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.

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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.

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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.

rocky-august

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.

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.