September 30, 2016 – Market Update

Wed, 05 Oct by Jody Saarela & Kim Elliot

September sales in Rocky recovered from a slower August and were back at an average pace for 2016.  The number of active listings is about 25% higher than a year ago which helps to explain the market advantage to buyers.  There is no doubt that the Rocky market has been affected by the energy industry slow down with large declines in year over year sales for the past 2 years.

As expected, all the activity in the Rocky market last month was in the lower price ranges.  The ratio of demand to supply is closet in the $350,000 – $400,000 price range where, strangely enough, the number of active listings has been falling for the last 4 months.

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.

Sylvan Lake – 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

Market Update – September 30, 2016

Fri, 30 Sep by Jody Saarela & Kim Elliot

Rocky – no sales in the first two weeks of the month for the second month in a row although we always seem to finish the month with some sales.  The number of active listings is the same as it was last month and higher than they were a year ago.

There are signs 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 rmh-september

August 31, 2016 – Market Update

Tue, 13 Sep by Jody Saarela & Kim Elliot

August sales in Rocky Mountain House were down from July’s but were on pace with August of last year.  The number of active listings remain stable, but higher than normal, keeping the market well inside buyer’s territory. The strength in the Rocky market continues to be in the $300,000 – $450,000 price range where supply and demand are in balance.

When the economy slows as it has over the past two years, the housing market is surely going to slow as well.  Sellers have to adjust their expectations when there are fewer buyers and more competition.  Recent sale results provide proof that there are still buyers for competitively priced homes.  Very low interest rates are contributing to better than expect market activity.

In spite of some continuing economic gloom, news of falling supply and increasing demand for oil in the world market provides home that prices will get past the magic US$50 mark for good in the coming months.  Energy companies have become streamlined and more cost efficient and will be able to generate profits at that price and put some of our unemployed workers back on the job.  Ultimately that is what will help get the Alberta economy back on track.

August 15, 2016 – Market Update

Tue, 13 Sep by Jody Saarela & Kim Elliot

Rocky sales in the first two weeks of August were well down from the first two weeks in July. The number of active listings is up slightly. 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.


Market Update – August 1, 2016.

Fri, 12 Aug by Jody Saarela & Kim Elliot

Year to date sales in Rocky Mountain House haven’t kept pace with last year. The year started out slow but rising oil prices to just over US$50 per barrel for West Texas Crude in the spring gave consumer confidence and we have experienced a bit busier June and July.  When the price of oil recently dropped below US$50 on its way to the current level around $42, consumer confidence went with it.  Inventories in Rocky are much higher than last year, and have pushed the market further into Buyer’s territory.

The good news for central alberta is, the light at the end of the tunnel is still on.  An August 3rd article in the Financial Post quotes Martin King, vice-president of institutional research at First Energy Capital Corp in Calgary. The gist of the article is that large reductions in capital expenditures in the world energy industry will have a direct impact on the long term supply of oil going forward.  Since the price of oil is driven by the relationship between supply and demand, lower capital investment means lower production that will lessen supply and bring prices back to a more equitable level.

Their prediction is US$60 average in 2017 and US76.50 through 2019. US$60 currently translates to about $78 Canadian which is likely enough to keep our energy industry working. Alberta will survive this latest downturn just like all the others before it.

July 15, 2016 – Market Update

Thu, 21 Jul by Jody Saarela & Kim Elliot

Rocky- an encouraging start to the summer market in Rocky with sales in the first two weeks of July even with last month as well as last year at the same time. It’s been a slow spring with year to date sales down 28% when compared to the same time last year with a much better month in June, so hopefully we are on the right track. Sales do typically slow somewhat as we move into July, but maybe we are satisfying some pent up demand as consumers start to consider a better market next year.

The number of active listings continues to creep up to levels well in excess of the number we reached last year and quite likely is back to levels likely last seen in 2010 – 2013 while sales for the first half of this year are slightly lower than 2009 and 2010 2009 and 2010. Coincidentally the price of oil was below $50 at the beginning of 2009, and the difference between then and now is that the price did recover back to $US 80+ within just a few months.

The one thing we do know is that the world is still using lots of oil and will do so for many years to come. That means there will be a market for Alberta oil. Left alone, the market will always find balance between the place where consumers are willing to buy it and producers are able to bring it to the market. This time, we don’t expect prices to recover as quickly, but we do expect to see producers become more efficient in order to generate profits even at lower prices.

Alberta Treasury Branch – Alberta Economic Outlook – Q3 2016

Without question the third quarter of 2016 is going to be difficult for many Albertans and businesses in the province. More layoffs in the energy sector and the setbacks presented by the Ft. McMurray disaster will add strain to an already struggling labour market. Adding to this is the heightened level of volatility in global markets and the questions surrounding the Brexit vote, all of which will continue to grind on optimism.

Yet while the unemployment rate may drift higher over the summer and early fall, there are signs that better days aren’t too far off. Oil prices have stabilized and should rally modestly to the range of $US 55-60 by the end of the year, which will bring stability to Alberta’s petroleum sector and the labour market. And barring any additional turmoil stemming from Europe (such as another major economy threatening to leave the E.U.) financial markets should calm down by the fall. In the meantime, Alberta’s retail, manufacturing, housing and construction sectors will continue to be challenged.

ATB’s economics and research team are forecasting a contraction of 1.9 per cent this year – the second consecutive year of recession. This will be followed by a modest recovery of 2.0 per cent growth in 2017.

RMH July

Market Update July 1, 2016

Fri, 15 Jul by Jody Saarela & Kim Elliot

Sales in Rocky in June more than doubled when compared to May, but were still down from last year at this time. The number of active listings dropped from last month, but is still much higher than it was a year ago. Supply and demand did move closer to balance this month and hopefully is the start of a new trend to go along with higher oil prices.

The median sale price for central Alberta recovered a little in the 2nd quarter and is now back to where it was at the peak in 2007. That means that in the 2nd quarter of 2016, when considering all the sales in Red Deer, Sylvan Lake, Lacombe, Ponoka, Blackfalds, Penhold and Innisfail, the sales price with an equal number of sales higher and an equal number lower moved up a little to $312,900 from $308,000 in the 1st quarter of 2016.

Median price is used to define trends only. An upward movement in the median price doesn’t necessarily mean that the price of an individual home went up. It more likely means that there were more sales in the higher price ranges. We have seen strong activity at the high of the price spectrum in some markets this year. It’s not possible to broadly define an exact percentage increase or decrease in prices for the overall market because every price range and every market is a little different based on the supply of active listings relative to the demand. Ask Jody Saarela or Kim Elliot for specific market advice about your property.

June 15, 2016 – Market Update

Mon, 27 Jun by Jody Saarela & Kim Elliot

Sales in the first half of June in Rocky were well up when compared with the same time in May and are on par when compared with the first two weeks of June 2015. The number of active listings in Rocky is the same as last month but way up from the same time last year. The high number of active listings will have an impact, but the local market has been quite stable all things considered. We consider the overall central Alberta market to be stable considering the economic situation in Alberta.

That stable market can probably be at least partly attributed to the fact that people are staying here rather than leaving, as indicated in the ATB article below. Apparently the job situation in other parts of Canada isn’t good enough to lure them away and they feel there is a future here.

Crude oil prices have fallen below the magical $50 US mark, which may be having some effect on consumer confidence.  We expect them to fluctuate up and down but most economists are predicting a gradual rise over the next few months and improvement in the Alberta economy starting this summer and fall.

Out-migration from Alberta Holding Steady, Todd Hirsch, ATB Economics – During a typical recession in Alberta, it’s common for people to move to other provinces for work. That trend makes what’s happening in the current downturn a bit surprising: so far the number of people leaving Alberta is relatively low.

The graph below shows the last 50 years of out-migration to other provinces, as a percentage of the population. The thin green line shows quarterly outflows that are subject to significant seasonality—people tend to leave mostly in the third and fourth quarters of the year. The heavy green line shows outflow averaged over four quarters, giving a better perspective of the general population movement.

The outflow was quite high during some of the 1960s and 1970s—more than one percent of the province packed up and left. The outflow gradually ebbed lower over the decades, with only a slight bump higher during the nasty recession of the 1980s.

The percentage of Albertans leaving has been remarkably stable since the mid-1990s at around 0.4 per cent per quarter. There was a slight jump in the 2008 recession to around 0.5 per cent. Despite the severity of the current 2015-16 downturn, out-migration from Alberta has risen only slightly above 0.4 per cent—mostly due to the fact that the job market in other parts of the country is not significantly better than it is in Alberta.

Chart Rocky June

Market Update: June 1st, 2016

Mon, 13 Jun by Jody Saarela & Kim Elliot

ROCKY MOUNTAIN HOUSE – Rocky Mountain House is the one central Alberta market that has been a little slower to respond to higher oil prices and mounting optimism for Alberta’s economy. Sales in May were down from April while the active listing count is up again this month over last. In fact, the number of active listings is almost double what it was a year ago, pushing the market well into buyer’s territory. The one place where inventory levels have been dropping is the $300,000 ‐ $350,000 range, but overall the Rocky market has ample supply to meet demand for the foreseeable future.

There is good news for home sellers moving forward. Oil prices climbed over the $50 US mark last week and this week continue to climb. Falling worldwide production combined with higher demand is forecast to push prices higher in coming months. Many economists are suggesting that the Alberta economy is very near bottom and will start to recover going into the second half of the year.

Of course, higher oil prices aren’t necessarily good news for home buyers. Low interest rates and an amply supply of available homes make this a very opportune time for buyers to take advantage of a situation that we don’t normally experience in Alberta, and that likely won’t last ‐ a market where buyers have the advantage.

May 20, 2016- Market Update

Fri, 20 May by Jody Saarela & Kim Elliot

Rocky – A slower start to the month of May compared to last month and also last year.  The number of active listings is up significantly compared to last month is and also significantly higher than last year at this time.

We suspect that the Ft. McMurray fires had a hand in the slower central Alberta market this month for a couple of reasons.  First, there are a lot of people living in central Alberta that work in Ft. McMurray and they certainly weren’t focused on the real estate market.  Second, catastrophic events like the Ft. McMurray fires grab everyone’s attention and limits their ability and desire to go out and make major decisions.  There is no doubt that this event has impacted the psyche of almost every Albertan.

We are already seeing activity levels resume.  It will take a long time for the people who live and work in Ft. McMurray to get back to normal.  If there is a silver lining in all of this, there will be jobs and economic activity generated putting the city back together.   Life in the rest of the province will carry on.

CMHC 2nd Quarter Housing Update – it seems things across Alberta are pretty similar to what we are dealing with here.  Sales are down a little and inventories are up a little which means prices are down a little.  Housing starts are down and net migration is negative, although we still have some net population gains due to international migration and new births.  Unemployment is up over 7%.  The slowdown in the energy industry is starting to impact other areas of the economy, although there are some sectors doing well, especially government.

CMHC is forecasting an improved economy in 2017 as long as oil prices continue to stabilize.  If they don’t, things will likely remain the same.  There is no question that consumer confidence in Alberta is directly tied to oil prices.  The unknown is where they are going.  There seems to be evidence lately that they are headed in the right direction, although no one believes they will get back to where they were.

It’s important to keep things in perspective when it comes to the economy and the housing market.  The media is heavily focused on the negative, but there are plenty of positives if we look for them.  Low interest rates, ample choice when it comes to choosing a home and stable prices are all the good things about our current real estate market.

Why is it that the media reports the “unemployment” rate instead of the employment rate?  One is 7%, the other is 93%.  That means there are still a lot of people working in Alberta.  Those people all need a roof over their heads.  Some of them will want to take advantage of all those positives mentioned earlier and move up.  For those people, it’s a good market.

Rocky May 2016

Jody Saarela & Kim Elliot, RE/MAX real estate central alberta Sylvan Lake
Cornerstone Building 4624 47 Street, Rocky Mountain House, Alberta, T4T 1C8
Tel: Kim: 403.844.5494 Jody: 403.846.6595 Fax: 403-887-3165
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