The market is slightly ahead of last year at this time in terms of sales, but with 150 fewer listings.  That means firming prices and more competition for the well priced and well presented properties.

Activity at the higher end of the price spectrum is much improved, but don`t expect prices to move as quickly there since the ratio of demand to supply is still in buyer`s market territory.

The amazing news in the article below is the fact that almost 80,000 new jobs have been created in Alberta in the past year.

While that definitely means lower unemployment rates in Alberta, it also means population growth.  People in less fortunate parts of the country will move to the jobs and the very low rental vacancy rate here would support that idea.  The great part is, as they get settled, many of them will move from their temporary rental accommodations into home purchases.

E.I. Numbers Down – Todd Hirsch, ATB Financial

In another sign of better economic times in Alberta, the social safety net for the unemployed has gotten a little bit less crowded.

The number of Albertans collecting employment insurance (E.I.) benefits fell to 26,900 in March. That number is adjusted to account for seasonality and it’s 31 per cent lower than it was in the same month a year ago. Nationally, total E.I. beneficiaries dropped to 549,410 in March—down by a much more modest 9.3 per cent from a year ago.

One factor that lowers the total number of beneficiaries is time. Benefits expire after a certain number of weeks. And in a region like Alberta where the unemployment rate is low, the number of eligible weeks is correspondingly low, with some unemployed workers eligible for as little as 14 weeks of benefits (depending on how long they had been working prior to a layoff).

However, in Alberta the most significant driver of E.I.’s falling number is job creation. As we know from recent labour force surveys, job creation in Alberta has been on the rise with nearly 80,000 new positions cropping up over the past year.

The release of the employment insurance report comes on an interesting day. This morning the federal government is expected to announce changes to the program which could tighten some of the conditions for collecting E.I. benefits. That may result in falling numbers in the months ahead—with or without new job creation.

Market Update – Alberta’s economy is still steaming ahead, but maybe not with the same strength as in 2005 – 2007.  That is good news.  Uncontrolled growth takes a heavy toll on everyone and isn’t healthy.  While we all want the value of our largest asset (our homes) to increase, flat out inflation makes it difficult for first time buyers to enter the market.  First time buyers make it possible for the people selling those houses to move up, and so on.  Sometimes, the good news is that the market is strong and balanced, which is where we seem to be in the Red Deer market.  The smaller surrounding markets are still in buyer’s market territory with ample supply, which is good news for home buyers willing to move to a smaller center.

Manufacturing Flattens Out – Todd Hirsch Senior Economist, ATB Financial

Factory floors and refineries in Alberta have been a blur of activity lately. However, the rate of increase seems to have levelled off somewhat in the first quarter of 2012.

Manufacturers in Alberta shipped a total of $6.4 billion worth of goods in March. That is only a slight improvement over February (+0.5 per cent). Total Canadian manufacturing sales jumped by a more impressive 1.9 per cent in March to $49.7 billion. This is the largest advance since September 2011. The gain was led by the petroleum and coal products industry, which was led by output in Ontario’s refineries.

Alberta’s manufacturing sector is essentially an extension of the energy sector. The largest manufacturing category is petroleum and coal products ($1.6 billion), which includes all of the products pumped out of refineries.

Other important categories are chemicals ($1.1 billion), machinery ($740 million) and fabricated metal ($500 million). The two main categories that are not related to the energy sector are food products ($954 million) and wood and paper manufacturing ($329 million).

After having shown some steady gains throughout 2011, manufacturing in Alberta has levelled off. This could be related to the stagnation of oil prices at around $US 100 per barrel for the North American benchmark price (Alberta’s oil sells at a discount to this). Manufacturers are still busy—they’re just not gaining much ground. Given that the province’s economy is back into “boom” mode, some tempering of activity in manufacturing may actually be a bit of a welcomed sign. Things can overheat quickly.

Market Update – The central Alberta real estate market continues to strengthen as we move through the spring market.  Generally, the supply of homes for sale in central Alberta is shrinking or stable while demand continues to grow.  Most of the smaller markets are in balance or favor buyers, while the Red Deer market is clearly in seller’s market territory with a 44% sales to listing ratio in April.  That means more competition for the good Red Deer properties and the potential for price increases.  Typically, the Red Deer market will improve first with the smaller surrounding centres following suit.  As prices in Red Deer firm up, more buyers will consider the smaller centres and the comparably lower prices available there.

Obviously, oil continues to be the stimulus for economic activity in central Alberta.  High oil prices make horizontal drilling in the rock formations along the foothills viable.  Those wells require huge frac activity to free up the oil and central Alberta is a centre for frac companies. 

The dark clouds on the horizon remain very low natural gas prices, the perceived “over-heated” Canadian real estate market, the US economic recovery and the European economic crisis.  The Governor of the Bank of Canada concerned enough about real estate inflation in Toronto that he is considering an interest rate increase for all of Canada.  In spite of the negatives, the short term future for Alberta appears to be very bright.  Our provincial government seems to believe so too, planning on huge spending programs and counting on massive resource revenues to pay the bills.  Those huge spending programs will almost certainly fuel strong growth for the short term as long as the expected revenues materialize to fund them.

Red Deer – year to date sales are up 22% over 2011.  April sales are up 57% over April 2011.  Listings as of May 1 are down 24% from May 1, 2011.  April sales to listing ratio – 43.9% – Seller’s Market.

Lacombe – year to date sales are up 34% over 2011.  April sales are up 39% over April 2011.  Listings as of May 1 are at the same level as May 1, 2011.  April sales to listing ratio – 20% – Buyer’s Market

Sylvan Lake – year to date sales are up 40% over 2011.  April sales are up 35% over April 2011.  Listings as of May 1 are at the same level as May 1, 2011.  April sales to listing ratio – 15.25% – Buyer’s Market

Ponoka – year to date sales are up 70% over 2011.  April sales were slightly lower than April 2011.  Listings as of May 1 are slightly higher than at May 1, 2011.  April sales to listing ratio – 9.25% – Buyer’s Market 

Blackfalds – year to date sales are up 54% over 2011.  April sales are up 130% over April 2011.  Listings as of May 1 are down 24% compared to May 1, 2011.  April sales to listing ratio – 31.5% – Seller’s Market

Blackfalds being the closest market to Red Deer, is now benefitting from the tightening supply and stronger prices in Red Deer.  Assuming the current trends continue, the rest of our smaller markets will soon follow suit.

One other interesting fact about the central Alberta real estate market in 2012 is that demand for homes above the starter market is much stronger than we’ve experienced since 2007.  Renewed confidence in the economy seems to have people moving up once again.