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, 12 Jul
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.
Wed, 04 Apr
The number of residential MLS sales in central Alberta in the first 3 months of 2018 was equal to the first 3 months of 2017. Local markets vary, with Red Deer and Ponoka up year over year, while Sylvan Lake, Lacombe, Blackfalds, Penhold and Rocky are down.
The biggest challenge we face as realtors is the public’s assumption that economic recovery means an immediate return to increased sales and higher prices. In fact, the real estate market recovery will lag two to three years behind this economic recovery, which is weaker and slower than past recoveries.
Further proof is that the combined median sale price of homes in eight central Alberta municipalities reached its lowest point in five years in the first quarter of 2018. The previous low was reached two years after the last economic recovery was announced.
Overpricing is the single biggest mistake a seller can make in a market where there are far more sellers than buyers, and it leads to longer sale times, lower prices and seller frustration. Less than 2 out of 10 homes listed on the MLS are selling each month in every central Alberta market. The one or two that sell will be homes that are priced according to local market reality.
Fri, 23 Mar
Sales in the first two weeks in March were down compared to the first two weeks of February in every market except Sylvan lake. Sales were also down slightly compared to the first two weeks of February 2017 in most markets.
The number of active listings are up substantially in every market compared to last month and are also higher than last year at this time. We attribute some of the extra listing activity to consumer confidence that the economy has turned and their desire to move after 3 years of slower markets.
It does seem busier although that hasn’t translated to hard sales yet. A resolution to the conflict between Alberta and B.C. over the pipeline would go a long way to improving consumer confidence and market activity.