Market Update – August 1, 2016.

Fri, 12 Aug by Dale Russell

Unlike the rest of central Alberta, Ponoka year to date sales are up compared to last year.  Sales across central Alberta started out slow but rising oil prices to just over US$50 per barrel for West Texas Crude in the spring gave consumer confidence and we experienced a busy spring market.  When the price of oil recently dropped below US$50 on its way to the current level around $42, consumer confidence was affected and will likely show up in August’s sales results.  Inventories levels in Ponoka are about where they were a year ago and are high enough to favour buyers.

The good news for central alberta is, the light at the end of the tunnel is still on.  An August 3rd article in the Financial Post quotes Martin King, vice-president of institutional research at First Energy Capital Corp in Calgary. The gist of the article is that large reductions in capital expenditures in the world energy industry will have a direct impact on the long term supply of oil going forward.  Since the price of oil is driven by the relationship between supply and demand, lower capital investment means lower production that will lessen supply and bring prices back to a more equitable level.

Their prediction is US$60 average in 2017 and US76.50 through 2019. US$60 currently translates to about $78 Canadian which is likely enough to keep our energy industry working. Alberta will survive this latest downturn just like all the others before it.

July 15, 2016 – Market Update

Thu, 21 Jul by Dale Russell

PONOKA – a decent start to the summer market in Ponoka with sales in the first two weeks of July up from last month, and also up when compared to last year at the same time. It’s a continuation of the last couple of months when we’ve been seeing positive signs – higher sales and slow inventory growth. Sales do typically slow somewhat as we move into July but hopefully this good start is a sign of things to come.

Ponoka is the one market in central Alberta where history has not repeated itself. The number of active listings is below levels we saw in 2009 – 2011 while sales for the first half of the year are higher than they were in 2009 – 2011. The price of oil was below $50 at the beginning of 2009, and the difference between then and now is that in 2009 the price of oil did recover back to $US 80+ within just a year or so.

The one thing we do know is that the world is still using lots of oil and will do so for many years to come. That means there will be a market for Alberta oil. Left alone, the market will always find balance between the place where consumers are willing to buy it and producers are able to bring it to the market. This time, we don’t expect prices to recover as quickly, but we do expect to see producers become more efficient in order to generate profits even at lower prices.

Alberta Treasury Branch – Alberta Economic Outlook – Q3 2016

Without question the third quarter of 2016 is going to be difficult for many Albertans and businesses in the province. More layoffs in the energy sector and the setbacks presented by the Ft. McMurray disaster will add strain to an already struggling labour market. Adding to this is the heightened level of volatility in global markets and the questions surrounding the Brexit vote, all of which will continue to grind on optimism.

Yet while the unemployment rate may drift higher over the summer and early fall, there are signs that better days aren’t too far off. Oil prices have stabilized and should rally modestly to the range of $US 55-60 by the end of the year, which will bring stability to Alberta’s petroleum sector and the labour market. And barring any additional turmoil stemming from Europe (such as another major economy threatening to leave the E.U.) financial markets should calm down by the fall. In the meantime, Alberta’s retail, manufacturing, housing and construction sectors will continue to be challenged.

ATB’s economics and research tem are forecasting a contraction of 1.9 per cent this year – the second consecutive year of recession. This will be followed by a modest recovery of 2.0 per cent growth in 2017.

Ponoka July

July 1, 2016 – Market Update

Mon, 18 Jul by Dale Russell

The Ponoka market in June bucked the trend we are seeing in our other central Alberta markets. Ponoka sales dropped when compared with May of this year while the number of active listings increased substantially, pushing the market further into buyer’s territory. In spite of that little setback, the number of sales year to date is up 13% compared to the same time last year.

The median sale price for central Alberta recovered a little in the 2nd quarter and is now back to where it was at the peak in 2007. That means that in the 2nd quarter of 2016, when considering all the sales in Red Deer, Sylvan Lake, Lacombe, Ponoka, Blackfalds, Penhold and Innisfail, the sales price with an equal number of sales higher and an equal number lower moved up a little to $312,900 from $308,000 in the 1st quarter of 2016.

Median price is used to define trends only. An upward movement in the median price doesn’t necessarily mean that the price of an individual home went up. It more likely means that there were more sales in the higher price ranges. We have seen strong activity at the high of the price spectrum in some markets this year. It’s not possible to broadly define an exact percentage increase or decrease in prices for the overall market because every price range and every market is a little different based on the supply of active listings relative to the demand. Ask your local RE/MAX Associate for specific market advice about your property.

June 15, 2016 – Market Update

Sat, 25 Jun by Dale Russell

Sales in the first half of June were down substantially from the same time last month, and are also well off where we were at this time last year. The number of active listings is up compared to last month, and about the same when compared to the same time last year. Ponoka has had a very strong year so far when compared to most central Alberta communities and it seems likely we are take a little rest from all the activity this spring.

We do consider the overall central Alberta market to be stable considering the economic situation in Alberta. That stable market can probably be at least partly attributed to the fact that people are staying here rather than leaving, as indicated in the ATB article below. Apparently the job situation in other parts of Canada isn’t good enough to lure them away and they feel there is a future here.

Crude oil prices have fallen below the magical $50 US mark, which may be having some effect on consumer confidence.  We expect them to fluctuate up and down but most economists are predicting a gradual rise over the next few months and improvement in the Alberta economy starting this summer and fall.

Out-migration from Alberta Holding Steady, Todd Hirsch, ATB Economics – During a typical recession in Alberta, it’s common for people to move to other provinces for work. That trend makes what’s happening in the current downturn a bit surprising: so far the number of people leaving Alberta is relatively low.

The graph below shows the last 50 years of out-migration to other provinces, as a percentage of the population. The thin green line shows quarterly outflows that are subject to significant seasonality—people tend to leave mostly in the third and fourth quarters of the year. The heavy green line shows outflow averaged over four quarters, giving a better perspective of the general population movement.

The outflow was quite high during some of the 1960s and 1970s—more than one percent of the province packed up and left. The outflow gradually ebbed lower over the decades, with only a slight bump higher during the nasty recession of the 1980s.

The percentage of Albertans leaving has been remarkably stable since the mid-1990s at around 0.4 per cent per quarter. There was a slight jump in the 2008 recession to around 0.5 per cent. Despite the severity of the current 2015-16 downturn, out-migration from Alberta has risen only slightly above 0.4 per cent—mostly due to the fact that the job market in other parts of the country is not significantly better than it is in Alberta.

Chart

Ponoka June

MARKET UPDATE – June 1, 2016

Mon, 13 Jun by Dale Russell

Ponoka sales in May took a large jump from April and were also much higher than May 2015. The number of active listings is up slightly over last month, but unlike most central Alberta markets, slightly lower than last year at this time. The majority of sales activity last month was in the $250,000 ‐ $400,000 price range which is to be expected in this economic environment. There does seem to be adequate choices for buyers in the lower prices, except in the $250,000 ‐ $300,000 range where the sales to listing ratio has turned that segment of the market to the seller’s advantage.

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.

May 20, 2016- Market Update

Tue, 24 May by Dale Russell

Ponoka– A better start to the month of May in spite of the distraction of the fires in Ft. McMurray The number of active listings is up a little compared to last month and actually lower than last year at this time.  Ponoka is one central Alberta market that has avoided the spike in the number of active listings that typically comes with an economic slowdown.  Low new housing starts in the last two years is likely the reason.

We suspect that the Ft. McMurray fires had a hand in the slower central Alberta 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 2nd 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.

Ponoka May 2016

May 1, 2016 Market Update

Tue, 10 May by Dale Russell

Market Update-   Another strong sales month in April moving the year to date market in Ponoka 15% ahead of the same period in 2015. As well, April sales were much stronger than they were in April of last year. And, Ponoka is the one market in central Alberta where the number of active listings is lower this month than it was a year ago. The Ponoka market still favours buyers, but is closer to balance than it’s been for a while.

It’s difficult to pinpoint exactly what impact the buyer’s market has had on prices in the current economy, 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!

Thu, 21 Apr by Dale Russell

Market Update- Ponoka sales in the first two weeks of April were right on pace with March’s and well ahead of sales for the same period in 2015.  The number of active listings climbed slightly but is still lower than a year ago.  It almost looks like the Ponoka market is unchanged in spite of grim economic news in Alberta.

 

The Ponoka market is like Lacombe from the perspective that inventory levels have not increased the way we would expect in this economy.  Lower inventory levels help keep the market stable and creates an environment where serious sellers still have an opportunity to attract buyers.

 

The overall central Alberta market is behaving the way we would expect in an economy suffering low energy prices and higher than normal unemployment.  Sales are slightly lower and the listing count is higher, creating an imbalance and finally an advantage for buyers.

 

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.

Ponoka April

April 1, 2016- Market Update

Thu, 07 Apr by Dale Russell

Market Update- Ponoka sales keep chugging along, keeping very close pace with last year’s.  The anomaly in the Ponoka market when compared with other central Alberta markets in that the number of active listings is static.  This is the time of year when the listing count naturally goes up.  In spite of stable listing counts, the market favours buyers.  In times like this, where the buyer has the advantage combined with the extra punch provided by low-interest rates, a first time or move up purchase might be a good decision.

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.”

March 15, 2016- Market Update

Fri, 18 Mar by Dale Russell

Ponoka – A great start to the month in Ponoka with sales well up from the same period last month.  As well, year to date sales in 2016 are slightly ahead of the same period last year.  And, contrary to most other central Alberta markets, the number of active listings is slightly lower than it was a year ago.

 

Strong sales this month may be a result buyers coming out of winter hibernation looking for some early spring deals.  Buyers thinking that prices will be lower later should understand that lower prices only come when supply balloons, putting the market way out of balance.  So far that has not happened in Ponoka.

 

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.

Ponoka Mar 2016