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Archive for December, 2013

December 15 2013 – Market Update

Tuesday, December 24th, 2013

Red Deer sales in the first two weeks of December were down from the same period in November but quite similar to the same time in 2012.  The number of active listings is also down and at normal levels for this time of year.

Sales activity is strongest in the $250,000 – $350,000 price range, probably because that is the market where people moving into the province and renters moving up are looking.  The higher price ranges are typically quiet at this time of year.  Some of the reasons for our strong middle priced market are explained below.

Alberta Apartment Vacancy Rates The Lowest in Canada – Todd Hirsch, Chief Economist, ATB Financial

Alberta is likely the best place to be in Canada if you’re looking for work. But if you need a place to live along with that new job, you might run into some problems. According to the latest Rental Market Report from the Canada Mortgage and Housing Corporation (CMHC), Alberta has the tightest rental accommodation markets in the country.

In October, the vacancy rate in Calgary was a mere 1.0 per cent, down from 1.3 per cent in October of last year. That was the lowest rate among any major municipal market tracked by the CMHC. Edmonton had the second lowest at 1.4 per cent. The strong in-flow of interprovincial and international migrants into the province is the primary driver of the low vacancy rate in Alberta’s two major cities.

Strong population growth benefits the general economy—boosting retail sales and personal services—but it puts pressure on the rental accommodation market. Typically, migrants rent before they decide to purchase a residential property. The spillover effect of such a low vacancy rate is higher rent. Unlike certain other provinces, there are no restrictions on the monthly rents that landlords can charge in Alberta. The tight rental market may therefore lead to higher costs for renters. Hopefully better job opportunities and the highest wages in the country will help ease that pain.

Oil and gas extraction tightens up – The amount of spare capacity in the Canadian economy shrank a small amount in the third quarter of 2013. Much of this tightening came as a result of a higher capacity utilization in oil and gas extraction. The industrial capacity utilization rate, as reported quarterly by Statistics Canada, is the ratio of an industry’s actual output to its estimated potential output. The higher the percentage, the more available resources are being utilized and the higher the rate of economic output.

Canada’s all-industry average was operating at 81.7 per cent during July, August and September, up about 0.6 percentage points from the previous quarter. That is one of the higher readings since the end of the recession in 2009. Leading the charge was a sharp rise in the capacity utilization of oil and gas extraction. It moved from 85.1 to 87.5 per cent capacity in the third quarter—its highest rate in a decade. The figures reported are for Canada as a whole and are not broken down to the provincial level. Alberta—along with Saskatchewan and Newfoundland and Labrador—is home to a great proportion of the country’s oil and gas extraction activity. The rising utilization rate in this sector is a strong reflection of the rapid overall growth that Alberta is experiencing.

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November 15, 2013 – Market Updates

Monday, December 2nd, 2013

Sales in the first half of November in Red Deer were down slightly from the same period in October as well as the same period in 2012.  The number of active listings is down very slightly and is holding at a level that keeps the market in balance – where neither the seller or the buyer has the advantage.

Sales activity is strongest in the $300,000 – $400,000 price range which is also where there are the most active listings.  A good, balanced market as well if the current trends continue.  The market where the buyer still has the advantage is in the $400,000 plus price range where the sales to listing ratio is lower.

The long term forecast for Alberta remains strong as we continue to lead the country in growth.  That growth should support a good real estate market going into 2014.  Strong building starts in both the residential and commercial sector are huge contributors to a strong economy.

Building permits inch higher – Todd Hirsch, Chief Economist, ATB Financial

Construction activity is an important driver of Alberta’s economy, and over the last few years it has remained remarkably steady. New information released by Statistics Canada suggests this trend will continue in 2014.

Alberta’s total building permits are an excellent indicator of future construction activity. In September, they rose 5.2 per cent over the previous month, to $1.43 billion. However, residential and non-residential permits moved in opposite directions.

Residential builders took out $954 million in permits in September, a steep jump from August and the second-highest single month on record. (The all-time record of $978 million was set in June of 2007.) The rising value of residential permits suggests that home builders are reacting to strong demand for new homes. This is consistent with other residential real estate indicators, such as home sales and rising prices, for both new and existing homes. It also makes sense given the steady inflow of interprovincial migrants to Alberta this year.

The increase in residential permits was almost completely offset by a drop in non-residential permits. They tumbled 18 per cent month-over-month to $475 million. That’s a nine-month low. The size and scope of some non-residential construction projects, including office towers, shopping malls and industrial complexes, makes them much more volatile month to month.

Combined total building permits in Alberta continue to rise. Over the last twelve months, permits are 19.7 per cent higher than the previous twelve months. This bodes well for construction spending and employment in the near-term.

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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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