MARKET UPDATE – August 30, 2017

Thu, 14 Sep by Jody Saarela & Kim Elliot

August sales in Rocky Mountain House were up dramatically from July’s, while the active listing count fell slightly, moving the market a little closer to balance.  Sales in most other central Alberta markets were also better in August, bringing year to date sales in line with the same period last year.

One month doesn’t make a market, but the improvement certainly suggests we are turning the corner.  There haven’t been any highly visible events that point to the change, but strong GDP growth in both the Canadian and Alberta economies suggest there is potential for continued recovery.  Unfortunately, a strong Canadian economy may cause another bump in the Bank of Canada rate which will trigger another jump in mortgage rates.  Tougher mortgage qualifying requirements imposed by the federal government combined with a rate increase would be detrimental to our fragile housing market recovery.

Oil prices remain subdued, moving up and down just under the $50US benchmark, but seem to be just sufficient to keep activity up in the energy sector.  Capital investment budgets in that sector are likely to be trimmed a little going into fall and winter and only the most cost efficient projects are moving ahead.  We are cautiously optimistic.

MARKET UPDATE – August 15, 2017

Wed, 23 Aug by Jody Saarela & Kim Elliot

Sales in the first two weeks of August were up compared to the same time in July in half our markets and down in the other half.  Active listing counts are also up in some markets and down in others.  There are certainly signs that the market may be improving, but it will likely be a slow process and it’s unlikely there will be any price stability until supply and demand move closer to balance.  I expect that will happen by next spring as long as oil prices stay stable.

MARKET UPDATE – July 30, 2017

Wed, 23 Aug by Jody Saarela & Kim Elliot

Sales in Rocky in July were on par with June while the number of active listings continues to rise.  The market remains well inside buyer’s territory and year to date sales are down just slightly when compared to the same period in 2016.

Some price ranges are doing better than others.  The $300,000 to $350,000 market is closer to balance and most advantageous for sellers at the moment.  Activity in the $200,000 – $250,000 price range also picked up last month and may be the first signs of a resurgence.

There is good news!  The Canadian dollar has gained quite a bit of ground against the US dollar in the past few months and oil prices briefly broke the $50 US barrier this week.  The Canadian economy is performing very well and most reports indicate that the Alberta economy has turned the corner.  Business optimism is up and the future is definitely looking brighter.

While we don’t expect a quick improvement in the central Alberta market from a seller’s perspective, we do see things gradually picking up moving into next spring.  This summer and fall may be the best opportunity buyers will have from a price, choice and interest rate perspective before the advantage starts to turn back to sellers.

MARKET UPDATE – July 15, 2017

Thu, 27 Jul by Jody Saarela & Kim Elliot

STATISTICS FOR CENTRAL ALBERTA

INTEREST RATE CHANGES:

The Bank of Canada announced on July 12th, 2017 that it was raising its trend-setting overnight lending rate from 0.5% to 0.75%. The increase partially unwinds the half-percentage point by which the Bank dropped interest rates in early 2015 following the sudden drop in oil prices in late 2014.

When announcing that it was raising rates for the first time in seven years, the Bank recognized that Canadian economic growth has recently been coming in stronger than it had previously predicted and broadly based.

The Bank suggested future rate hikes will depend on whether economic growth continues to broaden and become more sustainable, whether soft readings on inflation prove to be temporary, and whether exports and business investment improve.

Even under these conditions, the Bank said it remains wary about risks to the Canadian economic outlook posed by protectionist U.S. trade policy and high Canadian household indebtedness. That means the Bank will be cautious about further raising interest rates.

As of July 12th, 2017, the Benchmark five-year lending rate used to stress-test mortgage applications stood at 4.64 per cent, which is unchanged from both the previous Bank rate announcement on May 24th and from one year earlier. That said, Canada’s major chartered banks have recently raised advertised five-year fixed mortgage interest rates by one-fifth of a percent to 2.84 percent – which translates into an increase of $50 per month on a $500,000 mortgage loan ($60 of per month on a $600,000 mortgage loan, etc.).

The next interest rate announcement will be on September 6th, 2017. The next release of the Monetary Policy Report, which will update the Bank’s economic forecast, will be on October 25th, 2017.

 

MARKET UPDATE – June 30, 2017

Tue, 11 Jul by Jody Saarela & Kim Elliot

The Rocky market is one of the few in central Alberta with year to date sales higher than the same time in 2016.  In spite of the increase in sales, the large number of active listings is keeping the market in buyer’s territory.

Despite signs that the provincial economy is turning a corner, ATB Financial’s most recent Business Beat survey suggests a full economic recovery will still take time.  Optimism about the economy is up compared to last year but the latest round of surveying shows a slight decline in the number of small- and medium-sized businesses that believe Alberta’s economy will be stronger in six months. ATB’s Economy Index slipped from 58.4 in the first quarter of the year to 54.1 in the second quarter. (A value more than 50 means more business owners are more optimistic than not.)

The latest reading of ATB’s Business Index was 64.6, down by 1.5 points from the first quarter. Despite the moderate dips in the two indices, both economic and business optimism levels are above 50 and show that economic sentiment in the province is far better than last year.

We are of the same opinion when it comes to the housing market – there are signs of improvement but the real recovery may be a while coming.  In the meantime, there’s still tremendous opportunities for buyers.

MARKET UPDATE – June 15, 2017

Tue, 27 Jun by Jody Saarela & Kim Elliot

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 Jody Saarela & Kim Elliot

May sales in Rocky were down slightly compared to April and were on par compared to May of last year. Then number of active listings is up slightly from last month and pretty much even with last year at this time. While year to date sales have improved by 16%, the sales to listing ratio remains well into buyer’s territory.

Sellers who are wondering why their properties aren’t selling only need to look at the 8%sales to listing ratio. That means slightly less than 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, that 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 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

Sun, 21 May by Jody Saarela & Kim Elliot

Sales in Rocky Mountain House in the first two weeks in May were on par with the same time in April. The number of active listings is also on par with last month and last year. Year to date MLS sales in central Alberta are up 7.5%, a sign that our markets are moving in the right direction.

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.

MARKET UPDATE – April 30, 2017

Sun, 21 May by Jody Saarela & Kim Elliot

The Rocky market has recovered nicely this year with sales in the first four months up almost 8% over the same time last year.  The year to date increase is in direct contrast to what is happening in some other central Alberta markets, including Red Deer where sales for the same time are down year over year.  The number of active listings is higher than it was a year ago and that increase means buyers continue to have the advantage.

What does the future hold?  As tough as the last two years have been, fortunately, it is looking brighter….

The Alberta Treasury Branch summed up the last two years in Alberta this way – Many Albertans felt it. And the latest numbers confirm it. Alberta’s economy contracted another 3.8 per cent in 2016. This follows a similar decline of 3.7 per cent in 2015.  It was the second consecutive year that real gross domestic product (GDP) contracted, the last time this happened was in 1982 and 1983….

The last couple of years have been tough for Albertans and the provincial economy. But it is expected to get better in 2017. ATB is forecasting real GDP growth this year in the two to three per cent range. This represents an end to two consecutive years of recession and welcomes in an era of modest growth.

MARKET UPDATE – April 15, 2017

Sun, 21 May by Jody Saarela & Kim Elliot

ROCKY MOUNTAIN HOUSE: Year to date MLS sales in central Alberta are up 6.7% over the same period last year while sales in Rocky for the same period are down very slightly.  Rocky tends to have a higher than average number of people occupied in resource industries, so it makes sense that sales here are a little slower

The Rocky market started April a little better than last year.  The number of active listings is up slightly while sales are also up a little compared to the same time last year.  The comments below from ATB suggest that the economy is on the mend and some of our laid off workers are going back on the job.  All good news, but they probably won’t start buying houses right away.  The next few months will be used to catch up, pay bills and get some stability back in their lives.  Buying a home is probably at least a few months away.

That leaves those who have maintained their jobs through the recession.  Those who are thinking about a move would be well advised to do it soon, before those laid off workers get back on their feet.  The situation couldn’t be more perfect to buy – low interest rates with the threat of increases soon, lots of good inventory and a market where supply outweighs demand all spell “opportunity”.

Excerpts from The Owl, by ATB Economics

Manufacturing getting a lift from stronger oil prices ….another in a string of indicators that suggest Alberta is shaking off the recession and heading towards better days in 2017. In February, the value of manufacturing shipments in Alberta rose to $5.7 billion, an increase of 1.4 per cent over January.

The news is even better than that. From its lowest point during the recession in January of 2016, manufacturing shipments in our province have now increased by 15 per cent. That’s not quite enough to get it back to the pre-recession highs, but it has been steadily increasing over the last 12 months.

Production is Up!  While Alberta has oil reserves, it doesn’t mean they will be produced. Massive amounts of investment, expertise, creativity and technology are needed to locate, extract, transport and sell oil. This is a risky business that is subject to complex market forces and public policy.

In addition to those challenges, Alberta is landlocked and the oil trapped in the oil sands is not as easy to extract as conventional crude—factors which put us at a disadvantage when it comes to transforming our oil resources into viable business ventures.

Despite these challenges, Alberta produced 137 per cent more oil in 2015 than it did in 1985. In 2014, Alberta’s total annual production rose above one billion barrels for the first time and reached 1.1 billion barrels (3.1 million barrels per day) in 2015. Production fell in 2016 by 17 per cent as a result of the Fort McMurray forest fires but – barring another natural disaster — should fully recover and increase again in 2017.

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
The data included on this website is deemed to be reliable, but is not guaranteed to be accurate by the Central Alberta REALTORS® Association. The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license.