Housing sales swoon
Global turmoil takes toll on real estate; Alberta MLS numbers fall 35 per cent
By Mario ToneguzziDecember 16, 2008
The MLS residential market is continuing to reflect the grim economic reality in the country.
Sales have plunged from a year ago, average sale prices have dropped and a forecast calls for the housing funk to remain for several more months.
According to data released Monday by the Canadian Real Estate Association, sales plunged by 42.2 per cent in November--the second consecutive steep monthly decline -- across the country compared with November 2007. Every province witnessed a sharp drop led by British Columbia at 62 per cent and Ontario at 43.5 per cent. Alberta experienced a year-over-year sales decline of 34.6 per cent.
Average sale prices also took a hit during the month, falling by 9.8 per cent nationally to$280,880 compared with$311,485 in November 2007.
In Alberta, prices dropped by 4.2 per cent to $338,354 compared with $353,125 a year ago. British Columbia registered the steepest drop in prices--12.5 per cent -- to $395,687 from $451,991 in November 2007.
September MLS numbers were higher year-over-year in Alberta and it appeared the market was taking a turn for the better, but October coincided with the elimination of 40-year mortgages and zero-down mortgages, said Richard Corriveau, regional economist for Canada Mortgage and Housing Corp.
"With that, we've seen a decline in overall activity. It's not a surprise given the current economic turmoil," he said, adding the province remains in buyer's market conditions.
Corriveau said the prospect of further price reductions is helping to postpone people's decisions on buying residential property as they take a wait-and-see approach and are in no rush to buy.
"We think this type of market will prevail heading into the first six months of 2009," said Corriveau. "And only when buyers really gain confidence that prices have stabilized, and of course economic conditions are improving as well, only then will we see higher sales. On a year-over-year basis, we don't think that will occur until perhaps the second half of 2009 or even into 2010."
New listings across the country were also down by 4.6 per cent compared with a year ago, while in Alberta they were off by 18.8 per cent.
"The housing market reflects the economic reality of Canada,"said real estate association president Calvin Lindberg in a news release. The association also said research shows the decline in housing activity so far this year translates into $2.8 billion less in spinoff consumer spending in Canada.
On a year-to-date basis to the end of November, sales in Alberta are down by 20.3 per cent from a year ago and national sales are off 16.3 per cent.The average MLS sale price for the period is down by 0.7 per cent in Alberta($353,712) and by 0.3 per cent across the country ($304,462).
"These changes in the Canadian housing market reflect a broader and weakened picture of both the economy and buyer sentiment," said real estate association chief economist Gregory Klump in a news release. "National sales activity and price trends will continue reflecting increased cautiousness on the part of lenders and buyers, as the economy works its way."
Friday, December 19, 2008
Monday, December 15, 2008
Rental market softens
By Harley Richards - Red Deer Advocate
Published: June 06, 2008 6:18 AM
0 Comments The challenge of finding rental accommodation in Red Deer has eased, according to Canada Mortgage and Housing Corp.’s spring rental market survey.
The national housing agency reported on Thursday that the average vacancy rate for apartments in the city was 3.2 per cent in April.
That compares with 2.1 per cent in April 2007.
The vacancy rate for bachelor units jumped from 2.5 to 5.3 per cent during this one-year period. For one-bedroom apartments it went from two to three per cent, and in the case of two-bedroom suites, the figure rose from three to 3.2 per cent.
Bucking the trend were larger apartments with three or more rooms. Their average vacancy rate decreased from 5.4 to 2.9 per cent.
Regine Durant, a CMHC market analyst in Calgary, said the average vacancy rate in Red Deer was the fourth highest of the 17 larger urban areas in Alberta considered.
Grande Prairie, Brooks and Edmonton had higher averages.
She said reduced natural gas drilling activity, a decline in the number of people migrating to Alberta and a record number of local housing starts in 2007 trimmed demand for rental accommodation. Also, the number of rental units in Red Deer is up 17 per cent over last year.
Durant added that there are large inventories of new and existing homes on the local market.
Provincewide, CMHC concluded that the average vacancy rate in urban centres with 10,000 or more people was 2.9 per cent in April, as compared with a figure of 0.9 per cent a year earlier. Among the communities looked at were Sylvan Lake, which had an average vacancy rate of 1.5 per cent, and Lacombe, which came in at 1.2 per cent.
Ed Tkachuk, business manager with Hearthstone Property Management Inc. of Central Alberta, said CMHC’s numbers seem low.
“I know of buildings in Red Deer with 15 per cent vacancy rates today,” he said, adding that he heard about one building that’s 40 per cent vacant.
Tkachuk suggested that CMHC’s figures might be skewed because not all landlords and property managers disclose their vacancy rates.
Richard Corriveau, a CMHC economist for the Prairies and Territories, said his agency was unable to obtain information for 5.8 per cent of the units it surveyed — which equates to about 284 suites.
“Our 94-plus per cent response rate gives us a very reliable vacancy rate estimate,” he said.
Corriveau added that CMHC only considers structures of which half or more are designated for rental. Consequently, a basement suite in a house, or rental units in a condominium that is predominantly owner-occupied, would not be included.
Regardless, Tkachuk said renters now have much greater choice. This is particularly true in the case of one- and two-bedroom apartments, he said.
“There’s still a huge demand for single-family homes.”
Despite the higher average vacancy rate in Red Deer, rents here still appear to be rising. CMHC’s survey revealed year-over-year increases for all apartment types, with the average for bachelor suites up 3.6 per cent to $570, one-bedrooms jumping 8.7 per cent to $723, two-bedrooms climbing 5.3 per cent to $866, and apartments with three or more rooms rising 11.8 per cent to $1,013.
Durant attributed this to the continued high prices of new and existing homes, which prevents many renters from buying.
The average rent for two-bedroom apartments across Alberta’s largest communities was $1,049 in April, up 12.6 per cent from a year earlier. The numbers ranged from $2,350 in the Regional Municipality of Wood Buffalo (Fort McMurray) to $670 in Medicine Hat.
In Sylvan Lake, it was $757, while in Lacombe the figure was $679.
“That seems really low when you look in the newspaper or online,” said Tkachuk, referring to CMHC’s averages for Red Deer and Sylvan Lake.
He noted that more higher-end properties are going up for rent, a consequence of investors taking advantage of buying opportunities on the real estate market.
Contact Harley Richards at hrichards@reddeeradvocate.com
By Harley Richards - Red Deer Advocate
Published: June 06, 2008 6:18 AM
0 Comments The challenge of finding rental accommodation in Red Deer has eased, according to Canada Mortgage and Housing Corp.’s spring rental market survey.
The national housing agency reported on Thursday that the average vacancy rate for apartments in the city was 3.2 per cent in April.
That compares with 2.1 per cent in April 2007.
The vacancy rate for bachelor units jumped from 2.5 to 5.3 per cent during this one-year period. For one-bedroom apartments it went from two to three per cent, and in the case of two-bedroom suites, the figure rose from three to 3.2 per cent.
Bucking the trend were larger apartments with three or more rooms. Their average vacancy rate decreased from 5.4 to 2.9 per cent.
Regine Durant, a CMHC market analyst in Calgary, said the average vacancy rate in Red Deer was the fourth highest of the 17 larger urban areas in Alberta considered.
Grande Prairie, Brooks and Edmonton had higher averages.
She said reduced natural gas drilling activity, a decline in the number of people migrating to Alberta and a record number of local housing starts in 2007 trimmed demand for rental accommodation. Also, the number of rental units in Red Deer is up 17 per cent over last year.
Durant added that there are large inventories of new and existing homes on the local market.
Provincewide, CMHC concluded that the average vacancy rate in urban centres with 10,000 or more people was 2.9 per cent in April, as compared with a figure of 0.9 per cent a year earlier. Among the communities looked at were Sylvan Lake, which had an average vacancy rate of 1.5 per cent, and Lacombe, which came in at 1.2 per cent.
Ed Tkachuk, business manager with Hearthstone Property Management Inc. of Central Alberta, said CMHC’s numbers seem low.
“I know of buildings in Red Deer with 15 per cent vacancy rates today,” he said, adding that he heard about one building that’s 40 per cent vacant.
Tkachuk suggested that CMHC’s figures might be skewed because not all landlords and property managers disclose their vacancy rates.
Richard Corriveau, a CMHC economist for the Prairies and Territories, said his agency was unable to obtain information for 5.8 per cent of the units it surveyed — which equates to about 284 suites.
“Our 94-plus per cent response rate gives us a very reliable vacancy rate estimate,” he said.
Corriveau added that CMHC only considers structures of which half or more are designated for rental. Consequently, a basement suite in a house, or rental units in a condominium that is predominantly owner-occupied, would not be included.
Regardless, Tkachuk said renters now have much greater choice. This is particularly true in the case of one- and two-bedroom apartments, he said.
“There’s still a huge demand for single-family homes.”
Despite the higher average vacancy rate in Red Deer, rents here still appear to be rising. CMHC’s survey revealed year-over-year increases for all apartment types, with the average for bachelor suites up 3.6 per cent to $570, one-bedrooms jumping 8.7 per cent to $723, two-bedrooms climbing 5.3 per cent to $866, and apartments with three or more rooms rising 11.8 per cent to $1,013.
Durant attributed this to the continued high prices of new and existing homes, which prevents many renters from buying.
The average rent for two-bedroom apartments across Alberta’s largest communities was $1,049 in April, up 12.6 per cent from a year earlier. The numbers ranged from $2,350 in the Regional Municipality of Wood Buffalo (Fort McMurray) to $670 in Medicine Hat.
In Sylvan Lake, it was $757, while in Lacombe the figure was $679.
“That seems really low when you look in the newspaper or online,” said Tkachuk, referring to CMHC’s averages for Red Deer and Sylvan Lake.
He noted that more higher-end properties are going up for rent, a consequence of investors taking advantage of buying opportunities on the real estate market.
Contact Harley Richards at hrichards@reddeeradvocate.com
Thursday, December 11, 2008
Local housing starts plummet
By Advocate staff
Published: December 08, 2008 7:09 PM Housing starts in Alberta’s seven largest cities this year are down 37 per cent from the same point in 2007, with the decline most pronounced in Red Deer.
Statistics issued by Canada Mortgage and Housing Corp. on Monday revealed that residential construction starts in the city from January to November numbered 530, which is 65 per cent lower than for that period in 2007, when the tally was 1,510.
So far this year, work has begun on 325 single-detached homes and 205 units in multi-family buildings, as compared with 928 single-detached and 582 multi-family projects during the first 11 months of 2007.
Housing starts in Alberta’s other major cities during the past 11 months were down as well. Building in the Edmonton metropolitan area fell 56 per cent, in Medicine Hat the decline was 46 per cent, Grande Prairie dropped 40 per cent, Lethbridge and the Regional Municipality of Wood Buffalo were each off 23 per cent, and the Calgary metropolitan area experienced a 15 per cent decline.
During the month of November, there were 27 starts on single-detached homes and 35 starts on multi-family units in Red Deer, for a total of 62. This was down 60 per cent from November 2007, when work was started on 97 homes: 55 single-detached and 97 multi-family.
Elsewhere in the province, November starts in the Edmonton metropolitan area were 74 per cent lower than a year ago, in Medicine Hat the figure was down 66 per cent, in Grande Prairie it declined 27 per cent, in the Calgary metropolitan area the drop was 26 per cent, and in Lethbridge it was 22 per cent.
November housing starts in the Regional Municipality of Wood Buffalo was one per cent higher than a year ago.
Published: December 08, 2008 7:09 PM Housing starts in Alberta’s seven largest cities this year are down 37 per cent from the same point in 2007, with the decline most pronounced in Red Deer.
Statistics issued by Canada Mortgage and Housing Corp. on Monday revealed that residential construction starts in the city from January to November numbered 530, which is 65 per cent lower than for that period in 2007, when the tally was 1,510.
So far this year, work has begun on 325 single-detached homes and 205 units in multi-family buildings, as compared with 928 single-detached and 582 multi-family projects during the first 11 months of 2007.
Housing starts in Alberta’s other major cities during the past 11 months were down as well. Building in the Edmonton metropolitan area fell 56 per cent, in Medicine Hat the decline was 46 per cent, Grande Prairie dropped 40 per cent, Lethbridge and the Regional Municipality of Wood Buffalo were each off 23 per cent, and the Calgary metropolitan area experienced a 15 per cent decline.
During the month of November, there were 27 starts on single-detached homes and 35 starts on multi-family units in Red Deer, for a total of 62. This was down 60 per cent from November 2007, when work was started on 97 homes: 55 single-detached and 97 multi-family.
Elsewhere in the province, November starts in the Edmonton metropolitan area were 74 per cent lower than a year ago, in Medicine Hat the figure was down 66 per cent, in Grande Prairie it declined 27 per cent, in the Calgary metropolitan area the drop was 26 per cent, and in Lethbridge it was 22 per cent.
November housing starts in the Regional Municipality of Wood Buffalo was one per cent higher than a year ago.
Housing starts tumble to last month to lowest levels since late 2001, CMHC says
By The Canadian Press
Published: December 08, 2008 7:02 PM Construction of new homes in Canada slowed last month to levels not seen since late 2001, driven by a drop in condominium construction and a tougher environment for borrowers, according to a national housing agency.
Canada Mortgage and Housing Corp. said Monday the seasonally adjusted annual rate of housing starts fell to 172,000, down 19 per cent from 211,800 in October.
That was far below private-sector economist expectations of about 200,000, and the biggest percentage decline since last December.
Several bank economists noted that new-home construction has been lower this year compared with 2007, because pentup demand has been largely satisfied, but the pace of decline sped up in November because of changes in the credit markets.
And the decline is expected to continue throughout next year, the federal Crown corporation said.
November marked a significant deterioration in CMHC’s outlook for 2009 as both market value and consumer confidence crumbled to their lowest levels in recent memory.
But the November numbers “remain consistent with our forecast, which calls for more moderate activity of 212,000 units this year and 178,000 units next year,” commented CMHC economist Bob Dugan.
Dugan noted that home construction bulged early in the current decade because of pent-up demand, but “over the last few years, this excess demand gradually decreased and our forecast for 2008 and 2009 reflects this new reality, with housing starts more aligned with long-run demographic demand.”
The rate of urban starts dropped 21.6 per cent month-over-month to 144,800 in November, with declines in all parts of the country as volatile multiple starts tumbled 29.1 per cent to 81,700 while single-family starts eased 9.0 per cent to 63,100.
“After showing a great deal of resilience over the past year, the Canadian housing market is cooling,” said Dina Cover, an economist at TD Bank.
“With our expectation that homeowners will be facing tight credit conditions and a softening job market over the next two to three quarters, the rapid rate of growth in housing starts seen since early in the decade — which was simply not sustainable — is likely to continue to unwind.”
A correction in the Western Canadian housing market has been playing out since the start of the year, said Marc Pinsonneault, senior economist at National Bank.
“The pentup demand that was accumulating in the ’90s has been satisfied, so we viewed a lower level of activity in Canada even without the fear of a North American recession,” he said in an interview.
For the first 11 months of 2008, total residential construction starts were down 7.6 per cent compared with the corresponding period of last year, with urban single starts down 18.4 per cent but multiple-unit starts up 8.6 per cent.
“While single-family starts have been trending gradually lower for about five years, the pace of decline has accelerated in recent months — now down more than 35 per cent year-over-year — alongside falling sales and tighter credit conditions,” commented BMO Capital Markets analyst Robert Kavcic.
“Canadian housing starts have outpaced household formation for about six years, but with sales falling, credit conditions tight, and fading support from condos, a correction is now upon us.”
Kavcic said the latest data shows a second consecutive-month drop in condo starts.
The CMHC numbers coincide with a Royal Bank report saying the housing sector is entering a cyclical downturn but the risk of a U.S.-style meltdown is remote.
RBC senior economist Robert Hogue says many factors that triggered the U.S. housing collapse are absent or much less evident in Canada.
He predicts the housing market will hold up even as a sluggish economy threatens income growth and erodes consumer confidence, because subprime mortgages are not prevalent in Canada, while the banks are stable and households are generally not overstretched financially.
“These factors should provide enough of a foundation to prevent housing markets from spiralling down even as the Canadian economy slips into recession,” Hogue added.
Published: December 08, 2008 7:02 PM Construction of new homes in Canada slowed last month to levels not seen since late 2001, driven by a drop in condominium construction and a tougher environment for borrowers, according to a national housing agency.
Canada Mortgage and Housing Corp. said Monday the seasonally adjusted annual rate of housing starts fell to 172,000, down 19 per cent from 211,800 in October.
That was far below private-sector economist expectations of about 200,000, and the biggest percentage decline since last December.
Several bank economists noted that new-home construction has been lower this year compared with 2007, because pentup demand has been largely satisfied, but the pace of decline sped up in November because of changes in the credit markets.
And the decline is expected to continue throughout next year, the federal Crown corporation said.
November marked a significant deterioration in CMHC’s outlook for 2009 as both market value and consumer confidence crumbled to their lowest levels in recent memory.
But the November numbers “remain consistent with our forecast, which calls for more moderate activity of 212,000 units this year and 178,000 units next year,” commented CMHC economist Bob Dugan.
Dugan noted that home construction bulged early in the current decade because of pent-up demand, but “over the last few years, this excess demand gradually decreased and our forecast for 2008 and 2009 reflects this new reality, with housing starts more aligned with long-run demographic demand.”
The rate of urban starts dropped 21.6 per cent month-over-month to 144,800 in November, with declines in all parts of the country as volatile multiple starts tumbled 29.1 per cent to 81,700 while single-family starts eased 9.0 per cent to 63,100.
“After showing a great deal of resilience over the past year, the Canadian housing market is cooling,” said Dina Cover, an economist at TD Bank.
“With our expectation that homeowners will be facing tight credit conditions and a softening job market over the next two to three quarters, the rapid rate of growth in housing starts seen since early in the decade — which was simply not sustainable — is likely to continue to unwind.”
A correction in the Western Canadian housing market has been playing out since the start of the year, said Marc Pinsonneault, senior economist at National Bank.
“The pentup demand that was accumulating in the ’90s has been satisfied, so we viewed a lower level of activity in Canada even without the fear of a North American recession,” he said in an interview.
For the first 11 months of 2008, total residential construction starts were down 7.6 per cent compared with the corresponding period of last year, with urban single starts down 18.4 per cent but multiple-unit starts up 8.6 per cent.
“While single-family starts have been trending gradually lower for about five years, the pace of decline has accelerated in recent months — now down more than 35 per cent year-over-year — alongside falling sales and tighter credit conditions,” commented BMO Capital Markets analyst Robert Kavcic.
“Canadian housing starts have outpaced household formation for about six years, but with sales falling, credit conditions tight, and fading support from condos, a correction is now upon us.”
Kavcic said the latest data shows a second consecutive-month drop in condo starts.
The CMHC numbers coincide with a Royal Bank report saying the housing sector is entering a cyclical downturn but the risk of a U.S.-style meltdown is remote.
RBC senior economist Robert Hogue says many factors that triggered the U.S. housing collapse are absent or much less evident in Canada.
He predicts the housing market will hold up even as a sluggish economy threatens income growth and erodes consumer confidence, because subprime mortgages are not prevalent in Canada, while the banks are stable and households are generally not overstretched financially.
“These factors should provide enough of a foundation to prevent housing markets from spiralling down even as the Canadian economy slips into recession,” Hogue added.
City construction slowing
By Harley Richards - Red Deer Advocate
Published: December 08, 2008 7:10 PM At first glance, the numbers paint a grim picture of the state of the residential construction sector.
The City of Red Deer issued 1,704 permits for $97.2 million worth of residential projects from January to November — as compared with 2,671 permits valued at $184.3 million during the first 11 months of 2007.
Canada Mortgage and Housing Corp.’s tally of residential construction starts in Red Deer so far this year consists of 325 single-detached homes and 205 units in multi-family buildings. That’s down nearly 65 per cent from the 928 single-detached and 582 multi-family starts accumulated to the end of November 2007.
But there’s more to Central Alberta than Red Deer, says Scott Boyd, executive officer with the Central Alberta branch of the Canadian Home Builders’ Association.
CHBA members obtained 324 building permits in communities outside Red Deer from January to October 2008. That’s just six per cent lower than the 346 permits pulled by CHBA members in rural areas during the same period in 2007.
Boyd thinks this city-town disparity boils down to one key factor.
“It kind of goes back to the lack of serviced land available in Red Deer.”
Jonas Neidert, a partner in Avalon Central Alberta and president of the local CHBA, sees some validity in Boyd’s assessment.
“Early in the year, when there was demand, there wasn’t a lot of serviced land in Red Deer so probably a lot of it was going out of town,” he said.
The situation has improved, added Neidert, with lots coming on stream in the Southbrook and Clearview Ridge subdivisions. Both are projects of Melcor Developments Ltd.
Howard Thompson, manager of Red Deer’s Land and Economic Development Department, said much of the city’s residential land inventory was consumed quicker than anticipated.
Now it’s preparing to open up new areas in the city’s northeast, but must first install major trunk lines.
“It takes some time and investment to move into new areas,” he said, adding that this servicing has in some cases taken longer than anticipated.
“Some of that (delay) is at the planning stage, some of it’s at the approval/regulatory stage and some is at the actual construction stage.”
The city did hold a public lot draw for 130 city-owned sites in Timberlands, Johnstone Park and Oriole Park Estates on Nov. 26. That only resulted in successful bids on 19 lots.
Another reason that Red Deer might not be as attractive to some builders and buyers is that lot locations are more limited.
Thompson acknowledged that the selection of subdivisions isn’t as broad as it once was.
“I know there wasn’t as much choice for lots over the last couple of years as the different subdivisions filled up and you move to new subdivisions.”
Neidert thinks builders are also looking beyond the city’s boundaries because they now have the resources to do so.
“Now that things have slowed down in Red Deer, we’re looking at doing work out of town,” he said.
“We had a lot of people asking (previously) if we’d do an acreage, or if we’d build here or there. To do that we would have had to hire more people, which at the time wasn’t easy to do, so we just didn’t do it.”
Boyd wonders if land prices are also influencing decisions to build in rural communities.
“They’re typically less costly than in the city, so that could be part of the factor too.”
But Thompson maintains that lot prices also vary within most towns.
The pace of development this year in communities outside Red Deer varies, depending on who you talk to.
Planning officials in Blackfalds and Lacombe expect residential construction to be comparable with 2007, and perhaps even higher. Those in Sylvan Lake, Stettler, Rocky Mountain House, Penhold and Ponoka describe a slowdown relative to last year — although generally not as pronounced as Red Deer’s.
Some pointed out that construction levels appear worse than they really are because they’re being compared with the record tallies of 2007.
Penhold development officer Rick Binnendyk, for instance, estimates that residential construction in his town is about 65 per cent of last year’s pace. But it’s still better than 2006, which was the record year prior to 2007.
“A lot of people say that 2007 was almost uncontrollable,” he said.
“It’s fair to say that things have slowed down, but to me it’s much more manageable at this point.”
Carey Keleman, Ponoka’s economic development officer, agrees.
“It’s still healthy growth, it’s just not as crazy as in 2007.
“It’s kind of going back down to the average before the big boom.”
Thompson takes heart in a Canada Mortgage and Housing Corp.’s forecast that building activity will rebound in the next few years. In the meantime, he doesn’t mind seeing residential construction levels in neighbouring communities outpacing that in Red Deer.
“It’s all good for Central Alberta.”
Published: December 08, 2008 7:10 PM At first glance, the numbers paint a grim picture of the state of the residential construction sector.
The City of Red Deer issued 1,704 permits for $97.2 million worth of residential projects from January to November — as compared with 2,671 permits valued at $184.3 million during the first 11 months of 2007.
Canada Mortgage and Housing Corp.’s tally of residential construction starts in Red Deer so far this year consists of 325 single-detached homes and 205 units in multi-family buildings. That’s down nearly 65 per cent from the 928 single-detached and 582 multi-family starts accumulated to the end of November 2007.
But there’s more to Central Alberta than Red Deer, says Scott Boyd, executive officer with the Central Alberta branch of the Canadian Home Builders’ Association.
CHBA members obtained 324 building permits in communities outside Red Deer from January to October 2008. That’s just six per cent lower than the 346 permits pulled by CHBA members in rural areas during the same period in 2007.
Boyd thinks this city-town disparity boils down to one key factor.
“It kind of goes back to the lack of serviced land available in Red Deer.”
Jonas Neidert, a partner in Avalon Central Alberta and president of the local CHBA, sees some validity in Boyd’s assessment.
“Early in the year, when there was demand, there wasn’t a lot of serviced land in Red Deer so probably a lot of it was going out of town,” he said.
The situation has improved, added Neidert, with lots coming on stream in the Southbrook and Clearview Ridge subdivisions. Both are projects of Melcor Developments Ltd.
Howard Thompson, manager of Red Deer’s Land and Economic Development Department, said much of the city’s residential land inventory was consumed quicker than anticipated.
Now it’s preparing to open up new areas in the city’s northeast, but must first install major trunk lines.
“It takes some time and investment to move into new areas,” he said, adding that this servicing has in some cases taken longer than anticipated.
“Some of that (delay) is at the planning stage, some of it’s at the approval/regulatory stage and some is at the actual construction stage.”
The city did hold a public lot draw for 130 city-owned sites in Timberlands, Johnstone Park and Oriole Park Estates on Nov. 26. That only resulted in successful bids on 19 lots.
Another reason that Red Deer might not be as attractive to some builders and buyers is that lot locations are more limited.
Thompson acknowledged that the selection of subdivisions isn’t as broad as it once was.
“I know there wasn’t as much choice for lots over the last couple of years as the different subdivisions filled up and you move to new subdivisions.”
Neidert thinks builders are also looking beyond the city’s boundaries because they now have the resources to do so.
“Now that things have slowed down in Red Deer, we’re looking at doing work out of town,” he said.
“We had a lot of people asking (previously) if we’d do an acreage, or if we’d build here or there. To do that we would have had to hire more people, which at the time wasn’t easy to do, so we just didn’t do it.”
Boyd wonders if land prices are also influencing decisions to build in rural communities.
“They’re typically less costly than in the city, so that could be part of the factor too.”
But Thompson maintains that lot prices also vary within most towns.
The pace of development this year in communities outside Red Deer varies, depending on who you talk to.
Planning officials in Blackfalds and Lacombe expect residential construction to be comparable with 2007, and perhaps even higher. Those in Sylvan Lake, Stettler, Rocky Mountain House, Penhold and Ponoka describe a slowdown relative to last year — although generally not as pronounced as Red Deer’s.
Some pointed out that construction levels appear worse than they really are because they’re being compared with the record tallies of 2007.
Penhold development officer Rick Binnendyk, for instance, estimates that residential construction in his town is about 65 per cent of last year’s pace. But it’s still better than 2006, which was the record year prior to 2007.
“A lot of people say that 2007 was almost uncontrollable,” he said.
“It’s fair to say that things have slowed down, but to me it’s much more manageable at this point.”
Carey Keleman, Ponoka’s economic development officer, agrees.
“It’s still healthy growth, it’s just not as crazy as in 2007.
“It’s kind of going back down to the average before the big boom.”
Thompson takes heart in a Canada Mortgage and Housing Corp.’s forecast that building activity will rebound in the next few years. In the meantime, he doesn’t mind seeing residential construction levels in neighbouring communities outpacing that in Red Deer.
“It’s all good for Central Alberta.”
Wednesday, December 3, 2008
MLS® STATISTICS FOR THE MONTH OF NOVEMBER 2008
MLS® STATISTICS FOR THE MONTH OF NOVEMBER 2008
Prepared for the members of the Central Alberta Realtors® Association
City Residential Sales
November 2008 85
November 2007 121
January 01, 2008 to November 30, 2008 1,894
January 01, 2007 to November 30, 2007 2,147
Value of City Residential Sales
November 2008 $24,974,000
October 2007 $37,018,703
January 01, 2008 to November 30, 2008 $584,129,595
January 01, 2007 to November 30, 2007 $661,775,168
Selling to Listing Ratio (CITY)
November 2008 34,394%
February 2008 55.16%
Prepared for the members of the Central Alberta Realtors® Association
City Residential Sales
November 2008 85
November 2007 121
January 01, 2008 to November 30, 2008 1,894
January 01, 2007 to November 30, 2007 2,147
Value of City Residential Sales
November 2008 $24,974,000
October 2007 $37,018,703
January 01, 2008 to November 30, 2008 $584,129,595
January 01, 2007 to November 30, 2007 $661,775,168
Selling to Listing Ratio (CITY)
November 2008 34,394%
February 2008 55.16%
Tuesday, December 2, 2008
As sellers today please remember that there is uncertianty among buyers they must see value before they will make a commitment and they all seam to want something extra. It will be interresting too see if we have a government change next week and how that will effect the financial and real estate markets here over the next 6 months. Does that mean we may see a increase in inventories my guess is yes as my opinion is that a government change will effect our economy directly. I think a balanced market is about 3 months supply of inventory and our inventory level is higher than that now. We are seeing European counties offer 0% mortgage rates. Are we headed in that direction? Credit is tightening with the banks because their loss loan provisions are increasing, credit amounts for consumers thru credit cards are being lowered. I am seeing forcasts of oil at about $43.00 a barrel in the first quarter and very limited asset growth next year. As I see it our first quarter will be a challenge no matter what we do.
Monday, December 1, 2008
U.S crisis spreads further
Commercial real estate market latest to be hit.
Heather Landy and Dana Hedgpeth The Washington Post New York.
Another levee in the U.S. financial markets is crumbling.
Fears about rising defaults rates and declining property values, which engulfed the home mortgage market at the start of the credit crisis, are spreading to the commercial real estate market, hammering the value of bonds backed by loans made to office building, shopping centers and apartment complexes.
With the slowing economy threatening the health of commercial borrowers, investors are wary of scooping up the bonds, even though some cash-strapped banks, hedge funds and money managers are willing to part with them at steep discounts.
As a result, the market for commercial mortgage backed securities has been sent into a tailspin by the now familiar combination of forced selling and bleak economic forecasts.
Until recently, investor has presumed that commercial mortgage bonds were relatively safe. They avoided taking a direct hit from the subprime meltdown, which derailed the market for bonds backed by residential mortgages, and the bonds’ default rate, while climbing, has stayed below one per cent. But a report this week about delinquent payments on two high profile loans one for a California shopping centre and the other for two Westin resorts in Arizona and South California – stirred fears about whether an era of rosy business projections and loose lending standards will, like the residential market, give way to missed mortgage payments and a tough refinancing environment.
“A lot of very foolish loans were originated between 2005 and 2007, and many of those loans begin to mature in 2010,” said Mike Kirby, director of research at Green Street Advisors a commercial real estate research firm.
“You have a significant amount of debt maturing at that time and yet you don’t have a market to replace that debt.”
Atlanta, Detroit, New York and Tamp are among the markets showing sign of rising defaults on commercial mortgages that have been packaged into bonds.
Skittish investors are demanding higher premiums to hold commercial mortgages bonds. Yields on the safest-rated category of commercial-mortgage-backed debt are now 15 per cent above benchmark interest rates, traders said. At the start of the week, that spread was just 8.5 per cent.
Investors buying at the current yields would have all of their principal protected even if all of the loans pooled into the bonds defaulted and offered only modest recovery values, said Lisa Pendergast, an analyst at RBS Greenwich Capital Markets.
“It’s gotten to the point where I believe it’s more about fear that anything else,” she said. “But at some point if borrowers and real estate (investors) cannot get capital, then you really do start to have fundamental issues.”
Some investors were banking on the U.S. Treasury Department’s financial industry bailout plan to keep the commercial-mortgage-backed securities market propped up. They hoped that cash-strapped banks would either be able to sell those assets to the federal governments or get more breathing room to sit on their holding by off-loading other assets onto the governments.
But late last week, the Treasury Department announced that it wouldn’t buy any assets from banks under its Troubled Asset Relief Program, and instead would use TARP funds to buy stock in banks.
“That was the last hope for a lot of people,” said Sean Kirk, a trader at the Seaport Group in Miami Beach. “After two months of holding out for some sort of miracle bid, the market realized it was not going to be there and now these things are trading at liquidation levels.”
Adding to the panic is a spate of recent bankruptcy filing by high-profile merchants such as Circuit City. Dimming prospects for consumer spending in a slowing economy has stirred concern about the value of commercial-mortgage bonds tied to properties dependent on retail tenants.
General Growth Properties, which owns shopping malls around the country and acquired the developer of Columbia, MD., in 2004, is trying to stave off filing for bankruptcy protection as it struggles to refinance more than $27 billion of debt. The Chicago-based company, which took on debt when it bought the Rouse CO., announced Thursday that it has hired law firm Sidley Austin as a financial adviser.
Heather Landy and Dana Hedgpeth The Washington Post New York.
Another levee in the U.S. financial markets is crumbling.
Fears about rising defaults rates and declining property values, which engulfed the home mortgage market at the start of the credit crisis, are spreading to the commercial real estate market, hammering the value of bonds backed by loans made to office building, shopping centers and apartment complexes.
With the slowing economy threatening the health of commercial borrowers, investors are wary of scooping up the bonds, even though some cash-strapped banks, hedge funds and money managers are willing to part with them at steep discounts.
As a result, the market for commercial mortgage backed securities has been sent into a tailspin by the now familiar combination of forced selling and bleak economic forecasts.
Until recently, investor has presumed that commercial mortgage bonds were relatively safe. They avoided taking a direct hit from the subprime meltdown, which derailed the market for bonds backed by residential mortgages, and the bonds’ default rate, while climbing, has stayed below one per cent. But a report this week about delinquent payments on two high profile loans one for a California shopping centre and the other for two Westin resorts in Arizona and South California – stirred fears about whether an era of rosy business projections and loose lending standards will, like the residential market, give way to missed mortgage payments and a tough refinancing environment.
“A lot of very foolish loans were originated between 2005 and 2007, and many of those loans begin to mature in 2010,” said Mike Kirby, director of research at Green Street Advisors a commercial real estate research firm.
“You have a significant amount of debt maturing at that time and yet you don’t have a market to replace that debt.”
Atlanta, Detroit, New York and Tamp are among the markets showing sign of rising defaults on commercial mortgages that have been packaged into bonds.
Skittish investors are demanding higher premiums to hold commercial mortgages bonds. Yields on the safest-rated category of commercial-mortgage-backed debt are now 15 per cent above benchmark interest rates, traders said. At the start of the week, that spread was just 8.5 per cent.
Investors buying at the current yields would have all of their principal protected even if all of the loans pooled into the bonds defaulted and offered only modest recovery values, said Lisa Pendergast, an analyst at RBS Greenwich Capital Markets.
“It’s gotten to the point where I believe it’s more about fear that anything else,” she said. “But at some point if borrowers and real estate (investors) cannot get capital, then you really do start to have fundamental issues.”
Some investors were banking on the U.S. Treasury Department’s financial industry bailout plan to keep the commercial-mortgage-backed securities market propped up. They hoped that cash-strapped banks would either be able to sell those assets to the federal governments or get more breathing room to sit on their holding by off-loading other assets onto the governments.
But late last week, the Treasury Department announced that it wouldn’t buy any assets from banks under its Troubled Asset Relief Program, and instead would use TARP funds to buy stock in banks.
“That was the last hope for a lot of people,” said Sean Kirk, a trader at the Seaport Group in Miami Beach. “After two months of holding out for some sort of miracle bid, the market realized it was not going to be there and now these things are trading at liquidation levels.”
Adding to the panic is a spate of recent bankruptcy filing by high-profile merchants such as Circuit City. Dimming prospects for consumer spending in a slowing economy has stirred concern about the value of commercial-mortgage bonds tied to properties dependent on retail tenants.
General Growth Properties, which owns shopping malls around the country and acquired the developer of Columbia, MD., in 2004, is trying to stave off filing for bankruptcy protection as it struggles to refinance more than $27 billion of debt. The Chicago-based company, which took on debt when it bought the Rouse CO., announced Thursday that it has hired law firm Sidley Austin as a financial adviser.
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