January MLS sales in central Alberta are following last year’s trend.  One difference is the number of pending sales in Red Deer at 41 which is significantly higher than it was last January 15^th.  Activity after the Christmas lull typically starts out slow in January and builds to a peak in April or May.  That high pending sales count may be a sign that the strong spring market has come early.

The article below certainly explains why activity is already strong.  Lots of people are moving to Alberta where there are more jobs and better wages.  It’s difficult to predict how busy things will get, but if the world economy doesn’t get any worse and the US economy continues its gradual recovery, there will be lots of demand for our oil and natural gas.  Strong demand for those commodities means stable prices which means continued exploration and drilling.

At the risk of being repetitive, a strong energy sector means a strong central Alberta economy and all the benefits that accrue from it.  As mentioned below, new construction seems to be keeping pace, but there is the potential for some strain, which could lead to price inflation. 

Accommodating the Alberta bound – by Will van’t Veld, Economist, ATB Financial 

There’s a reason why Calgary’s C-Train has been feeling more congested lately: people have been flocking to Alberta. Not since the boom years have so many people arrived in our province—and if the pace keeps up it will have important implications for the local economy.

That people are coming to Alberta shouldn’t be a surprise. In fact, it’s slightly more surprising that it took until the first quarter of 2012 to see the numbers really spike. The unemployment rate is not only well below the national average, but wages have been steadily climbing. In fact, the average weekly wage in Alberta is now $156 higher than in Ontario.

While migrants from other provinces have recently shown more interest in our province, the upward trend in international migration has been occurring since the recession hit. Alberta gained about six thousand migrants due to international migration in the first quarter, almost double what the province was recording just five years ago.

The tremendous influx of people during the boom years caused a severe shortage of housing and other social services. So far, Alberta’s infrastructure and housing stock appears more prepared to accommodate the growing population.  There’s a good reason for this, as housing starts, for instance, might have dipped during the past couple years, they didn’t fall off of a cliff either. Major infrastructure projects also continued to go ahead.

With companies actively recruiting out of province workers, both nationally and internationally, and the prosperity gap still heavily in Alberta’s favour, there’s a good chance more people will be Alberta bound in the coming quarters. At a certain point it may strain our ability to accommodate them, but so far so good.

A familiar refrain at this time of year – listings are down.  Very normal considering most folks don’t want to be bothered with showings over the holiday season.  The difference this year is that they are down more than the last few years and,  there are more buyers out there than usual as folks continue to move to Alberta for all those great paying energy sector jobs.  It’s quite possible that those looking to sell after Christmas might be best served by jumping right into the market rather than waiting until spring when there will be more competition. 

Excerpts from the ATB Economic Comment by Todd Hirsch and Will Van’t Weld

Steady housing market – There were continued signs Alberta’s housing market is in relatively good shape. Nationally, urban housing starts dipped slightly in November to a seasonally adjusted 174,000, which is a pretty significant drop from the 200,000-unit pace Canada has been building at for much of 2012. Alberta, on the other hand, recorded the second highest housing start figure of the year at 35,500.

New housing price index data were also released this week. Since 2011, the national year-over-year monthly growth rate has been a steady 2.27 per cent, but this hides some important variation between provinces. In Ontario, the rate averaged 3.89 per cent; Alberta’s growth rate averaged just 0.73 per cent; and in B.C. it averaged -0.6 per cent.

Recently, Alberta’s rate of growth has quickened, rising by 1.62 per cent in October over 2011, but in Ontario and B.C. the rate has remained relatively constant.

Sticker shock? Not so much for new homes – Fresh paint, new appliances, shiny bathrooms— there’s plenty of appeal to owning a brand new home. And consistent with the currently balanced real estate market in Alberta, the price tags on these newly built abodes remain steady.

In October, the price index on a new home in Alberta stood at 94.2—up only modestly from 94.1 in September. The index is based on new home prices in 2007. Setting that price to an index of 100, the price of new homes in Alberta fell by about 10 per cent during 2008, and has been almost unchanged since then. Calgary’s new home price index in October (98.0) is higher than Edmonton’s (90.8), but both cities remain below the price level five years ago.

Compared to our neighbouring provinces, the new home market in Alberta is still lagging. In British Columbia, the price index of 98.8 is slightly higher than Alberta’s—but it has been trending gradually downward since early 2010.

Saskatchewan is a completely different story. New home prices did wobble during the economic downturn, but have been rising steadily since then. In October 2012, the index in that province stood at 134.0—suggesting prices today are higher by more than a third compared to 2007.

Prices in Saskatchewan have risen more quickly than in Alberta, but the index does not compare the absolute price tag across provinces. Saskatchewan’s home prices are still only catching up to the much higher values in Alberta and British Columbia.