May sales in Red Deer were very strong, up 22% from April and just slightly below what they were in May of last year. And, the number of active listings actually dropped some from the first of May. The effect of higher sales and a little lower listing count is a market that moved well into balanced territory from a buyer’s market. Sales in May were concentrated in the $250,000 ‐ $500,000 price range showing near normal levels for this time of year. With a sales to listing ratio in the $400,000 to $450,000 range at almost 50%, that part of the market moved well into seller’s market territory.

There is good news for home sellers moving forward. Oil prices climbed over the $50 US mark last week and this week continue to climb. Falling worldwide production combined with higher demand is forecast to push prices higher in coming months. Many economists are suggesting that the Alberta economy is very near bottom and will start to recover going into the second half of the year.

Of course, higher oil prices aren’t necessarily good news for home buyers. Low interest rates and an amply supply of available homes make this a very opportune time for buyers to take advantage of a situation that we don’t normally experience in Alberta, and that likely won’t last ‐ a market where buyers have the advantage.

Red Deer sales in the first half of May held up really well in spite of the distraction of the fires in Ft. McMurray The number of active listings kept climbing and that number is now significantly higher than it was a year ago.

We suspect that the Ft. McMurray fires had a hand in the slower market this month for a couple of reasons.  First, there are a lot of people living in central Alberta that work in Ft. McMurray and they certainly weren’t focused on the real estate market.  Second, catastrophic events like the Ft. McMurray fires grab everyone’s attention and limits their ability and desire to go out and make major decisions.  There is no doubt that this event has impacted the psyche of almost every Albertan.

We are already seeing activity levels resume.  It will take a long time for the people who live and work in Ft. McMurray to get back to normal.  If there is a silver lining in all of this, there will be jobs and economic activity generated putting the city back together.   Life in the rest of the province will carry on.

CMHC 2^nd Quarter Housing Update – it seems things across Alberta are pretty similar to what we are dealing with here.  Sales are down a little and inventories are up a little which means prices are down a little.  Housing starts are down and net migration is negative, although we still have some net population gains due to international migration and new births.  Unemployment is up over 7%.  The slowdown in the energy industry is starting to impact other areas of the economy, although there are some sectors doing well, especially government.

CMHC is forecasting an improved economy in 2017 as long as oil prices continue to stabilize.  If they don’t, things will likely remain the same.  There is no question that consumer confidence in Alberta is directly tied to oil prices.  The unknown is where they are going.  There seems to be evidence lately that they are headed in the right direction, although no one believes they will get back to where they were.

It’s important to keep things in perspective when it comes to the economy and the housing market.  The media is heavily focused on the negative, but there are plenty of positives if we look for them.  Low interest rates, ample choice when it comes to choosing a home and stable prices are all the good things about our current real estate market.

Why is it that the media reports the “unemployment” rate instead of the employment rate?  One is 7%, the other is 93%.  That means there are still a lot of people working in Alberta.  Those people all need a roof over their heads.  Some of them will want to take advantage of all those positives mentioned earlier and move up.  For those people, it’s a good market.

Market Update:  April sales in Red Deer were up almost 28% over March, but off 15% compared to April 2015. Year to date sales are also down about 15% compared to the same period last year. And, active listings at the beginning of May were up 21% compared to May 1, 2015, moving the market from balanced at this time last year, to a buyer’s market now.

It’s difficult to pinpoint exactly what impact the move to a buyer’s market has had on prices, but there is no doubt there has been some. Higher priced homes have been affected the most while starter and mid‐priced homes have held their value better, a function of different demand to supply ratios in different price ranges.

When the market softens, buyers naturally want to buy when prices are lowest. If you wait another month, prices may be lower, but maybe they won’t. We only know what the bottom is when prices are already on their way back up.

The absolute best time to buy is in a buyer’s market. It’s also not a bad time to sell, if you are going to buy again in the same market. If you are worried that the house you are selling has gone down in price, take comfort in the fact that the one you are buying has also gone down an equivalent amount. The benefit of buying now is there is much more to choose from!

The Red Deer market is behaving the way we would expect considering current economic conditions in Alberta.  Sales are down slightly in the first two weeks of April when compared to the same period last year.  The number of active listings is up again compared to last month and much higher than they were a year ago.  The vast majority of the increase in active listings since last year comes in the $250,000 – $350,000 price range, creating an incredible opportunity for first time buyers.

The overall central Alberta market is also behaving the way we would expect.  Sales are generally slightly lower and the listing count is higher, creating an imbalance and finally an advantage for buyers.  And it appears that buyers are taking advantage based on the number of pending sales at the middle of the month.

There is no question this is the right time to be looking to purchase your first home or make a move up.  The stars of low interest rates, many homes to choose from and a stable price environment are lining up to create an exceptional opportunity.  Those who wait for the exact bottom of the market may wistfully look back at this time and wonder why they didn’t see the opportunity.

Employment surges higher in March – Todd Hirsch, ATB Economics

Had this morning’s jobs report come one week earlier, it would clearly have appeared to be an April Fool’s Day joke, especially given the province’s current economic woes. But according to the latest Labour Force Survey, a whopping 19,000 jobs were added in March—the highest monthly advance in employment in over two years.

With the gain in employment, the province’s unemployment rate plunged from 7.9 per cent in February down to 7.1 per cent in March—matching the national average for the month.

The news gets even better—and more surprising. Of the 18,900 new jobs, the vast majority of them (14,500) were full-time positions. And the sector that had been losing thousands of positions—the resource sector—actually eked out a small gain in total employment for the month. The only sector that continued to suffer major job losses was manufacturing (-7,900).

It is difficult to explain the surprising advance in Alberta’s job market, particularly since there has been nothing else to suggest that the economy is showing signs of recovery. The only way to understand the data is to remember that the jobs report is survey research—it provides only an estimate. From month to month those estimates may undershoot or overshoot, and it’s dangerous to read too much into one single month. Taking a longer time perspective, Alberta’s job market is less surprising—fewer people are working than a year ago, especially in oil and gas.

Today’s job report was encouraging, but it’s still far too soon to call the downturn over.

Market Update- Red Deer sales in March didn’t keep pace with last year, but were up from February and, April sales are off to a good start.  As usual at this time of year, the number of active listings is up from last month.  In spite of lower sales and higher inventories, the market is just into buyer’s territory.  There haven’t been many times in the past few years where the buyer has had the advantage and with the extra punch provided by low interest rates along with more choices, it truly is a great time to buy.

No one can predict where the bottom of a price cycle is exactly, but some firming of oil prices recently could be an indication that the bottom is not far off.  Smart buyers move when others are still trying to decide what to do.

Unfortunately, the media is currently very focused on Alberta’ embattled energy industry while we know that other economic drivers in the province are doing quite well.  Agriculture is one that continues to have a large impact on the central Alberta economy. According to a recent article by ATB economist Nick Ford, “The latest revenue and expense data on farms reveal a resistant and formidable sector that some Albertans may forget about.  And yet without our province’s agriculture sector, it’s likely the blow of low energy prices would be felt more.”

Red Deer – Sales in the first half of March are a little slower than last year although the pending sales count suggests that the month could end up within a reasonable distance of last year.  Sales activity is strongest in the $250,000 – $350,000 range but quite resilient in the higher price ranges as well.

The active listing count has climbed a little quicker than last year and as a matter of fact is higher than it was at any time last year.  The higher number of active listings will likely remain above average until things start to return to normal.  A high listing count relative to lower demand creates a buyer’s market.

The real estate market has three modes – seller’s market, buyer’s market and balanced market.  The nature of real estate markets is that they rise and fall, in tune with the economy.  Central Alberta has experienced a balanced or seller’s market almost continuously since 2012.  Now buyers will have the advantage for a time until the economy (oil prices) recover a little.

The only people that lose in a buyer’s market are those that sell and don’t buy again in the same market.  In fact, those people only lose if they are moving to a seller’s market.  If the house you are selling goes down in value, the one you buy to replace it will have also gone down in value.

The real winners in a buyer’s market are first time buyers – more choice, stable prices and low interest rates are a rare combination that shouldn’t be ignored.

A small piece of good news broke on March 15 in regard to the Alberta economy.  A portion of an article from the Calgary Herald appears below that states that the provincial government is hinting that the small business tax may be reduced in the upcoming budget.  That would leave employers with a little more money for wages and expansion and certainly help the local economy.

Premier hints small business tax may be cut in April 14 budget, Calgary Herald, Mar. 15, 2016

Alberta small businesses could get a break in the April 14 budget in the form of a one percentage point tax cut, Premier Rachel Notley hinted Tuesday.

Notley told reporters her NDP government is looking seriously at cutting the tax from three per cent to two per cent as urged by business leaders in an open letter this week.  “On the issue of the small business tax, I would say that we simply all stay tuned for the budget,” Notley told reporters after making a speech to rural politicians in Edmonton.

The premier said her government has been meeting with business leaders and stakeholders across the province on how best to stimulate economic activity and the reduction of the small business tax has been raised. “There’s no question that’s one of the issues that has been presented to us and we’re considering a whole package of issues which will be announced in the budget,” Notley added.

Market Update- RED DEER sales in February probably exceed most expert’s expectations, almost keeping pace with February of last year. The one statistic that gives some cause for concern is the number of active listings – up 28% compared to a year ago.

The central Alberta markets where we’ve seen strong new home construction in the past few years are the ones that are now experiencing higher inventory levels. Building new homes is a many months long process and slowing that process down can take many more months.  New homes that have been started have to be finished and sold.  As demand slows those new homes are finished before they are sold and as a result, added to the MLS inventory.

It seems the Alberta economy is resigned to lower for longer oil prices which will likely mean a little slower real estate market in the short term. Prices may moderate slightly, but always take longer to go down than up. The resiliency of the real estate market is being demonstrated by the number of sales we are experiencing in spite of the current energy industry slowdown.  The law of supply and demand works in energy the same as it does in the real estate market.  People will continue to need carbon energy for the foreseeable future.  The price will find a level that sustains a reasonable supply. Alberta has vast amounts of that supply that will continue to be sold and, while the boom has faded, the industry will survive like it has many times in the past.

Market Update- Red Deer sales in February kept pace with the same period in 2015 and the pending sales count confirms there is still lots of activity in the Red Deer market.  It’s interesting to note that there are sales pending across the price spectrum, with 2 sales pending on homes listed for more than $1,000,000.  That suggests confidence in the Red Deer market.  The small worry is that the active listing count is much higher than last year at this time.

Sales across central Alberta so far this year appear to be about average when compared with the last five years.  The ATB article below does provide a partial explanation.  While it does discuss Calgary and Edmonton, central Alberta certainly will be experiencing similar gains.  It seems that “bad” in Alberta is just normal in the rest of the country and we are still an attractive destination for people looking for opportunity.

There are other reasons why the market is still behaving relatively normally.  Energy accounts for about 25% of Alberta’s economy compared to 35% a couple of decades ago.  Some of the rest of the economy outside of energy is benefitting from low energy prices.  Some of it is benefitting from the low Canadian dollar.   And some is just behaving normally, not affected by low energy prices at all.  We don’t want to minimize the pain energy companies and their employees are experiencing, but constantly dwelling on the negative does not help them, or us.  Alberta is and always will be in the future a terrific place to live, grow and invest.

Population Growth Still Strong, Rob Roach • Director of Insight, ATB Financial

The latest population estimates from Statistics Canada show that Alberta’s two large metros grew by more than 65,000 people between July 1, 2014 and June 30, 2015. At 2.4 per cent, Calgary and Edmonton tied for second spot on the list of fastest growing Census Metropolitan Areas (CMAs) in the country.

Average growth across all CMAs was 1.2 per cent. Thunder Bay, Peterborough, Saguenay, Sudbury, and Saint John are the five CMAs that saw a reduction in population.

The economic slump has slowed the inflow of both international and interprovincial migrants to Edmonton and Calgary. As a result, their growth rates are down from the previous year. Growth in 2013-14 was 3.5 per cent in both.

Taking a longer view, Calgary and Edmonton have grown by 47.2 per cent and 41.7 per cent since 2001—the fastest growth rates in the country. This translates into 462,000 new Calgarians and 401,000 new Edmontonians over that last decade and a half.

In terms of overall size, Calgary and Edmonton are the fourth and fifth largest CMAs in the country, respectively, and are two of Canada’s six CMAs with populations over one million. With the economic slump continuing into 2016, growth in the two cities will likely continue to slow but still remain among the strongest in the country.

Market Update- Some central Alberta real estate markets are behaving like we would expect in current economic circumstances and some have surprised us.  Past economic downturns have generated markets with slower sales and higher listing inventories.  The change in unit sales from 2014 to 2015 was -27% in Sylvan, -36% in Rocky, -25% in Ponoka, -26% in Lacombe, -17% in Red Deer and +1% in Penhold.  Those changes take us back to 2012 & 2013 sales levels.

The surprise comes in the number of active listings. Sylvan Lake, Lacombe, Ponoka, Rocky and Penhold listing counts are only slightly higher than last year at this time, while Red Deer and Blackfalds have higher than normal counts, but not high enough to be a large concern at this point.  Ultimately the relationship between Supply and Demand determines where prices will go and if the number of active listings remains stable, prices are unlikely to fluctuate much.

Is it a good time to buy or sell? That depends on your individual situation.  Every market and every price range inside those markets offer different opportunities.  Smart consumers make their buying and selling decisions based on current market information specifically tailored to their situation by their local RE/MAX real estate central alberta office – where you’ll find “local” experts.

Market Update– Red Deer sales maintained a good pace starting out the new year, actually a little higher than the same period in 2014.  The pending sales count indicates that we could finish up the month as almost strong as last year too.  The number of active listings is considerably higher than it was last January and is a bit of a concern.  An over-supply puts downward pressure on prices.

A bigger concern is that consumer confidence may be hurt by the constant barrage of tales of doom from the media – thousands of jobs lost in the energy industry etc.  Truth is, many of the jobs lost in Alberta were in Fort McMurray and it’s likely a lot of those people were commuting to work from all over Canada.  Their paychecks went home with them and the only contribution they made to the Alberta economy was the work they produced.  We used to hear that there were 70,000 jobs unfilled in Alberta.  Even if a lot of those jobs were energy related, some of them weren’t and have been undoubtedly filled as a result of the slack in the energy industry.  While we are cognizant of the fact that people in central Alberta have lost jobs and potentially more could, we also believe that the media is only focused on the negative and that there is much positive out there if we just look for it.  The Alberta Treasury Branch’s Alberta Economic Outlook for the first quarter of 2016 offers a realistic look at what we may experience over the next 18 months.  If offers hope that things will slowly begin to turn around in the middle of this year and slowly get better from there.  The summary of the report is as follows:

Downturns are not unusual in Alberta’s economy, which remains closely tied to the price of energy resources.  A steep drop in oil prices in 2014 – which continued and accelerated in 2015 – led to a contraction in Alberta’s GDP of about one percent last year.  Unfortunately, early 2016 holds little promise of a quick rebound.  Excess global supply form OPEC producers, coupled with uncertainty in China, Europe and the Middle East, continues to weigh on oil prices.  This has led to even greater stress on the balance sheets of the province’s energy producers as they struggle to reduce costs.  Natural gas prices continue mostly unchanged in a price range unsupportive of new investment or production.

                The strains in the oil patch are also weighing down industries peripheral to petroleum extraction, particularly manufacturing and construction.  As well, weaker consumer sentiment has resulted in reduced retail trade and residential housing construction.  All of this has resulted in an overall deterioration in the job market.

                As always, though, there remain pockets of optimism.  Agriculture, forestry, tourism – which are the province’s other major industries – continue to perform well.  Prospects for 2016 are positive, particularly with the weak Canadian dollar making commodity exports more attractive, and encouraging more U.S. tourism.

                The Economics and Research team at ATB Financial is estimating a GDP contraction of 1 percent in 2015, with a smaller contraction 0.5 percent in 2016.  Most of the economic stress on the economy and labour market are expected in the first half of the year.  Stability and even some return to modest growth is still anticipated by the end of the year.