2011 Year End Market Update – 2011 was a much better year than 2010 with MLS sales in central Alberta up 19.5%.  We are still a long ways from the 2007 boom at only at 73% of that year’s heady levels, but 2011 did get back to 2009 sales levels. 

At the same time our inventory of active listings has steadily dropped in most markets but especially in Red Deer, trending closer to balanced market conditions than we’ve seen in three years.  We are not back to that perfect balance yet, but if the current trend continues we could see those conditions later this spring. 

Everyone wants to know what prices are going to do.  Future predictions are very dangerous, but a simple law of economics states that when demand increases and supply decreases, prices will go up.  We have seen the relationship between supply and demand diminish over the last six months and know that a continuation of that trend will eventually see prices firm up. 

Our analysis of the median price of homes sold in Red Deer, Lacombe, Sylvan Lake, Ponoka, Innisfail, Blackfalds and Penhold over the past year shows that prices went down in the spring and summer and increased slightly the last six months.  The median price of homes in those markets is still down approximately 9% from the high in the second quarter of 2007.  While the median is not always and accurate representation of value, it does show us trends.  We believe the trend right now is up barring an economic collapse in Europe or the United States.  High oil prices continue to be the key factor in our economic well being. 

Red Deer – 2011 sales were up almost 13% over 2010.  Active listings as of Dec 31 this year are down an incredible 42% over Dec. 31, 2010.  The December sales to active listing ratio was 20.2% down from the previous month but probably just a reflection of a typically slower Christmas season. 

Lacombe – 2011 sales were up 8.4% over 2012.  Listings were slightly higher at the end of 2011 and the ratio of sales to active listings is currently 14% representing a market where the buyer still has an advantage. 

Sylvan Lake – 2011 sales managed to eke out a 1.9% increase over 2010.  Active listings as of Dec. 31, 2011 are finally trending down by 17% over 2010.  The sales to active listing ratio at only 5.6% suggests the Sylvan Lake market still heavily favours buyers.

Ponoka – 2011 sales were up 34% over 2010.  Active listings are about the same level as they were a year ago.  The sales to active listings ratio was down in December due to the Christmas slowdown, but still suggests a buyer’s market.  We expect to see a more balanced market in the spring. 

Blackfalds – 2011 sales are up 27% over 2011.  Active listings at Dec. 31, 2011 are down 22% from Dec. 2010.  The December sales to active listings ratio was 13.5% – still a buyer’s market, but the Blackfalds market is following Red Deer’s lead and quickly trending towards balance.

What is a perfect real estate market?  Well, to a home buyer it might be low prices and an ample supply to choose from.  But a seller sees things a little differently.  He wants a high price.  It gets a little confusing when we are buyers and sellers all at once.

Our vision of a perfect real estate market is one where neither the buyer or the seller has an advantage.  Where price changes are consistent with inflation and housing is affordable for the average citizen.  According to the Royal Bank’s most recent housing affordability report, Alberta remains one the most affordable housing markets in Canada which may explain why folks are moving here.

Going into 2012 most central Alberta markets still favour buyers.  That means more homes for sale than buyers looking to buy.   We saw signs in the last half of 2011 that trend was changing and things are moving toward balance, but it will likely take some more time before we can expect to see prices moving up.  People are moving to Alberta at a quicker rate than in the past several years, but the builders are ready and able to provide a boost to inventory levels which will keep supply and demand in balance.

Interprovincial Migration Pulls Back in Q3 – ATB Financial Weekly Economic Bulletin

After tanking during 2009 and remaining fairly slow during 2010 Alberta net-interprovincial migration picked back up again in the first half of this year. And while Canadians continued to move here during Q3, the interprovincial migration rate fell to its lowest level of the year. 

A total of 3,136 Canadians moved here from other provinces between July and September (inclusive), down from 4,720 in Q2 and 5,275 in Q1. Despite this slowing, it is still the highest rate for Q3 net interprovincial migration since 2006. 

Through the first three quarters of this year a total of 13,131 Canadians moved here from other provinces, up from only 2,106 in 2010 and 4,369 in 2009. While migration levels are unlikely to rise significantly in Q4 (Q4 is typically not a strong period for migration for seasonal reasons) the relatively healthy Alberta economy should continue to entice some Canadians westward. Looking over the next few years, Alberta net-interprovincial migration should remain fairly strong as the Alberta economy continues to churn out more jobs, housing is relatively affordable, and has one of the lowest unemployment rates in Canada.