CALGARY — A group that represents Canadian oil and gas drillers is revising its already grim 2009 forecast to reflect an even bleaker outlook for the industry.
The Canadian Association of Oilwell Drilling Contractors is predicting 22 per cent fewer wells will be drilled in Western Canada this year than it called for in its October forecast.
“Activity levels have been low enough that we’re not tracking onto a 2009 forecast that was fairly pessimistic to begin with,” association president Don Herring said in an interview Friday.
He said it’s the first time in his 25-year tenure at CAODC that a forecast has been revised in mid-winter, typically the busiest time of year for natural gas drillers.
The group released a report Friday predicting 11,176 wells will be drilled in 2009, well below the 14,325 it forecast in the fall and half 2005 and 2006 levels.
Natural gas prices sunk below US$4 per 1,000 cubic feet on the New York Mercantile Exchange Friday — about half of what most producers would need to make their drilling economically viable.
As well, a freeze in credit markets has taken a big toll on the industry, Herring said.
The Alberta government has moved to mitigate the effects of royalty changes that came into effect Jan. 1 and is in the process of consulting with industry and the financial community about an incentive program for smaller energy firms.
“These are things we expect to bring forward in short order,” said Alberta Energy spokesman Jason Chance.
Herring’s group met with Alberta Energy Minister Mel Knight on Friday to give some input on what should be included in the incentive program.
“You can kind of dress it up any way you want and describe it as some kind of a tax credit, or an incentive.
“But essentially for activity to increase, the royalty take has to go down,” Herring said before the meeting.
BMO Capital Markets analyst Mike Mazar said there’s little the government can do — aside from direct subsidies to natural gas drillers — that would help in any significant way.
“Royalties could be zero and there wouldn’t be any activity,” he said.
Like Herring, Mazar said 2009 is turning out to be far worse than he had expected as recently as the fall — and there’s no reason to believe the gloom will subside in the near future.
Joining the growing list of firms scaling back, Calgary-based oil and gas driller Peak Energy Services Trust (TSX:PES.UN) said Thursday it would reduce its workforce by 15 per cent, cut salaries and force employees to take unpaid days off.
The Petroleum Services Association of Canada predicted last month a 21 per cent decline in drilling activity from 2008 levels — a more severe downturn than the 10 per cent drop it called for in its November outlook.
The group is now pegging the number of wells drilled in Canada this year at 13,500, compared with the final 2008 tally of 17,043.
“The overall well count is falling almost quicker than we can forecast,” said PSAC president Roger Soucy.
Tuesday, February 24, 2009
Monday, February 23, 2009
Housing starts, resale prices expected to drop
Despite hopes for a rebound in 2009, the Canada Mortgage and Housing Corp. (CMHC) predicts housing starts and resale prices across the province will drop this year.
A CMHC report released this week said resale prices will drop for the first time since 1982. In Red Deer, the average house will sell for $271,000 this year, compared with a record high of $278,040 in 2008.
The city’s 2.5 per cent decline is still less than half the predicted provincial drop of 5.6 per cent.
“As listings rise and there aren’t as many buyers, it puts a lot of pressure on the market. But by 2010, we forecast prices to rise to another record high of $280,000,” said Lai Sing Louie, a senior analyst with the CMHC.
Louie said property owners in Red Deer have still done well over the past five years. In 2005, the average resale price was in the $160,000 range.
“Annual averages are a bit deceiving, they’re a bit like a roller-coaster. We’re seeing some price erosion now, but long-term homeowners have still done well in real estate in Red Deer,” he said.
The CMHC predicts Alberta’s multi-family housing market will drop by 55 per cent in 2009, citing a slower adjustment to the weakening economy than the single-family market.
It forecasts only 6,500 multi-family housing starts in Alberta in 2009, compared with 14,448 in 2008. Single-family units will fare slightly better, with 12,700 expected in 2009, compared with 14,700 the previous year. In Calgary, multi-family housing starts are forecast to drop a whopping 75.9 per cent.
“A lot of the high-rise condos were planned back in 2005 and 2006. . . . Even though we were in buyers’ market, once you start one of those condos, they take a while to complete so that’s why this market has been slower to adjust,” said Louie.
Red Deer, which saw a 63 per cent decrease in housing starts last year, won’t feel the effects as dramatically as other areas. Multi-family starts will decline to 200 from 205 in 2008, and the city will see 350 single-family housing starts versus 367 in 2008.
The 3.8 per cent decline in housing starts might seem like small beans compared with the 63 per cent drop last year, when only 572 starts were reported after a record 1,558 in 2007.
“What you have to remember is that 2007 was a year of incredible growth,” said Red Deer Mayor Morris Flewwelling.
Flewwelling said a steep drop back to normal numbers is to be expected after an economic boom, and argued that many people are still moving to Red Deer for jobs, even as the province reported it expects to lose 15,000 jobs and fall into recession this year.
Vacancy rates have also increased to 4.5 per cent, up from a record low of 0.5 per cent in 2006.
“My sense is that 2009 is going to be a year we endure and then we will climb back up again. Hopefully, the climb won’t be as dizzying as before,” said Flewwelling.
Gord Bontje, owner of local business Laebon Homes, said the statistics don’t tell the whole story. According to Bontje, sales slowed for his staff in mid-2007 and have just recently picked up again.
“We’re seeing excellent customer response and frankly, that’s in large part a reflection of the fact that first-time homebuyers can get unbelievably low rates. Like a four per cent mortgage — that’s almost breathtaking.”
Growth is expected to improve slightly in 2010 — in Red Deer, 675 housing starts are forecast next year, an increase of 22.7 per cent. Bontje said potential buyers should act now.
“I’ve been around a long time and I’ve seen these cycles come and go. If you’re a teacher or a police officer, somebody that’s not working in the oil business, it’s a phenomenal time to buy because things are so cheap,” he said.
A CMHC report released this week said resale prices will drop for the first time since 1982. In Red Deer, the average house will sell for $271,000 this year, compared with a record high of $278,040 in 2008.
The city’s 2.5 per cent decline is still less than half the predicted provincial drop of 5.6 per cent.
“As listings rise and there aren’t as many buyers, it puts a lot of pressure on the market. But by 2010, we forecast prices to rise to another record high of $280,000,” said Lai Sing Louie, a senior analyst with the CMHC.
Louie said property owners in Red Deer have still done well over the past five years. In 2005, the average resale price was in the $160,000 range.
“Annual averages are a bit deceiving, they’re a bit like a roller-coaster. We’re seeing some price erosion now, but long-term homeowners have still done well in real estate in Red Deer,” he said.
The CMHC predicts Alberta’s multi-family housing market will drop by 55 per cent in 2009, citing a slower adjustment to the weakening economy than the single-family market.
It forecasts only 6,500 multi-family housing starts in Alberta in 2009, compared with 14,448 in 2008. Single-family units will fare slightly better, with 12,700 expected in 2009, compared with 14,700 the previous year. In Calgary, multi-family housing starts are forecast to drop a whopping 75.9 per cent.
“A lot of the high-rise condos were planned back in 2005 and 2006. . . . Even though we were in buyers’ market, once you start one of those condos, they take a while to complete so that’s why this market has been slower to adjust,” said Louie.
Red Deer, which saw a 63 per cent decrease in housing starts last year, won’t feel the effects as dramatically as other areas. Multi-family starts will decline to 200 from 205 in 2008, and the city will see 350 single-family housing starts versus 367 in 2008.
The 3.8 per cent decline in housing starts might seem like small beans compared with the 63 per cent drop last year, when only 572 starts were reported after a record 1,558 in 2007.
“What you have to remember is that 2007 was a year of incredible growth,” said Red Deer Mayor Morris Flewwelling.
Flewwelling said a steep drop back to normal numbers is to be expected after an economic boom, and argued that many people are still moving to Red Deer for jobs, even as the province reported it expects to lose 15,000 jobs and fall into recession this year.
Vacancy rates have also increased to 4.5 per cent, up from a record low of 0.5 per cent in 2006.
“My sense is that 2009 is going to be a year we endure and then we will climb back up again. Hopefully, the climb won’t be as dizzying as before,” said Flewwelling.
Gord Bontje, owner of local business Laebon Homes, said the statistics don’t tell the whole story. According to Bontje, sales slowed for his staff in mid-2007 and have just recently picked up again.
“We’re seeing excellent customer response and frankly, that’s in large part a reflection of the fact that first-time homebuyers can get unbelievably low rates. Like a four per cent mortgage — that’s almost breathtaking.”
Growth is expected to improve slightly in 2010 — in Red Deer, 675 housing starts are forecast next year, an increase of 22.7 per cent. Bontje said potential buyers should act now.
“I’ve been around a long time and I’ve seen these cycles come and go. If you’re a teacher or a police officer, somebody that’s not working in the oil business, it’s a phenomenal time to buy because things are so cheap,” he said.
Wednesday, February 11, 2009
Statistics of Value of City Residential Sales
January-09: $15,766,700
Jabuary-08: $31,944,500
Jan. 1/09 to Jan 31/09: $15,766,700
Jan. 1/08 to Jan 31/08: $31,944,500
Decrease in value of city residential sales from:
January 2008 to January 2009: -50.64%
Decrease in value of city residential sales from:
Jan. 1-Jan 31/08 to Jan 1-Jan 31/09: YTD -50.64%
Jabuary-08: $31,944,500
Jan. 1/09 to Jan 31/09: $15,766,700
Jan. 1/08 to Jan 31/08: $31,944,500
Decrease in value of city residential sales from:
January 2008 to January 2009: -50.64%
Decrease in value of city residential sales from:
Jan. 1-Jan 31/08 to Jan 1-Jan 31/09: YTD -50.64%
Statistics of City Residential Sales
January-09: 62
January 08: 106
Jan. 1/09 to Jan 31/09: 62
Jan. 1/08 to Jan 31/08: 106
Decrease in the city residential sales from:
January 2008 to January 2009: -41.51%
Decrease in the city residential sales from:
Jan 1-Jan 31/08 to Jan1-Jan 31/09: YTD -41.51%
January 08: 106
Jan. 1/09 to Jan 31/09: 62
Jan. 1/08 to Jan 31/08: 106
Decrease in the city residential sales from:
January 2008 to January 2009: -41.51%
Decrease in the city residential sales from:
Jan 1-Jan 31/08 to Jan1-Jan 31/09: YTD -41.51%
Tuesday, February 10, 2009
Planners see clouds on horizon
Planning and development officers throughout Central Alberta had reason to be upbeat a year ago.
The 17 towns in the region had issued nearly $500 million worth of building permits during 2007, a figure that topped their combined 2006 tally by 32 per cent.
The officials who oversaw those construction approvals were generally optimistic about what lay ahead, but Rocky Mountain House’s director of planning and development voiced concerns about clouds on the horizon.
“I’m hoping it will be a good year,” said Elly Martin, whose town had just recorded a 57 per cent jump in permit values, to $31.9 million.
“But it’s kind of scary with the lumber industry and the oil industry and the stock market.”
Martin’s reservations haven proven to be well-founded.
Building permit values in Rocky tumbled 37 per cent in 2008, and the West County town was not alone.
After nearly cracking the half-billion-dollar mark in 2007, the building permit tally for Central Alberta’s towns dropped 40 per cent to $300.3 million.
The biggest percentage declines occurred in Innisfail (81 per cent), Ponoka (55 per cent), Sylvan Lake (50 per cent) and Olds (48 per cent).
Bucking the trend were Lacombe and Rimbey, which saw their building permit values rise by 13 and 41 per cent respectively. Stettler’s tally increased slightly.
Carol-Lynn Gilchrist, Lacombe’s planner and development officer, pointed out that her town’s permit numbers declined in 2007 when those in most other communities were moving higher.
“We ran out of residential lots in the summertime, around August,” she explained.
The problem had been rectified by fall, and the pace of construction picked up in 2008.
In Rimbey, a handful of big commercial projects — including a new Best Western Hotel — accounted for $8 million of the community’s construction approvals in 2008, said town manager Russell Wardrope.
Wes Holowachuk, the development officer in Stettler, said a new town office, affordable apartment building and town shop expansion helped maintain construction values in his municipality.
“Our own projects kept those numbers up.”
In Olds, there was a marked decline in institutional work. The town had no permits in this category in 2008, after the two preceding years the figures were $49.6 million and $40.3 million.
However, Olds did experience a jump in residential work last year.
Innisfail also had a banner year on the institutional front in 2007 — with $23.1 million worth of work approved for the likes of the Legacy West Partners assisted living complex and the town water reservoir — which makes 2008 look bad by comparison.
And the new Econolodge Inn and Suites and Best Western hotel helped boost commercial permits in Innisfail to $7.9 million in 2007, a figure it couldn’t match last year.
“There were some big projects in the last two to three years that skewed our numbers somewhat,” said Innisfail development officer Elwin Wiens.
In Blackfalds, building activity wasn’t far behind 2007 if a couple major institutional projects that year worth $7.9 million are removed from the equation.
Nicole Jensen, Blackfalds’ planning and development officer, said permit numbers so far this year are well ahead of the pace from 2007 and 2008.
“Everybody keeps talking about this slowdown. We sure aren’t seeing it.”
Sylvan Lake, which is Central Alberta’s perennial leader when it comes to building, suffered a sharp drop in 2008.
But Tim Schmidt, the town’s director of planning and development, noted that 2007 was an exceptional year with permits issued for the likes of Wal-Mart, Sobeys and Shoppers Drug Mart.
He expects development to rebound this year, with the build-out of the SmartCentres shopping centre and residential activity at Beacon Hill and Sylvan Lake’s waterfront district.
Dean Schweder, Rocky’s tourism and economic development co-ordinator, said residential construction in his town last year was adversely affected by the fact most of the available lots were held by a few builders. But the town enjoyed a jump in commercial activity, with strong activity at Gateway Crossing and a nearby commercial plaza.
Carey Keleman, Ponoka’s economic development officer, thinks the permit slowdown in 2008 was in part a consequence of the frantic pace of development the year before.
“I think it was catch-up time this last year.”
Wiens added that the reduced activity in 2008 might have set the stage for a busier 2009 for his department.
“I think it’s going to rebound somewhat, just because I think demand increases when you do hold back for a year; suddenly your demand kind of builds up, and we’re seeing a bit of that already this spring.”
Wardrope believes the pace of development in 2009 will be determined by broader economic conditions.
“I guess the market will dictate how much people are willing to invest in real property, as opposed to hiding it in their mattress, or whatever.”
The 17 towns in the region had issued nearly $500 million worth of building permits during 2007, a figure that topped their combined 2006 tally by 32 per cent.
The officials who oversaw those construction approvals were generally optimistic about what lay ahead, but Rocky Mountain House’s director of planning and development voiced concerns about clouds on the horizon.
“I’m hoping it will be a good year,” said Elly Martin, whose town had just recorded a 57 per cent jump in permit values, to $31.9 million.
“But it’s kind of scary with the lumber industry and the oil industry and the stock market.”
Martin’s reservations haven proven to be well-founded.
Building permit values in Rocky tumbled 37 per cent in 2008, and the West County town was not alone.
After nearly cracking the half-billion-dollar mark in 2007, the building permit tally for Central Alberta’s towns dropped 40 per cent to $300.3 million.
The biggest percentage declines occurred in Innisfail (81 per cent), Ponoka (55 per cent), Sylvan Lake (50 per cent) and Olds (48 per cent).
Bucking the trend were Lacombe and Rimbey, which saw their building permit values rise by 13 and 41 per cent respectively. Stettler’s tally increased slightly.
Carol-Lynn Gilchrist, Lacombe’s planner and development officer, pointed out that her town’s permit numbers declined in 2007 when those in most other communities were moving higher.
“We ran out of residential lots in the summertime, around August,” she explained.
The problem had been rectified by fall, and the pace of construction picked up in 2008.
In Rimbey, a handful of big commercial projects — including a new Best Western Hotel — accounted for $8 million of the community’s construction approvals in 2008, said town manager Russell Wardrope.
Wes Holowachuk, the development officer in Stettler, said a new town office, affordable apartment building and town shop expansion helped maintain construction values in his municipality.
“Our own projects kept those numbers up.”
In Olds, there was a marked decline in institutional work. The town had no permits in this category in 2008, after the two preceding years the figures were $49.6 million and $40.3 million.
However, Olds did experience a jump in residential work last year.
Innisfail also had a banner year on the institutional front in 2007 — with $23.1 million worth of work approved for the likes of the Legacy West Partners assisted living complex and the town water reservoir — which makes 2008 look bad by comparison.
And the new Econolodge Inn and Suites and Best Western hotel helped boost commercial permits in Innisfail to $7.9 million in 2007, a figure it couldn’t match last year.
“There were some big projects in the last two to three years that skewed our numbers somewhat,” said Innisfail development officer Elwin Wiens.
In Blackfalds, building activity wasn’t far behind 2007 if a couple major institutional projects that year worth $7.9 million are removed from the equation.
Nicole Jensen, Blackfalds’ planning and development officer, said permit numbers so far this year are well ahead of the pace from 2007 and 2008.
“Everybody keeps talking about this slowdown. We sure aren’t seeing it.”
Sylvan Lake, which is Central Alberta’s perennial leader when it comes to building, suffered a sharp drop in 2008.
But Tim Schmidt, the town’s director of planning and development, noted that 2007 was an exceptional year with permits issued for the likes of Wal-Mart, Sobeys and Shoppers Drug Mart.
He expects development to rebound this year, with the build-out of the SmartCentres shopping centre and residential activity at Beacon Hill and Sylvan Lake’s waterfront district.
Dean Schweder, Rocky’s tourism and economic development co-ordinator, said residential construction in his town last year was adversely affected by the fact most of the available lots were held by a few builders. But the town enjoyed a jump in commercial activity, with strong activity at Gateway Crossing and a nearby commercial plaza.
Carey Keleman, Ponoka’s economic development officer, thinks the permit slowdown in 2008 was in part a consequence of the frantic pace of development the year before.
“I think it was catch-up time this last year.”
Wiens added that the reduced activity in 2008 might have set the stage for a busier 2009 for his department.
“I think it’s going to rebound somewhat, just because I think demand increases when you do hold back for a year; suddenly your demand kind of builds up, and we’re seeing a bit of that already this spring.”
Wardrope believes the pace of development in 2009 will be determined by broader economic conditions.
“I guess the market will dictate how much people are willing to invest in real property, as opposed to hiding it in their mattress, or whatever.”
Home-market ‘correction is in full swing’: construction, sales, prices down
As the recession digs in and the unemployment rate rises, economists say nervous consumers are standing still when it comes to buying and selling real estate.
The results are increasing numbers of dwellings on the market, dropping prices and a slowdown in construction.
“The Canadian housing correction is in full swing, having a wide impact across the country,” BMO Capital Markets economist Robert Kavcic commented Monday.
Canada Mortgage and Housing Corp. reported housing starts fell to a seasonally adjusted annual rate of 153,500 units in January, down 10.9 per cent from December in the steepest monthly drop since March 1995.
It was the fifth straight decline and left home construction at its slackest pace since 2001, well below market expectations of 169,000.
Also Monday, the Canadian Real Estate Association predicted house prices nationally will fall eight per cent this year as the number of Multiple Listing Service sales tumbles 16.9 per cent to 360,900 units.
Three months ago, the association was forecasting only a 2.1 per cent price slippage for 2009 on a three per cent decline in the number of sales.
Its latest forecast would represent the smallest national MLS sales volume since 2000, following a 17.1 per cent drop in 2008.
Gregory Klump, chief economist for the association, said that although there were some incentives for home buyers in the recent federal budget, “they won’t take hold until there is an improvement in buyer psychology.”
The Jan. 27 budget included a plan to expand the insured mortgage purchase program by $50 billion to $125 billion, which is meant to encourage banks to increase mortgage lending.
Ottawa also increased the RRSP withdrawal limit for qualified home buyers to $25,000 from $20,000, and introduced up to $750 in tax relief for closing costs for first-time buyers.
The real estate association said sales are expected to fall in every province this year, led by declines of about 19 per cent in British Columbia, Alberta and Ontario.
B.C and Alberta, which have seen the biggest price jumps in recent years, are expected to see home prices fall the most, by 10.6 per cent and 8.9 per cent respectively.
Meantime, the average home price in Newfoundland and Labrador is forecast to rise 4.8 per cent — the only province forecast to see an increase.
CIBC economist Benjamin Tal said he is forecasting a sales drop of about 15 per cent and price decline of about 10 per cent nationwide this year.
Tal said the Canadian housing market is in a “correction, not a free fall.” However, “the recovery will not be very quick.”
Scotiabank economist Adrienne Warren said the home market is in “retrenchment mode.”
“It’s no surprise that home builders are pulling back, facing slowing demand and increasing amounts of unsold inventory,” Warren said.
“What you are also seeing now is that the condo market has finally cooled off.”
Still, Warren said Canada has nowhere near the housing crisis as the United States, where risky lending has made foreclosure sales common.
CMHC said in its report that overall housing starts declined across the country, with a lot of the steam coming off the hot market that had prevailed in most of Western Canada.
“Reduced sales and increased listings in the existing-home market have led to reduced spillover demand in the new-home market,” stated Bob Dugan, the Crown corporation’s chief economist.
On a seasonally adjusted basis, January’s starts were down from December by 30.3 per cent on the Prairies, 29.1 per cent in British Columbia, 14.6 per cent in Ontario, 8.6 per cent in Atlantic Canada and 1.4 per cent in Quebec.
“Western Canada in particular continues to see activity fall off a cliff, with starts in B.C. at the lowest level since 2002, and in Alberta the weakest since 1996,” BMO’s Kavcic wrote in a note. “Both provinces are seeing activity at half year-ago levels.”
And last month’s steep national drop in single-family-unit starts “adds further downside risk to economic growth forecasts,” commented TD Bank economist Pascal Gauthier.
Gauthier said single-unit construction is generally less volatile than multiple-unit starts, and the sharp downturn “bodes poorly for the private residential investment component of real GDP growth.”
The TD commentary added that improved home affordability will likely support starts this year at the pre-boom level of about 150,000, but “if starts continue on this downward momentum without signs of stabilization ... even this prudent forecast could fall by the wayside.”
The results are increasing numbers of dwellings on the market, dropping prices and a slowdown in construction.
“The Canadian housing correction is in full swing, having a wide impact across the country,” BMO Capital Markets economist Robert Kavcic commented Monday.
Canada Mortgage and Housing Corp. reported housing starts fell to a seasonally adjusted annual rate of 153,500 units in January, down 10.9 per cent from December in the steepest monthly drop since March 1995.
It was the fifth straight decline and left home construction at its slackest pace since 2001, well below market expectations of 169,000.
Also Monday, the Canadian Real Estate Association predicted house prices nationally will fall eight per cent this year as the number of Multiple Listing Service sales tumbles 16.9 per cent to 360,900 units.
Three months ago, the association was forecasting only a 2.1 per cent price slippage for 2009 on a three per cent decline in the number of sales.
Its latest forecast would represent the smallest national MLS sales volume since 2000, following a 17.1 per cent drop in 2008.
Gregory Klump, chief economist for the association, said that although there were some incentives for home buyers in the recent federal budget, “they won’t take hold until there is an improvement in buyer psychology.”
The Jan. 27 budget included a plan to expand the insured mortgage purchase program by $50 billion to $125 billion, which is meant to encourage banks to increase mortgage lending.
Ottawa also increased the RRSP withdrawal limit for qualified home buyers to $25,000 from $20,000, and introduced up to $750 in tax relief for closing costs for first-time buyers.
The real estate association said sales are expected to fall in every province this year, led by declines of about 19 per cent in British Columbia, Alberta and Ontario.
B.C and Alberta, which have seen the biggest price jumps in recent years, are expected to see home prices fall the most, by 10.6 per cent and 8.9 per cent respectively.
Meantime, the average home price in Newfoundland and Labrador is forecast to rise 4.8 per cent — the only province forecast to see an increase.
CIBC economist Benjamin Tal said he is forecasting a sales drop of about 15 per cent and price decline of about 10 per cent nationwide this year.
Tal said the Canadian housing market is in a “correction, not a free fall.” However, “the recovery will not be very quick.”
Scotiabank economist Adrienne Warren said the home market is in “retrenchment mode.”
“It’s no surprise that home builders are pulling back, facing slowing demand and increasing amounts of unsold inventory,” Warren said.
“What you are also seeing now is that the condo market has finally cooled off.”
Still, Warren said Canada has nowhere near the housing crisis as the United States, where risky lending has made foreclosure sales common.
CMHC said in its report that overall housing starts declined across the country, with a lot of the steam coming off the hot market that had prevailed in most of Western Canada.
“Reduced sales and increased listings in the existing-home market have led to reduced spillover demand in the new-home market,” stated Bob Dugan, the Crown corporation’s chief economist.
On a seasonally adjusted basis, January’s starts were down from December by 30.3 per cent on the Prairies, 29.1 per cent in British Columbia, 14.6 per cent in Ontario, 8.6 per cent in Atlantic Canada and 1.4 per cent in Quebec.
“Western Canada in particular continues to see activity fall off a cliff, with starts in B.C. at the lowest level since 2002, and in Alberta the weakest since 1996,” BMO’s Kavcic wrote in a note. “Both provinces are seeing activity at half year-ago levels.”
And last month’s steep national drop in single-family-unit starts “adds further downside risk to economic growth forecasts,” commented TD Bank economist Pascal Gauthier.
Gauthier said single-unit construction is generally less volatile than multiple-unit starts, and the sharp downturn “bodes poorly for the private residential investment component of real GDP growth.”
The TD commentary added that improved home affordability will likely support starts this year at the pre-boom level of about 150,000, but “if starts continue on this downward momentum without signs of stabilization ... even this prudent forecast could fall by the wayside.”
Alberta home prices to slip 9% in '09: Crea
Published: Tuesday, February 10, 2009
The Canadian Real Estate Association is forecasting MLS residential sales will fall by 19 per cent this year in Alberta compared with 2008,while the average sale price will drop by nine per cent in the province.
CREA said Monday it expects MLS sales in the province to decline to 45,650 units this year, but increase by 15.2 per cent in 2010 to 52,600 units. It also said the MLS average sale price in Alberta will fall to $321,500 in 2009 and drop another 1.1 per cent in 2010 to $318,000.
"There's caution among prospective buyers," said Richard Corriveau, regional economist for the Prairies and Territories for Canada Mortgage and Housing Corp. "They have a number of factors working in their favour that one would assume would result in additional demand.Those being low mortgage rates. We've already seen some price reductions and there's also a heightened amount of active listings. So the selection is fantastic for prospective buyers."
But Corriveau said the concern and caution people have is the overall economic uncertainty" that's hanging over their heads."
"We saw tremendous job losses nationally. Many within the province as well. If people are concerned about their job security, naturally that will hinder the decision to conduct the most major purchase in their lives," he added.
Corriveau said the CMHC believes the bottom of the market will be in 2009 with the second half of the year stronger than the first half as people start to understand economic conditions are improving. He said prices should eventually stabilize.
"Currently, the expectation is prices will likely moderate somewhat over the first half of the year as well, but we think once demand starts to pick up and the level of active listings do moderate we'll return to a more positive price path and once that occurs that should knock some prospective buyers off the shelf," said Corriveau.
Nationally, CREA said MLS sales will decline by 16.9 per cent this year to 360,900 units, but rise by 9.9 per cent in 2010 to 396,600 units. The 2009 figure would be the lowest level for national sales activity since the year 2000.
Across the country, CREA said the average MLS sale price will fall by eight per cent in 2009 to $279,400, but increase by 1.1 per cent in 2010 to $282,400.
"Increasingly cautious homebuyers and mortgage lenders means that active listings will take longer to sell in 2009 compared to previous years,"said CREA's chief economist Gregory Klump, who developed the forecast. "The national housing market is recalibrating due to weak sales activity. Supply will take time to adjust to lower demand, but sellers unwilling to accept offers below their expectations will remove their home from the market.Fewer active listings reduces buyer choice and in time puts a floor under prices."
In 2008, the association said there were 434,477 MLS sales in Canada, a decline of 17.1 per cent from the previous year while in Alberta there were 56,399 sales, dropping by 21 per cent on an annual basis. Last year, the average MLS sale price dropped by 0.7 per cent nationally from 2007 to $303,594. In Alberta, that price decline was 0.9 per cent to $352,857.
The Canadian Real Estate Association is forecasting MLS residential sales will fall by 19 per cent this year in Alberta compared with 2008,while the average sale price will drop by nine per cent in the province.
CREA said Monday it expects MLS sales in the province to decline to 45,650 units this year, but increase by 15.2 per cent in 2010 to 52,600 units. It also said the MLS average sale price in Alberta will fall to $321,500 in 2009 and drop another 1.1 per cent in 2010 to $318,000.
"There's caution among prospective buyers," said Richard Corriveau, regional economist for the Prairies and Territories for Canada Mortgage and Housing Corp. "They have a number of factors working in their favour that one would assume would result in additional demand.Those being low mortgage rates. We've already seen some price reductions and there's also a heightened amount of active listings. So the selection is fantastic for prospective buyers."
But Corriveau said the concern and caution people have is the overall economic uncertainty" that's hanging over their heads."
"We saw tremendous job losses nationally. Many within the province as well. If people are concerned about their job security, naturally that will hinder the decision to conduct the most major purchase in their lives," he added.
Corriveau said the CMHC believes the bottom of the market will be in 2009 with the second half of the year stronger than the first half as people start to understand economic conditions are improving. He said prices should eventually stabilize.
"Currently, the expectation is prices will likely moderate somewhat over the first half of the year as well, but we think once demand starts to pick up and the level of active listings do moderate we'll return to a more positive price path and once that occurs that should knock some prospective buyers off the shelf," said Corriveau.
Nationally, CREA said MLS sales will decline by 16.9 per cent this year to 360,900 units, but rise by 9.9 per cent in 2010 to 396,600 units. The 2009 figure would be the lowest level for national sales activity since the year 2000.
Across the country, CREA said the average MLS sale price will fall by eight per cent in 2009 to $279,400, but increase by 1.1 per cent in 2010 to $282,400.
"Increasingly cautious homebuyers and mortgage lenders means that active listings will take longer to sell in 2009 compared to previous years,"said CREA's chief economist Gregory Klump, who developed the forecast. "The national housing market is recalibrating due to weak sales activity. Supply will take time to adjust to lower demand, but sellers unwilling to accept offers below their expectations will remove their home from the market.Fewer active listings reduces buyer choice and in time puts a floor under prices."
In 2008, the association said there were 434,477 MLS sales in Canada, a decline of 17.1 per cent from the previous year while in Alberta there were 56,399 sales, dropping by 21 per cent on an annual basis. Last year, the average MLS sale price dropped by 0.7 per cent nationally from 2007 to $303,594. In Alberta, that price decline was 0.9 per cent to $352,857.
Monday, February 9, 2009
Oilpatch faces major job cuts
An oilpatch trade association is warning that deep cuts in the petroleum services industry are imminent.
“Drilling activity in the first quarter is down from last year, and it’s looking like come March or April, things are going to be pretty grim,” said Petroleum Services Association of Canada president Roger Soucy in a news release.
“Without healthy drilling activity, there’s just no work for this segment of the industry, and without work, there are no jobs.
“There are a lot of people in the province of Alberta whose jobs are at stake — not just directly in the industry, but in all cities and towns where industry and workers support hotels, coffee shops, restaurants, stores and countless other businesses.”
PSAC estimates that the petroleum sector, which includes drilling, service and geophysical contractors, employs more than 100,000 Albertans.
Another concern is that skilled workers who are displaced won’t return.
“If we lose these workers, and likely a number of companies as well, it will become very difficult to recruit new people. That means, when the economy is poised for a turn-around, there simply won’t be the manpower and expertise to keep Alberta’s economic engine churning.”
On Thursday, the provincial government announced an incentive program for the industry. Soucy said his organization welcomes the help, but added that the main issue is the economics that currently make exploration and drilling impractical.
“Until commodities recover, the only way to protect jobs, and our economy, is to create an environment where it is economical for producers — big and small — to keep drilling wells.”
PSAC represents more than 270 companies with more than 62,000 employees in the petroleum services industry. Last week, it projected that there will be 21 per cent drop in drilling activity in Canada this year, and a 27 per cent decline in Alberta.
“Drilling activity in the first quarter is down from last year, and it’s looking like come March or April, things are going to be pretty grim,” said Petroleum Services Association of Canada president Roger Soucy in a news release.
“Without healthy drilling activity, there’s just no work for this segment of the industry, and without work, there are no jobs.
“There are a lot of people in the province of Alberta whose jobs are at stake — not just directly in the industry, but in all cities and towns where industry and workers support hotels, coffee shops, restaurants, stores and countless other businesses.”
PSAC estimates that the petroleum sector, which includes drilling, service and geophysical contractors, employs more than 100,000 Albertans.
Another concern is that skilled workers who are displaced won’t return.
“If we lose these workers, and likely a number of companies as well, it will become very difficult to recruit new people. That means, when the economy is poised for a turn-around, there simply won’t be the manpower and expertise to keep Alberta’s economic engine churning.”
On Thursday, the provincial government announced an incentive program for the industry. Soucy said his organization welcomes the help, but added that the main issue is the economics that currently make exploration and drilling impractical.
“Until commodities recover, the only way to protect jobs, and our economy, is to create an environment where it is economical for producers — big and small — to keep drilling wells.”
PSAC represents more than 270 companies with more than 62,000 employees in the petroleum services industry. Last week, it projected that there will be 21 per cent drop in drilling activity in Canada this year, and a 27 per cent decline in Alberta.
Subscribe to:
Posts (Atom)
