Fri, 14 Sep
In spite of the heat and smoke, August turned out quite nicely in Red Deer, Lacombe, Sylvan Lake and Blackfalds with stronger than expected sales. At the same time the number of active listings continued their downward trend, pushing supply and demand slightly closer to balance. Ponoka, Rocky Mountain House and Penhold didn’t experience the same sales activity, but the number of active listings did come down slightly. Unfortunately, we have a long way to go to get the market back to balance and prices will remain depressed until then.
For the last three and a half years the Alberta real estate market has experienced excess inventories, slow sales and declining prices. Any gains we should have made from the economic recovery have been offset by crippling changes the federal government applied to mortgage qualifying rules.
Will the ongoing challenges to construction of the Trans Mountain Pipeline will affect the real estate market? The simple answer is yes, but it’s important to note there is still hope that the issues can be resolved. The Federal Government is heavily invested in this project both politically and financially and must find a solution.
Wed, 08 Aug
The usual summer trend to lower sales in July held true this year in every market we serve except Penhold which experienced a burst of activity. The other trend that we are seeing is the number of active listings finally starting to come down slightly. The sales to listing ratio in central Alberta continues to favour buyers, but we are finally seeing it easing its way toward balance.
Many of our clients are wondering why the market hasn’t rebounded more quickly when they are hearing that the economy is improving. A stronger economy is positive for sure, but that puts pressure on interest rates which directly impact the real estate market. Higher rates in conjunction with restrictive Federal Government imposed mortgage rules are making it difficult for buyers. Many have opted to stay put because they can’t qualify to move up. And, move up buyers are a huge, missing piece of the puzzle.
Today’s real estate market is like a huge wheel that is stuck and needs a nudge to get it moving. Once it starts to turn, momentum will help it keep turning. Some relaxation of the mortgage requirements or easing of rates in Alberta would be the grease that makes it easier to get unstuck. Neither option seems very likely, so we will have to be patient and accept things the way they are for now.
Thu, 12 Jul
June sales in central Alberta were down compared to May in most central Alberta markets except Red Deer, which managed a slight increase. In that time the number of active listings has experienced slight increases in some markets and slight decreases in others.
There are several big picture issues that are influencing the real estate market in Alberta, positive and negative. On the positive side, oil prices are up again and there appears to be some good news on the pipeline front – Kinder Morgan still in progress rather than stopped completely, Enbridge’s Line 9 has received further approvals in the U.S (although there are still some regulatory hurdles) and even the long-delayed Keystone appears to be making headway. And, for the first time in three years, Alberta experienced a positive net interprovincial population increase in the first quarter of 2018.
On the negative side, the escalating trade war between Canada and the U.S. is causing some real financial stress for some, but more importantly, anxiety and a loss of confidence on the part of many Canadians. That loss of confidence causes people to hesitate when it comes to large decisions, one of the most important being home purchases. We do believe the market may have bottomed out with better prospects for the balance of the year on the assumption that the trade issue doesn’t escalate further.
Thu, 14 Jun
May sales were up slightly in some central Alberta markets and off slightly in others. Concern over the Kinder Morgan deadline may have impacted consumer confidence negatively, causing sales to slow slightly compared to last month. We believe it is more likely the pipeline will be completed under federal government ownership and if the general-public feels the same way, consumer confidence will rise, and more people will consider buying their first home or moving up.
The statistic that is most affecting our markets now is the number of active listings which continues to rise in almost every market we serve. The increase is most dramatic in Red Deer and Sylvan Lake where the active listing count has reached an all time high. Almost all our central Alberta markets have historically high listing counts.
There are positives and negatives that come with high listing counts. The positive for buyers is ample choice and the negative for sellers is it keeps prices in check. Prices have fallen significantly in the past 3 years and while the market is starting to show signs of improvement, it is likely to take more time before sellers can expect to see prices start to recover. With less than 2 out of every 10 listings selling each month, a price that reflects our current reality is the most important ingredient for a successful sale.
Thu, 10 May
Our assumption that the cold and snowy March played a part in a slower real estate market may have been correct since April was busier in showing activity, new listings and sales. Central Alberta sales were up a whopping 25% in April compared to March while the number of active listings were also up dramatically. While weather almost certainly played a part, some increase from March to April is normal.
Another contributing factor is the improving economy. There is no doubt that our economy runs on energy and despite all the other challenges we are facing, we are seeing the benefit of oil prices hitting almost $70US for West Texas Intermediate and the gap narrowing for our own Western Canada Select. The additional profits from higher priced oil are funding more jobs and adding to the government’s coffers.
Increased consumer confidence is the product of a more stable economy. That added confidence is a big contributor to increased housing market activity. People need to feel confident to make big decisions. Continued good news for buyers however, increased sales normally means higher prices, but higher than normal inventories in almost every central Alberta market will keep prices where they are for now.