Sales in August slipped while the number of active listings increased slightly. It is likely that we are now seeing the first signs
of low oil prices in the housing market. Historically, slower sales and higher inventory levels in Alberta have occurred about
a year after a slowdown in the energy industry.
The Red Deer market has finally moved into balance after giving sellers the advantage for several months. Extremely low
interest rates have been influential in our strong market so far this year. Higher supply and lower demand will have a
calming effect on prices this fall and combined with those low interest rates, will create an ideal environment for buyers who
are not affected by the energy industry slowdown.
Opinions on where energy prices are going vary. Some believe that OPEC will reduce production while US oil reserves are
shrinking more quickly than previously forecasted. Others believe the price of oil will remain below $50 for at least another
year. Whatever the case, the world still needs vast amounts of oil every day and energy companies will adapt to their
environment. The Alberta economy does rely on a strong energy sector to fuel a “strong” economy, but we will survive this
downturn the same as previous ones and come out of it stronger, smarter and more efficient. That’s what Albertans do.

Red Deer Market Update – Sales in the first half of July were down from the same period in June which is normal. July
and August are typically a little slower months with people focused on summer activities. The number of active listings
dropped compared to the same time last month, keeping the ratio between supply and demand in balanced territory,
where neither seller or buyer have an advantage.
Sales appear to be nicely spread across the price spectrum with adequate inventory to satisfy most buyers in every price
range. The pending sales count is also down slightly from this time last month, but still well within the “normal” range.
The price range where buyers have the most options and the least competition is over $500,000.
The Bank of Canada dropped its lending rate this week by another 0.25% to 0.5% which put downward pressure on the
Canadian dollar. In the meantime, the US Government brokered a deal with Iran that would see some of their financial
sanctions eased and allow them to start producing and selling more oil into the world market. That agreement was
probably at least partly responsible for oil prices dipping very close to the $50 mark.
It seems the economy was adjusting well to $60 oil. $50 may not be high enough to keep oil companies investing in new
projects. Many of the workers laid off in January have been trickling back to work, but a protracted spell of much lower oil
prices could put them back on the sidelines. There is still much good news out there however. The Treasury Branch
article below provides proof that the Alberta economy is not solely dependent on oil prices.
Construction activity holding up – Todd Hirsch, Alberta Treasury Branch
Despite the economic downturn, the roar of bulldozers, jackhammers and cement mixers was just as loud over the second
quarter as it’s ever been in Alberta. The total value of non-residential spending was $2.73 billion from April to June,
essentially unchanged from the first quarter. Compared to the second quarter of last year, spending is actually up five per
cent.
Commercial projects—one of three non-residential building construction categories—slipped to $1.86 billion. That’s down
from previous quarters, but not dramatically so. Commercial building projects include office towers, hotels and shopping
centres, and account for the largest share of total non-residential spending. Given the current pace of construction in
downtown Edmonton and Calgary, it’s not surprising that spending on commercial projects has yet to see much pullback.
Government and institutional spending rose slightly to $512 million, the highest level since early 2011. Industrial projects
were essentially unchanged at $359 million.
While non-residential building activity has held up remarkably well during the current economic downturn, it is expected to
slip further as the year progresses. Many of these projects, particularly the large commercial office towers, were planned
and started well before oil prices started to fall a year ago. Once started, construction spending generally continues until
the project is completed—which sometimes takes several years.
Even with more pullback expected in the coming quarters, spending on commercial projects is likely to hold up reasonably
well—especially compared to the much sharper downturn in 2009.

Another strong sales month in May, up from April but down from May of last year. The Red Deer market continues to favour
sellers as a result of the number of active listings actually falling compared to last month. A lower listing count is a bit of a
surprise as is the strength in the local market considering the current economic situation. The reason may be that builder’s
spec inventory has been absorbed while fewer building starts is keeping inventories lower.
In most of the central Alberta communities we serve, the market is slower this year compared to last. However, comparisons
between the 2014 and 2015 markets can be a little misleading. The 2014 market was the busiest since 2007. In fact, the
active listing and sales counts this year are quite normal when compared with 2012 and 2013. We don’t want to minimize the
impact that lower oil prices have had on the economy, but so far we aren’t seeing it in a large way in the housing market.
Since dropping to about $45/barrel, oil prices have recovered to the $60 range. The consensus among the experts seems to
be more of the same for the rest of the year with a slight improvement in 2016. The one thing that isn’t clear is how that will
impact our economy and the housing market. It certainly won’t be as bad as it would be with $45 oil, but it would be foolish
to assume that it will be as good as it was last year. We are looking forward to a stable market for the rest of the year.

Another strong month in May, up from April but down from May of last year.  The Red Deer market continues to favour sellers as a result of the number of active listings actually falling compared to last month. A lower listing count is a bit of a surprise as is the strength in the local market considering the current economic situation.  The reason may be that builder’s spec inventory has been absorbed while few building starts is keeping inventories lower.

In most of the central Alberta communities we serve, the market is slower compared to last year.  However, comparisons between the 2014 and 2015 markets can be a little misleading.  The 2014 market was the busiest since 2007.  In fact, the active listing and sales counts this year are quite normal when compared with 2012 and 2013.  We don’t want to minimize the impact that lower oil prices have had on the economy, but so far we aren’t seeing it in a large way in the housing market.

Since dropping to about $45/barrel, oil prices have recovered to the $60 range.  The consensus among the experts seems to be more of the same for the rest of the year with a slight improvement in 2016.  The one thing that isn’t clear is how that will impact our economy and the housing market.  It certainly won’t be as bad as it would be with $45 oil, but it would be foolish to assume that it will be as good as it was last year.  We are looking forward to a stable market for the rest of the year.

The first two weeks in May continued to generate strong market activity with sales up almost 40% over the same period in April.  Although sales were down compared to the first two weeks in May of 2014, we have to remember that 2014 was the best year we’ve had since 2007.  The number of active listings continues to creep up although we are still not oversupplied based on the demand we are experiencing.  The exception would be in the higher price ranges where supply and demand are out of balance in favour of buyers.

All in all, sales are still quite respectable in central Alberta despite what the media portrays.  There are lots of opinions about where our economy is going and they range from negative to positive.  As stated below, optimism will go a long way to helping the economy.  There are lots of reasons to be positive.  Alberta experienced job growth in the first quarter of the year.  People are still moving to Alberta because there are job vacancies that need to be filled.  Low interest rates and stable home prices make home ownership attractive.  Cattle prices are high and exports to the US are bringing valuable US dollars to producers.

We choose to be optimistic that Alberta will not only survive the current energy situation but come out of it stronger and better.

Albertans Feeling More Optimistic About Our Economy – Rob Roach, Senior Analyst ATB Financial – May 15, 2015

Some economists are predicting a recession in Alberta, but the results from ATB Financial’s latest Ear to the Ground Survey show that Albertans are starting to feel more, not less, optimistic about the future state of our economy.

When it comes to how we think we will be doing in six months in two key areas—our personal financial situations and the state of our local economies—we are beginning to feel increasingly confident. Some 43 per cent of Albertans surveyed last week feel that the economy will be stronger in six months compared to just 24 per cent who felt that way in April. This growing confidence is matched when it comes to how many of us are more confident about our own job security and that of those around us. That number is now up from 44 per cent to 56 per cent.

While not everybody has shaken off the economic blues, these results suggest many more Albertans are optimistic about the future than they were just a few weeks ago. This is a good sign because optimism is much more likely to spur economic growth than pessimism. With that said, optimism is cold comfort to those who have lost their jobs or are otherwise struggling during this downturn.

Another healthy sales month in April combined with just a slight increase in the number of active listings puts the Red Deer market in a very healthy condition going into our typically busiest time of the year.  While sales are off slightly from last year’s hectic pace, they are very normal when considering the last five years.  The number of active listings is also normal for this market and provides adequate choices for buyers in all price ranges.

The rest of central Alberta market (except Blackfalds) is also faring well with strong activity in the low to mid-price ranges and stable active listing levels.  So far we have experienced very little fallout from low energy prices, although it would be foolish to expect there won’t be some before the year is over.  It does appear that most of the layoffs have already happened and many oil companies are in good enough financial shape to keep working even with lower prices.

Oil prices have recovered back to the mid to high $50 range but most experts aren’t predicting prices over $60 until next year.  While world demand for oil is increasing, storage supplies are still growing and there are thousands of already drilled wells in the US just waiting for the prices to go up before fracking.  There is concern that once prices to up, that supply will very quickly come on the market and drive prices down again.

Red Deer Market Update – a great start to the month with 86 sales and 66 more that are pending.  We aren’t quite where we were a year ago but keeping right up with the first two weeks of April 2012 and 2013.  The total number of active listings is up slightly but mostly at the high end of the price spectrum.  The number of listings actually dropped some of the low and mid price ranges.

There are markets inside every market.  Supply and demand can favour buyers at one price range and sellers at another.  In most central Alberta markets right now, sales are strong in the starter and move-up markets while things are slower in the higher price ranges.

The central Alberta real estate market seems to have avoided the dire straits predicted by media and the government so far this spring with “normal” sales and inventory levels when compared to the last five years.  Comparisons with last year are down, but 2014 was the best year since the heady days of 2007 and should be considered in that light.

The Alberta Treasury Branch recently released its Alberta Economic Outlook for the 2^nd Quarter of 2015.  While there is unquestionably some pain as a result of the downturn in energy prices, their forecast is more optimistic than many and we think presents a reasonable scenario going forward.

Key results from the ATB Economic Outlook are:

• Alberta’s economy will slow significantly in 2015 with real GDP growth of 0.8 per cent
• Labour markets are being affected by rising unemployment
• Consistently weak oil and gas prices have curtailed investment in the energy sector
• Housing starts remain stable, but softness in residential real estate suggests construction activity will cool
• Net interprovincial migration will slow but should remain positive – a net gain of 40,000 in 2015

The same report postulated some risk scenarios for global energy prices and the implications for Alberta.  The one they label as “most likely” states:

Global economic growth stabilizes; OPEC members unable to maintain current production levels indefinitely and prices start to rebound by summer or early fall. WTI = $US 50-60

• Some high-cost producers come off the market, including some OPEC members (e.g. Venezuela, Nigeria)
• Restocking continues and storage space for oil remains available (albeit near capacity).
• Prices continue to drop, but start to stabilize at $US 45 before rebounding above $US 55 in the summer, ultimately testing $US 60/bbl by year’s end.
• More oilsands projects in Alberta are delayed or scaled back, conventional drilling is reduced.
• Layoffs in Alberta’s energy sector and energy service providers, contractors, etc. continue.
• Alberta’s unemployment rate rises to 6.0 to 6.5 per cent by the end of 2015. • Provincial real GDP growth slows to around 0.5 to 1.0 per cent.

Alberta has certainly weathered bigger storms in the past and no doubt will do so again.

The Red Deer Market continued to defy logic again in March with sales that almost matched last year’s. At the end of the month there was still a large number of sales pending and strong viewing activity that suggests we could have a very good April as well.  The one slight concern is the growing number of active listings which is well above where we were last year at this time.  High inventory levels are good news for buyers and will keep prices in check this spring.

The ATB Alberta Economic Outlook just released suggests that while oil and natural gas prices are down, there are lots of bright lights in the Alberta economy.  Forestry, agriculture and tourism are all going to benefit tremendously from the low dollar, lower energy costs and better labour market. The construction industry will also benefit from those things and will be kept busy to some degree as the provincial government pushes ahead with public works projects, schools and hospitals.

The real estate and residential construction industries will undoubtedly feel the impact of lower oil prices, but will not be impacted as heavily as previous downturns.  Net immigration to Alberta is expected to reach 40,000 people in 2015 and those people will need homes.  Historically low mortgage rates under 3% combined with stable prices will make home ownership a very attractive proposition for anyone needing a place to live in Alberta in 2015.

Red Deer Market Update – Sales in the first two weeks of March have been like the weather – balmy.  And the current pending sales count indicates that total sales for the month could be well over 100 – a great start to the spring market and contrary to the negative news we have been hearing from the provincial government and the media.

We often hear “I’m going to wait for prices to come down”.  That might work for first time buyers, but if you have to sell one property to buy another, there is little logic in that statement.  If prices come down, the value of the property you have to sell is going to go come down in proportion to the one you are buying.The number of active listings is up almost 50% over the first of March last year.  That is very positive if you are a buyer, but not a big advantage if you are seller.  The advantage to buyers is obvious – more choices and the potential for better prices.  When the ratio between supply and demand falls below 25%, the advantage turns to the buyer, something we haven’t seen in the past year.

The real estate market is much like the stock market.  You never know for sure where the top or bottom is.  Warren Buffet, one of the world’s most successful investors buys on the way down and makes his gains on the rebound.  You can’t go far wrong following his example.

ATB’s Survey Shows Continued Consumer Confidence – Nick Ford – Economist – Alberta Treasury Branch – Mar. 5, 2015 The results from ATB Financial’s bi-weekly Ear to the Ground survey show Albertans remain confident and level headed when it comes to the current state of our economy.

Consumer sentiment in February’s second wave of surveying showed that almost half of all respondents (47 per cent) view the current Alberta economy as strong, an increase of two percentage points from the previous polling period. At the other end of the spectrum, 22 per cent of respondents perceive the current economy as weak, a decrease of five percentage points from the last survey.

Red Deer Market Update – a much better start to the month in February, almost as good as last year.  Along with a strong sales count we see a higher than average pending sales count that should see us finish the month in very good shape.  Active listings are up again, but in very good shape for this time of year and the market we are experiencing.  In some central Alberta markets, sales have slowed from last year while the active listing count is up.  It’s only normal that some buyers are holding off, waiting until they are sure their jobs are secure and for some indication where the market is going in the longer term.  Unfortunately some irresponsible comments by the media and our provincial government about the length of the downturn and the size of the budget shortfall are causing more damage than the economy itself.

Read carefully and it’s obvious that a lot of the jobs cut by major energy producers are not all in Alberta and the ones that are here are mostly contractors.  Many of those contractors will be able to fill some of those vacant positions that have been unfilled in the past.  Only 25% of Alberta’s economy is derived from energy and not all the jobs are going away.

New ATB Poll finds: Albertans are keeping calm and moving on – Nick Ford – ATB From newspapers to TV screens, there’s been heavy coverage of Alberta’s current and future economic landscape. Politicians, journalists and economists have all weighed in but how do Albertans feel about the current state of the economy? ATB Financial asked this question and others to gauge consumer sentiment in its brand new bi-weekly Ear to the Ground poll.

Despite news of oil’s price struggles and a weakened loonie, 45 per cent of the survey respondents view the current Alberta economy as strong with 27 per cent of respondents perceiving our economy as weak. There are signs of worry amongst Albertans however.  Over a third of Albertans anticipate that the economy will be weaker six months from now compared to about a quarter who believe it will be stronger. Additionally, close to 40 per cent of Albertans express intent to delay major purchases such as a house or car. And, 45 per cent are reconsidering travel plans. In general, Albertans are waiting for the dust to settle before deciding to make any large-scale purchases. This is likely tied to market uncertainty and the concern the economy might weaken in the next six months.

In general, Albertans are relatively optimistic about our economy. The latest retail sales numbers indicate that spending is still well above where it was two years ago. For now, Albertans will continue to trudge through the flurry of economic news stories.

ATB Financial’s most recent forecast projects that Alberta’s economy will grow by two per cent in 2015.