The question we are asked most often lately is “How is the market?  Are prices going down?  Where is the market going?  To answer the first question, the market so far this year has been very normal when compared to the last five years.  Answers to the other two questions are a little more difficult.

There are two major components that make up every real estate market – Supply (sellers) and Demand (buyers).  There are many factors that influence those two components, but the economy is the most important.  Most people rely on the media to tell them how the economy is doing.  The way the media represents the economy can influence consumer confidence.  When consumers are confident in the economy, they make buying and selling decisions.  When they are not confident, they tend to delay making those decisions.

The federal election campaign has no doubt impacted consumer confidence.  Every political party has been telling us that if the other guy wins, we are doomed.  Whichever one you believe, if you aren’t convinced they are going to win, it’s possible your confidence is low.

Sales so far this month in central Alberta have been generally normal for this time of year, but we have noticed that the number of pending sales are down, suggesting that the market has slowed a little just recently.  It is certainly possible that the election campaign and the uncertainty of the result has caused people to hold back until the election is over.

We can’t predict whether prices will go down or where the market is going.  The relationship between supply and demand will determine what prices do. We do know that it takes much longer for prices to go down, than it does for them to go up.

ATB Business Beat: Optimism drops, but businesses still happy, by Nick Ford, Economist at ATB Financial

ATB Financial’s third quarter Business Beat survey shows a decline in the number of small- to medium-sized businesses that believe Alberta’s economy will be stronger in six months. When asked about the province’s expected general economic performance, the index fell from 39.0 in the second quarter of the year to 25.2 in the third quarter.

This was the sixth consecutive quarter that there was a falling-off in the ATB Business Index, too. This particular measure of future business performance sat at 46.6, nearly seven points lower than the last round of polling and about 24 points lower than this time last year.

There’s no doubt that falling optimism is related to uncertainty clouding the energy sector. This last round of surveying was conducted in August, the month that saw the price of oil fall to around $US 38 per barrel. Given this, the drop in optimism is not surprising.

But, this latest version of the Business Beat survey focused on happiness, and despite the tension and frustration overshadowing our province’s oil and gas sector, over half of small and mid-sized business owners in Alberta report being pretty happy with nearly a quarter reporting that they are very happy.

So while oil prices remain suppressed and continue their battle in the marketplace, small- and medium-sized business owners in our province remain pretty happy.

September sales in Red Deer were off slightly from August’s while the number of active listings jumped, pushing the market into
buyer’s territory after several months when sellers had the advantage. The central Alberta market has fared extremely well this
year considering ATB economists are now predicting a slight contraction in the Alberta economy for 2015, and only modest
growth for 2016. The biggest reason for our stable market is that our population is still growing (a net gain of more than 8,000
people in Alberta in the 2nd quarter of this year, along with similar gains in the first quarter).
This week’s ATB Financial 4th Quarter Economic Outlook stated, “After 5 years of exceptionally strong growth, it now appears
certain that Alberta’s economy will contract in 2015. While that will be a challenge for many businesses and individuals who will
face loss of income and employment, it is not uncommon for our energy‐dependant province to face the occasional recession.
The single reason for the economic challenges this year is the drop in oil prices….. producers in Alberta have cut investments,
spending and workers…. Other major economic indicators showed some stability over the first three quarters of the year.
Residential construction was solid, wholesale and retail trade has stabilized and manufacturing has leveled off (albeit at a lower
value than a year ago).” See the entire report at www.atb.com/learn/economics