Red Deer January sales are down from the same period last year, something we certainly expected considering the current situation with the oil prices. We did start the year with low inventory levels and while they are up some, we are still very close to a balanced market. The good news is, we are starting off this month with a better than average number of pending sales, which should translate into a good February.

The media is mostly full of doom and gloom about our economy, but there are a few positive tidbits mixed in if you look for them. Oil prices rebounded a little this week and the dollar with it. Oil futures for May are trading at much higher prices than we are currently seeing. And the news that oil companies are shutting down drilling means the production will slow. The price of oil is driven by supply and demand. When the price goes down, demand will increase in supply will decrease. As demand increases and supply decreases, price will find its balance. In the past, OPEC has artificially managed supply to keep prices high, but it appears they are willing to do that anymore. The imbalance is currently only about one – 1.5% of total consumption. It won’t require much increase in demand or decrease of supply to bring the market back in the balance.

Red Deer Market Update – sales in the first two weeks of the New Year are off from the same time in December but close to the first two weeks of January 2014.  The number of active listings is slightly higher than it was a year ago, but normal for this time of year.

We are consistently asked how oil prices will affect the housing market.  House prices, like oil and everything else in the world that is sold in an open market, are dictated by supply and demand.  The reason oil prices are low is that supply has been growing faster than demand.  When oil (and house) prices go down, a couple of things happen – demand goes up and supply goes down, eventually bringing supply and demand back into balance.

We don’t have a world recession.  The American economy is strong.  We still have low interest rates. Many industries and most consumers benefit from lower fuel prices and a lower Canadian dollar.  Yes, there will be some slowdown while oil prices sort themselves out, but we will still have an economy that will perform as well as most other Canadian provinces according to all of Canada’s major banks.  The question is, “is the glass half full, or half empty?  We think it’s half full!
Typically it takes a little time for the law of supply and demand to work its way through the economy, but it always does.  We have been through these situations before and always come out stronger and better equipped to handle the next one.  If there is a nice thing about the current situation, it is that we are just dealing with an imbalance in the supply of and demand for oil.

Not all forecasts see Alberta’s economy the same way – Todd Hirsch, Chief Economist, ATB Financial

With oil prices plummeting in recent months, there’s been intense interest in how Alberta’s economy will fare in 2015. Although economists wished we had a crystal ball, we have to settle for our best guesses and insights to forecast how things may turn out—and here there is some disagreement.

The graph below shows the most current forecasts from some of Canada’s largest and most closely followed economic forecasters. They generally show an expectation of real GDP growth to be somewhere around 2 per cent—a far cry from the 4 per cent growth that the province has managed over the last several years.

One outlier that’s been attracting a lot of attention is the forecast from the Conference Board of Canada. They now expect Alberta’s economy to be in an outright contraction this year—in other words, a recession. If that happens, it will be the first time the province’s economy has shrunk since 2009 when it fell by 4.2 per cent.

Of course it’s impossible to say for sure if the Conference Board’s forecast is correct—or if any of these forecasts are correct. And it’s normal for there to be some varying opinions about how far low oil prices will drag down the economy. But while economists don’t always agree, they are all in unison about one thing: Alberta’s economy is set to slow significantly in 2015.

Red Deer residential sales end of the year on a very positive note with annual sales up to up more than 10% over last year’s pace. For the first time ever, there were at least 100 sales and every month of the year, although we didn’t quite make the total sales achieved in 2007 (2240). New homebuilders obviously did a good job this year as inventories pretty well kept pace and are in good shape going into the New Year.

Sales in all of central Alberta were up just over 13% from 2013 while the active listing count is down substantially in almost every market. That bodes well for home prices if the energy industry and the economy suffer from the current low oil price situation. Going into a slower market with lots of inventory could trigger price pressure as long as the building industry refrains from adding too much inventory in the way of new spec homes, the market should be able to sustain a period of its slower activity.

We don’t know what the future holds for Alberta’s economy, but we believe the housing market can weather a short term slowdown of a year or so without too many casualties. We do believe, like many others, that oil prices will recover within the next year or two and the Alberta economy will continue to lead the rest of the country in spite of short-term setbacks.

Sales in the first two weeks of December were almost as good as the same time in November while the number of active listings dropped again, but stayed above last year’s level.  Activity is strong at the high end of the price spectrum which is a little unusual at this time of year.  The number of pending sales suggests we could end the year with above average sales for December.  It’s too early to tell what impact falling oil prices will have on the market, but unless they drop dramatically and stay down for an extended time, the impact could be slight.  Many experts are predicting oil prices to recover in less a year or less.  That would likely mean a chance for the local housing market to stabilize and catch its breath.  Sometimes a little breather is not a bad thing.

Oil production not faltered by price – Nick Ford, Economist, ATB Financial – Alberta’s crude oil producers don’t seem too troubled by the plethora of news stories and business columns detailing oil’s price plunge, at least according to new Statistics Canada data on oil supply and distribution. Instead of cutting in September, Alberta’s oil producers extracted the same amount as in August and exported even more.  Since 2013, oil extraction has grown by eight per cent year-over-year. On a more impressive note, total oil withdrawn in Alberta has increased by 46 per cent over the past four years.

Exports were approximately 1.2 million barrels higher in September, marking a two per cent increase over August. Crude exports are 16 per cent higher this year than last. Virtually all of Alberta’s crude oil exports are sent to the United States, which is particularly interesting given the success of fracking south of our border.

We may still see similar output and distribution over the next couple of months. One reason is the simple fact that many oil producers need the money. Even with less than optimal prices, producers that have hedged large sums of money require funds to pay investors and creditors. Cutting off or easing operations could terminate valuable operating revenue and prove even more costly.

Jobs report shakes off falling energy prices – Todd Hirsch, Chief Economist, ATB Financial – If plummeting oil prices are expected to bring waves of layoffs in Alberta, it appears that companies in the province haven’t bought into the panic—at least not yet. In fact, last month the number of jobs in our province actually increased.  According to this morning’s Labour Force Survey, total employment increased by 3,200 (adjusted for seasonality), all of them full-time positions. Alberta’s unemployment rate remained unchanged at 4.5 per cent.

There were significant gains in construction (+9,100), health care and social assistance (+6,500), and even in oil and gas (+4,700)—the sector around which there is some worry at the moment. While the price drop for West Texas Intermediate probably overstates the price drop for Western Canadian oil, there is no question that producers in this province are seeing lower cash flow.

But while the number of jobs increased, there may still be some cracks starting to show in the energy sector. Employment in professional, scientific and technical services took a big hit—a loss of 11,000 jobs. Occupations in this category include geologists, engineers, accountants, lawyers and technicians—the kinds of services acquired by oil and gas producers. Even though they didn’t lay off any of their own workers, energy producers may be starting to pull back on contracts with external service providers.

Also, the survey of employment was conducted between November 9 and 15—and since then the price of Western Canadian Select blend oil has slumped another $10 per barrel. It’s almost certain that at least some job losses in the province are still to come.

In Red Deer November sales dropped 30% from October’s and it appears that the winter market has finally appeared along with the winter weather.  While the number of active listings fell again the month, it wasn’t enough to offset the drop in sales pushing the market into balance for the first time since early this year.  There’s no need to panic though, this situation is typical for this time of year.

At this time of year we are often asked for a forecast for the new year.  Of course our crystal ball is no better than anyone else’s, but there are a number of things to consider.  The one cloud in our otherwise sunny skies is the specter of low oil prices.  Lower oil prices could certainly have a negative impact on our economy and the housing market if they persist.  Most experts don’t believe that will happen.

Alberta economy has led the country for several years and most likely will continue to do so.  We have the lowest taxes and the highest wages in Canada and people from other parts of the country will be attracted to that.  Strong population growth and high wages usually are reliable predictors of a strong real estate market.  We continue to believe central Alberta is the best place in the world to live, even if it can be a little cold some days.

Red Deer Market Update – The market is moving back toward normal for this time of year on both the supply and demand sides of the spectrum although the number of pending sales suggests we could finish the month stronger than last year.  There appears to be ample supply to satisfy buyers in every price range which suggests the market is balanced.  While there is some concern over lower oil prices, many experts believe our economy will remain strong at least for the next two years.

More Jobs Added Last Month – Todd Hirsch, Chief Economist, ATB Financial – Alberta’s jobs market kept chugging along in October with a moderate but positive gain of 3,300 (new) jobs. But while the total number of jobs added last month was only moderate, what was more impressive was the quality of the new employment.

There was a gain of 11,800 full-time jobs, offset by a loss of 8,500 part-time jobs. This suggests that better jobs are being created than the ones that are being eliminated, or that the part-time workers are moving into better paying full-time positions.

Looking at only the monthly movements in the job market, one would be tempted to conclude that the employment situation in Alberta has been volatile. The summer months were marked with job losses—and indeed a huge drop in August. That was followed by an apparent surge in September when the province posted one of the strongest monthly gains on record.

But this volatility is probably more illusion than reality, and a reminder that it is never wise to infer too much from one month of data. Looking over the longer term trend presents a better picture of what is happening, and indeed the situation in Alberta’s job market is healthy and stable. Since October 2013, there’s been a gain of 58,500 jobs—an increase of 2.6 per cent. As well, the unemployment rate has hovered within a balanced band in the mid-four per cent range, suggesting Alberta remains one of the hottest job markets in the country.

Excerpts from CMHC Housing Outlook – 4^th Quarter 2014 – Alberta is experiencing the highest regional price gains this year as sales growth is helping lift the average resale price by more than four per cent to a projected $399,000 in 2014. The average price will continue to rise but at a slower pace to $407,800 in 2015 and $417,500 in 2016.

In Alberta, MLS® sales are projected to increase about eight per cent to 71,200 in 2014. Momentum from large migration inflows and employment gains are expected to help lift resale transactions to 72,900 in 2015 and 74,600 in 2016. The movement from rental tenure to homeownership, along with rising incomes, will help increase sales as will move-up buying. On the other hand, moderating migration inflows and higher monthly carrying cost are expected to slow the gain moving forward.

The average MLS® price in Alberta is projected to increase by over four per cent to $398,900 in 2014 and rise to $407,800 in 2015 and $417,500 in 2016. Sellers’ market conditions in Calgary are projected to ease as new listings rise, reflecting an overall provincial trend. Overall resale market conditions are forecast to remain balanced over the forecast period with the pace of price growth declining through 2016.

October sales in Red Deer were very strong compared to previous years and kept pace with August and September of this year.  The number of active listings is up from last year, keeping the market relatively close to balance.  Surprisingly, the tightest market falls in the $350,000 to $500,000 range.  In spite of lower oil prices, Alberta still suffers from a worker shortage which brings migration.  Population growth combined with high wages will keep the housing market strong.

Alberta’s hot job market continues to lure thousands of job seekers from across the country and around the world.  But while job opportunities are plentiful, it’s also the fat pay cheques that are attracting workers.  In August, employees in Alberta earned on average $1,164.88, the highest of all of the provinces by a considerable measure. Nationally, employees earned $943.30, with those in Prince Edward Island bringing in the least at $787.70.  Not only are earnings highest in Alberta, they continue to grow quickly.  Compared to last year earnings are up 5.1 percent—second only to earnings in Manitoba which grew by 5.3 percent.  The rate of earnings growth in Albert is nearly double the rate of consumer inflation, which clocked in at 2.6 percent in August.  Todd Hirsch, Chief Economist, ATB.

Red Deer Market Update – Sales to the middle of October are predictably down a little from the same period in September, although we see a very strong number of pending sales compared to last month.  Pending sales are the result of the past two week’s activity and suggest we could finish the month with a surge.  The number of active listings is up from last year but down from last month and are low enough to keep the market slightly in favour of sellers.

A strong real estate market is a function of a strong economy.  Oil prices are down which is not good, but the dollar is down as well which means oil company revenues and government royalties stay relatively high.  The new premier is spending lots of money on construction and will continue to spend until the election in 2016.  All in all the future looks bright.

Housing construction continues at strong pace – Todd Hirsch, Chief Economist, ATB Financial – Home builders in Alberta ended the summer of 2014 on a high note when construction started on a near record number of new homes.  The Canada Mortgage and Housing Corporation reported yesterday that housing starts in Alberta totaled 47,105 in September. This figure is adjusted for seasonality, and represents starts on an annualized basis—that is, the number of new homes that would be started if the pace set in September was maintained for twelve months.

Housing starts in Alberta are up 6.6 per cent from August. Over the last twelve months, they’ve risen by an astounding 17 per cent compared to the previous twelve month total. It’s also the second highest month for housing starts since the end of the last big construction boom hit the province in 2006-2008. The only other month that has seen higher numbers was June of this year.

The surge in housing starts is in response to strong demand, much of it driven by in-migration to the province. It is also consistent with the strong demand for existing housing, which is reflected by the sales and prices of homes on the market over the past year. For now, Alberta’s economy is creating enough new jobs—and keeping wages high enough—to sustain this pace of home construction. There is little to suggest that builders are creating a real estate bubble by putting too many homes onto the market.

Job market roars back to life in September – Todd Hirsch, Chief Economist, ATB Financial – After shedding jobs over the summer, Alberta’s labour market was back in high gear at the beginning of fall. The 21,200 jobs added last month marked the highest monthly increase in over three years and one of the biggest jumps on record for the province. About two-thirds of the new jobs were full-time positions. (All figures are seasonally adjusted.)

Alberta’s unemployment rate fell to 4.4 per cent, a drop of half a percentage point from August. The unemployment rate in the province has fluctuated between four and five per cent, representing a healthy, balanced job market. Alberta has added over 54,000 jobs over the last twelve months, most of these in manufacturing, educational services and construction.

The jobs report also had good news for the country. Canada’s economy added 74,000 jobs, the majority of them full-time. Ontario, which has suffered from very slow job growth over the last year, saw the largest increase with almost 25,000 new positions. Saskatchewan also added 7,000 new jobs. The national unemployment rate fell two-tenths of a percentage point to 6.8 per cent—the lowest it’s been since December 2008. Alberta’s strong job results last month more than made up for the large number of jobs lost over the summer. With over 11,000 jobs shed in August, some may have worried about the health of the province’s economy. But one month of data is never a trend. Taking the last several months into account, Alberta still appears to be the place to be for job seekers.

By Deborah Kearns, RE/MAX Senior Editor, Corporate Communications

This spring, we welcomed a healthy baby boy to our family. His happy addition expanded our family from three to four. It also expanded the housework, cleaning and laundry tenfold now that we have two kids!

I admit, it hasn’t always been easy. After a few exhausting weeks, we eventually settled into a rhythm, a productive albeit at times chaotic, one.

What helped were the steps I took before he was born.

1. Take stock and declutter. Before the baby arrives, it helps to declutter your home as much as possible – for your own sanity and to make room for all the baby gear you’ll acquire. Paring down unnecessary belongings and furniture is a great way to add some simplicity to your now-very-busy life.

2. Baby-proof your home in stages. You don’t have to do it all at once! To save time and money, childproof your home as your baby shows signs of reaching milestones like rolling over, sitting up, crawling and walking. Here’s a great guide from Parents.com.

3. Make the nursery functional. It’s tempting to want to re-create the immaculate nursery designs you see on Pinterest, but my advice is to put function first. Ease and practicality should take precedence over style.  Install window coverings that block out UV rays to help keep the room comfortable and dark during sleep times.

4. Check those smoke detectors. You might not think of this in the hustle and bustle, but testing the smoke and carbon monoxide detectors in your home is extremely important. We have smoke detectors in every room, and a carbon monoxide detector on every level. The U.S. Fire Administration has many resources to help you choose and install these critically important devices.

Have your own tips to share on prepping a home for a new baby’s arrival? Share them below! And if you’re looking for more space for your little addition(s), contact the agent on duty to help you find the right place.

Sales in Red Deer in September were off only slightly from August. The number of active listings dropped keeping the ratio of sales to listings firmly in seller’s market territory.  Sales at the low to midpoint of the price spectrum remained strong, while the higher price ranges lost some of the momentum picked over the spring and summer.

When pondering the future of central Alberta, the story remains pretty much the same – strong in-migration from other provinces driven by a strong job market, high wages and low taxes.  In April, May and June of this year, Alberta gained a net 13,204 new people from other parts of the country (the difference between the number of in-migrants less the number of out-migrants). That is the equivalent of Alberta adding another city the size of Camrose to its population in a matter of 3 months.

Part of the reason for our strong economy is that our oil is making its way to market by train.  New markets mean higher prices for producers and more royalties for the government who will be spreading the money around before another provincial election in 2016.