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Greg Martens 403-391-8849

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Archive for May, 2017

MARKET UPDATE – May 15, 2017

Sunday, May 21st, 2017

Red Deer sales in the first two weeks in May were up from the same time in April, but down compared to the first two weeks of May 2016. Year to date sales in Red Deer continue to lag behind the same time last year while overall central Alberta sales are up 7.5% year over year.

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

Sunday, May 21st, 2017

It feels like the spring market in Red Deer, like the weather, still hasn’t arrived.  The percentage drop in year over year sales at 15.3% is not what most people would have expected this year so far, but we aren’t surprised because we know that a recovery in the real estate market always lags behind an economic recovery by a year or so.  In spite of the year over year decline in sales, the number of active listings is lower than a year ago which has helped push the sales to listings ratio just into balanced territory.

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

Sunday, May 21st, 2017

RED DEER Year to date MLS sales of all property types in central Alberta are up 6.7% over the same period last year while year to date sales in Red Deer are down 13.4%  It’s difficult to pinpoint the reason for the discrepancy and it is unusual that Red Deer is down when the rest of the area is up.  It may be that people are being forced into the less expensive small markets by tighter mortgage rules.

The Red Deer market has not started April as well as it did last year.  The number of active listings is up significantly while sales are off slightly 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.

MARKET UPDATE – March 30, 2017

Sunday, May 21st, 2017

Sales in Red Deer in the first quarter of 2017 were down from the same time in 2016 by 14.5% which is a little surprising considering the Alberta economy is supposed to be on the mend.  There are a couple of facts that will help in understanding this trend.  First, there is more activity in Red Deer than last year, but it hasn’t translated into firm sales yet.  At the end of March, there were a large number of pending sales that should help boost April’s numbers closer to normal.  Second, an improving economy normally doesn’t translate into an active housing market for a while.  The housing market typically lags as much as a year behind the economy.

The number of active listings is down compared to the same time last year, which is a good sign that the market has survived quite well in spite of the economic situation.  One of the reasons the Alberta housing market has survived as well as it has is that in spite of what we’ve been experiencing here, the net population losses have been minimal.  According to ATB’s The Owl, over the last five quarters of recession, we’ve suffered a net population loss of only 11,000 people.

Compare that with the 20 quarters leading up to the 4th quarter of 2015 when Alberta welcomed more than 133,000 net new people to Alberta.  So, in spite of all our recent troubles, Alberta is obviously still a great place to live.


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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