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Archive for September, 2013

September 15, 2013 – Market Update

Friday, September 27th, 2013

Sales in the first half of September are off to s slower start than August and also slightly lower than the first two weeks in September of 2012.  The pending sales count at 52 is a good indication that the month will finish strong.  In the same time, the number of active listings is down again, creating an imbalance in supply and demand.  That will mean a continuation of the seller’s market we have been experiencing most of this year.

Sales activity is once again strongest in the $200,000 – $400,000 price range while the higher price range is slow with lots of active listings.  Buyers moving up to the $500,000 plus range can quite likely sell high and buy relatively low.

There are a lot of reasons why our market will continue the current trend – viable oil and natural gas prices, strong migration to Alberta, and low interest rates will keep the market active.  When people move into a market they typically need rental accommodation first.  Vacancy rates go down, rents go up and existing tenants are pushed into home ownership, which allows starter home owners to move up… and the cycle continues. 

A lot of swinging hammers – Todd Hirsch • Chief Economist, Alberta Treasury Branch

While building sites can often be noisy and messy to look at, there’s no denying the positive contribution that construction activity has on Alberta’s economy. Judging by the most recent statistics on building permits, it appears that our province can anticipate strong construction activity in the coming months.

This morning, Statistics Canada released its monthly report of building permits issued by municipalities across the country. In Alberta, the value of permits issued in July of this year reached $1.63 billion—an increase of 19.1 per cent over the previous month. Taking a longer-term view, building permits over the last 12 months are up 19.6 per cent compared to the previous 12-month period.

July’s soaring building permits were driven mostly by non-residential projects, which jumped to $816 million. On a month-to-month basis, non-residential projects tend to display more volatility than residential permits simply because of the size and scale of certain projects. Commercial construction projects—such as office buildings and shopping centres—made up nearly all of the non-residential permits in July, increasing from $350 million in June to $626 million in July.

But residential building is charging steadily higher in Alberta as well. Despite warning bells in other parts of Canada about over-valued real estate, Alberta’s home builders are in a more balanced position. House prices are rising, but not out of line with higher demand driven by in-migration and rising wages. That’s encouraging home builders to offer more choices onto the market for potential home buyers.

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August 15, 2013 – Market Update

Friday, September 6th, 2013

Month to date sales in Red Deer kept pace with July’s and were almost double the number sales for the same period in 2012.  The change from last year is in the number of active listings – down more than 10% from last year.  Fewer listings combined with strong sales is keeping Red Deer in Seller’s market territory, a bit unusual for the summer market.

Strong activity in new construction is a big factor in keeping the market closer to balance as people continue to move to Alberta in large numbers as indicated in the ATB article below.  It’s good to see that the jobs are not all energy related.  Growth in other sectors is critical to balance in our provincial economy.

Interest rates are on the rise, but still very low compared to the last 30 years.  Mortgage rate increases will have some negative impact on house prices. It will be interesting to watch how high they go and what impact they will have over the rest of the year.  It’s possible we could see stronger activity because buyers with locked in rates on mortgage pre-approvals are hurrying to buy before their lower rates expire.

Weather Cool, But Job Market Hot – Todd Hirsch, Senior Economist, ATB Financial 

Alberta may be experiencing a cold, damp summer—but its’ job market is anything but.  In July, Alberta gained 16,600 new jobs, bringing the seasonally adjusted total employment to 2.217 million workers. The June flood may have played a part: while the provincial unemployment rate fell to 4.5 per cent, it actually ticked higher in Calgary to 5.3 per cent.

Canada’s job picture was not as rosy this morning. A loss of 39,000 jobs surprised economists who had, in a consensus forecast, predicted a modest gain of 6,000 jobs. The national unemployment rate ticked up a tenth of a percentage point to 7.2 per cent—now only slightly below the 7.4 per cent rate in the United States.

Alberta and Saskatchewan remain the hot job markets of the Canadian economy with employment growing by 3.0 and 3.9 per cent, respectively, over the last twelve months. Nationally employment has grown by a much more sluggish 1.3 per cent.

The sectors creating the most jobs in Alberta are not, however, the traditionally strongest sectors. Indeed, the oil and gas sector has shed 9,500 jobs (year-over year), as has the construction sector (-4,900). The strongest gains have come on the service side of the economy—professional, scientific and technical services (+28,200), retail and wholesale trade (+17,600) and information, culture and recreation (+13,700) showed the largest annual gains.

The surging employment has also been marked by good quality jobs. Nearly 89 per cent of the new positions created over the last twelve months are fulltime. That has helped boost consumer confidence, retail sales and the housing market throughout the province.

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Greg Martens, RE/MAX Real Estate Central Alberta
4440-49 Ave, Red Deer, Alberta, T4N 3W6
Tel: 403-391-8849 Cell: 403-391-8849 Fax: 403-340-3085
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