The central Alberta real estate market continues to chug along.  Sales in the first half of June are down from May’s and off slightly from last June.  Historically June has been a slower month coming off our strong spring markets and we believe it’s because families are typically very busy in June with school year ending activities and just have less time to spend on looking at homes.  Typically, June has also been the end of spring break-up in the energy industry, marking the time those workers are back to work with less time to think about looking at homes.

Of course, there are many very complicated factors that affect the local and world economies and therefore the local real estate market.  That makes it very difficult to predict what comes next, but historically the market slows some going into the summer months and will pick up again in the fall.  Right now it appears that the market is close to balance with adequate inventories in most price ranges and reasonably strong demand as people continue to move to Alberta.

The biggest reason we continue to have adequate inventories is very strong activity in home construction as indicated in the article below.  Quite simply, at this point anyway, the builders are keeping up with demand and we are looking for a “normal” summer and fall market.

Housing starts hit five-year high – Todd Hirsch, Chief Economist, ATB Financial

While softer energy prices may be moderating overall economic growth this year, it appears that homebuilders didn’t receive the memo. Judging by the most recent statistics, its boom time in Alberta!

According to the latest figures from Canada Mortgage and Housing Corporation, builders started construction on 41,438 new homes in our province in May. That’s the highest this year and the first time since early 2008 that the figure has risen above the 40,000 mark. What’s more, the trend over the last several months clearly suggests that the housing market is heating up. Between May 2012 and May of this year, housing starts are 14.1 per cent higher than they were in the previous 12-month period.

What’s causing this boom in home construction isn’t any big mystery: population growth. Even if overall economic growth has slowed somewhat, the inflow of people into our province hasn’t. The latest Labour Force Survey (released last Friday) points to a surge in the labour force, which has grown by 59,400 (+2.6 per cent) over the last 12-months. Interprovincial and international migration to Alberta is driving some of the demand for new homes. High wages, low unemployment and a younger population are also contributing factors.

The strong housing starts number this morning is supported by another figure from Friday’s employment report—the number of construction jobs is also rising. Even if jobs in the energy patch and manufacturing have eased back a bit, employment in construction continues to provide some great work opportunities.

Another strong sales month in Red Deer – up 20% from last month and slightly ahead of May 2012.  The number of active listings did rise in May which is keeping the relationship between supply and demand from getting severely out of balance.  The rest of the central Alberta market continued on an active pace in May with sales up again over last month, but that market also saw an increase in the number of active listings and the Sylvan Lake, Lacombe and Ponoka markets are still balanced slightly in favour of buyers.  We are seeing more buyers expanding their searches into the outlying markets looking for more choice and better prices.

The ATB article below explains why our markets are good, but not going out of control.  The Canadian economy is moving a little slow, but oil prices are still quite strong which keeps Alberta at the head of the Canadian economic pack.  The pace of growth in Alberta is so far being matched by the construction industry adding living accommodations in pace with demand.

Canada’s economic thaw – Todd Hirsch, Chief Economist, ATB Financial 

With spring slowly morphing into summer in Canada, it appears the temperature is not the only thing on the rise.  Canada’s economy is slowly crawling out of last year’s winter chill.

In March, the Canadian economy expanded by 0.2 per cent over the previous month. While that is shy of the rate of growth in January and February, it is the third consecutive month in which the gross domestic product has advanced.

For the entire first quarter of 2013, Canada’s economy expanded by 0.6 per cent quarter-over-quarter, the fastest pace in over two years. The major contributor to growth was the mining and oil and gas sector, which advanced 4.1 per cent in the quarter. This was due largely to higher prices for Canadian crude oil, which pushed up the value of exports.

At an annualized rate—that is, the rate of growth the economy would experience if this same pace was sustained for 12 months—Canada’s economy grew by 2.5 per cent in the first quarter. That is ahead of the comparable growth rate in the U.S., which clocked in at a revised 2.4 per cent.

The GDP’s growth in March and in the first quarter is a good sign for the Canadian economy. Nonetheless, the pace of growth is still somewhat below what the Bank of Canada would regard as “potential growth”— meaning some excess capacity remains in the economy. Today’s GDP report is unlikely to change the Bank of Canada’s position it took earlier this week when interest rates were kept unchanged.