January 30, 2017 – Market Update

Thu, 16 Feb by Jody Saarela & Kim Elliot

The Rocky market started the year the same way we started 2016.  Sales were up slightly over the January last year, while the number of active listings is up, but not enough to push the market further out of balance as we move into the spring market.  The good news is January sales in all of central Alberta were up a promising 12.8% compared to January 2016.

The difference between this January and last is that the price of West Texas crude is $25US higher and because of that, there are more oil rigs working.  There’s been a US presidential election, three pipeline announcements, a provincial carbon tax enacted and federal carbon tax announcement, and all kinds of excitement on the Alberta political front.

Of course, no one can predict the future, but it seems the Alberta economy is trending in the right direction.  Some of those things that have happened over the past year will create jobs and grow the economy in the future, but not necessarily in the next few months.  The thing that may carry the economy until that growth becomes real is confidence.  Confidence is a powerful force – it encourages people to invest, to spend, to hire and grow their businesses.  All by itself, It is an engine of the economy and what we really need to carry us through.

January 15, 2017 – Market Update

Thu, 26 Jan by Jody Saarela & Kim Elliot

The housing market in central Alberta is off to a slower start, very similar to what we experienced in 2010, a little less than two years after the September 2008 economic crisis.  The general consensus in Alberta economic circles is that we are starting to turn the corner, and things should improve this year, but a little slower than the last recovery.

The housing market generally lags behind an economic recovery by at least a year, so we don’t expect 2017 to be a boom year for sales or prices.  We do expect to see a marginal improvement as the economy continues that slower climb back to wellness.

What does this mean for home sellers?  It means they will have to be reasonable around their price expectations.  Price is determined by the relationship between Supply and Demand.  While the Supply of available homes is lower than it’s been for a couple of years, it’s still too high in most central Alberta markets to get them close to balance.  The homes that show the best and are priced competitively will sell and the rest won’t.

What does this mean for home buyers?  The first thing home buyers need to understand is that prices come down very slowly.  While the housing market is slower, the vast majority of home sellers are not forced to sell, and won’t unless they receive a price they deem fair.  Offers that are substantially lower than market value won’t fly.  The huge advantage home buyers still have, are historically low interest rates and a good supply of homes to choose from.  It’s a great time to invest in a home.

What does this mean for both buyers and sellers?  We are not in a crisis.  Home values have softened some, but Supply and Demand are not so far out of balance that Sellers should expect to give their property away and buyers should expect more moderate prices, but not a fire sale.

For those consumers selling and buying in the Alberta market, it’s important to remember that the whole province is floating in the same real estate pond.  To a large degree, the level of that pond rises and falls at the same rate.  If you are selling at a price that you perceive to be low, you should also be able to buy at a price that is relatively the same, therefore there is no loss or gain, other than you are now living in a home that suits your needs better.

Owning a home is much more than an economic endeavor.  In Alberta, our homes are necessary to keep us warm and out of the elements, but they are also the place where we live and raise our families.  The housing market in Alberta will survive and thrive in spite of economic ups and downs.

At RE/MAX real estate central alberta, we want to be consultants for our clients, providing sound information, good advice and a competent guiding hand through the increasingly complex process of buying or selling your home.  Call us first!

Rocky Jan 2017

December 31, 2016 – Market Update

Sat, 21 Jan by Jody Saarela & Kim Elliot

Rocky sales in December were down when compared with November and pretty much on par with December of 2015.  The number of active listing also came down again last month, but are still higher than they were last year at this time leaving supply and demand well out of balance to end the year.

Total sales in Rocky in 2016 were down 23% compared to 2015 after a 36% drop from 2014 to 2015 with this market being the hardest hit of all the central Alberta markets we serve.  The overall central Alberta market fared better in 2016 with sales down 12.6% from 2015.

A struggling energy industry was the biggest contributor to a slower market in 2016, but provincial government initiatives including minimum wage legislation and the new carbon tax also had an effect on business and consumer confidence.  When business and consumers are unsure how government policies will affect them, business is reluctant to invest and consumers are unlikely to make large buying decisions.  The federal government’s new mortgage rules also contributed by making it more difficult to qualify for a mortgage.  All these factors may combine to offset what could have been substantial gains in 2017.  We expect the 2017 housing market to be only slightly better than 2016 assuming oil prices stay above $50 US.

MARKET UPDATE – December 15, 2016

Mon, 19 Dec by Jody Saarela & Kim Elliot

Sales in Rocky in the first two weeks of December were up compared to the first two weeks in November and also up compared with the same time last year. The number of active listing fell slightly bringing that number closer to last year’s levels. A good start to the last month of the year is welcome in this market that has suffered more than most of our other central Alberta markets this year.

Last year at this time oil prices were headed into the $US28 range and optimism was not very high. The outlook is much better this year, but we are now being impacted by the federal government’s tougher rules for mortgage qualifying that have reduced the average buyer’s ability to finance their home purchase. It is an effort to curb rising prices in Toronto and Vancouver, but unfortunately, their country wide tinkering is negatively affecting Albertans who can least afford it.

Other than the new Alberta Carbon Tax, there has been lots of good news lately in addition to strengthening oil prices. Two pipeline approvals, increased 2017 budgets on the part of several major oil companies, oil patch workers being called back and one of the most visible signs of all – oil company truck convoys on the highways. Natural gas prices are also up, as indicated in the ATB article below.

Natural Gas Prices Jump Up …… Quietly by ATB Financial Economics

In case you missed it, natural gas prices have climbed to levels not seen for about two and a half years. As of yesterday, the Canadian benchmark’s (AECO) spot price closed around C$3.40/MMBtu while the North American benchmark, Henry Hub settled around $3.50/MMBtu.

The reason? Supply and demand.

First, let’s start with supply. Natural gas is required by oil producers for upgrading purposes and to run oilsands operations. As these businesses start to piece things back together and pick up the pace, they have been forced to draw a bit more natural gas from inventories thereby reducing supply. But, it’s not just businesses drawing down stockpiles, it’s us, the consumers too!

With temperatures dipping around -30*C, this cold snap that has covered much of the province has caused many Albertans to crank the temperature on their thermostats. Doing so has increased the amount of natural gas required to heat our homes and run Alberta’s businesses which has also caused a drawdown on storage supplies.

Collectively, these draws on natural gas inventories have boosted demand and caused the price to rise. Of course, as supply diminishes, demand bumps up and causes the price of natural gas to increase.

Both Canadian and North American gas prices are likely to stay at higher levels, at least as long as these cooler temperatures continue to stick around. AECO’s price is expected to float around C$3.40/MMBtu for the next couple of months while Henry Hub is expected to bounce around $3.50/MMBtu.


MARKET UPDATE – December 1, 2016

Tue, 13 Dec by Jody Saarela & Kim Elliot

Sales in Rocky were up slightly in November from October, and double the sales in November of last year.  The number of active listings dropped again last month, to levels we haven’t seen since last March and April.  There is no doubt that some listings have come off the market as a result of slower activity with the intention to come back on in the spring.  The Rocky market has felt the biggest impact from low oil prices in central Alberta.

However, two recent developments should almost certainly impact the local economy in the coming year.  First, OPEC announced an agreement with its member states to reduce oil production by 1.2 million barrels per day starting in January.  It’s difficult to predict whether the participants will actually live up to their promises, but oil prices immediately moved above the magic $US50 mark and are predicted to move higher with some predictions as high as $US70 by the end of 2017.

Second, the federal government approved two pipelines, one to the US and the Kinder Morgan expansion to Vancouver.  When complete, the Kinder Morgan expansion allows 600,000 additional barrels of oil per day to flow to Asian markets where it will receive world prices rather than the discounted prices we get from the US.  These two announcements will undoubtedly boost consumer confidence and generate some desperately needed jobs for Albertans.

MARKET UPDATE – November 15, 2016

Mon, 21 Nov by Jody Saarela & Kim Elliot

We experienced normal MLS sales in Rocky Mountain House in the first half of November compared to the same period last month and last year. That supports our theory that we may be on the road to recovery.  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.

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.


MARKET UPDATE – October 31, 2016

Tue, 08 Nov by Jody Saarela & Kim Elliot

Sales in Rocky in October slowed slightly compared to September, which is typical for this time of year.  The number of active listings is down again, but still higher than the numbers we saw at this time last year.  The 7.3% 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.

Market Update – October 15, 2016

Thu, 27 Oct by Jody Saarela & Kim Elliot

The number of active listings is down slightly, a very good sign that the economy and housing market are heading in the right direction. Sales were much better in the first two weeks of October than the same time in September and August. Hopefully a new trend for the Rocky market.

The most active market so far this month is between $150,000 and $250,000. Hopefully those sales will translate into sales further up the price ranges as those sellers become move up buyers. The opportunity for buyers in the $250,000 to $400,000 range is very good right now with an ample supply of homes to choose from.

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.



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

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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