for this, as housing starts, for instance, might have dipped during the past couple years, they didn’t fall off of a cliff either. Major infrastructure projects also continued to go ahead.

With companies actively recruiting out of province workers, both nationally and internationally, and the prosperity gap still heavily in Alberta’s favour, there’s a good chance more people will be Alberta bound in the coming quarters. At a certain point it may strain our ability to accommodate them, but so far so good.

July 15, 2012 – Market Update

Thu, 26 Jul by Dale Russell

Month to date July sales in Sylvan Lake just about the same as the same period in July in 2011 and also the same as the first two weeks in June, while Red Deer sales have slowed compared to last month and last year.

It’s hard to understand why local markets can be so different, but it is possible that the smaller centres are finally catching up a little with Red Deer.

The world economic situation seems to have stabilized slightly in the past few weeks and the price of oil has held just above $80.  That is good news for central Alberta and as long as those indicators remain stable, we expect our real estate markets to be stable as well.  The Red Deer and Blackfalds markets still favour sellers and the Lacombe, Sylvan Lake and Ponoka markets favour buyers.

Excerpts from ATB Financial Weekly Economic Bulletin – July 13, 2012

Mixed housing market signals – Regulatory changes geared at cooling the housing market came into effect this week—but data on how much the market was already cooling in recent months, is providing mixed signals.

Last week sales data showed a precipitous drop in June, while this week construction data came in relatively strong, with strong housing starts and new home price data.

Year-over-year the new home price index rose 2.4 per cent in May. This was driven mostly by Toronto, where prices rose 5.5 per cent (in Alberta new home prices were flat).

Housing starts data for June was also surprisingly strong coming in at a seasonally adjusted annual rate of 222,700 units—that’s about 5 thousand more than May’s number.

Total starts in Alberta were 31,100 in June, steady from starts in May.  Starts in our province’s two major cities made significant jumps, with Calgary numbers 65 per cent higher than in 2011 and 46 per cent higher in Edmonton.

2011 Natural Gas – Anyone who follows the natural gas market would probably like to forget 2011. For that matter, the first half of 2012 as well. The folks at the Energy Information Administration (EIA) aren’t in the business of forgetting however, publishing a year-end review for natural gas in 2011 this week.

The EIA charts a disastrous year for 2011 in which average prices dropped to $3.98/MMbtu from 2010’s $4.37/MMbtu.  This was due to record high production and storage levels, which pushed the price even lower through 2012.  Why did production keep rising despite rock bottom prices? The EIA attributes this not only to the cheap abundance of shale gas, but the desire of drillers to drill for crude and other projects that produced natural gas as a by-product.

June 30, 2012 – Market Update

Fri, 06 Jul by Dale Russell

Market Update – The central Alberta real estate market is moving along nicely, although demand has leveled off since early spring.  Lacombe, Sylvan Lake and Ponoka remain over supplied with sales to listings ratios that give the advantage to buyers.  Red Deer and Blackfalds markets remain solidly in seller market territory with sales to listing ratios in June of 37.5% and 33% respectively. 

Year to date sales of all types of residential properties in central Alberta are up almost 20% this year compared to 2011.  There are signs that prices have leveled off in all markets, and even increased slightly in as the gap between sales and listings has narrowed.

Excerpts from: Mortgages: 25 to 40 and back to 25 in 6 years – Will van’t Veld, ATB Financial

It turned out to be a brief flirtation. In 2006, 40 year amortization periods were introduced, now, six short years later, the standard amortization period on a home loan is returning to 25 years. Much of this is being driven by a desire to cool a housing market without touching interest rates (that influence the entire economy). But there are differences worth highlighting between how interest rates and altering credit conditions influence the demand for housing.

Real-estate is a unique good. It’s the largest investment a household is likely ever to make. The return the household gets from that investment is shelter—which as a necessity of life—and would have to be purchased in any respect in the form of rent. Giving Canadians the option to get into the property market instead of renting or having to wait to upgrade their living conditions, was no doubt the primary motivation behind the lengthening of the traditional amortization period.

Opting for a longer amortization period wasn’t cheap. Not only did it cost the mortgage holder a higher upfront free, but it also represented tens of thousands more in interest payments. Households were offered higher credit than they’d normally be offered—but it came at a cost to borrowers—and lenders still had to do their due diligence. Underwriting standards weren’t reduced, as they were in the United States, but the credit limit was increased. ……

Clearly the move to 40 year amortizations likely stimulated demand far more than anticipated, as no one in 2006 was equating longer amortization periods as an alternative to lowering interest rate to stimulate demand just for housing (i.e. the flip of today’s argument for going back to 25).

There’s a big difference between how changes to amortization periods might impact housing demand and the impact that lower interest rates has on the demand for housing. The former is truly a trade-off of higher current housing consumption or investment versus higher total interest and other costs, whereas the latter doesn’t entail any kind of trade off, it’s just cheaper or more expensive.

Take the impact of the recently announced shortening of amortization periods. The monthly payment on a $350,000 mortgage at four per cent increased $176 by lowering the amortization 5 years, but it saved the borrower about $47 thousand in total interest. The equivalent jump in monthly payments, keeping an amortization period constant, could be obtained by seeing mortgage rates increase 85 basis points. In this case, instead of seeing the all-in cost of the house decline it actually increases by a total of $63 thousand. ……..  Some wind will certainly be taken out of the home buyer market, especially at the margins with first-time homebuyers, but it was a prudent move.

May 15, 2012 – Market Update

Wed, 23 May by Dale Russell

Market Update – Alberta’s economy is still steaming ahead, but maybe not with the same strength as in 2005 – 2007.  That is good news.  Uncontrolled growth takes a heavy toll on everyone and isn’t healthy.  While we all want the value of our largest asset (our homes) to increase, flat out inflation makes it difficult for first time buyers to enter the market.  First time buyers make it possible for the people selling those houses to move up, and so on.  Sometimes, the good news is that the market is strong and balanced, which is where we seem to be in the Red Deer market.  The smaller surrounding markets are still in buyer’s market territory with ample supply, which is good news for home buyers willing to move to a smaller center.

Manufacturing Flattens Out – Todd Hirsch Senior Economist, ATB Financial

Factory floors and refineries in Alberta have been a blur of activity lately. However, the rate of increase seems to have levelled off somewhat in the first quarter of 2012.

Manufacturers in Alberta shipped a total of $6.4 billion worth of goods in March. That is only a slight improvement over February (+0.5 per cent). Total Canadian manufacturing sales jumped by a more impressive 1.9 per cent in March to $49.7 billion. This is the largest advance since September 2011. The gain was led by the petroleum and coal products industry, which was led by output in Ontario’s refineries.

Alberta’s manufacturing sector is essentially an extension of the energy sector. The largest manufacturing category is petroleum and coal products ($1.6 billion), which includes all of the products pumped out of refineries.

Other important categories are chemicals ($1.1 billion), machinery ($740 million) and fabricated metal ($500 million). The two main categories that are not related to the energy sector are food products ($954 million) and wood and paper manufacturing ($329 million).

After having shown some steady gains throughout 2011, manufacturing in Alberta has levelled off. This could be related to the stagnation of oil prices at around $US 100 per barrel for the North American benchmark price (Alberta’s oil sells at a discount to this). Manufacturers are still busy—they’re just not gaining much ground. Given that the province’s economy is back into “boom” mode, some tempering of activity in manufacturing may actually be a bit of a welcomed sign. Things can overheat quickly.