Red Deer Real Estate

Housing sales to slow until next year

2010-10-19T12:26:00.000-07:00

Text By The Canadian Press

Published: October 17, 2010 4:41 PM
TORONTO — Home sales in Canada were down 20 per cent in September from the record highs of last year in what the chief economist of Canada’s main real estate industry group described Friday as a trend that will continue well into next year.

The Canadian Real Estate Association said Friday that 33,913 homes were sold in September, up three per cent from last month and the most since May.

But sales were still significantly lower than the 42,431 recorded last September, when buyers flocked to the market as the economy showed signs of recovery from the recession.

“They were pretty strong year-ago numbers, so that’s to be expected,” CREA’s chief economist, Gregory Klump, said of the drop in comparative numbers.

However, he noted that this September’s sales reflected similar sales for the month in 2006, 2007 and 2008.

Prices were little changed from last year at $331,089.

Unfavourable year-over-year comparisons are expected to continue into the second quarter of next year because sales didn’t start to drop from post-recession record highs until this spring, Klump said.

“We certainly do expect continued year-over-year comparisons to be negative until at least the end of the first quarter of 2011,” he said.

“If you take a look at what happened from the standpoint of sales activity in late 2008, early 2009, they fell to the lowest level in a decade.

“And when it became apparent that the worst of the economic crisis was behind us, a lot of deferred purchases began to flood back into the market.”

A pull-forward effect in advance of looming higher interest rates, tighter mortgage qualification rules and a new sales tax in Ontario and British Columbia that took effect this spring, further contributed to distorted year-on-year comparisons.

The impact of the recession on delaying purchases until late last year combined with the temporary factors that pushed sales ahead this spring condensed a flurry of demand into a very short time frame.

“It’s going to take a year for those things to fall out of the numbers,” Klump said.

“Even with steady numbers, compared to year ago levels, you’re still going to see comparisons that are going to fall short of some pretty extraordinary sales activity one year ago.”

Sherry Cooper, chief economist at the Bank of Montreal, said back-to-back advances in August and September figures followed an ugly slide in the first seven months of the year that saw sales plunge 30 per cent from peak to trough.

“The Canadian housing market has returned to balance, which still feels like a stark change from the rip-roaring sellers’ market seen (earlier this year),” she said in a note.

The slight monthly rise in sales can be attributed to falling five-year fixed mortgage rates, which have helped offset a decline in consumer confidence as the economy weakens, she added.

Shahrzad Mobasher Fard, an economist at TD Economics, said the pullback in mortgage rates will continue to stimulate borrowing and help home sale activity.

“This, together with recent developments in existing home sales activity, signal the likelihood that we are closer to a balanced market position than previously envisaged. Some firming up in existing home sales and prices may consequently be in sight,” he said.

However, he warned the decelerating pace of Canada’s economic growth, weak prospects for employment and income growth, and rising household indebtedness will limit Canadian existing home sales activity.

Two-thirds of local markets posted monthly increases in September, led by Winnipeg, Calgary, and Montreal, CREA said. Sales declined in only one province, Nova Scotia.

The number of new property listings coming on the market last month was up less than one per cent from August and remained 15 per cent below this year’s peak in April. At current levels of activity, it would take an estimated 6.6 months to sell all the homes on the market at the end of September. That’s down from 6.9 months in August and 7.2 months in July.

2010-09-14T10:39:00.000-07:00

Housing starts fall for a thi

Text By Advocate staff

Published: September 10, 2010 9:27 AM
Activity in Red Deer’s residential construction sector could be waning, after a third consecutive month in which 2010 housing starts were down from 2009.

Canada Mortgage and Housing Corp. reported on Thursday that work began on 36 homes in the city last month: 23 single-detached houses and 13 units in multi-family projects. That’s down 43 per cent from August 2009, when there were 43 single-detached starts and 20 multi-family starts for a total of 63.

In July, Red Deer recorded 42 housing starts, one fewer than in July 2009. And in June, the tally was 46, as compared with 65 the previous year.

Despite these year-over-year declines, total housing starts in Red Deer so far this year remain 64 per cent ahead of the 2009 tally to the same point. As of Aug. 31, work had started on 435 homes: 266 single-detached and 169 multi-family. That compares with 266 during the first eight months of 2009, including 190 single-detached and 76 multi-family.

Among the seven largest urban centres in the province, Red Deer, Lethbridge and Grande Prairie all posted big declines in the number of housing starts recorded this August. The Regional Municipality of Wood Buffalo was up slightly and Medicine Hat, Calgary and Edmonton all had sizable jumps in residential construction starts last month.

Nationally, the seasonally adjusted annual rate of housing starts in August decreased three per cent from 12 months earlier, said CMHC.

“Housing starts moved lower in August, reflecting a decrease in both single and multiple starts,” said Bob Dugan, chief economist at CMHC’s market analysis centre

First video

2010-09-04T16:06:00.000-07:00

I have just posted my first video but without sound and music so I will be still getting educated on adding this. If you have some suggestions please let me know. Thanks

64 Oakdale Place

2010-09-04T16:03:00.000-07:00

Resale activity slipping

2010-09-01T13:49:00.000-07:00

Activity in the local residential resale market will remain subdued for the rest of this year, with only a slight improvement expected in 2011, says Canada Mortgage and Housing Corp.

In its latest housing market outlook, released on Tuesday, the national housing agency predicted that 3,000 Central Alberta homes will be sold through the Multiple Listing Service this year. That would be a 20.4 per cent drop from the 3,770 sales that closed in the region last year.

CMHC is projecting weaker year-over-year sales in five of Alberta’s seven larger urban centres, but the decline in Red Deer would be the greatest. Home resales in Calgary are forecast to fall 14 per cent, with Edmonton 11.2 per cent lower, Lethbridge down 8.4 per cent and Medicine Hat slipping 1.7 per cent.

MLS residential sales in Grande Prairie are expected to rise by 4.5 per cent, and the figure for the Regional Municipality of Wood Buffalo to jump 13.3 per cent this year.

In CMHC’s previous housing market outlook, issued in May, MLS sales in Central Alberta this year were anticipated to reach 3,500.

Looking further ahead, CMHC is calling for resales of local home to improve to 3,100 in 2011. Three months ago, it was forecasting 3,700 sales next year.

In its quarterly report, CMHC said resale transactions in Alberta received a boost during the first half of this year as buyers rushed to take advantage of market conditions — a trend that hasn’t continued.

Low interprovincial migration and higher monthly carrying costs for homeowners have also slowed sales.

Next year, said CMHC, “a tighter labour market, combined with wage growth and improved migration will expand sales in the low single-digits.”

For the Red Deer area, home resales are projected to reach 3,100 in 2011, as compared with the 3,700 that CMHC was forecasting in May.

Despite the drop in sales this year, CMHC expects the average price of MLS transactions in Central Alberta to hit $270,000 — 2.1 per cent higher than the $264,417 average last year but down slightly from the $273,000 it was forecasting in May. Next year, it anticipates that resale prices will average $275,000, a downward adjustment from the $282,000 it was previously projecting.

An increase in the number of home listings will continue to constrain prices, said CMHC.

The housing market outlook is rosier when it comes to new construction.

CMHC is anticipating 720 housing starts in Red Deer this year: 440 single-detached dwellings and 280 units in multi-family projects. Those figures are unchanged from the agency’s May forecast and much higher than the corresponding stats from 2009.

Specifically, residential starts this year are expected to be 44.9 per cent higher than last year’s 497, with the single-detached category up 32 per cent from the 333 starts last year, and multi-family units up 70.7 per cent over the 164 posted in 2009.

Compared to Alberta’s other large urban centres, the anticipated year-over-year jump in Red Deer’s total housing starts would be second only to Edmonton’s 50.4 per cent. And the local increase in the multi-family category would be the highest among the big cities.

Next year, housing starts in Red Deer are projected to number 770, with 460 single-detached homes and 310 multi-family units.

Those numbers are much more conservative than the figures CMHC was offering in May, when it projected 900 residential construction starts in 2011: 530 single-detached and 370 multi-family.

In its report, CMHC said the rising number of homes being built and increased competition from the resale market should impact demand and lead to a slowdown in the pace of construction.

“Wage and employment growth, as well as more balanced market conditions in 2011, will allow single-detached starts to increase in the single-digits.”

Nationally, CMHC is expecting housing starts to moderate during the remainder of this year and stabilize in 2011.

Bob Dugan, CMHC’s chief economist, said in a news release that existing home market conditions will remain balanced over the next two years as MLS resales ease and inventory levels remain elevated.

In 2011, MLS sales will move lower, CMHC said. And with an improved balance between demand and supply, the average MLS price is expected to edge lower through the end of 2010 and then rise modestly in 2011, it added.

Conflicting views on 'bubble' emerging

2010-09-01T13:48:00.000-07:00

Home prices that continue to inflate even as sales and construction activity fall sparked conflicting views in two new reports Tuesday over whether the Canadian housing market has become a precarious bubble that could burst at any time.

The reports place renewed emphasis on questions that have been simmering since Canada’s housing market appeared to be overheating earlier this year before a major spring slowdown.

Is Canada experiencing a housing bubble?

If so, when will it burst? And, perhaps most troubling for homeowners, will Canadians face a crisis like the one in the U.S?

In the view of the Canadian Centre for Policy Alternatives, prices in six of Canada’s largest housing markets are in bubble territory for the first time in 30 years — and a U.S.-style correction is still not out of the question.

But the C.D. Howe Institute dismissed the possibility in its own report, which concluded that Canada’s cautious mortgage lending policies will protect against a housing crash similar to the one that has hammered the market in the United States.

Bubbles generally occur when housing prices rise faster than inflation, incomes and economic growth, until they reach unsustainable levels and a collapse in prices is triggered.

Many of the concerns about the Canadian housing market are motivated by the recent experience in the U.S., where one in 10 homeowners faces foreclosure.

But there is little likelihood of a surge in foreclosures or a collapse of house prices in Canada, according to the C.D. Howe report.

That’s because of the country’s tighter mortgage requirements — which include a minimum down payment of five per cent, as opposed to zero down at some U.S. banks — as well as regulations against risky lending and a much smaller subprime mortgage market, the C.D. Howe report says.

U.S. home prices fell about 30 per cent between 2006 and 2009, while Canadian prices fell only about nine per cent before a rapid bounceback last year.

Canadian homes are now estimated to be overvalued by as much as 15 to 20 per cent.

The CMHC predicts average prices in the third quarter of this year will be $336,400, a 2.4 per cent decline from an April peak of over $344,000.

The Canadian Centre for Policy Alternatives report says the steep rise in house prices — which now sit at 4.7 to 11.3 times Canadians’ annual income in many cities — is an “accident waiting to happen.”

It would take only a one to 1.25 per cent mortgage rate increase by Canada’s big banks to cause a housing crash similar to the one the U.S. is grappling with, said David Macdonald, author of the report.

However, many economists have concluded that Canada’s once-overheating housing market, which began to cool in the second quarter of the year, has stopped just shy of a bubble.

Adrienne Warren, a real estate economist at Scotiabank, said overvaluation in the Canadian market is largely due to underlying supply and demand conditions that have driven prices up, and not the type of speculative activity normally associated with a housing bubble.

“Given the strength of demand, there was a shortage of choice out there and that led to essentially sellers’ market conditions throughout the decade. It’s something that is fairly unprecedented,” Warren said.

She maintained that Canada’s housing market will avoid a sharp correction, and will instead continue to see a gradual softening in prices.

“A trigger for a sharp correction would be signs of overbuilding ... or a recession and a sharp rise in unemployment rates,” she said.

“That’s not the typical scenario we see unfolding for the next few years.”

Bob Dugan, chief economist at the Canada Mortgage and Housing Corporation, said new housing starts are expected to moderate in the second half of this year and stabilize in 2011 as they adjust to lower demand, which should further deflate fears of a bubble.

He pointed out that while prices have risen rapidly from a trough at the end of 2008, they have increased by a more moderate 2.1 per cent over the 31-month period beginning with a pre-recession peak of $325,000 at the end of 2007 to around $332,000 in July.

Dugan said home prices are expected to gradually decrease, and there isn’t a lot of evidence to support the fact that Canada is experiencing a house-price bubble.

The CMHC predicts average prices in the third quarter of this year will be $336,400, a 2.4 per cent decline from an April peak of over $344,000, Dugan said.

“I don’t think it has to do with a bursting bubble. It has to do with the fact that ... we’re seeing a different balance between supply and demand.”

Housing bubble threat resurfaces

2010-09-01T13:33:00.000-07:00

Home sales may be slowing, but prices in six of Canada's largest housing markets are in bubble territory for the first time in 30 years — and a U.S.-style correction is still not out of the question, according to a report from an Ottawa-based think tank.
The report by the Canadian Centre for Policy Alternatives, to be released Tuesday, says home prices now sit at 4.7 to 11.3 times Canadians’ annual income — much higher than historical comfort levels of between three and four times income.
"To see all of the (major) markets outside of that comfort zone is very unique and concerning," said David Macdonald, a research associate who authored the report entitled "Canada's Housing Bubble: An Accident Waiting To Happen."
Sales have fallen by 25 per cent since reaching a peak at the beginning of the year as fewer buyers compete and more houses come onto the market. But Canadian home prices were up 13.6 per cent in June from a year ago in Canada's major cities, according to the Teranet-National Bank composite house price index.
June prices were up 1.5 per cent compared to May — the largest monthly increase since last August and the 14th straight monthly increase.
The steep rise in house prices in so many cities points toward an "accident waiting to happen,” Macdonald said.
In the past 30 years Canada's housing market has undergone three bubbles. Bubbles occur when housing prices increase more rapidly than inflation, household incomes and economic growth, according to the report.
Each of Canada's previous bubbles was punctured by only a one per cent rise in interest rates over two years, Macdonald warned.
It would take only a one per cent to 1.25 per cent mortgage rate increase by Canada's big banks to cause a housing crash similar to the one the U.S. is grappling with, he added.
Vancouver saw housing bubbles in 1981 and 1994 and another one burst in Toronto in 1989. In Canada's other major markets — Calgary, Edmonton, Ottawa, and Montreal — prices remained stable from 1980 to 2001 at around $150,000 to $220,000 in today's dollars.
"The concern today is all six major markets, not just Vancouver and Toronto, are out of that comfort zone," Macdonald said. "All six major markets now have an average price of over $300,000."
And the current cooling trend doesn't necessarily signify that the market has emerged from a bubble, he added.
Before Toronto's housing market crashed in 1989, the market saw a similar decline in sales volumes in 1987, but that marked only the halfway point before further increases led to the burst.
Douglas Porter, deputy chief economist at the Bank of Montreal, said that while the report's warnings should not be dismissed as completely improbable, it's clear that the market is backing off bubble territory as price increases subside.
"Given the rebound we've seen in employment in the last year in Canada and the fact that interest rates are still at extremely favourable levels, I can't get that pessimistic on the outlook for housing," he said.
Many economists have concluded that Canada's once overheating housing market, which began to cool in the second quarter of the year, has stopped just shy of a bubble. They credit stricter Canadian lending rules with preventing the type of dramatic crash experienced stateside, where one in 10 households is facing foreclosure.
"A lot of the fundamental differences between the Canadian and U.S. markets suggest that we're far less likely to have the kind of deep downturn that the U.S. market went through," said Porter.
However, Canada is not immune to a serious housing market correction and if prices continue to rise for a prolonged period, even as the resale market slides, that could be a danger sign, he added.
Macdonald said he sees at least a few similarities in home price index data between some American and Canadian cities. Calgary and Edmonton have seen the same price increases as some of the worst-hit U.S. cities, for example.
Canadian homes remain affordable because mortgage rates sit at record lows, but home affordability could change rapidly if rates return even partway to their historic norms, the report warns.
If that does happen, young families who have over-extended themselves and seniors relying on selling their house for retirement income would be most affected.
Macdonald said there's about a six-month to one-year window of opportunity before mortgage rates rise dramatically to "let some air out of the housing market" and help prevent the possibility of future bubbles.
Mortgage qualification changes announced in April, meant to discourage homeowners from taking out mortgages on homes they might not be able to afford down the road, didn't go far enough, Macdonald said.
He argued that the government should change the required downpayment from five per cent to ten per cent to further deter those who won't be able to afford rate increases.
But Porter said there's little point in increasing the minimum downpayment level now as the market is softening on its own.
He pointed out that the bubble bursts of the early 1990s were sparked by the Bank of Canada's decision to raise interest rates to 10 per cent above inflation, aimed at taking down the housing market.
"I don't see the Bank of Canada going on a campaign to lift interest rates to absolutely crush the housing sector. It's just not that much of an inflation concern to them this time," Porter said.

Do I Buy or Should I Wait

2010-08-27T10:36:00.000-07:00

I am getting asked by many people whether they are clients or acquaintances DO I BUY OR SHOULD I WAIT. This question is probably one of the most discussed topics right now no matter where you are in the world.
Two years ago when we were affected by the economic downturn everyone’s investments took a hit including their homes. We read about the markets bouncing back and therefore real estate rebounding, this may be true in the large financial centers but is it happening here in our local market? Are we in for another adjustment or a double dip as economists call it? I think you need to look at supply and demand because price movements are not always correct while the number of units sold is absolute. This is where my concern is because inventory levels are up substantially. Is there a problem with financing I do not think so. You can read all you want about the national market but you must remember that real estate is local and I believe that the oil industry is getting ready for busier winter based on what I am hearing and therefore in a few months the spinoff will be great for my business. The people that look at the opportunity today and act on it, will I believe have taken advantage of an opportunity we have not seen since the early eighties. In my opinion that opportunity is found in newer homes under $300,000.00 in Red Deer, Lakefront property at Sylvan Lake, and Valley of the Sun properties in Arizona. I am also seeing what I believe are buying opportunities in specific areas of the Euro zone because of downward price adjustments, currency differences and the biggest adjustment is yet to come because of the change the Euro zone needs to make to adjust to the new world economic realities.

Summertime: July Finally

2010-07-16T14:12:00.000-07:00

We are really starting to see some good weather and it will become harder to put deals together as the buyers, sellers and facilitators all put themselves into a summer mood and schedule until the kids get back in school. At this time of the year I like to look at the market and adjust my business plan for the balance of the year. What I have noticed in the first 6 months of this year is that unit sales are down, inventory levels are increasing more than I expected, pricing in my opinion has held steady but for how long.
I think we will see mortgage rates continue to trend upward through the remainder of the year; the stock market will be flat and finish with a loss compared to where it started the year. It is my opinion credit thru the banks will continue to be tight for any type of borrowing.
As an investor there are still strong opportunities if you are prepared to hold properties or re merchandise properties such as zoning changes for suites and look at a realistic returned based on the amount invested not on the total leveraged amount.
As an investor I still believe the fundamentals of diversification, risk management and cash property re balancing need to be addressed so you can take advantage of the many opportunities that will present themselves in the next few months. Are you adaptable to the market changes?
All of this means business in the next few months will be more challenging to complete and will take all-embracing expansive type of experience not just more experience. As inventories increase, prices will start to fall so motivation and realism will rule the day to complete the negotiations. Anyone can write the deal but can they get it to close? This will be the question going forward.
What are a few things you need to consider when selling your home
1) Know the current situation in the housing market
2) Price your property realistically
3) Smarten up your home
4) Avoid delays in the selling process
5) Eliminate any problems before you list
6) Read the contracts you are signing
7) Make sure you understand the representation you are receiving
8) Choose the right agent

It is my opinion that the next few months will be like a child in the candy store who likes 10 candies but can only have one but which one. Welcome to real estate going forward this year.

Home sales continue slide in June

2010-07-16T08:45:00.000-07:00

Canada’s housing market continued to slide in June in a trend that economists expect will be accelerated by an anticipated interest rate hike by the Bank of Canada next week.

Seasonally-adjusted home sales fell 8.2 per cent in June from May levels, according to statistics released Thursday by the Canadian Real Estate Association.

“With interest rates on the rise, housing affordability and home sales activity are expected to continue to erode over the second half of 2010,” Gregory Klump, the Canadian Real Estate Association’s chief economist, said in the report.

“National home sales activity is easing due to fewer and more cautious first-time homebuyers,” he added.

Home sales are now down 25 per cent from the peaks reached at the end of last year, said Bank of Montreal (TSX:BMO) deputy chief economist Douglas Porter, who added that the sector is now firmly in buyer’s market terrain.

Housing sales were front-end loaded in the early months of 2010 ahead of higher interest rates and the new harmonized sales tax in the hot markets of British Columbia and Ontario, but “are now in rapid reverse,” Porter wrote in a note Thursday.

Economists have predicted a slowdown in the housing market in the second half of the year as many buyers hurried to close in late 2009 and the first half of this year to take advantage of record low interest rates.

The Bank of Canada is widely expected to hike interest rates a quarter-point to 0.75 per cent in its policy announcement next week.

“(That) may add yet another dampener to sales, although the recent slide in longer-term mortgage rates suggests borrowing costs may be less of a factor on housing than initially feared,” Porter said.

Sales have declined about 13.3 per cent from near-record levels seen in the first quarter. In May, seasonally adjusted home sales departed from historical averages to drop by 9.5 per cent nationally from near-record activity the month before.

Sales activity in the second quarter of this year stood 2.8 per cent below the comparable 2009 period, but on a year-to-date basis, sales are up 13.6 per cent.

“This gap is expected to shrink as the year progresses, since activity trended upward over the second half of last year and is forecast to continue easing over the second half of 2010,” CREA said in its release.

Toronto and Calgary led June’s decline that saw sales contract in nearly 70 per cent of local markets last month.

The market is becoming more challenging for sellers as buyers are in less of a hurry to make a purchase. Tighter mortgage regulations and anticipated interest rate hikes are also eroding some of the competitive pressure to get into the market, CREA said.

Some economists had predicted a boost in June sales driven by a rush to market before the HST hit Ontario and B.C. on July 1, but any pickup as a result of that wasn’t enough to offset weaker overall sales.

Meanwhile, the number of newly listed homes on CREA’s Multiple Listing Service declined 6.8 per cent last month from May — a trend the association says will help maintain balance between supply and demand.

Although a more balanced market is expected to eventually bring prices down, the national average price of a home rose 4.9 per cent on a year-over-year basis to $342,662 last month. That was down from the 8.5 per cent increase in May, which was a slower increase than has been seen over the past nine months.

On a seasonally-adjusted basis, it would take 6.9 months to sell all of the houses on the market in June at the current rate of sales activity — the highest number since March 2009. It could rise further as sales activity trends lower.

“While the pricing environment is becoming more challenging, a recovering economy and job market will provide support for housing activity and prices,” Klump said.

Porter noted that seasonally adjusted prices have stabilized since last fall.

He believes there will be some modest declines in prices before the year is over — particularly in the HST affected markets of B.C. and Ontario. However, double-digit price increases in hot markets like Vancouver are still much more common than price declines in major markets.

“It will be just a matter of months before the year-on-year price comparisons sag to around the zero line,” Porter said.

“While the headlines may look soggy for the next few months, there are reasons to believe the market could soon regain its balance (since) long-term mortgage rates have dropped, employment remains on a roll, and prices have stabilized,” he added.

Red Deer ranked highly for property

2010-06-07T12:40:00.001-07:00

Looking for a Canadian city in which to put some money?

Red Deer should rank high on your list, says a Calgary-based organization that researches property investment opportunities.

The Real Estate Investment Network (REIN) has included the Central Alberta city on a list of 11 places it said deserve consideration by prospective property buyers. The others are Calgary, Edmonton and St. Albert; Surrey and Maple Ridge, B.C.; Saskatoon, Sask.; Winnipeg; and Kitchener-Waterloo-Cambridge, Hamilton and Simcoe Shores (Barrie-Orillia), Ont.

A report issued by REIN said Red Deer’s appeal is helped by its location on the bustling Calgary-Edmonton corridor. It added that the city and Red Deer County have experienced “tremendous economic growth” in the past seven years and the impact of the recent economic downturn was less prevalent there.

The report added that an influx of people to the region has helped support a strong rental and real estate market, and it credits municipal leaders for creating “a vision of renewal, revitalization and economic stability.”

It also acknowledged that Red Deer will suffer some growing pains as it diversifies, and urged investors to review plans for the city to identify opportunities.

Written by REIN president Don Campbell — who has published several books about investing in Canadian real estate — as well as REIN researchers Melanie Reuter and Allyssa Epp, the report said markets should be analyzed by looking at a number of factors. These include income, population and job growth relative to the provincial average, economic diversity, political leadership, infrastructure development and appeal to baby boomers, among others.

Rec property sales soar from last year

2010-05-27T12:52:00.000-07:00

Recreational property sales in most major Canadian markets have soared this year compared with a year ago, according to a report released Thursday by Re/Max.

The 2010 Re/Max Recreational Property Report found that 79 per cent of recreational areas reported an upswing in the number of properties sold during the first three months of the year. Starting prices for recreational properties were also on the move, with 43 per cent posting a nominal increase.

The report said the number of units sold in Canmore was up a substantial 130 per cent over a year ago, with 90 properties sold between January and March as opposed to 39 sales for the same period in 2009.

But the average price dipped by 17 per cent to $583,000 from $684,000, "bringing values more in line with markets further afield like Fernie and Invermere."

"Lower values -- combined with rock-bottom interest rates -- have finally kick-started Canmore's recreational property market," said the Re/ Max report.

"The popular resort area lagged behind Calgary and Edmonton in terms of housing recovery, but with prices now at or near bottom, cautious purchasers are coming out of the woodwork."

Pablo Martinez and his partner Gen Bouchard noticed the price reduction when they started looking for a place in Canmore close to three months ago. They purchased a condominium in the resort area about a month ago.

"It was good timing for both of us," said Martinez. "Canmore was a perfect place because we like the outdoors and the landscape is just fantastic.

"The price had dropped a lot. It was affordable for us. It was a very good deal."

Jessica Stoner, with Re/Max Alpine Realty, said the Canmore market has improved since last year.

"Last year there was just not much moving," Stoner said. "The sellers were not able to sell and the buyers were not able to buy because the price point overall hadn't adjusted much in Canmore. Over the last year we've had corrections. We just took longer to get there and because of that now the buyers are very interested in Canmore and the sellers are able to sell it. It's a far-improved market now."

The report said entry-level condominiums have sparked the greatest attention, with one-bedroom units most popular with first-time buyers of secondary properties.

"Demand in the top end of the market has also been on the upswing as buyers take advantage of softer prices. The most expensive sale so far this year was priced at $2.1 million."

As a contrast to Canmore, Sylvan Lake, the other recreational property market surveyed by the report, has seen buyers "continue to sit on the sidelines."

"No waterfront sales have been recorded to date, although a handful of back row properties have sold under $500,000," said Re/Max. "The starting price for a three-bedroom, winterized recreational property on a prime waterfront lot on Sylvan Lake is now $1.2 million.

"Pricing will be critical this season as well-priced properties are expected to move, while those that are overpriced will stagnate."

Carl Stepp, with Re/Max Real Estate Central Alberta, said last year's recreational property market in Sylvan Lake was "relatively slow with the downturn in the economy obviously."

"But there's definitely more people out and about looking around. Sales aren't a whole lot more than they were last spring, but there's more people looking anyway. Showing a little more promise," said Stepp.

"I think as the oilpatch picks up, because we are solely dependent on the oilfield here, people will be back looking at recreational property, lakefront property."

The report said oil executives, aged 35 to 45, with young children, have eclipsed the Baby Boomers as the most active purchasers in the Sylvan Lake market. Re/Max said many potential buyers are being lost to bargain U.S. markets.

At the national level, "stronger than expected economic recovery, combined with additional incentives such as rising interest rates, stricter lending criteria and a new sales tax, have served to kick-start activity in recreational property markets from coast-to-coast," said Elton Ash, regional executive vice-president, Re/ Max of Western Canada.

Sylvan Lake home to some of Canada’s priciest waterfront

2010-05-27T09:48:00.000-07:00

Canada’s priciest waterfront might now be located on Sylvan Lake.

The 2010 Re/Max Recreational Property Report, released on Thursday, places the starting price for a three-bedroom lakefront property on the Central Alberta lake at $1.2 million. That’s the same as for a comparable home on Lake Windermere in British Columbia, and higher than the nearly 50 other resort communities considered in the report.

Last year, Re/Max’s Recreational Property Report determined that the starting price for lakefront property at Sylvan Lake was $1,125,000. That ranked behind Lake Windermere and Vernon, B.C., which each came in at $1.2 million.

In the 2008 report, Sylvan Lake’s price was $1,250,000, and the year before that it was $1 million.

Re/Max noted this year that no waterfront properties at Sylvan Lake had been sold as of March 31. Back row homes were going for less than $500,000, with water-access properties available from $800,000 and smaller cottages from $600,000.

The most expensive property available on Sylvan Lake is priced at $2.5 million, said the report, with the cheapest $598,000.

Typical buyers of recreational property at Sylvan Lake were identified as 35- to 45-year-old oil executives from Edmonton or Calgary, with young families.

Canmore was the only other Alberta community included in the report, with the starting price for a two-bedroom condominium there listed at $270,000.

The least expensive waterfront properties in Canada were on Newfoundland’s east coast, with the starting price for a three-bedroom home there $105,000.

The other most expensive included Vernon ($1.15 million), Tofino ($875,000), Salt Spring Island ($750,000 to $800,000), Fraser Valley ($800,000) and Okanagan Valley ($800,000), all of which are in B.C.

The report noted that sales of recreational property have increased in nearly 80 per cent of the areas considered, with prices going up in 43 per cent.

It added that few Americans are now buying recreational properties in Canada. Instead, discounted homes in the southern states are drawing purchasers from Canada.

2009 Comments

2010-01-03T22:11:00.000-08:00

It is now the end of 2009 and I thought I would make a comment on the real estate market in Red Deer. 2009 has been a very funny year with lot's of change. I believe most people thought the year would be another tough year and in the first half of the year that was correct in my opinion. The majority of my business was under $325,000.00 and by the end of the year we saw price increases in this part of the market. We also saw inventories decrease which is a great signal for 2010. I do not believe we saw much change in the market in the higher priced homes. It is my opinion that the first half of 2010 will see strong sales and some price increases. The back half of the year could be interesting based on inflation, where mortgage rate go, and any government changes to down payments and amortization periods.Thank you for reading and your e-mails and I look forward to 2010.

Higher mortgage rates forecast

2009-12-10T05:41:00.001-08:00

The Canadian housing market has seen a stronger and faster rebound from the recession than any other segment of the economy, due in large part to enticingly low mortgage rates.

But rates this low — 5.59 per cent for a five-year fixed-rate mortgage and 2.25 per cent for a five-year variable-rate mortgage at one bank — can’t last forever, and experts are advising borrowers to prepare for higher rates within the next 12 months.

“We have to realize those are emergency interest rates,” said CIBC economist Benjamin Tal.

“Interest rates will rise — it’s just a question of time, it’s not a question of if. And if that’s the case, we have to make sure that when we borrow this money we can afford the same mortgage 200 or 300 basis points higher. That’s the key responsibility now of borrowers and lenders, to make sure that what we do, we do it in a prudent way.”

Depending on whether they are fixed or floating-rate, mortgages are tied to either the bond market or the Bank of Canada’s key lending rate, which are closely related. The central bank’s rate has been sitting at a record low of 0.25 per cent since the spring and it has said it will keep it steady until at least next June to help stimulate the ailing economy.

On Wednesday, three of Canada’s biggest banks — Royal Bank (TSX:RY), Bank of Montreal (TSX:BMO) and TD Bank (TSX:TD) — announced that they will cut posted rates for fixed-rate mortgages by up to 0.25 percentage points. On Thursday, CIBC (TSX:CM), Laurentian Bank (TSX:LB) and Scotiabank (TSX:BNS) followed suit by cutting their five-year mortgages by 0.25 per cent to 5.59 per cent, in the case of CIBC and Scotiabank, and 5.6 per cent at Laurentian.

But mortgage lenders agree that rates are nearing the bottom and will begin to rise again in 2010.

“The only sort of assurance that you hear in the marketplace is the Bank of Canada’s going to try to maintain that rate until June. But past that, there are already warnings that if there need to be adjustments, the adjustments could be a little more abrupt than we’ve been used to in the past,” said Martin Beaudry, vice-president of retail lending at ING Direct.

CIBC’s Tal said that with rates this low, “it’s almost a crime not to take a mortgage out,” but warned that consumers need to be prepared for higher interest rates later on and what this could mean for their personal finances.

For example, a $200,000 mortgage with a term of 25 years and an interest rate of 2.25 per cent has monthly payments of $876.26. For the same mortgage with an interest rate of five per cent, the monthly payments become $1,169.18.

And this doesn’t only apply to variable-rate mortgages, but to fixed-rate mortgages that are coming up for renewal, Tal said.

“It’s not just variable rates, because five years from now the rates will be much higher, so you don’t want to find yourself in a situation five years from now where you can’t afford the house,” he said.

“It’s important to be extremely prudent and not to be totally blinded by those rates.”

New subdivision a first for the city

2009-09-11T09:41:00.000-07:00

In what is believed to be a first for Red Deer, the city’s municipal planning commission has approved a “strata space subdivision.”

The subdivision relates to a 210-suite supportive living complex and restaurant in Oriole Park West. Slated to be called The Gardens at Hwys 2 & 11, the 6845 66th St. project is being developed by a group of joint-venture partners.

The commission heard on Tuesday that strata space subdivision was being sought so that ownership of the residential and commercial components of the building could be separated. The commercial elements would include the restaurant, a hair salon and administrative facilities, with these located on various floors of the four-storey building.

The commission was told that such “three-dimensional” subdivisions have been done in Calgary, but not in Red Deer.

Toby Lampard, one of the partners involved in the development, said previously that the residential units will consist of suites with one bedroom, two bedrooms, and one bedroom with a den. Each will have cooking facilities and a washer and dryer, with shared amenities to include an exercise room, a library area with computers, a lounge and TV rooms.

Residents will be able to access different levels of support, with staff on site 24 hours a day.

Underground and surface parking are planned, and the Perkins Restaurant & Bakery will serve both residents and members of the general public.

The units will be sold as condominiums, said Lampard. Some will be rented to tenants, he added, including under life-lease arrangements.

The commission also approved the subdivision of the land into two bareland condominium units. This will allow the project to be completed in two phases.

Lampard said the first will contain 110 units and the restaurant, with completion anticipated by the spring of 2011. The second, 100-unit phase will be added when demand warrants.

The cost of the project has been estimated at about $23 million for the first phase and $20 million for the second.

Housing stars rebound

2009-09-11T09:38:00.000-07:00

Red Deer builders enjoyed a bigger year-over-year increase in housing starts last month than was the case in any of Alberta’s other major cities.

Canada Mortgage and Housing Corp. has reported that work on 43 single-detached homes was initiated in the city last month, up from 21 in August 2008. In the case of starts related to multi-family units, the figure last month was 20, as compared with zero the previous year.

That combined 200 per cent increase in August housing starts topped the figures for Lethbridge, which experienced a 121 per cent jump; Edmonton, which was up 32 per cent jump; and Grande Prairie, which rose 28 per cent. August housing starts in Calgary, Medicine Hat and the Regional Municipality of Wood Buffalo were all down in 2009.

CMHC market analyst Regine Durand commented last week that the Red Deer housing market was rebounding faster than her agency had previously anticipated. That prompted it to modify its forecast for local housing starts in 2009 to 430, from the 425 it was projecting as of May.

Fewer listings on the resale market and a decline in the inventory of unsold new homes were factors affecting the residential construction sector, she said.

So far this year, there have been 266 housing starts in Red Deer: 190 in the single-detached category and 76 multi-family units. That’s well behind the 392 starts accumulated to the same point in 2008, when there were 226 single-detached starts and 166 multi-family units.

Building momentum

2009-09-11T09:36:00.000-07:00

The declining cost of home ownership has prompted Canada Mortgage and Housing Corp. to adopt a more optimistic view of Central Alberta’s real estate market. And the national housing agency expects local home builders to be much busier next year than their counterparts elsewhere in the country.

In its housing market outlook released on Thursday, CMHC projects that 3,700 Central Alberta homes will be sold through the Multiple Listing Service in 2009. It is anticipated that this number will rise more than five per cent the following year, to 3,900.

An earlier forecast issued in May called for 3,550 MLS sales this year and 3,770 in 2010.

CMHC is also anticipating higher average prices on the local resale market: $269,000 in 2009 and $277,000 in 2010. That compares with its previous forecasts of $264,000 and $271,000 respectively.

“Typically, what we’re seeing is affordability is improving because of the drop in resale prices,” said Regine Durand, a market analyst with CMHC.

Those reduced prices, combined with lower interest rates, have made home ownership more appealing.

“Mortgage payments on average have dropped by 18 per cent from January to July,” said Durand.

“This is boosting MLS sales, and next year we are expecting to see more of that also.”

She added that the cost difference between renting and owning has decreased — narrowing 36 per cent on average from January to July, and luring many tenants into the market.

Although resale prices in Central Alberta next year are expected to increase by about the same percentage as for Alberta as a whole, sales volumes here are projected to climb five per cent, as compared with three per cent for the province.

CMHC has also modified its forecast with respect to new home construction in Red Deer.

As of May, it was projecting 425 housing starts this year and 515 in 2010. Those figures have changed to 430 and 490.

Durand said the increase for 2009 was motivated by signs the new home market is strengthening.

In July, she pointed out, residential construction starts were 16 per cent higher than in the same month of 2008. In the case of single-family starts, the year-over-year jump was 76 per cent.

“We are seeing that the market is picking up a bit faster than what we were expecting.”

One of the factors boosting this demand is fewer options on the local resale market.

“Active listings were down 14 per cent in July,” said Durand.

CMHC’s decision to reduce its 2010 housing start forecast for Red Deer by 25 units was motivated by the surplus of multi-family units still on the market.

“Inventories of singles in July were down 39 per cent, year-over-year, but we still had 111 multis in inventory, which is three times more than last year,” said Durand.

But even with the reduced forecast, Red Deer’s 2010 housing starts would be 14 per cent higher than the figure forecast for 2009, she pointed out. That’s a slightly bigger increase than the 13 per cent residential construction growth expected provincewide, and more than twice the six per cent increase CMHC has pencilled in for Canada.

The numbers are still much lower than in 2008, when there were 4,214 MLS sales in Central Alberta, with an average price of $278,000. The year before that, sales numbered 5,075 with an average selling price of $270,494.

On the construction side, 572 homes were built in Red Deer last year and a record 1,558 in 2007.

Nationally, CMHC pointed to improved resale activity and lower inventory levels in both the new- and existing-home markets as factors that should prompt builders to increase construction.

However, CIBC World Markets economist Benjamin Tal suggested that the recovery in housing starts would be much slower. He believes slower population growth and higher costs for new homes after provincial sales taxes are harmonized with the GST in provinces like Ontario and B.C. next year will soften near-term growth in new home construction.

Scotiabank economist Adrienne Warren also sees a slow recovery in new home building due to oversupply in some major markets, particularly in the condominium sector.

But Warren said the CMHC forecast is yet another sign Canada’s real estate market is on the rebound, and performing better than previously thought.

Residemtial building stats show turn of tide in real estate

2009-07-06T10:35:00.000-07:00

Midway through 2009, the cumulatiuve value of building approved by the City of Red Deer is about half of what it was at the same point in 2008.
But activity at the city's Inspections and Licensing Department last month suggests the constuction tide might be turning--at least in the case of housing.
Municippal staff issued building permits for $10.2 million in residential work in June. That's up 86% from a year ago, when the residential permit tally was $5.5 million. It marks the first month this year that the 2009 value exceeded the 2008 figure.
Providing a $2.4 million boost were 36 permits to Carolina Homes Inc. for multi-family development at 31 Jamieson Avenue.
Last June, multi-family projects contributed only $580,000 to permit tally, noted Rachelle Trepanier of Inspections and Licensing.
The residential construction jump reflects more than a few big projects, however. Trepanier said 30 permits worth a combined $4.9 million were issued for single-family homes for last month, more than double the 14 permits valued at $2 million that were recorded in June 2008.
"It seems to be picking quite a bit" confirmed Natalie Larkam, co-owner of Larkaun Homes Ltd. and president of the Central Alberta branch of the Canadian Homebuilder's Association.
Larkam said some builders might not be proceeding with homes that they struck deals on this spring.
She added that there is a good supply of residential lots in Red Deer, a situation that didn't exist in early 2008.
"We have to remember that last year was a bit slower because of the inventory issue we were having."
At $13.5 million the combined value of building permits issued last month in all categories was still behind the June 2008 total of $28.4 million.
Work on public projects including $1.2 million for interior renovation to the Red Deer Museum and Art Gallery, generated $2.8 million. That compares with $20 million in the public category in June 2008.
Permits issued last month for commercial work, which were valued at $456,000, was also down from the 2008 number of $2.8 million. As for industrial work, there was $33,000 worthof projects approved last month, a year-over-year drop from $70,000.
For the year to date, total permit values are %59.1 million, as compared with $116.9 million for the first half of 2008.
Residential approvals this year are $33.1 million, down from $63.9 million; commercial permits are up to $9.1 million, as compared with $26.2 million versus $3.9 million dollars in 2008; and public construction and renovation are up to $16.2 million, a decline from $23 million.
In 2007, $174.6 million worth of permits had been issued by the end of June. That year ended with a record $421.1 million in building approvals.

Cottage market showing signs of revival

2009-07-06T10:14:00.000-07:00

The economic downturn has not diminished people’s appetite for a piece of Sylvan Lake waterfront, says a national report issued on Thursday.

But waterfront properties, particularly those in higher price ranges, are taking longer to sell.

Royal LePage’s 2009 Recreational Property Report collected data from Realtors in resort communities across the country said the recreational market is showing signs of revival following a slowdown in the latter half of 2008 and into the winter.

“There has been some uncertainty due to the economy, but we still have an active market that is fairly comparable to last year in terms of the level of interest from buyers,” Al Hughes of Royal LePage Network Realty Corp. is quoted as saying.

He added that listed properties, particularly those in higher price ranges, are taking longer to sell.

The report said the average price of land-access property between 1,000 and 3,000 square feet on Sylvan Lake is $691,666. Water-access homes in the same size range average $1,125,000, and residential properties 1,000 square feet or smaller that are not on the water average $285,000.

Most of the sales at Sylvan Lake last year involved homes priced between $350,000 and $450,000, said Hughes. This year, he added, properties valued from $250,000 to $350,000 have been the most popular.

The Royal LePage report said waterfront properties near the Town of Sylvan Lake are popular with professionals and other high-income buyers, while less expensive homes near other lake-front communities like Jarvis Bay and Sunbreaker Cove appeal to younger families.

Hughes said the attraction of Sylvan is the fact it offers year-round activities.

“People want properties they can use in the winter,” he said, adding that for many, boat access is also very important.

Hughes noted that fewer cottages and vacation homes in Sylvan Lake are available for rent.

“People seem to be using the cottages themselves,” he said. “A lot of older cottages that were revenue properties are being torn down and the owners are putting in new homes.”

Across Canada, the average price of a standard waterfront cottage with three bedrooms and measuring 1,000 square feet in size was $370,000 to $600,000, according to the report.

These range from lower-end properties selling for $100,000 or less in the Atlantic provinces, to between $530,000 and $880,000 in British Columbia. The range in Alberta is $400,000 to $460,000.

Royal LePage’s 2009 Recreational Property Report came less than a month after Re/Max issued its own recreational property report.

The Re/Max report estimated the starting price of a three-bedroom, winterized home on a standard-sized lot on Sylvan Lake at $1,125,000. That was the third-highest figure among the more than 50 resort areas considered, with only Vernon and Lake Windermere, B.C., topping it. Both came in at $1.2 million.

Market stabilizing

2009-07-06T10:10:00.000-07:00

The past-president of the Central Alberta Realtors Association thinks residential sales activity in the last quarter is reason for optimism.

Randy Weins of Weins World Real Estate Inc. said the median prices of single-family dwellings sold in Red Deer, Lacombe, Rocky Mountain House and Sylvan Lake from April to June were all above the medians for the preceding three months.

In Red Deer, 387 single-family homes sold through the Multiple Listing Service system with a median price of $315,000. That compares with 210 sales at a median price of $305,000 in the first quarter.

In Lacombe, 41 single-family homes sold for a median price of $312,000, up from 23 sales at a median price of $289,000.

Single-family home sales in Rocky reached 30, with a median price of $284,000. That was a jump from the 20 sales and median of $280,000.

In Sylvan Lake, sales of single-family homes tallied 76, with a median selling price of $328,000. That was up from 43 sales and a median of $318,000.

Weins suggested these communities provide a good indication of what’s happening in the market.

“That’s the best bird’s-eye view, is firstly look at Red Deer and then look at Sylvan,” he said, adding that Rocky serves as a barometer for the West Country.

The median prices of single-family homes sold in Blackfalds, Innisfail, Ponoka and Stettler during the last quarter were all down from the previous three-month period.

Blackfalds had 32 sales at a median price of $271,000, as compared with 22 deals at $278,000 to start 2009.

Sales of single-family dwellings in Innisfail numbered 28 with a median price of $255,000. By contrast, there were 24 sales and a median price of $263,000 in the first quarter.

Single-family home sales in Ponoka reached 33, with a median price of $224,000. In the preceding quarter, there were 20 sales and a median price of $247,000.

In Stettler, sales numbered 21 with a median price of $220,000. There were three fewer sales in the first quarter but the median price was $254,000.

“Innisfail, Ponoka and Stettler I can understand because they’re further from the city,” said Weins of the price declines.

The economic downturn has hit small rural towns particularly hard, he explained.

Blackfalds, added Weins, experienced a big increase in home construction when the selection in Red Deer was scarce.

“Their inventory levels are still fairly high for a town of its size.”

Blackfalds also saw house prices approach, and in some cases surpass, Red Deer’s, he noted.

“There’s probably just an adjustment there.”

Although single-family home sales increased in all eight Central Alberta communities, Weins said this reflects a seasonal fluctuation.

“The fourth and the first quarters are the slowest half of the year, so you’ve got to be realistic whey you look at the numbers.”

Still, he added, the second quarter was stronger that he’d predicted. Weins forecast in January that there would be an eight per cent drop in single-family home values from the second quarter of 2008 to the same period this year. The change in the median figure turned out to be about 2 1/2 per cent.

In Red Deer, the second quarter of 2008 produced 445 single-family sales at a median price of $323,000; in Lacombe, the Q2 figures in 2008 were 55 and $313,000; in Rocky they were 29 and $291,000; in Sylvan Lake, 98 and $376,000; at Blackfalds, 43 and $312,000; in Innisfail, 37 and $275,000; in Ponoka, 26 and $254,000; and in Stettler, 29 and $215,000.

Weins thinks the Central Alberta market has stabilized.

“I don’t see prices going down any further; I don’t see them skyrocketing.

“I think we’ll have a stable market the rest of the year.”

Government stimulus packages have yet to make an impact, he added, and oil prices have strengthened, interest rates are at historic lows, mortgage money remains available and the stock market has enjoyed an extended period of stability.

One worry is the agricultural sector, he said, with government debt at the federal and provincial levels also a concern.

New cycle in '10

2009-06-15T08:37:00.000-07:00

A market analyst with Canada Mortgage and Housing Corp. says the clouds hanging over Red Deer’s residential real estate market are dispersing.

Regine Durand recently presented a local market outlook to housing industry officials in Red Deer.

Speaking to the Advocate this week, she said a theme of her message was that conditions will improve in 2010.

“We’re going to enter into a new cycle, starting next year.”

Red Deer, said Durand, has undergone three economic cycles since 1988: from 1988 to 1995, 1996 to 2000 and 2001 to 2007. Each brought growth in employment and residential construction starts.

She produced a graph that showed the inventory of new, single-detached homes in Red Deer is declining, with the current count of approximately 66 such homes likely to be absorbed in about 49 days. In the case of new, semi-detached homes, the inventory was down to seven in May — a year-over-year decline of 73 per cent.

This should spur builders to increase construction activity.

“They’re going to want to start replenishing their stock next year.”

Durand also foresees increased volumes on the resale market.

“Next year, we’re going to see higher sales because prices have stopped going up on the resale market, and with lower mortgage rates, mortgage payments have dropped.”

She pointed out that from 1998 to 2005, the cost of home ownership was comparable to the cost of renting similar accommodation. But that situation started to change in 2006, and by 2007 the annual carrying cost of a condominium was $542 more than rent for a two-bedroom apartment.

This gap decreased to $445 last year, and continues to narrow. That should draw more people onto the housing market and increase sales.

“They’re going to make the jump to owning.”

In fact, if the latest CMHC forecast of 3,770 home resales in Central Alberta in 2010 holds true, it will be the fifth busiest year ever in the region (behind 2007, 2006, 2008 and 2005).

Durand also described a change in the ratio of high-priced to low-priced homes in recent years.

Single-detached homes selling for more than $250,000 on the Red Deer market have increased from 46 per cent in 2006, to 80 per cent in 2007 and 97 per cent in 2008. The demand for those higher-priced homes helped pull up the average selling price.

Durand noted that this year more lower-priced homes, selling for $100,000 to $174,000, are being offered by builders.

“These products are available again.”

Durand also described a change in the ratio of high-priced to low-priced homes in recent years.

Single-detached homes selling for more than $250,000 on the Red Deer market have increased from 46 per cent in 2006, to 80 per cent in 2007 and 97 per cent in 2008. The demand for those higher-priced homes helped pull up the average selling price.

Durand noted that this year more lower-priced homes, selling for $100,000 to $174,000, are being offered by builders.

“These products are available again.”

Durand also presented Statistics Canada figures that indicate the number of people employed in Red Deer during the first quarter of 2009 compares favourably to the peaks of 2007 and 2008 — topping the 50,000 mark.

In April, she added, the city’s labour market participation rate for employable residents exceeded 81 per cent. That’s seven percentage points above the provincial rate and 14 percentage points over the Canadian figure.

“There’s a greater proportion of the labour force in Red Deer being employed, compared to Alberta and Canada.

“It’s definitely a positive factor.”

However, Durand said the 2010 market rebound will occur across Alberta.

“I think it’s fairly consistent,” she said, explaining that decreasing inventories of new homes and low mortgage rates, combined with improving market indicators like a strengthening stock market and rising consumer confidence, will have a broad, positive effect.

News getting better in real estate

2009-06-11T08:19:00.000-07:00

After a steady diet of bad news, the Canadian real estate market got some favourable stats to chew on last month.

The Canadian Real Estate Association reported that April home sales across the country were up 11.2 per cent from March, on a seasonally adjusted bases. That marked the biggest jump in five years and the third consecutive month that both residential sales and their average price had increased.

This positive trend is one that Derek Austin, president of the Central Alberta Realtors Association, has observed locally.

“There are more things selling, more interest and more inquiries, more people going to the banks trying to get pre-qualified,” the owner of Innisfail’s Century 21 Your Realty said recently.

“There’s more confidence out there as to the future.”

In April, the number of homes sold through the Multiple Listing Service in Central Alberta numbered 341 — the highest figure since last fall.

Even on a seasonally adjusted basis, residential sales have climbed sharply since December, said the Central Alberta Realtors Association.

The 2009 numbers are still down from the corresponding months in 2008, but the gap is narrowing, said the association. April’s sales figure was 25 per cent lower than the 456 homes sold in April 2008, but four months earlier, the year-over-year difference was 40 per cent.

Canada Mortgage and Housing Corp. isn’t declaring the real estate slowdown over, however.

Home sales climb

2009-05-25T08:52:00.001-07:00

Central Alberta’s residential real estate sector continues to show signs of improving health.

Home sales in the region last month climbed to their highest level since last fall, with 178 Multiple Listing Service sales in Red Deer and 163 in the surrounding region. Although the total was 25 per cent lower than the 456 homes sold in April 2008, the year-over-year difference has narrowed considerably since December, when the gap was 40 per cent.

Last month’s residential sales marked a 17 per cent increase over March, and the Central Alberta Realtors Association said in a news release that even on a seasonally adjusted basis, month-to-month sales rose 2.5 per cent.

With seasonally adjusted increases of 16 per cent in January and 10 per cent in February, total gains since December have been 28 per cent, said the association.

“The bridge between buyer demand and housing supply is continuing to narrow, which helps bring stability to housing prices, said Derek Austin, president of the Central Alberta Realtors Association.

Meanwhile, new residential listings declined on a year-over-year basis for the fourth consecutive month.

The 852 units added to the MLS system in April were 14 per cent fewer than a year earlier.

That reduced the number of active listings as of the end of April to 2,271 — down 13 per cent from the same point in 2008 and the biggest drop in more than two years, according to the Central Alberta Realtors Association.

The median price of residential MLS properties sold in Central Alberta last month was $263,000, down seven per cent from the $284,0000 median last April, said the association.

In March of 2009, the median price was $260,000.

Market may yet surprise: realtor

2009-05-25T08:49:00.000-07:00

The president of the Central Alberta Realtors Association is questioning some of the assumptions Canada Mortgage and Housing Corp. made when arriving at a pessimistic forecast for the region.

In an update of its housing market outlook released on Tuesday, CMHC projected that 3,550 homes will be sold through the Multiple Listing Service in Central Alberta in 2009, down from 4,214 in 2008. It expects that number to jump to 3,770 sales in 2010.

An earlier forecast released by the national housing agency in February said home sales in Central Alberta would reach 3,750 this year, with the number swelling to 4,000 in 2010.

Derek Austin wondered if the late arrival of spring might have made real estate activity in Central Alberta appear more depressed than it really is.

He also thinks CMHC could have underestimated the positive influences that low interest rates and government stimulus programs will have on the market as the year progresses.

“It’s taken longer for that turn-around.”

Austin pointed to the recent strengthening of energy prices as another reason the local real estate market could prove more robust than some expect.

“Oil prices are up and the guys should be going back to work when (spring) break-up ends.”

Austin believes the market is improving, and said he and other Realtors have noticed greater interest from buyers as the weather improves.

Regine Durand, a market analyst with CMHC, said the forecast in part reflects the fact that much of the local demand for homes was absorbed during the frenzied buying period leading up to 2008. She added that there has also been a decline in the number of people migrating into this region.

Rather than demand having been absorbed, Austin believes a big reason many people aren’t buying now is the tighter lending practices of banks.

“I think they’re slowly starting to turn around, but stuff that they would have just put through no problem before, they’re holding back on.”

Many people want to buy real estate, he added, but can’t get the money.

Durand also said that some people are reluctant to buy real estate following the run-up in prices in 2006 and 2007.

“There is still that buyer’s resistance, that aversion to price growth,” she suggested.

Austin disagreed.

He thinks people’s reluctance to buy has more to do with speculation that prices could come down further. With interest rates lower now than they were previously, the monthly cost of owning a home is, in many cases, actually less than it was when prices were cheaper.

CMHC also downgraded its outlook for the local residential construction sector.

It said housing starts in the city of Red Deer would number 425 this year and 515 in 2010. Last year the tally was 572.

The updated numbers are both down from CMHC’s February predictions, when it said starts would hit 550 this year and 675 in 2010.

Durand said the lower housing start estimates for Red Deer reflects the high inventory of unsold homes and an increasing gap between the price of new homes and the price of existing homes, which is pushing some buyers onto the resale market.

Housing slowdown expected to worsen

2009-05-25T08:48:00.000-07:00

Canada’s national housing agency has become significantly more pessimistic about the outlook for residential real estate in Red Deer, and beyond.

A forecast issued by Canada Mortgage and Housing Corp. on Tuesday projects that housing starts in Red Deer will fall to 425 this year. That’s down nearly 26 per cent from the 572 starts recorded in 2008.

In 2007, the tally was a record 1,558.

The CMHC forecast also anticipates that the local resale market will continue to slide. It expects 3,550 home sales to be processed through the Multiple Listing Service in Central Alberta this year, which would be down almost 16 per cent from 2008, when 4,214 MLS sales occurred in the region.

The average resale price in 2009 will be $264,000, according to the forecast, which is five per cent lower than the $278,040 average in 2008.

In 2007, there were 5,075 MLS sales in Central Alberta with an average selling price of $270,494.

CMHC is anticipating improved numbers in 2010, with 515 housing starts in Red Deer and 3,770 home resales across Central Alberta. But all of the numbers are lower than those in an earlier forecast published by CMHC in February.

At that time, the agency was predicting 550 housing starts in Red Deer for 2009, and 3,750 home resales in Central Alberta at an average price of $271,000.

For 2010, CMHC was anticipating 675 housing starts in the city and 4,000 transactions on the Central Alberta resale market, with these selling for an average price of $280,000.

Regine Durand, a market analyst with CMHC, said the lower housing start estimates for Red Deer reflects the high inventory of unsold homes. She added that an “increasing gap” between the price of new homes and the price of existing homes is pushing many buyers onto the resale market.

In 2007, she said, the difference was about $25,000.

“Today, the gap between the resale price and the new price is like $105,000.”

As for CMHC’s downgraded outlook for Central Alberta’s resale market, Durand said this reflects the fact many people are reluctant to buy after the rapid run-up in prices in 2006 and 2007.

“There is still that buyer’s resistance, that aversion to price growth.”

Durand added that high sales volumes in Central Alberta from 2006 to 2008 absorbed much of the demand for homes, and the in-migration of people to the region has slowed.

CMHC expectations for the rest of province are even gloomier.

Housing starts in Alberta are forecast to hit 13,700 this year, down 53 per cent from the 29,164 starts in 2008. Next year, the number is projected to rebound somewhat to 16,200.

On the resale market, MLS sales in the province should reach 44,000 this year, with an average selling price of $322,500, said CMHC. Those deals would represent a 22 per cent decline in numbers from 2008, when 56,399 sales occurred at an average price of $352,857.

Resales in 2010 will recover to 48,000 in Alberta, says the CMHC forecast, with an average price of $329,000.

Nationally, housing starts are expected to hit 141,900 this year, down 33 per cent from 2008, when work was started on 211,056 homes.

The CMHC forecast said Alberta home builders will continue to cut production in response to a rise in the number of unsold units on the market and weak demand. In the case of multi-family construction, many projects have been cancelled, it noted.

The situation should improve next year, as the inventory of unsold units declines.

With respect to the resale market, CMHC noted that MLS transactions have been declining in Alberta since mid-2007. The slide was initially the result of rising prices, but more recently it can be attributed to economic uncertainty, a weakening job market and reduced migration into the province, said CMHC.

Concerns of homeowners that they will have trouble selling their existing property if they buy another has also created a drag, said the agency.

Improved economic conditions, and lower prices and mortgage rates should help boost the resale market later this year and into 2010.

House starts down

2009-05-19T09:28:00.000-07:00

Housing starts in Red Deer continue to lag well behind last year’s pace, although the construction drop-off is more pronounced elsewhere in Alberta.

Canada Mortgage and Housing Corp. reported on Friday that work was started on 15 homes in the city in April, with 13 of the projects single-family homes and two of the units in multi-family buildings. A year ago the monthly tally was 27, all of which fell under the single-family category.

This 44 per cent decline in housing starts compares favourably with most other large cities.

Medicine Hat experienced an April-to-April slide of 88 per cent, while in the Calgary metropolitan area the drop was 71 per cent, in Grande Prairie and the Edmonton metropolitan area it was 65 per cent and in Lethbridge it was 59 per cent. Only the Regional Municipality of Wood Buffalo had a better month than Red Deer for year-over-year construction starts, off just two per cent from the 2008 figure.

Interest rates hit floor

2009-04-22T14:48:00.000-07:00

OTTAWA — The Bank of Canada has pegged its key policy interest rate to the lowest level practical — probably for more than a year — in expectation of a deepening recession, but the new glum outlook was disputed Tuesday by Finance Minister Jim Flaherty.

“I’m comfortable with our projections. The Bank of Canada has changed theirs, but my projections are the projections we put in the budget,” Flaherty said in rejecting opposition calls for more stimulus spending.

“I’m staying with our budget projection. We’re on track,” he said after the central bank had halved the overnight interest rate to 0.25 per cent.

The apparent divergence of views comes after close co-operation between the Finance Department and the Bank of Canada so far during the current crisis.

It was not clear whether it marked a fundamental difference about the economy or whether the finance minister was attempting to hold off demands that he re-open his budget that only started taking effect at the start of the fiscal year three weeks ago, on April 1.

But the difference — if it exists — is substantial and if the Bank of Canada proves correct, will have profound repercussions for the government’s books.

The new forecast from the central bank of a three per cent economic retreat this year is half a point weaker than what parliamentary budget officer Kevin Page said last month would add at least $19 billion to Ottawa’s deficit over the next two years.

Both the bank and the government had made their calculations in January in expectations the economy would shrink 1.2 per cent, which now looks like boom times by comparison.

Conceding it had miscalculated in January, the central bank said it will almost certainly have to keep its overnight rate at the “the effective lower bound for the rate” until mid-2010.

Such historically cheap money is needed, it said, because the economy will do much worse this year, but also next, growing by 2.5 per cent as opposed to the 3.8 per cent it had earlier envisioned.

Flaherty said Carney’s original expectation for 2010 was “overly optimistic,” but he was sticking to the budget projection for 2009, although most economists see shrinkage of at least double the rate.

“The minister is making a mistake,” NDP finance critic Thomas Mulcair declared as his party called for a second stimulus package beyond the $40 billion introduced in the January budget.

“More is needed to help the Canadian economy now,” Mulcair said. “We’ve simply bled out far too many jobs.”

Prime Minister Stephen Harper left open the possibility of doing more to stimulate the economy.

“I think it’s important to note that our economic action plan did provide a significantly larger stimulus package than the International Monetary Fund was asking for, and one that we think is fairly robust in handling changing economic circumstances,” Harper said during a visit to Jamaica.

“But obviously we will continue to examine the situation, and particularly the employment situation, and we will make adjustments where necessary.”

Flaherty said the stimulus spending only began with the fiscal year starting in April and there will be a clearer view of how it is working in the summer.

Following the Bank of Canada’s rate-cutting decision, the commercial banks quickly lowered their prime lending rate.

They were led by Bank of Montreal (TSX:BMO) which said less than two minutes after the central bank’s announcement that prime, the benchmark for variable-rate mortgages and other loans, was dropping by a quarter-point to 2.25 per cent. Some fixed mortgage rates were also trimmed.

Carney will make a closely watched policy statement Thursday and is widely expected to detail plans for so-called quantitative easing — increasing the money supply through central bank purchases of bonds and other assets from commercial lenders, increasing their reserves.

TD Bank chief economist Don Drummond predicted that this next step will be modest, however, and will bring to a close Ottawa’s attempts to spark the domestic economy.

“Now our fate is cast with the prospects of recovery in the world and U.S. economy,” said Drummond.

According to the Bank of Canada, conditions have deteriorated significantly since the beginning of the year as a result of a global slump that has “intensified” and deteriorating credit conditions “have spread quickly through trade, financial and confidence levels.”

As a result, Carney has basically thrown out the playbook he outlined in January.

Now the bank says the economy won’t stop falling until at least the fourth quarter, in line with projections by the Organization for Economic Co-operation and Development and a growing number of private-sector economists.

It also is more reflective of an economy that has shed 270,000 since January.

Carney remains a relative optimist with his prediction of a bounce-back of 2.5 per cent next year. While lower than his previous prediction of 3.8 per cent growth in 2010, it is still far above the OECD’s forecast of 0.3 per cent.

Economists at the Bank of Nova Scotia termed the central bank’s revised forecast a “significant mid-course correction ... and one that is on the mark across the board.”

Meanwhile, the central bank sees no danger of inflation — in fact, it predicts prices will drop at a 0.8 per cent rate in the third quarter and not return to its two per cent target before the third quarter of 2011.

New home sales rise

2009-04-22T14:40:00.000-07:00

The frigid market for new homes could be into a spring thaw.

The Central Alberta branch of the Canadian Home Builders’ Association said in a news release on Tuesday that new home sales in Central Alberta during the first quarter of 2009 were up from the previous quarter. It added that members of its builder council have reported an increase in housing starts and sales across the region.

“We’ve all noticed a fairly substantial increase in sales, basically since the snow melted,” said branch president Jonas Neidert.

This was particularly true in March, he said, with the trend continuing this month.

Neidert, who is partner in Avalon Central Alberta, acknowledged that spring has historically been a busy period for home builders. Climactic conditions were particularly harsh this winter, which compounded the economic problems facing his industry.

But he’s still encouraged by renewed activity in recent weeks.

“It seems the traffic to the show homes is quite good. Maybe we’re returning to more the way it was a few years ago when spring was a really busy season.”

Neidert also suggested that many of the new homes being sold were built some time ago, and accordingly are not included in current construction stats.

“Permit numbers don’t always indicate the whole sales story.”

The local branch of the Canadian Home Builders’ Association also cited data indicating that the price of existing homes in Red Deer that sold twice between February 2008 and February 2009 increased by an average of 3.6 per cent.

Neidert added that local Realtors he’s talked to have indicated a rise in sales activity.

“It seems to be a general trend.”

The association provided information about the impact the housing industry has on the local economy. For instance, it said 1,570 jobs would likely result from the construction of 600 housing units in the region.

“I don’t think people realize how much it does contribute to the local economy overall,” said Neidert.

He believes federal stimulus programs will help the situation.

“I think it’s having a little bit of an impact.”

hrichards@reddeeradvocate.com

Quarterly stats boost optimism

2009-04-20T13:47:00.001-07:00

Sales statistics for the month of March that suggest an improving real estate market appear to be supported by quarterly figures.

Randy Weins, owner of Weins World Real Estate and past-president of the Central Alberta Realtors Association, has been compiling sales volumes and price numbers for Red Deer and other Central Alberta communities in three-month increments for years.

He concludes that the real estate market has hit bottom.

Looking only at single-family dwellings, which Weins believes is most representative of the overall market, he found that 210 homes were sold through the MLS system in Red Deer between January to March of this year.

That figure was up from 171 sales in the fourth quarter of 2008, but down from 296 a year ago.

There were 43 sales of single-detached homes in Sylvan Lake during the most recent three-month period.

That compares with 38 in the final quarter of 2008 and 69 in the first quarter of last year.

Sales of single-detached homes in Innisfail reached 24 last quarter.

The figure was 21 to end last year and 30 in the first quarter of 2008.

This year started with 23 single-detached sales in Lacombe, up from 20 in the final quarter of 2008 but down from 34 in the first three months of that year, reported Weins.

Single-detached home sales in Blackfalds reached 22 in the most recent quarter, jumping from 14 for the final three months of last year but down from 27 to start 2008.

Ponoka and Rocky Mountain House each recorded 20 sales of single-detached dwellings during the first three months of 2009.

That number compares with eight for Ponoka and 15 for Rocky in the fourth quarter of 2008, and 20 and 18 for the two communities respectively to start 2008.

In the case of Stettler, Weins determined that there have been 18 MLS sales of single-detached homes as of March 31 of this year.

For the preceding quarter the figure was 19, and for January to March 2008 it was 13.

He calculated that the median price of single-detached homes sold in Red Deer during the first quarter was $305,000. The median was $310,000 in the preceding quarter and $327,000 in the first quarter of 2008.

In Sylvan Lake the median price for this type of home to start 2009 was $318,000, with the corresponding figures for the fourth and first quarters last year being $370,000 and $323,000, respectively.

For Lacombe, the median price was $289,000 in the most recent quarter, as compared with $308,000 in the preceding three-month period and $320,000 a year ago.

Single-detached dwellings in Blackfalds have sold for a median price of $278,000 so far this year, said Weins, which is down from $284,000 and $305,000 for the fourth and first quarters of 2008.

The median price in Ponoka was $247,000, up from $231,000 at the end of last year and $207,000 at the beginning of last year.

At Rocky, the median price from January to March was $280,000, this was the same figure as the previous quarter but lower than the $306,000 median of a year ago.

Finally, Stettler experienced a big jump in the median price of single-detached houses sold last quarter.

The $254,000 figure was well above the $185,000 median in the fourth quarter of 2008 and also topped the $228,000 median from the first quarter last year.

Real estate recovery

2009-04-20T08:56:00.000-07:00

Housing sales hit six-month high in March.

Residential real estate activity in Central Alberta continues to lag behind last year’s pace, but the gap appears to be narrowing.

The Central Alberta Realtors Association reported on Wednesday that home sales in the region hit a six-month high in March, with 123 transactions processed through the Multiple Listing Service in Red Deer and 169 in the surrounding area. The combined total is 23 per cent fewer than the 380 city and rural sales in March 2008, but that difference is smaller than in any of the preceding four months.

“If you want to get in at the bottom, it’s probably around this time,” suggested association president Derek Austin, who owns Century 21 Your Realty in Innisfail.

Austin thinks the real estate market will be busier this month, explaining that buyers and sellers tend to become more active as the weather warms. He also believes people are tired of the negative news and are now realizing that the world is not ending.

There is plenty to be optimistic about in Central Alberta, he added, offering as an example major construction projects like the proposed Holiday Inn in Gasoline Alley.

Austin thinks there is a growing awareness of the record low interest rates and reduced home prices as well. And he doesn’t believe federal and provincial stimulus programs have had an effect yet.

“You add those things together, what better time to get into the market?”

The median price of homes sold in Central Alberta last month was $260,000, according to the Central Alberta Realtors Association. That’s down eight per cent from the $283,000 figure for the same month in 2008.

Austin said a better comparison is 2005, prior to the sharp run-up in prices and sales volumes.

In March of that year, single-family dwellings in Red Deer sold for a median price of $182,000. A year ago, the median price for the same type of property was $335,000, and last month it was $326,230.

Prices and sales figures over the past few years were an “anomaly,” said Austin, and are unlikely to be repeated in the near future.

“That would be unreasonable to think that we’d still have the same number of sales.”

Central Alberta Realtors Association said new MLS residential listings for Central Alberta declined 15 per cent last month, as compared with a year earlier. It marked the third consecutive month that new listings have decreased, and contributed to five per cent drop in total active listings.

In Red Deer alone, new listings slid 29 per cent.

Austin said the forces of supply and demand should exert upward pressure on prices, although listing numbers should increase as spring continues.

Nationally, the number of existing homes sold last month was down from a year ago but continued an upward trend that began in February, said the Canadian Real Estate Association.

The association also reported that the national average price for homes fell again in March, compared with the same month last year.

“Housing markets are starting to show signs of buyer interest because of lower prices and interest rates,” CREA president Dale Ripplinger said in a statement.

The year-over-year decline in March sales was 13.5 per cent, but the smallest 2008-to-2009 decrease in six months.

The average house price in Canada fell to just under $289,000 — down 7.7 per cent from March 2008 — also the smallest year-to-year decline in six months.

Robert Kavcic, of BMO Capital Markets, wrote in a separate analysis saying that “the improvement in recent months is an encouraging sign that the Canadian housing market has crossed the halfway point for this downturn.”

“Despite two months of improved sales activity, buyers are still in control of the Canadian real estate market,” Kavcic wrote.

“Further price declines and low mortgage rates will ultimately help trigger a recovery, but a reversal in the wave of job losses is one major pre-requisite still outstanding.”

hrichards@reddeeradvocate.com

File from The Canadian Press

Building boom stalls

2009-04-13T10:53:00.000-07:00

The first quarter of 2009 was one to forget for Red Deer home builders.

Canada Mortgage and Housing Corp. reported on Wednesday that housing starts in the city during the first three months of the year numbered 58 — down 51 per cent from the first quarter of 2008.

Single-detached homes accounted for 50 of the 2009 total, as compared with 89 the preceding year. The rest of the starts were units in multi-family buildings.

During the month of March, there were 20 housing starts in the city, with 16 of these single-detached projects. Last March, the tally was 29, with all of these single-detached homes.

Despite this 31 per cent decline in construction starts last month, Red Deer’s residential construction sector experienced a smaller percentage drop-off than any of Alberta’s other large cities.

Calgary’s metropolitan area experienced a 90 per cent year-over-year slide in residential starts in March, while in the Rural Municipality of Wood Buffalo the decrease was 78 per cent, in the Edmonton metropolitan area it was 72 per cent, in Lethbridge it was 63 per cent, in Medicine Hat it was 47 per cent and in Grande Prairie it was 39 per cent.

On a quarterly basis, Red Deer’s decline in residential construction was less than all but one of its urban counterparts. The Calgary metropolitan area experienced an 84 per cent drop, in the Edmonton metropolitan area it was 67 per cent, in the Rural Municipality of Wood Buffalo it was 63 per cent, in Lethbridge it was 60 per cent, in Medicine Hat it was 48 per cent and in Grande Prairie it was 20 per cent.

For Alberta municipalities with 10,000 or more people, housing starts during the first three months of 2009 fell a cumulative 73 per cent.

Nationally, CMHC reported that housing starts were up 13.7 per cent in March as compared with February — which marked a nine-year low.

BMO Capital Markets economist Douglas Porter noted that almost all of the gain was in the volatile multiple unit category, which was up 28.3 per cent while urban single-family starts rose just 1.3 per cent.

“Home-building reports around this time of year can be as much a weather report as an economic report, and March was generally on the mild side,” Porter wrote in a note to clients.

“The level of residential building permits sagged to just 124,000 units in February, suggesting activity is likely to fade further.”

“March’s level of starts is still down a towering 35 per cent from a year ago,” Porter said.

CMHC said urban housing starts increased by 35 per cent in Ontario and by 23.3 per cent in Quebec, but declined by 17.3 per cent in British Columbia, by 7.9 per cent in Atlantic Canada, and by 7.5 per cent in the Prairies.

TD economist Pascal Gauthier suggested that poor weather conditions in Central Canada during the first two months of the year likely added to the usual winter weakness, with milder than usual March weather helping to boost residential construction.

“There is not enough in this monthly March data to believe it breaks the previously entrenched downtrend,” Gauthier wrote in a note to clients.

“We expect further weakness in the coming quarters, and will be looking for signs of stabilization in home-building activity towards the end of the year in sync with the rest of the economy.”

With files from The Canadian Press

Statistics Selling to Listing Ratio (CITY)

2009-03-05T08:35:00.000-08:00

February-09 39.51%

Statistics Value of City Residential Sales

2009-03-05T08:26:00.000-08:00

February-09 $33,952,600
February-08 $55,008,923
Jan. 1/09 to Feb. 28/09 $49,719,300
Jan. 1/08 to Feb. 29/08 $86,953,423

Decrease in value of city residential sales from:

February 2008 to February 2009 -38.28%

Decrease in value of city residential sales from:

Jan 1-Feb. 29/08 to Jan 1-Feb 28/09 YTD -42.82%

Statistics City Residential Sales

2009-03-05T08:18:00.000-08:00

February-09 113
February-08 171
Jan. 1/09 to Feb. 28/09 175
Jan. 1/08 to Feb. 29/08 277

Decrease in city residential sales from:

February 2008 to February 2009 -33.92%

Decrease in value of city ressidential sales from:

Jan 1-Feb. 29/08 to Jan 1-Feb 28/09 YTD -36.82%

Dismal drilling outlook gets worse

2009-02-24T11:58:00.000-08:00

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.

Housing starts, resale prices expected to drop

2009-02-23T10:05:00.000-08:00

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.

Statistics Selling to Listing Ratio (CITY)

2009-02-11T13:48:00.000-08:00

January-09: 24.60%

Statistics of Value of City Residential Sales

2009-02-11T13:39:00.000-08:00

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%

Statistics of City Residential Sales

2009-02-11T13:26:00.000-08:00

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%

Planners see clouds on horizon

2009-02-10T14:05:00.000-08:00

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.”

Home-market ‘correction is in full swing’: construction, sales, prices down

2009-02-10T14:00:00.000-08:00

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.”

Alberta home prices to slip 9% in '09: Crea

2009-02-10T13:52:00.000-08:00

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.

Oilpatch faces major job cuts

2009-02-09T16:49:00.000-08:00

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.

Red Deer housing starts down 63 per cent: CMHC

2009-01-15T15:56:00.000-08:00

By Advocate staff

Published: January 09, 2009 11:04 AM

The news is unlikely to surprise anyone who followed Red Deer’s residential construction industry last year.

Housing starts in the city fell 63 per cent from 2007 levels, according to Canada Mortgage and Housing Corp. statistics that were released on Friday.

The 572 projects started during the year consisted of 367 single-detached homes and 205 units in multi-family buildings.

In 2007, Red Deer recorded 1,558 housing starts: 974 single-detached and 584 multi-family homes.

Although 2007 was a record year for residential construction in Red Deer, the 2008 figures are also significantly lower than CMHC’s Red Deer numbers for the previous five years. In 2006, the city had 1,095 single-detached and 334 multi-family starts for a total of 1,429; in 2005, the tallies were 886 and 384 for a total of 1,270; in 2004, they were 789 and 554 for a total of 1,343; in 2003, they were 779 and 345 for a total of 1,124; and in 2002, they were 948 and 537 for a total of 1,485.

Jonas Neidert, president of the Central Alberta branch of the Canadian Home Builders’ Association, said earlier this week that he thinks the outlook for 2009 is better. Concerns about the economy have prompted many people to postpone buying a home, he suggested, which could mean a market rebound this year.

He added that there is also an improved selection of residential lots in the city this year.

In the final month of 2008, there were 42 single-detached and no multi-family starts in Red Deer. That compares with 46 single-detached and two multi-family starts in December 2007.

Of the 14 urban areas in Alberta surveyed by CMHC, 13 had fewer housing starts in 2008 than in 2007, and the decrease for these was at least 15 per cent. But only two, Cold Lake and Okotoks, had a greater decline than Red Deer.

In Cold Lake, housing starts plummeted 77 per cent in 2008. Okotoks experienced a 72 per cent slide, while in the Edmonton metropolitan area the drop was 56 per cent.

Camrose was off 47 per cent, Medicine Hat 42 per cent, Canmore 40 per cent, Grande Prairie 38 per cent, Wetaskiwin 37 per cent, the Regional Municipality of Wood Buffalo (which includes Fort McMurray) 31 per cent, Lethbridge 24 per cent, and the Calgary metropolitan area 15 per cent.

Housing starts on the Alberta side of Lloydminster were up 83 per cent, but on the Saskatchewan side of the community they were down 33 per cent.

The combined housing starts for all 14 communities in 2008 were down 34 per cent from 2007.

CMHC also provided 2008 housing start figures for a number of smaller municipalities, including several in Central Alberta. These revealed that there were 107 single-detached and 216 multi-family starts in Sylvan Lake, 77 single-detached and 49 multi-family starts in the town of Lacombe, 117 single-detached starts in Mountain View County, 85 single-detached starts in Clearwater County, 76 single-detached and four multi-family starts in Red Deer County, and 52 single-detached starts in Lacombe County.

No comparable statistics for 2007 were available.

2008-12-19T09:33:00.000-08:00

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."

2008-12-15T10:15:00.000-08:00

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

Local housing starts plummet

2008-12-11T19:18:00.000-08:00

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.

Housing starts tumble to last month to lowest levels since late 2001, CMHC says

2008-12-11T19:16:00.001-08:00

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.

City construction slowing

2008-12-11T19:14:00.001-08:00

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.”

MLS® STATISTICS FOR THE MONTH OF NOVEMBER 2008

2008-12-03T14:06:00.000-08:00

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%

2008-12-02T13:29:00.000-08:00

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.

U.S crisis spreads further

2008-12-01T11:23:00.000-08:00

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.

2008-11-28T09:45:00.000-08:00

In my opinion our market has hit the Christmas slow down. So I have included a couple of articles for general intrest. Our city lot draw was this week and about 25% of the lots sold. That is a far cry from other years when everything sold. Our inventory has climbed on the resale side and I believe it will continue to do so. The pricing seams to be softening but I think we will be Spring 2009 before we can get a good reading on the market direction. My opinion is intrest rates still will come down but unemployment will continue to rise which should make for less expensive home construction costs on the labor imput cost side. I think we will see some great opportunities to buy and hold over the next few months but will we recoginize these opportunities, that will depend on our risk tolerance levels. I am looking forward to seeing where sales are this month compared to last year. I should have those numbers posted about the 8th of December.

U. S. home builders face even worse year ahead

2008-11-19T10:50:00.000-08:00

Cash-strapped companies cutting jobs
Helen Chernikoff, Reuters
Published: Wednesday, November 19, 2008
The U. S. housing slump is set to worsen in 2009, as fallout from this year's plunge in the stock market and consumer confidence continues to cast a pall over potential buyers.

Builders will find themselves increasingly cash-strapped and forced to pull out of more markets and cut more jobs.

"As weak as it's been, it could get weaker," said Fitch Ratings analyst Robert Curran, who has detected a tendency on the part of forecasters to shift their predictions of a 2009 housing market bottom into 2010.

Home builders collectively see that loss of consumer confidence driving the entire industry "another leg down," UBS analyst David Goldberg wrote in a client note.

Such a protracted slump--the market peaked in 2006--could yet force a big builder to fail, Curran said.

So far, Florida-based condo builder WCI Communities Inc.'s filing in August was the biggest among builder bankruptcies, which also included Tousa Inc. and Levitt& Sons, regarded as the builder of the first planned community.

Credit default swaps on Hovnanian Enterprises, Beazer Homes USA Inc. and Standard Pacific Corp. are trading at an upfront cost.

That happens when a company is considered to be distressed and sellers of protection want to be paid more at the outset of the contract due to higher perceived risk of the company defaulting on its debt.

As the lifeblood of any company, cash becomes a crucial gauge of a business' health in tough times, said Georgia Tech College of Management professor Charles Mulford.

Since the slump started, builders have focused on accumulating the shiny stuff by ramping up incentives and selling the land they accumulated at peak prices during boom times, even at a loss.

"They're in deep hibernation trying to live off what they built in the past," Mulford said. Yet next year's cash flow might be weaker than this year's.

"2009 will not look like 2008 from a cash generation perspective in the industry in general because again, the demand continues to fall," Pulte Homes Inc. Chief financial officer Roger Cregg said during the company's third-quarter conference call.

2009 is shaping up to be treacherous from a cash flow perspective in part because of the expiration of a tax provision, the "net operating loss carry-back,"which enables companies to generate a tax refund against operating losses.

Several builders have used this mechanism to bolster cash flow. Of the $192 million in cash flow Hovnanian generated in its third quarter, $95 million was a federal tax refund.

In the absence of such refunds or a renewed flow of cash from home sales, builders might have to turn to their banks for support. The problem is that they have already done so, repeatedly asking their banks to revise their agreements to reflect the weakened state of their business.

CMHC sees stable housing market

2008-11-19T10:48:00.000-08:00

Dan Healing, Calgary Herald
Published: Wednesday, November 19, 2008

The Calgary housing market turmoil that has led to layoffs at new home construction companies, abandoned condo projects and a collapsing average resale home price will moderate and stabilize in 2009, according to the latest quarterly forecast by Canada Mortgage and Housing Corp.

One result will be the end of the current buyers' market.

The average resale home price will be $406,000, the federal agency predicts, barely above the anticipated 2008 price of $405,000 and down almost two per cent from $414,000 in 2007. Sales will slide from 32,177 in 2007 to 25,000 this year and 25,700 in 2009, coming back to near the 10-year average level.

In new construction, 4,500 single-family detached homes will be constructed in 2009, up from 4,300thisyearbutoffby42percent from7,777in2007anddown 57 per cent from the 10,482 in 2006.Multi-family starts will slide to 2,500 in 2009 from 6,800 this year.

"We're looking at a slower level of growth," said Lai Sing Louie, a senior market analyst for CMHC, after a presentation to about 500 people at the Roundup Centre.

"Employment is growing by about 1.3 per cent (about 9,100 jobs in Calgary in 2009) so it's a more moderate pace of growth."

He added Calgarians looking to buy homes have the power to negotiate now because of a glut of resale home listings and a shrinking new home order sheet.

"Overall, we are in buyers'market conditions," he said. "But buyers'market conditions do not last forever and, moving into 2009, we're looking for more balanced conditions."

Richard Corriveau, CMHC economist for the Prairies, said Alberta is forecast to post real gross domestic product growth in 2009 of 1.9per cent, after hitting 2.1 per cent this year, 3.3percent in 2007 and 6.6 per cent in 2006.

Employment growth will be 1.3 per cent provincially and net migration will reach about 51,000.The Alberta forecast calls for 15,000 new single-family detached homes, 9,000 new multi-family starts and 61,000 resale home sales at an average price of $356,000 (about the same as the record level in 2007).

Trevor Gloyne, CMHC general manager forthe region, cautioned members of the crowd not to take the CMHC's or any other forecast asgospelbecausethereissomuch uncertainty in the marketplace, especially regarding oil and gas investment.

"The(factors)Iwouldwatchare capital commitments and oil and gasprospects. Thesearechanging on us on a fairly rapid basis," he said, adding consumer spending is also an unknown quantity.

Louie forecast Calgary apartment vacancy rates would rise from 1.5 per cent in 2007 to three per cent next year and 2.5 per cent thisyear, leadingtoaveragerenton atwo-bedroomapartmentof$1,140 this year and $1,150 next year.

Meanwhile, the cost of home ownership will decline thanks to lower housing prices and interest rate cuts, narrowing the cost difference between renting and owning.

He expects new single-family detached home prices will fall by two per cent in 2009, making it easier for homeowners to move up to a new house.

"We'll likely see the cost escalationswe'veexperiencedinthepast come down, so if people are planning a project, probably 2009 is a good time to do it," said Louie.

Dhealing@theherald.CanWest.com

CANADIAN HOME SALES PLUNGE TO SIX-YEAR LOW

2008-11-18T14:30:00.000-08:00

Slide suggests major downshift by consumers

Eric Beauchesne Canwest News service OTTAWA

The Canadian economy has taken a sudden sharp turn for the worse, with the housing boom finally turning to bust with the home sales plunging 14 per cent to a six-year low in October the steepest monthly drop in 14 years, and prices tumbling 10 per cent from year earlier.
The fall in sales from September left them down more than 25 per cent from a year earlier, the Canadian Real Estate Association reported Friday.
The surprisingly weak housing report was released Friday afternoon as North American stock markets were retreating and oil prices and the Canadian dollar were failing in the wake of a much steeper than expected retreat in U.S. consumer spending last month.
One bay Street, the disappointing U.S. news overshadowed strong economic reports on Canadian factory shipments and auto sales.
Bay Street’s benchmarks S&P/TSX dropped nearly three hundred points, wiping much of the previous day’s gains, while on Wall Street, the blue chip Dow Jones industrial average slumped nearly 338 points, also erasing most the previous day’s gains. Oil fell by more than $1US barrel to $57.04, helping knock the loonie down by nearly a cent to a close of 81.60 cents US.
“Many homebuyers across Canada battened down the hatches in October as they were concerned with dire headlines about stock market volatility and a global economic downturn,” said Gregory Klump, chief economist at the Canadian Real Estate Association.
“The breadth and depth of the drop in … activity suggest a major downshift in consumer psychology” he said, adding that has moved many people to the sidelines until the economy starts to improve.
The federal government’s tightening up of the mortgage eligibility rules, aimed ironically at avoiding a U.S.-style housing bust, likely also had an impact, he added.
“Elimination of mortgage default insurance availability for purchases with less than a five per cent down payment and for amortizations beyond 35 years also likely payed a lesser role in the decline in sales activity,” he said.
“These figures, on the surface, would suggest the bust has begun,” said BMO Capital Markets economist Douglas Porter, adding that while the sharp drop may overstate the current weakness in the Canadian housing market, Canadians should expect even further declines in sales and prices in the months and year ahead.
National sales were down 27 per cent from year-ago levels, while some of the larger cities in the country, notably Vancouver and Toronto, posted even steeper drops, he noted. Further, nine of 10 provinces reported double digit sales declines in the month, with Newfoundland and Labrador bucking the trend with sales there up 15 per cent from a year earlier.
Even before the release of the home sale report, North American stock markets were posting triple-digit retreats, after the U.S. reported retail sales last month fell 2.8 per cent, the steepest drop in 11 years, which followed a 1.3 per cent drop in September.
“The drop was much worse than the 2.1 per cent decline expected by the markets, and was the fourth consecutive monthly drop in the indicator,” said TD Securities analyst Millan Mulraine, nothing that sales there were also down 4.1 per cent from a year earlier, the worst performance on records dating back 40 years.
“The details of the report were simply dismal,” Mulraine said. “The general tone of the report was very dire as it clearly indicating that U.S. consumers may have finally thrown in the towel.”

HOUSING SLOWDOWN EXPECTED TO WORSEN

2008-11-14T17:00:00.000-08:00

Consulting firm forecasts starts to decline further
Eric Beauchesne Canwest News Service Ottawa

The slump in housing construction starts in Canada next year will be widespread and will be deeper than what is now being forecast by the federal housing agency, according to a real-estate industry consulting firm.
Starts will plunge more than 20 per cent to 165,000 units, Altus Group said Tuesday in a forecast that expects to see the pace of construction falling in every region and in all major cities.
The forecast pace of construction next year is also seven per cent less than the 178,000 projected by Canada Mortgage and Housing Corp., while the Altus Group projection for this year, at 208,700 is also somewhat less than the 212,000, now projected by CMCH.
“The acceleration in the international financial crisis in recent weeks is quickly taking a toll on the Canadian economy in the form of decimated consumer confidence, tighter lending standards and plummeting prices for energy and commodity prices,” it noted in its forecasts. “A strong likelihood of an economic recession has emerged from the crisis and along with it dramatically weaker housing demand.”
“Expect sharply lower housing markets in 2009 as Canadian housing markets get pummeled by these forces,” it warned, adding there’s a risk the economic down-turn could also be sharper and more prolonged that is assumed in making the forecast, and the housing slump could be similar to those of the early 1980s and 1990s rather than the shallower housing recessions of the 1950s and 1960s.
Home resale have now been waning for five quarters and inventories of unsold new and existing homes is rising, it said, adding it survey results show that while buying intentions held steady last month, they are down from their peaks.
It projects there will be no growth in jobs next year and only weak gains in incomes, which will dampen demand for housing.
On the bright side, it noted there was less speculative home construction than in the U.S. and that inventories are nowhere near the levels that exist south of the boarder. At the recent pace of sales activity in Canada there is only a one month supply of unsold homes on the market, it said. That compares with 10 months in the U.S.
Meanwhile, a survey of real estate firms by consulting firm PricewaterhouseCoopers and the Urban Land Institute found that 58,2 per cent of respondents felt they had “very good” or “excellent” prospects for profitability, down only moderately from the 62,3 per cent who felt that way last year about 2007.

HOUSE PRICES EXPECTED TO FALL FOR AT LEAST A YEAR

2008-11-14T15:08:00.001-08:00

Garry Marr
Canwest News Service Toronto

The average price of a home sold in Canada will fall this year for the first time in a decade and might not even recover by 2010, the Canadian Real Estate Association said Monday.
The Ottawa-based group, which represents 100 boards across the country, updated its forecast in light of new economic conditions and now expects home prices to drop 0,6 per cent this year and 2,1 per cent next year. Three months ago the group was forecasting price increases for this year and next year.
“Canadian economic growth is being side-swiped by financial market turmoil, slowing world economic growth and weaker commodity prices,” says Gregory Klump, chief economist with CREA. “The question of whether Canada will avoid a technical recession is moot, growth will be slow enough that it will feel like a recession.”
The forecast comes on the same day Canada Mortgage and Housing Corp. said new home construction remains strong, but economists cast doubt on the strength of that market, too.
“While new home construction in Canada has been holding up quite well thus far, we expect starts to weaken considerably over the next year,” said Dina Cover, an economist with TD Bank Financial Group.
She expects a decline in the part of the market that includes condominiums.
“We expect this month’s drop in multiple-family units to continue and to put a major dent in the headline figure.”
CMHC said there were 211,800 units constructed in October on a seasonally adjusted annualizes basis, down three per cent from month earlier. The crown corporation said last month that for the first time in seven years it expects housing starts to dip below 200,000 in 2009. It is forecasting a 16,1 per cent decline in new home construction next year.
Klump said despite the fact Canada is still building more homes than are required based on demographics, existing home sales have not been affected.
CREA expects housing sales will decline by 12 per cen this year from 2007 and then fall another three per cent next year. It expects improving conditions in 2010.
“The pricing environment will be more firm than it is now”, said Klump adding it’s too early to say whether prices will rise in 2010.
CREA president Calvin Lindberg also repeated his position Monday that the U.S. housing market is much different, most notably because the Canadian market does not have the same oversupply of homes.

Housing starts still lagging

2008-11-13T09:57:00.000-08:00

By Advocate staff

Published: November 10, 2008 9:17 PM

With two months remaining in 2008, housing starts in Red Deer are down nearly two-thirds from 2007.

Canada Mortgage and Housing Corp. reported on Monday that from January to October, work had commenced on 298 single-detached dwellings and 170 units in multi-family buildings, for a total of 468 starts.

During the same period last year, the numbers were 873 for single-detached homes and 485 for multi-family units, for a combined 1,358.

This decline of 65.5 per cent was the greatest among Alberta’s seven major urban centres.

The Edmonton metropolitan area had the second-biggest drop at 54.5 per cent, Medicine Hat was down 44.1 per cent, Grande Prairie experienced a 41.6 per cent slide, Lethbridge was off 26.3 per cent, and the Regional Municipality of Wood Buffalo fell 24.1 per cent. The Calgary metropolitan area recorded the smallest decline, at 13.8 per cent.

During the month of October, there were 42 construction starts on single-detached homes in Red Deer, as compared with 61 in October 2007.

No starts on multi-family units were reported in the city this October or last.

Total housing starts across the seven urban centres during October decreased 43 per cent from last year, to 1,682 from 2,931.

Nationally, CMHC said housing starts during the month were six per cent lower than for the same period in 2007.

MLS® STATISTICS FOR THE MONTH OF OCTOBER 2008

2008-11-05T14:25:00.000-08:00

MLS® STATISTICS FOR THE MONTH OF OCTOBER 2008
Prepared for the members of the Central Alberta Realtors® Association

City Residential Sales

October 2008 128
October 2007 152
January 01, 2008 to October 30, 2008 1,809
January 01, 2007 to October 30, 2007 2,026

Value of City Residential Sales

October 2008 $38,073,800
October 2007 $46,818,150
January 01, 2008 to October 30, 2008 $559,155,595
January 01, 2007 to October 30, 2007 $624,756,465

Selling to Listing Ratio (CITY)

October 2008 35,37%
February 2008 55.16%

The Informed Home Buyer/Seller™

2008-11-05T14:12:00.000-08:00

2008-10-20T14:00:00.000-07:00

Are you confused about our market?? I think if you talk to 10 different people you will get 10 different answers or opinions on our real estate market. Here is my opinion on our market. Up until a month ago I was very positive about our market as many of you know, I was of the opinion that our inventory levels were going to bottom out in November and stabilize until spring. My opinion was that we would see a slight increase in pricing next year and my guess was about 5%. Over the last 3 weeks my opinion has changed drastically!! I now have huge concerns about our financial system not only here but on a global perspective and secondly on our economy both here at home and abroad. I am of the opinion that our market is still driven by the oil industry and if you agree with me then our slide in oil prices should be of a concern. In the last few days oil prices have traded in a range of $68.00 to $72.00 and many experts are suggesting we could see prices in the $50.00 to $55.00 price range. Even if the prices stay where they are currently or decrease slightly more I believe our conventional oil is still okay, but what about natural gas which is our largest percentage of production not oil. Our natural gas prices need to increase to keep drilling. But here is the big question can the junior oil companies get the financing they need to operate drilling programs this year?? If not in my opinion we have a problem. What about the heavy oil at about $85.00 a barrel my guess is you are at about break even. How long do the major oil companies wait before they moth ball the expansions. I think that our commodities and the dollar have a direct correlation and as commodities drop so will our dollar. With United States and Europe in a recession we will have trouble shipping our products to the rest of the world. If the Bank of Canada lowers it's interest rates by say another 1% will it really help I think not. I am seeing our real estate inventories increase. In the last 2 weeks our increases have been way more than I ever thought and my opinion is this is going to continue. So get you helmets on and buckle up, as I think we are in for a interesting ride over the next 18 months. I am of the opinion that we will be hit less here than the rest of Canada but will the banks pull there horns in? Did I need to ask that last question it has already happened. If I am right you will need a realtor that has a vision and ideas to see you through these turbulent times. I have a plan to help you get through these times. I believe it will be sucessfull as the way my marketing plan has been. If I am right there will be a lot of money made and a lot of money lost in real estate over the next 18 months. Where do you want to be? Give me a call to discuss your real estate needs.

Home construction slides

2008-10-16T15:35:00.000-07:00

By Harley Richards

There are a variety of words that could be used to describe the slowdown in Red Deer’s residential construction sector.
Regine Durand chooses “correction”.
A market analyst with Canada Mortgage and Housing Corp. In Calgary, Durand acknowledges that the decline in housing starts this year has been substantial.
The 426 single-detached and multi-family units started during the first nine months of 2008 represent a 67 per cent drop from the 1297 units started during the same period last year.
The figure is 58 per cent lower than Red Deer’s five-year average of 1004 starts and down 51 per cent from the 10 year average of 874 starts.
But Durand sees reason for optimism.
She pointed out that the inventory of new, single-detached homes in the city awaiting buyers at the end of September numbered 85 – down from 107 the preceding month.
Meanwhile, the number of listings on Red Deer’s resale market in September was 268, as compared with the 598 active listings a year earlier.
“its good news,” said Durand. ‘It means that the market is absorbing more units”.
By 2009, she continued, the surplus inventory of new and used homes on the market should disappear and demand for new construction will rise.
Encouraging this will be the moderation of house prices.
Members of the local homebuilding industry agree that business has slowed, but they also characterize the situation as a “correction”.
“It looks like things will pick up again in 2009,” said Scott Boyd, executive officer with the Canadian Home Builders’ Association, Central Alberta branch.
Gord Bontje, president of Laebon Homes, is also anticipating better times.
He notices improved sales in August and said that trand has continued.
“Two weeks ago was our best sales week in a couple of years,” Bontje said.
Thare have been cutbacks in staffing, said Boyd and Bontje, but they think this reflects the fact many companies boosted their payrolls in 2006 and 2007 to keep pace with demand.
“Thas was the abnormal piece,” said Bontje, describing how his company sent its human resources manager to the Maritimes and looked into bringing foreign workers to Canada in its efforts to add people.
“I think today is kind of the way it should be”.
Laebon’s current payroll – about 110 – is about the same as it was before the building boom hit, he said.
Jonas Neidert, president of the local branch of the Canadian Home Builders’ Association, agreed with Bontje’s assessment.

Construction: Commercial sector still humming

2008-10-15T12:39:00.001-07:00

“A lot of guys have expanded over the last year or two years. Even with layoffs, they’re probably returning a little bit more to normal”
He added that his own company, Avalon Central Alberta, has been getting a lot of phone calls from trades’ people looking for work.
But many of these people have been able to find places in the commercial construction sector, which continues to hum along.
As for the global financial meltdown, Durand downplayed its likely impact on the local housing market.
“Just looking at Red Deer, the economic fundamentals are still strong there,” she said, citing continued job creation and the migration of people to Alberta from other provinces. In fact, added Bontje, though times in other parts of the country – such as Central Canada where the manufacturing sector is struggling – could stimulate demand for housing here.
“What’s the first thing you need when you move to Alberta?
“Well, you need a place to live and then you need a job – or vice versa.”

Housing demand

2008-10-14T10:20:00.000-07:00

Marty Hope, Calgary HeraldPublished: Saturday, October 11, 2008

Despite a diversified economy, net migration into Red Deer is weakening -- and that could impact the pace of new home construction, says a federal agency.
A growing agriculture, expanding retail, wholesale, distribution and manufacturing industries, booming construction and a strong oil and gas market continue to drive the economy of the central Alberta city.
In May, major construction projects proposed, completed or under construction in the region stood at $2.9 billion, up 70 per cent from May 2007.
"However, net migration, one of the key drivers of household formation and housing demand, is weakening," says Richard Corriveau, Prairie region economist for Canada Mortgage and Housing Corp. "Moving into the forecast period, the weakening net migration will likely put a brake on the demand for housing."
After dropping by 11 per cent in 2007, single-detached starts are expected to drop another 59 per cent this year to 400 units. To the end of June, single starts fell by 69 per cent as builders prudently responded to rising inventories and huge selection in the competing resale market.
After reaching their second highest level in 21 years in 2007, multi-family starts will drop 40 per cent this year.
At the end of June, year-to-date multi-family starts were down 47 per cent. To reduce inventories in the face of a well-supplied competing resale market, builders will restrain the number of multi-family starts to 350 units this year.
Following five consecutive years of increases, resale activity should fall to 4,500 units in 2008, down 11 per cent from 2007. Year-to-date transactions fell by 22 per cent to the end of June 2008. A potential up tick in demand in the spring buying season of 2009 should also draw supply levels lower, and bring it back to balanced conditions. Expect sales to rebound to 4,650 units in 2009, up 3.3 per cent from 2008.
In the wake of a 32 per cent gain in 2007, the total average resale price is expected to rise by 5.4 per cent in 2008 to $285,000. Price pressure will ease further in 2009 with price growth being strongly held back by excess inventories. Look for prices to hit $295,000 in 2009, up 3.5 per cent from 2008, the weakest gain in 13 years.
The following is a look at some other areas in Alberta:
Grande Prairie
Currently the natural gas sector is a major driver of the Grande Prairie economy, but the industry slowed as inventory levels in North America reached a five-year high, causing gas prices to decline. In addition, the new royalty framework also introduced some uncertainty in the market.
The slowdown in the natural gas industry affected the economy in Grande Prairie and would eventually put a damper on housing demand.
The natural gas industry appears poised to recover in the latter half of 2008. However, the increased activity in the economy is not expected to make any major impacts to housing demand until 2009.
The city's forestry manufacturing industry has slowed with the downturn in the United States housing market, falling lumber prices, increased costs, and the rising Canadian dollar.
Inventory of lumber is also at elevated levels.
In 2007, single-detached starts in Grande Prairie ended the year with 784 units, down 26 per cent from 2006. The demand for housing has slowed from 2007, and inventories are currently at record levels.
Builders are pulling back starts in 2008 to allow the current inventory to be drawn down. Starts in 2008 are anticipated to fall to 400 units, down 49 per cent from a year earlier.
Multi-family starts reached a new record in 2007 at 839 units, up 49 per cent from 2006. Over the forecast period, multiple starts are expected to decline in response to the growing inventory on the market.
In 2008, starts are anticipated to drop by 79 per cent to 175 units.
The economic slowdown has also dampened activity on the MLS market. Sales fell from 3,017 in 2006 to 2,550 sales in 2007, representing a 15 per cent decline. In 2008, sales are expected to decrease by nearly nine per cent to 2,325 and rise by 3.2 per cent to 2,400 in 2009.
Following price growth of over 11 per cent in 2007, gains in the average resale price are expected to be minimal over the forecast period.
In 2008, the average price is expected to remain unchanged at $265,000, while in 2009 the average price is expected to increase by four per cent to $275,000. Price growth will improve next year in the face of more balanced conditions.
Lethbridge
Housing demand in this southern Alberta city is expected to be lower throughout the forecast period due largely to weaker population growth from net migration which is expected to decline in 2008 by more than half those record levels seen in 2006. Despite this, however, employment growth and economic trends remain favourable for the Lethbridge region.
Economic growth in Lethbridge will occur in agriculture as most grain prices are up this year and producers face a promising crop yield.
Furthermore, the region will benefit from the manufacturing and commercial/retail sectors.
Following a record year in 2007, single-detached starts are forecast to decline by nearly 16 per cent to 775 in 2008. A further decline of ten per cent is expected in 2009 to 700 starts. Builders continue to pull-back production in the face of rising supply and with lower demand.
To the end of June, 422 single-detached foundations were poured, a decline of 13 per cent over the previous year. The amount of units under construction hit a record high in April of this year of 750 units.
Inventories have remained at or near record levels throughout the year, with 64 units completed and unabsorbed at the end of May 2008 up from 22 in May 2007.
In 2007, Lethbridge multi-family starts more than doubled the performance in 2006. The forecast calls for starts to weaken in 2008 to 175, and then strengthen to 225 units in 2009.
Due to a record number of single-detached starts in 2007 and continued elevated levels so far this year, sales on the existing home market are expected to decline in 2008.
New listings have increased as buyers of new homes have put their existing home up for sale.
However, with lower demand in the market, supply levels have increased over the first six months of this year. the forecast is for 2,300 sales at the end of 2008, while in 2009 sales are forecast to increase by three per cent to 2,375.
In 2007, the resale market in Lethbridge experienced record price growth. At the end of June, the average resale price reached $244,727, up nearly 11 per cent over the corresponding period last year.
The average selling price for this year calls for slower with an increase in the average resale price of eight per cent to $247,500.
In 2009, average price growth is expected to near four per cent with the average resale price ending the year at $256,500.

Region remains buyers’ market

2008-10-09T14:12:00.000-07:00

By Harley Richards - Red Deer AdvocatePublished: October 03, 2008 7:49 AM

The Red Deer region remains a buyers’ market, says the president of the Central Alberta Realtors Association.
Plenty of listings, stable prices and steady mortgage rates has created a situation that’s “about as good as it gets” for home shoppers, said Randy Weins in a news release issued by the association on Thursday.
Weins’ assessment was based on Multiple Listing Service statistics for the third quarter of 2008.
It indicated that 400 single-family homes were sold in Red Deer from July to September, up from 344 during the same period in 2007.
The median price of those 400 homes was $324,000, down from $330,000 for the corresponding quarter last year.
In the case of townhomes, there were 76 sales with a median price of $233,000 during the past quarter in Red Deer.
That compares with 52 deals and a mid-point price of $239,000 for the July-to-September period of 2007.
In the case of half-duplexes, 55 sales with a median price of $266,000 were recorded in the most recent quarter. During the corresponding period in 2007, the figures were 53 and $275,000.
The news release said that Weins considers single-family sales to be the market benchmark.
Elsewhere in the region, the Central Alberta Realtors Association recorded 90 single-family home sales in Sylvan Lake during the third quarter, with the median price of these $325,000. That compares with 85 sales and a median price of $347,000 a year earlier.
In Lacombe, 38 single-family homes were sold, with the median price of these $316,000. That was down from 51 sales for the same period in 2007, when the median price was $307,000.
In Blackfalds, there were 29 single-family homes sold at a median price of $284,000 from July to September.
During those months in 2007, the figures were 31 and $296,000.
The association reported 28 MLS sales of single-family homes in Stettler in the last quarter, with these attracting a median price of $218,000.
The number of sales was unchanged from 2007, but the price a year ago was $236,000.
Ponoka had 25 sales of single-family homes during the past quarter, with $255,000 the median price. A year earlier there were 31 deals in this category, with the median price $243,000.
There were also 25 single-family homes sold in Rocky Mountain House between July 1 and Sept. 30. The median price of these was $290,000.
Last year, Rocky generated 32 sales of this home type, with the median price $291,000.
Innisfail produced 23 single-family sales with a median price of $269,000 during the same period this year. For 2007, the numbers were 33 and $302,000.
Weins suggested that sellers looking to close a deal on apartment condominiums or homes priced in the top 20 per cent of the market are probably having the toughest time.
“If your property is listed in the top end of your competitive price range then you can likely bring out the Christmas tree and put it up,” he said.
The inventory of homes are declining in most communities, added Weins. And he warned that prospective buyers should act before credit tightens and mortgage rates rise.
The Central Alberta Realtors Association has cautioned that general price information can help identify trends and provide comparisons over time, but may not reflect the actual price of a specific home.

MLS® STATISTICS FOR THE MONTH OF SEPTEMBER 2008

2008-10-09T10:18:00.000-07:00

MLS® STATISTICS FOR THE MONTH OF SEPTEMBER 2008
Prepared for the members of the Central Alberta Realtors® Association

City Residential Sales

September 2008 185
September 2007 158
January 01, 2008 to September 30, 2008 $1,681
January 01, 2007 to September 30, 2007 $1,874

Value of City Residential Sales

September 2008 $57,131,828
September 2007 $50,490,982
January 01, 2008 to September 30, 2008 $521,081,795
January 01, 2007 to September 30, 2007 $577,939,315

Selling to Listing Ratio (CITY)

September 2008 69.03%
February 2008 55.16%

Alberta leads slide in housing

2008-10-01T09:14:00.000-07:00

Mario Toneguzzi, Calgary HeraldPublished: Wednesday, October 01, 2008

Alberta led all provinces in Canada with the biggest decrease in the average sale price for an existing home in August compared with a year ago, according to the Canadian Real Estate Association.
Statistics released Tuesday by the association show the average MLS sale price in Alberta dipped by 5.2 per cent to $343,148. The only other province experiencing a year-over-year price decline was British Columbia at 4.1 per cent to $421,685. At the national level, prices in August dropped by 4.6 per cent from a year ago to $290,347.
The association numbers also showed sales in Alberta were down 8.4 per cent from a year ago while new listings have dropped by 18.4 per cent.
Nationally, sales were down 21 per cent and new listings were off by 3.4 per cent. British Columbia saw a sales decline of 47.4 per cent.
"Slower activity in some of Canada's pricier housing markets compared to year-ago levels will continue weighing on the national average price," said Gregory Klump, the association's chief economist.
On a year-to-date basis until the end of August, Alberta MLS sales are down 22.7 per cent but new listings were up 9.9 per cent. The average sale price has increased by 0.2 per cent to $357,145.
Across the country, sales are down 14 per cent year-to-date compared with the same period in 2007 and new listings increased by 8.7 per cent. The average sale price has increased by 1.9 per cent to $309,698.
Every drop in the value of Canadian real estate elevates the level of anxiety about a U.S.-style housing meltdown in Canada, said CIBC World Markets economist Benjamin Tal in a research note.
"To be sure, house prices in Canada will continue to ease in the coming months. But the triggers that led to a free fall in Canadian real estate markets in the early 1990s and today in U.S. markets are nowhere to be found," wrote Tal.
"At this rate of growth in unit sales and new listings, by early next year the Canadian housing market will turn, for the first time since 1995, to a buyer's market."
Tal also said Calgary and Edmonton, where until recently homeowners doubled the value of their real estate "during the course of breakfast," are now seeing close to two and a half new house listings for every unit sold.
And with house prices in Alberta doubling since 2004, housing affordability has deteriorated to levels not seen since the early 1990s, added Tal.

Old listings seen piling up

2008-09-25T12:35:00.000-07:00

Mario Toneguzzi, Calgary HeraldPublished: Thursday, September 25, 2008

The number of residential MLS listings in the Calgary area that have expired without a sale soared in the month of August to nearly double what it was a year ago.
According to the Calgary Real Estate Board, there were 2,550 MLS listings that expired in August comprising single-family homes and condominiums in Calgary metro, as well as residential properties in CREB's market area, which includes acreages as well as town and country.
In August 2007, there were 1,368 listings that expired.
There are more listings expiring each month, said Ron Esch, executive vice-president of the local real estate board.
For many sellers, the expectation of a sale is not being met probably due to pricing, he said.
In August, MLS sales were down compared with a year ago throughout CREB's market area in four categories -- single-family homes in Calgary metro (10.96 per cent), condominiums in Calgary metro (17.2 per cent), towns outside Calgary (30.3 per cent) and country residential or acreages (20.3 per cent).
People need to know that condos now average 58 days to sell, compared with 35 days last year, while single-family homes were averaging 52 days in August, compared with 39 days a year ago, said Lai Sing Louie, senior market analyst in Calgary for the Canada Mortgage and Housing Corp.
"So it is taking longer to sell right now and people have to be in touch with the current market conditions," said Louie. "If you price it above, there's likely another house that's selling maybe a little below and that will go first."
He said people selling a home these days have to price their property according to product that's very similar.
Active listings are coming down in the Calgary market, but remain high.
"In terms of August, over 11,000 units were for sale. It's the highest August on record that we have going back to 1981," said Louie. "Even though it's peaked, the peak appears to have happened in May this year at over 13,000, it is coming down and the trend line is also down, but historically comparing the number, it's still high. We expect it to come down."
In August, average sale prices in the Calgary market dropped in four different areas compared with last year -- single-family homes in Calgary metro (down 9.3 per cent), condominiums in Calgary metro (10.3 per cent), towns outside Calgary (six per cent) and country residential including acreages (0.8 per cent).
Esch said MLS listings expire in two ways -- a listing contract runs out after 60 or 90 days with the property not selling or sometimes listings are terminated in advance of the expiration date. He said the majority of expirations are because they've run the course of the listing period and did not sell.
Data supplied by realtor Mike Fotiou of First Place Realty show that expirations in single-family homes in Calgary metro hit a high of 1,332 in December 2007 and have been over 1,200 in each of the months of August, July and June. Over the past year, expirations in the Calgary metro condo market hit a high of 614 in July.
On his web blog, Fotiou writes that the days-on-the-market (DOM) tatistic is not accurate these days.
"In the past few years, when properties were actually selling in 60 days or less, the DOM stat was quite accurate," he said.
But now with close to five months of supply for the inventory, "homes are expiring and getting relisted frequently, skewing the DOM stat."
He said the days-on-market clock resets back to zero when a property expires and is relisted.

mtoneguzzi@theherald.canwest.com

Housing market feels fall chill

2008-09-25T12:25:00.000-07:00

Canada warned it may follow U.S. meltdown

Geoffrey Scotton, Calgary HeraldPublished: Thursday, September 25, 2008

Two prominent economists warned Wednesday Canada's housing market is at a tipping point and could trigger a financial meltdown that would mirror the unprecedented crisis gripping our neighbour to the south.
"We fear . . . it may simply be a matter of time (before) . . . housing and credit markets in Canada crack," said Merrill Lynch Canada Inc. analysts David Wolf and Carolyn Kwan in a note to clients. "Markets remain overly sanguine with respect to the prospects for the Canadian housing market, the financial sector and the overall economy."
Locally, some real estate players are carefully watching stretched household finances coinciding with falling real estate values, worried the squeeze could steepen the descent of a falling market -- or worse.
"There's definitely some concern -- prices in Calgary have been on a downward trend for well over a year and inventories are high," said realtor Gary MacLean of Re/Max Real Estate Central Calgary. "If there's a downswing, Albertans will get hurt the most. The fact that people are over-extended and leveraged to the max should be of concern to everyone."
Prime Minister Stephen Harper dismissed the Merrill Lynch report, saying both the housing and consumer markets and financial institutions in Canada are "much stronger" than in the U.S.
"I do not accept this conclusion, not at all," Harper said.
The two economists -- who ironically work for the Canadian arm of investment bank Merrill Lynch & Co. Inc., a casualty of the financial shakeout in the U.S. that is pounding global markets -- argue household finances here are as over-extended as those in the U.S. and the U.K. were before falling house prices caused the bubble to burst.
"These data imply the Canadian household sector is now overextending itself as much as the U.S. or U.K. ever did, challenging the consensus view that Canadian lenders and borrowers have been far more conservative through the cycle," said Wolf and Kwan.
"The absence of a Canadian credit crunch to date may be cause for concern, not comfort. How can it be that mortgage debt is growing at a double-digit pace against an asset class now seeing deflation?" said Wolf and Kwan.
Other economists believe worrisome parallels between the U.S. and U.K. housing markets, and Canada's, are limited.
"We don't see the same factors," RBC Financial Group assistant chief economist Dawn Desjardins told the Herald, citing modest Canadian mortgage delinquency and foreclosure rates, a smaller housing market inventory overhang than south of the border, and a lack of subprime mortgages. "From the fundamental structural backdrop, we just don't see the same situation that we saw in the U.S."
Calgary Economic Development chief economist Adam Legge was adamant Calgary's housing fundamentals remain strong. "Is the housing market in trouble? No. Will the bottom drop out? No," said Legge. "We should not fear a collapse."
Nonetheless, house price deflation was clear in Canadian Real Estate Association statistics showing the average Canadian house sales price in August was down 5.1 per cent from a year earlier. The association noted sales volume dropped almost 20 per cent.
Nowhere in Canada is the softness in real estate more pronounced than in Calgary, where association figures showed the average price for a house in August was eight per cent lower than a year earlier, while sales volume plunged nearly 17 per cent and new listings dropped 16.3 per cent.
"I think there's a credit problem," said MacLean. "I don't think it's going to cause us to crash, but I do agree that the world is too overextended and too leveraged and something has to happen. There are going to be people that lose a bundle."
Canada Mortgage and Housing Corp. declined to be interviewed on questions about Canada's housing market fundamentals and the Merrill Lynch report.

gscotton@theherald.canwest.com

Rising costs squeeze builders

2008-09-19T13:05:00.001-07:00

Mario Toneguzzi, Calgary HeraldPublished: Friday, September 19, 2008

Rising labour and material costs as well as a continued cooling in the housing sector will rip into profits of Canadian home builders for a second consecutive year, according to a report released Thursday by the Conference Board of Canada.
As demand for new home construction weakens, profits this year are expected to dip by three per cent compared with a year ago to $3.6 billion. This follows a 16.4 per cent year-over-year plunge in 2007.
The Conference Board's Canadian Industrial Outlook: Canada's Residential Construction Industry -- Summer 2008 said profits will drop another 6.6 per cent to $3.3 billion in 2009 before swinging upwards in 2010-2012.
The Conference Board's forecast says year-over-year increases in 2010, 2011 and 2012 will be 6.7 per cent, 4.1 per cent and 2.3 per cent respectively and peak at $3.8 billion at the end of the forecast cycle. "Costs escalating at frenzied paces ripped a strip off profits last year," said the report.
"It was the first time in recent years that cost growth outpaced revenue growth. Despite a much slower pace of cost growth, industry profits will fall again this year and in 2009 as slowing construction activity and input price appreciation take their toll on the industry."
Profits for the home building industry peaked at $4.4 billion at the height of the housing boom in 2006.
The report said the heated housing markets in Western Canada have been doused with cold water this year. Housing prices have hit an affordability ceiling in both British Columbia and Alberta and there has been an oversaturation of supply in many local markets. Because of that, construction activity will moderate over the next few years in a correction.
In Alberta, housing starts will shrink by a whopping 23.7 per cent this year and another three per cent in 2009, predicted the Conference Board.
"High costs will continue to plague the industry," added the report. "Labour is scarce and expensive, and although lumber prices remain weak, other materials (such as steel and concrete) are expensive and costly to transport."

Get set for $200 oil, says CIBC economist

2008-09-19T13:05:00.000-07:00

Geoffrey Scotton, Calgary HeraldPublished: Friday, September 19, 2008

The fundamentals for oil are enormously strong, outspoken analyst Jeff Rubin told international business leaders Thursday -- warning those fundamentals may in fact be too strong as high energy prices spark inflation globally and a reordering of the world economy.
Speaking to the Global Business Forum in Banff, Rubin also argued indicators show the underlying cause of the crisis gripping U.S. and world financial markets linked to the credit crunch -- weakening U.S. home prices -- is close to an end.
"The underlying problem is about to be remedied," said Rubin, chief economist and strategist of the Canadian Imperial Bank of Commerce. He warned that amid global financial uncertainty, investors and corporate leaders need to be careful not to make poor decisions based on what he believes are fleeting conditions. He forecasts U.S. house prices will bottom and begin to rebound by the beginning of 2009, while oil prices could hit $200 in four or five years.
"What's happening out there is a giant head fake . . . that could easily put you running in the wrong direction," Rubin told about 200 senior corporate and government leaders at an invitation-only gathering at the Fairmont Banff Springs.
Rubin's comments came as central bankers pumped or promised $180 billion US of injections Thursday into world financial markets to ensure liquidity amid continued fears about the solvency among major U.S. investment banks and the repercussions of a potential failure.
Nonetheless, while the financial market turmoil will work itself out over time as home prices begin to regain lost ground, there are other spectres on the horizon as the global economy begins to revive, said Rubin.
"By the first quarter of next year the word's really going to change, because instead of deflation and Wall Street we're going to be talking about inflation and energy," Rubin said.
He predicts the world oil price will hit $200 in four or five years, but that will just be a signpost marking a longer ascent.
Other analysts and experts at the Banff event warned the global economy is about to slip into as long as three years of recession.
"We're taking the froth off, but it's going to hurt," U.K.-based Institute of Directors chief economist Graeme Leach said, referring to a downturn in the wake of credit tightening worldwide.
"You ain't seen nothing yet. The economy is going to get significantly worse before it gets better. (We're going to have) much weaker economic growth, much weaker employment growth," he said.
"The bigger the party, the worse the hangover," noted James Bond, chief operating officer at World Bank Multilateral Investment Guarantee Agency. "I think we're in the hangover phase right now. This may be Wall Street, but Main Street is going to hurt."
Rubin argued oil supply has effectively not risen over the past three years and existing, low-cost conventional supply is being replaced with uncertain, high-cost non-conventional supply -- either deepwater or oilsands. Deepwater sources, such as the Gulf of Mexico, face dramatic and substantial rates of decline.
"Every year the marginal cost of the new barrel of oil goes higher and higher," Rubin said. "The U.S. is going to be facing an enormous oil crunch."
At the same time, Rubin explained that due to consumer and industry prices that are far below world market prices for oil in many countries in the Middle East and the Third World, demand there is soaring. He noted for the first time, demand and consumption from countries outside the Organization for Economic Co-operation and Development is about to overtake OECD demand and overall demand will inevitably ratchet higher.
In the wake of dramatically higher energy costs, sharply heightened transportation charges are set to remake the world economic order, Rubin said.
"We're going back to a world where distance costs money," said Rubin, noting the phenomenon has already been seen in the return to competitiveness of U.S.-produced steel, which for many years could not stand up to Chinese imports.
In turn, returned competitiveness is likely to spark wage inflation as workers demand some of the returning profit in industries where transportation costs have made them newly competitive.
In that type of environment, Rubin said, policy-makers will be forced to react.
"That's the world where interest rates are going up, not down -- and it doesn't matter what happens to Goldman Sachs in the next three months because there's nothing the Federal Reserve can do to change that world."

Calgary house price drop largest in Canada

2008-09-17T09:22:00.000-07:00

Sales activity plunges 28% from last year

Mario Toneguzzi, Calgary HeraldPublished: Tuesday, September 16, 2008

The average MLS sale price for a Calgary residential property in August was eight per cent less compared with a year ago -- the biggest decline in the country, according to statistics released Monday by the Canadian Real Estate Association.
The association's major market survey for August showed Calgary's average price for single-family homes and condominiums was $390,091 during the month. Sales for the month were also off 16.7 per cent, at 1,990, and new listings dropped by 16.3 per cent to 4,103.
Nationally, house sales plummeted by 19.3 per cent in August compared with August 2007 while the average sale price dropped by 5.1 per cent to $316,052.

"Price declines in the pricier major markets are pulling down the overall average price," said Gregory Klump, the association's chief economist. "Significantly lower sales activity in Greater Vancouver compared to a year ago means that the most expensive market in Canada now has less weight in the overall average price calculation.
"Sales activity is down in a number of resale housing markets in Western Canada that earlier posted hefty price increases. Prices continue rising in other markets where price gains have been more modest."
Sales in Vancouver were a whopping 53.9 per cent off from a year ago while Victoria saw a 37.5 per cent plunge.
The real estate association said new listings have eased in many major centres across the country, and now stand at their lowest level this year.
"This trend has been most evident in Calgary and Edmonton," said the association.
On a year-to-date basis, until the end of August, the average MLS residential sale price in Calgary is down 0.9 per cent to $411,510 compared with the same time period last year while the national average price is up 1.5 per cent to $336,225.
But sales activity in Calgary has plunged by 28.8 per cent while new listings have increased by 9.6 per cent. Across the country, sales have slipped by 13.7 per cent so far this year compared with a year ago for the first eight months while new listings have increased by seven per cent.
Calgary's residential real estate market is currently in buyers' conditions, said Lai Sing Louie, senior market analyst in Calgary for Canada Mortgage and Housing Corp.
"There's a lot of supply out there relative to demand and that's putting downward pressure on prices."
Nationally, existing home sales year-to-date have experienced the steepest decline since 1998 excluding March's 19.4 per cent year-over-year slide, said Robert Kavcic of BMO Capital Markets Economics in a commentary on the real estate association's numbers.
He said with sales activity "falling steadily" average prices remain under pressure and the annual decline is the steepest one since 1996.
"Canada's housing market continues to face strong headwinds from declining confidence, low affordability and an upward trend in new listings. While we highly doubt that the downturn in Canadian housing will reach U.S. proportions, slower sales activity and softer prices are still ahead," said Kavcic.

Real estate association president Calvin Lindberg said people have to remember that 2007 was a record year for real estate sales in Canada.
"In light of that fact, our current market can certainly be characterized as stable," he said.
"The Canadian market fundamentals are still solid and mortgage rates are still at near record low levels. The challenge is for sellers to price their home to meet the local market realities and for buyers to realize there is no real estate bubble that will burst and send prices to new lows."

Average Prices
Selected housing markets' average sale prices in August and percentage change from a year before
Calgary $390,091 -8
Edmonton $329,207 -4.8
Montreal $261,604 6.2
Ottawa $282,792 5.6
Regina $237,814 36.1
Saskatoon $279,366 10.3
Toronto $364,880 0.8
Vancouver $557,114 -5.2
Victoria $452,205 -1.2
Windsor, Ont. $164,503 -5
Winnipeg $190,979 12.6
National average $316,052 -5.1

New house prices post worst record in 12 years

2008-09-12T08:54:00.000-07:00

Decline of 0.3% comes after years of stunning gains

Mario Toneguzzi, Calgary Herald; with a file from Canwest News ServicePublished: Friday, September 12, 2008

New house prices in the Calgary census metropolitan area decreased in July from the previous year, one of only three markets in the country to see a decline, according to Statistics Canada.
The federal agency, in releasing its New Housing Price Index on Thursday, said the Calgary area saw new house prices drop by 0.3 per cent in July 2008 from July 2007, the worst performance in 12 years.
In Edmonton, the year-over-year change was the worst in 23-years at a negative 5.3 per cent.
"Markets in these cities continue to adjust after experiencing record price increases in the last two and a half years," said Statistics Canada.
Nationally, the rate of increase in new housing prices continued to ease in July for the sixth consecutive month. The growth rate of the index has been on a downward trend since September 2006, mainly due to the softening of the market in Western Canada, said the federal agency.
And a report to be released today by Sal Guatieri, senior economist with BMO Capital Markets Economics, says Canada faces the prospect of lower house prices in the year ahead similar to many other countries -- the United States, Britain, Ireland, Spain, France and Australia.
"After six years of unsustainable growth, prices have run smack into the affordability wall," says the report. "Demand is sagging, listings are at record highs, and prospective first-time buyers are choosing to rent rather than own."
The average house price in major markets rose 78 per cent from early 2002 to late 2007. The report says Canadian prices increased more than twice as fast as income and since peaking in late 2007, the prices have trended moderately lower.
"Canadian house prices will likely decline moderately further to restore better value," says the report. "The brisk housing tailwind of recent years will likely reverse course, damping economic growth in the year ahead."
Across the country, contractors' selling prices for new homes rose 2.7 per cent between July 2007 and July 2008, a slower pace than the year-over-year increase of 3.5 per cent in June.
On a monthly basis, prices rose 0.1 per cent between June and July.
In Calgary and Edmonton, on a monthly basis, prices dropped by 0.2 per cent.
"Housing continues to cool markedly," said Douglas Porter, deputy chief economist with BMO Capital Markets Economics, in a research commentary.
Porter said the annual year-over-year increase in Canada was the slowest pace since 2001 and down from a peak of 12.1 per cent year-over-year just two years ago.
For the Calgary area, the year-over-year price change was 9.8 per cent from July 2006 to July 2007. The annual rate of new house price growth in the Calgary area peaked at 60.6 per cent in August 2006.
The Calgary CMA includes the city, Airdrie, the Municipal District of Rocky View, Chestermere, Cochrane, Irricana, Beiseker and Crossfield.
Regionally, prices rose at the fastest pace in Regina, which led the nation with a year-over-year price increase of 29.6 per cent, down from its record increase of 34 per cent in April of this year. St. John's was next at 24.3 per cent.
Only Calgary, Edmonton and Victoria (0.1 per cent) experienced year-over-year decreases.
Charmaine Buskas, senior economics strategist at TD Securities, said July's national figures are "yet further evidence that the housing market in Canada continues to cool.
"Looking ahead, there is scope for further correction, in line with a normal housing cycle."
Thursday's housing report followed three others so far this month that show how dramatically the Calgary real estate market has cooled. Total housing starts in August plunged by 60.3 per cent compared with a year ago in the Calgary area, according to Canada Mortgage and Housing Corp.
As well, residential building permit value in the City of Calgary is down 35 per cent to $1.2 billion compared with a year ago. And the Calgary Real Estate Board reported the average MLS sale price for a single-family home in Calgary fell by more than nine per cent in August compared with a year ago, while the average condo price dropped by just over 10 per cent.

New Housing Price Index
July 2007 to July 2008 % Change
Canada 2.7
Calgary - 0.3
Regina 29.6
St. John's 24.3
Saskatoon 13.1
Halifax 7.3
Winnipeg 7

Canadians stampede into U.S. real estate

2008-09-11T13:59:00.000-07:00

Eric Beauchesne, Canwest News ServicePublished: Thursday, September 11, 2008

Canadians have been flooding into the depressed U.S. housing market, purchasing a record number of homes south of the border, and twice as many as a year earlier.
Armed with what until recently was a strong currency, most were also paying cash, according to the 2008 National Association of Realtors annual profile of international home-buying activity in the U.S.
Canadians have replaced Mexicans as the top foreign buyers of U.S. properties, the survey revealed.
The surge in purchases of U.S. properties by Canadians is due to the combination of the stronger dollar, a drop in U.S. house prices, and last winter's record snowfall, John Clinkard, a consulting economist with Reed Construction Data, said in an analysis of the report Wednesday.
The annual report, based on a survey of U.S. realtors, found that in the 12 months ended last May, nearly a quarter of foreign buyers of U.S. properties were from Canada, double the proportion of a year earlier, reflecting both a surge in Canadian buyers to a record high and a drop in purchases by other foreigners.
"Condominiums were most popular among those foreign buyers from Canada," it said, noting that nearly half of all properties purchased by Canadian buyers were condominium apartments.
Florida and Arizona were the most popular states for Canadian buyers, accounting for more than 60 per cent of their purchases.
The amounts Canadians paid for their properties were relatively modest compared with other foreign purchasers. The median price -- with half higher and half lower -- of properties purchased by Canadians was $277,800 US, well below the $450,000 US by buyers from China, and less than the $297,000 US paid by all foreign buyers. Among the six top nationalities of foreign buyers of U.S. properties, only Mexicans paid a lower median price than Canadians.
Only 5.1 per cent of Canadian buyers paid more than $1 million US.

___________________________________________________
I thought this article might be interesting, I am sure I am no different than most other Canadians that think about owning US properties when the snow starts to fly. In the last year I know of or have heard of people that have purchased properties in Phoenix or vicinity. I have been to Phoenix in the last year to look at properties and get educated to the market. I have found it overwhelming.

Home prices skid nearly 10 per cent

2008-09-04T10:15:00.000-07:00

Average single-family home now $440,625 amid sales drop

Mario Toneguzzi, Calgary HeraldPublished: Wednesday, September 03, 2008

The average MLS sale price for a single-family home in Calgary fell by more than nine per cent in August compared with a year ago, while the average condo price dropped by just over 10 per cent, says the Calgary Real Estate Board.
Sales in both markets also declined -- by nearly 11 per cent for single-family homes and more than 17 per cent for condos.
Data released by the board Tuesday showed the average MLS sale price of a single-family home in the Calgary metro area in August was $440,625, down 9.32 per cent from August 2007 when it was $485,914. The average price of a condo in Calgary metro was $287,832, a drop of 10.27 per cent from August 2007 when it was $320,790.
Realtor Lana Wright, with Re/Max Professionals, said August is typically quiet for herself and husband, Steve, but this past month has been busy for her despite what the CREB numbers indicate.
"We're getting a lot more buyers coming in and, in our experience, they're not as pessimistic as other buyers have been," she said. "They're very well-educated. They know what's going on. I think that they're realizing that the market has stabilized and waiting any longer may not do them any justice. So most will take advantage of what's out there in the market."
Wright added typical buying patterns have been thrown out of whack.
"Historically, (the market) picks up in the fall but I would say the last two years we've not been able to count on anything historically because it's been so odd."
Wright said she's also seeing a little bit of a "surge" in her business because of mortgage changes coming this fall. The federal government announced changes taking effect Oct. 15 which include the requirement for buyers to put down at least five per cent for a down payment.
It is also implementing a reduction of government-backed mortgages from maximum amortization periods of 40 years to 35 years.
"People who are in that situation right now -- those are their options for qualifying -- are out there in the market right now looking," said Wright.
In August, according to the real estate board, single-family home sales were 1,170, a 10.96 per cent decrease from the 1,314 sales in August 2007. In July, it was 1,313 sales.
Condo sales in August were 495, a 17.22 per cent drop from August 2007 when they were 598. Condo sales in July were 535.
As for new listings, in the single-family market, there were 2,270 for August, down 19.99 per cent from a year ago (2,837). In July, there were 2,559 new listings.
Last month, the condo market saw 1,054 new listings, a drop of 11.13 per cent from a year ago (1,186) and down from July's 1,183.
Median sale prices also dropped in August. For single-family homes, it was $398,000, down 7.4 per cent from a year ago ($430,000) and down 2.6 per cent from July ($408,500). For condos, it was $268,500 -- off 10.8 per cent from $301,000 a year ago.
Real estate board president Ed Jensen, in a news release, said the median price for single-family homes is under $400,000 for the first time since January 2007, "which may indicate that properties are being reduced in price and that some sellers have waited too long."
Lai Sing Louie, senior market analyst in Calgary for the Canada Mortgage and Housing Corp., said declining sales in the Calgary market combined with still high listing levels (5,541 for single-family homes and 2,699 for condos at the end of August) are putting downward pressure on prices.
"Right now it's a matter of consumer confidence," he said. "Pricing uncertainty is impacting consumer confidence. People are taking a wait-and-see position. The actual levels of supply are starting to come down, but it's still going to take awhile."
In July, the average sale price for a single-family home was $456,380 while the median price was $408,500. For condos, the average price was $296,338 and the median price was $273,500.
The average price of a single-family home in Calgary peaked at $505,920 in July 2008 while the condo peak was $332,237 in May 2007.
Year-to-date until the end of August, single-family home sales are down 27.57 per cent and the average sale price ($466,677) is off by two per cent compared with the same period a year ago. Meanwhile, condo sales are off by 32 per cent and the average sale price ($307,640) is off by 2.6 per cent.

MLS® STATISTICS FOR THE MONTH OF AUGUST 2008

2008-09-04T09:57:00.000-07:00

MLS® STATISTICS FOR THE MONTH OF AUGUST 2008
Prepared for the members of the Central Alberta Realtors® Association

City Residential Sales

August 2008 --> 204
August 2007 --> 200
January 01, 2008 to August 31, 2008 $1,496
January 01, 2007 to August 31, 2007 $1,716

Value of City Residential Sales

August 2008 $62,642,250
August 2007 $62,427,893
January 01, 2008 to August 31, 2008 $463,949,967
January 01, 2007 to August 31, 2007 $527,447,333

Selling to Listing Ratio (CITY)

August 2008 74.45%
February 2008 55.16%

_______________________________________________________

It is my opinion that our market here in Red Deer mirrors the Calgary market in percentages. With CMHC changing its lending guide lines in October I believe that you will see a bump up in sales in September and October because of first time home buyers beating these changes. I think this will also affect sales in the spring of 2009.

Edmonton beats Calgary for real estate investment.

2008-08-29T10:48:00.000-07:00

Report blames 'correction' for slide in ranking
Mario Toneguzzi, Calgary HeraldPublished: Thursday, August 28, 2008

Edmonton tops Calgary as the best place to invest in the province's residential real estate market, according to a report by the Real Estate Investment Network.
Alberta's Top Ten Investment Towns report says while Edmonton's market is going to begin performing closer to historic norms, "the good news is that Edmonton's historic norms will be at or near the top of performance for all of Canada, both economically and in the resale and rental housing sectors."
Edmonton leads the list followed by Calgary, Red Deer, St. Albert and Grande Prairie. There are actually 13 locations cited in the report and they also include, in descending order: Lethbridge, Fort McMurray, Airdrie, Cochrane, Sylvan Lake, Lacombe, Devon and Sturgeon and Strathcona Counties.
The report says Calgary has just experienced one of the best economic and real estate periods in Canadian history and ran neck-and-neck with Edmonton for the No. 1 spot on the list.
"In 2008, the (Calgary) market is making a predictable (albeit soft) correction resulting in slightly more affordable housing compared to recent years," says the report.
"It was economically impossible for the market to continue at the pace at which it was heading and now finds itself adjusting to market realities. This adjustment period, as the market searches for its new foundation from which to build, should continue into 2009 when the provincial economy is poised for another growth spurt."
According to a recent report by the Canadian Real Estate Association, falling prices in Calgary and Edmonton are dragging down Canada's housing market. Led by declines of eight per cent in Calgary and five per cent in Edmonton, average house prices in Canada dropped 3.6 per cent overall in July compared with a year ago, according to the association.
The average national MLS residential sale price last month was $327,020, while in Calgary it was $402,788. In Edmonton, it was $335,100.
Don Campbell, president of the Real Estate Investment Network in Canada, said Edmonton's housing market will benefit from the economic ripple of the multibillion-dollar investment in the oilsands, leading to job creation.
"The people in Calgary, if they want to play offence and defence, should be following the ring road and the extension of the LRT and then starting to move into regions such as Forest Lawn, Forest Heights -- regions that have had a more difficult reputation than they should because the demographic has changed, the pride of ownership has changed," said Campbell, the author of two books -- Real Estate Investing in Canada and 51 Success Stories from Canadian Real Estate Investors.
The Real Estate Investment Network's previous top 10 list had Edmonton first, followed by Grande Prairie and Calgary.
A recent outlook by Canada Mortgage and Housing Corp. forecasts existing home sales in Alberta will drop by 20 per cent this year, the sharpest decline since 1982, due to demand being cut by weaker migration and the hefty jump in mortgage carrying costs from earlier years. The average price gains of 31 per cent in 2006 and 25 per cent in 2007 have proven unsustainable as the resale price is expected to advance by only one per cent this year, says the CMHC.

The CMHC is forecasting Calgary's average MLS sale price this year to increase by one per cent from a year ago to $418,000 while Edmonton will see an increase of 0.4 per cent to $340,000. The CMHC says the Wood Buffalo region, which includes Fort McMurray, will lead the province with a 16.6 per cent price hike this year to $540,000.
As for 2009, the CMHC is forecasting a 2.9 per cent jump in Calgary ($430,000), 3.5 per cent in Edmonton ($352,000) and 8.3 per cent in Wood Buffalo ($585,000).
The investment network report says a focus on the reality of the economics behind the Calgary market today is critical at this juncture and it will be important for investors and homeowners to pay close attention to the fundamentals.

Provincially, "Alberta's economy is as good as it gets," said the report, with high energy prices, rapid population growth, low unemployment, an abundance of jobs, and improved infrastructure.

Centres
1. Edmonton
2. Calgary
3. Red Deer
4. St. Albert
5. Grande Prairie
6a. Lethbridge
6b. Fort McMurray
7. Airdrie
8a. Cochrane
8b. Sylvan Lake
9a. Lacombe
9b. Devon
10. Sturgeon and Strathcona Counties
Source: Real Estate
Investment Network

Good Real estate lasts published "Saturday, May 10, 2008"

2008-05-23T09:07:00.000-07:00

I have recently received tons of email, and not all of it favourable.

Some people wish to bet me money _ some a case of beer_ that real estate is going to go down, just wait and see.

Likely they are all the people who never bought anything. If you go to www.realestatetalks.com you can see some than 14 years about the ups and downs of Vancouver real estate.

It is always the same guys and gals that argue collapse _ and (yep) often these same people that argue that eventually, we will always be higher (because of monetary expansion creating it). So take easy.

If you had listened to the experts who were dispensing the best advice available 20 years ago, and locked yourself and your wealth into a plan which guaranteed to remit the then prevailing "safe amount" of an income stream of $500 per month (a lot back then _ pocket change today) for the rest of your life, imagine the desperate poverty that you would retire to today. Stone soup would be a luxury.

Yes, we need more money now, but who knows what this money will be worth tomorrow?
Yes , we need more income, but who can possiblyknow the state of the world three months from now... much less 20 years from now? Nobody knows for sure the "what and where" of interest rates and inflation rates and the value of money. It's just not possible.

What we do know is that the safety that was inherent in the projected big income of 20 years ago is a pitiful joke today. Yep, forecasting is never easy _ particularly when it's about the future.

Crystal balls crack, vaunted talkshow soothsayers wither and drop off the television scene, and the books that were treasure maps wind up in the remainder bin at the bookstore.

In the last three decades, stock market have surged up and crashed down. Certain mutual funds that looked like they were blue chips sprang leaks and sank while others soared like rockets only to burn out and fall back down.

Through all of this, the average folk watched their savings get chewed away by insidious inflation. However, in all the turmoil of this sound and fury, one asset has whearthered the changes.

Three decades ago, had you bought good quality real estate, you would not be concerned about your future today. That real estate would have kept up with inflation, remained secure in value, and steadily appreciated. Sure, there would have been some temporary dips. There has to be because real estate is cyclical in nature. But one things is certain _ over the years, the base values have been steadily increasing.

Back to that purchase 30 years ago. Today, it would be paid off and clear title _ which means either a mortgage-free home (no more monthly "rent" payments to the bank) and / or a steady rental income courtesy of your tenants.

Put onto perspective, if you place a good portion of your assets into real estate today, you won't have to worry about tomorrow. It doesn't mtter how wild or turbulent the economy or the marketplace. It's like riding a horse with one spur _ if half has to go along with it.

No matter how deep or tempestuous the water , you're going to be floating on top of it.
Let's review something all of us already know. The Chinese have used real estate holdings for wealth creation for 2,000 years. All huge fortunes were either started or extended with real estate.

Home ownership (the most common form of real estate holding) has been the single largest factor in the accumulation of wealth for the average North American, first because of straight appreciation due to inflation, secondly, due to the leverage involved and thirdly, real estate has a use and therefore always a value. This basic principle of appreciation holds true for pretty well any healthy major urban center.

Let's take Vancouver, BC, for an example. In 1960, the average Vancouver home sold for $13,105. Thirty eight years later in 1998 the average sale price was some $310,000.
Almost a 2,300 per cent return. But in March 2008, the average sale price was $895,000. Play with the return on down payment of $655 and you get tens of thousands per cent returns. If this kind of appreciation is going to continue, you have to be on the conveyor belt. If you are not, you are going to be left so far behind that it will be financially disastrous. And here we're only talking only fron the perspective of a place to live. This isn't even adddressing the investment aspect of those monies outside the family home.

When you ombine appreciation with leverage, you unlock the great secret of achieving the optimum result with real estate investment. And as you can see from the foregoing numbers, the "lever" can lift you up or the "appreciation", if you're on the wrong side, can crush you down.

When your gain is meausred on the capital invested, not the actual actual price of the property, some really astourding results come into focus.

GOOD: Understand goals

But the game is not as simple as it used to be. The goal posts move. The only constant is that everything is always changing. The secret of surviving and prospering is the ability to adapt to the changes. The 1980's in Vancouver were very forgiving for the amateur. Benign with a capital B.

That "B" could also represent "bucks" and "brainless." Back then, if you had a few dollars, you could buy any piece of real estate, anywhere, and you would make money.
Even if you could barely hear thunder and see lightning, it was almost impossible to make a big enough mistake. If you paid too much, it only meant that you had bought a little soon. The clock and the calendar made you into a finacial wizard. Thanks to inflation, prices soon caught up to you and bailed you out.

Still, there were lots of people in Vancouver int he early 1980's who managed to lose all their money in real estate. Those were the people who put their money into the wrong syndications, limited partnerships or real estate investment trusts. But we'll talk more about that later. In the late 80's, fortunes were made. But after the 1980,s, the real estate world became less forgiving. For some investors, the times were downright terrifying. All of a sudden, there was the sudden change. Markets fluctuated area by area both as to volume of sales and prices. Different real estate categories rose or fell without any apparent linkage to each other.

You could see in one market area the average single-family detached home rise in value by 40 per cent, while in the exact same market area downtown condos slumped in value by 12 to 20 per cent (Vancouver 1990 to 1995).

The people who tried to play by the old rules found themselves playing someone else's game. And most of the time, they were handed their heads. Was it possible to avoid the dangers and yet at the same time prosper with the good stuff?

Yes, it was, but you had to pu a side location, location, location, and instead you had to read the trends, position yourself as to the timing and then implement some new techniques. To be successful real estate investors, we must understand ourselves. That means we have to understand our investment objectives in relation to the risks we are willing and able to tolerate.

But having done that, we then must understand that aspect of ourselves that is part of the "new customer." (Next week: the new consumer and the new way make money in real estate in 2008) press Day seminar on Canadian real estate on May 24 in Vancouver. Calgarians interested in participating will get $100 off the attendance fee.

To be successful at real estate, we must learn to understand ourselves.

House prices will rise, but sales expected to slide "published the May 7, 2008"

2008-05-22T09:56:00.000-07:00

Alberta Lls sales will decline in 2008, the Canadian Real Estate Association predicts in its latest report.

Alberta will lead falloff in MLS activity in 2008.

The Canadian Real Estate Association is forecasting Alberta Mls residential sales to experience the biggest year-over-year percentage decline in 2008 compared with the rest of the country.

In a report released Tuesday, CREA said the resale market in the province will drop by 18.9 per cent to 57,900 units this year and experience a further five per cent drop in 2009 to 55,000 Mls sales.

The report says the average sale price in Alberta will rise by 4.7 per cent to $373,000 while it will only go up by 2.8 per cent in 2009 to $383,300.

Nationally, the organization says Mls sales will fall by 11.5 per cent in 2008 to 460,900 units and another four per cent in 2009 to 442,500.

The average sale price across the country is forecast by CREA to jump 5.3 per cent this year to $323,500 and another 4.2 per cent the following year to $337,000.

"MLS home sales will remain strong, despite coming in lower than last year's breakneck pace," said CREA chief economist Gregory Klump. "After -tax income growth, strong employment and short term interest rate cuts will support housing demand, despite further home price increases and increasing economic uncertainty."

For Alberta, the number of MLS sales in 2006 was 74,350 units, an increase from the 65,866 sales in 2005, said Richard Corriveau, regional econmit for the Canada Mortgage and Housing Corp.

In 2006, Alberta recorded an average MLS sale price of $285,383, which was up from the $218,266 recorded in 2005, he added.

For 2007, total sales fell to 71,430 in the province, in the province, with the average sale jumping to $356,235, said Corriveau. Overall, sales in 2007 were down 3.9per cent from the previous year while the average price increased by 24.8 per cent.

The CMHC is expected to release next week its latest forecast for the local, regional and national real estate markets.

"As soon as the buyers who are sitting on the fence restore that confidence of upward price growth, they'll get back into the market place," said Corriveau. "And that's why we think that the decline won't be as pronounced as perhaps CREA believes. Now, that said, there's still a huge number of listings in the marketplace and we're not as optimistic on price growth. We're forecasting under four per cent and that's unchanged from what we forecast three months ago. So we're not as bearish on sales, but not as positive on price growth."

But if listings do moderate into 2009, that should pave the way for stronger rate of price growth next year, he said.

Meanwhile, in a report released Tuesday by Statistics Canada, real estate agents, brokers, appraisers and related industries reported total operating revenues of $10.6 billion in 2006, an 8.1 per cent increase from the previous year, with Alberta leading the way at a whopping 37 per cent hike.

The federal agency said "Canada's real estate industry has benefited from sustained high demand for real estate that resulted in increased sales and higher real estate prices."

And no province fared better than Alberta, where the real estate market " continued to flourish in 2006" said statistic Canada. For the second straight year, the province led national growth in operating revenues for that industry.

In 2005, its annual growth rate was 20 per cent compared with the previous year.

According to Statistics Canada, in 2006, the real estate agents and brokers industry in Alberta had operating revenues of $1.22 billion, up from $0.89 billion in 2005.

In that year, real estate agents, brokers, apraisers and other related activities industries in Alberta had operating revenues of $1.40 billion, up from $1.02 billion in 2005.

Alberta ar head of housing slowdown, "published April 30, 2008"

2008-05-08T08:28:00.000-07:00

Alberta led the country with the biggest drop in resale housing activity in the first quarter of this year while at the same time outpacing the other provinces in new MLS listings.

A report released Tuesday by the Canadian Real Estate Association says MLS sales in the province were down 30.5 per cent compared with the first quareter of 2007, new listings increased by 36.2 per cent, total dollar volume of all transactions dropped by 26.7 per cent but the average sale price increased by 5.4 per cent to $361.544.

And the report also showed a similar real estate scenario for March, with the province experiencing the biggest yearly drop in sales across the country, at 34.3 per cent compared with March 2007, and a 25.1 per cent hike in new listings for the Month _ again the provincial leader.

The average MLS sale price in Alberta increased by 3.7 per cent in March from a year ago to $365.888 but total dollar volume of all transactions was down by 31.9 per cent.

At a national level, MLS sales in the first quarter of 2008 were down 13.2 per cent compared with the same period last year and new listings were up six per cent. The average resale price in Canada increased by 6.4 per cent to $312.583.

"This is the smallest year-over year price increase since the fourth quarter of 2001, reflecting a more balanced market" said the CREA report.

On a monthly basis, MLS sales dropped by 19.1 per cent compared with March 2007 and new listings decreased by 0.6 per cent.

The average national resale price in March was up 4.8 per cent to $314.279 _ the smallest increase since October 2001.

"Resale housing activity is trending lower in the four most active provinces:, said CREA chief economist Gregory Klump.

"Housing markets are becoming more balanced and price gains are becoming more modest as a result. This trend is forecast to continue as rising mortgage carrying costs and property taxes erode affordability."

At the national level, the CREA report said new listings reached their highest quarterly level ever.

As for sales, the data show it was the third consecutive quarterly decline since activity peaked in the second quarter last year.

CREA president Cal Lindberg said it's important to remember 2007 was a record year for MLS sales in Canada.

The declining MLS numbers have raised concerns about a possible housing crash similar to what has happened in the United States in the past few years.

But a recent analysis by Marc Pinsonneault, senior economist with National Bank of Canada, said: " We do not believe that the Canadian market is vulnerable to a major correction akin to the one that has been underway in the United States for the past two years."

The report concurs with an IMF report, "which found that the home prices in Canada are not overvalued."

Over the past three quarters the number of homes sales has fallen in Calgary while the number of new listings on the market has increased steadily," said Pinsonneault.

"The upshot is that the seller's market that had prevailed until the first half of 2007 has since clearly turned into a buyer's market."

Writen by Mario Toneguzzi

Alberta communities tell own real estate stories

2008-05-07T11:09:00.000-07:00

Calgary, Edmonton markets experience "price correction"

The provincewide boom in housing prices gripping Alberta for the last several years has been replaced this spring with price variations tied to local economies. They now range from increases of 23 per cent to declines of 15 per cent, according to a national survey by Century 21 Canada brokers.

The report says prices of homes in Alberta commubities this spring are determined by the strength of the local econmy and the supply of new housing built during the boom.

"The metro areas around Calgary and Edmonton are experiencing some price corrections," said Don Lawby, president of Century 21. In Calgary and nearby communities High River and Airdrie, for example, prices in 12 neighbourhoods surveyed varied from increases of nine per cent to decreases of 13 per cent.

"It's a reflection of what actually happened over about a two-and-a half-year period where prices just sort of skyrocketed. And all of a sudden the reality has to come back and we had lots od builders out building all of that," said Lawby. "So we have good supply, which has brought prices down a bit _ probably back to more of a stable environment."

The Century 21 Canada 2008 Spring National House Price Survey reflects the price of a typical home in 197 neighboorhoods in 66 communities across Canada. The real estate firm defines a typical home as the type that occurs most frequently in any given neighboorhood or community. The homes selected for inclusion in the survey were by the company's brokers in those communities.

Across Canada, the survey found price increases in 167 neighbourhoods, flat prices in nine neighbourhoods and price declines in 21 neighbourhoods.

The Calgary Real Estate Board's monthly MLS sales data for March had the average sales data for March had the average sale price for a single-family home in Calgary metro at $475,513. It was a slight drop from the $479.914 figure registered in March 2007. In the condominium market, the average sale price in Calgary metro was $312.620 in March, up slightly from $312.280 in March 2007.

" You continue to have a great economy. Ther's lots of employment opportunity," said Lawby of real estate situation in Alberta. "If you have that, that's what causes a stable real estate market. Eventually the oversupply of development will get picked up".

written by Mario Toneguzzi (Calgary Herald)

Report sees cooling trend for housing starts published in "Calgary Business 11/04/2008"

2008-04-14T12:43:00.000-07:00

ATD Bank Financial Group predicts the pace of resale home growth will slow over the next two years.

"A soft landing is anticipated says TD Bank"

A report released Thursday by TD Bank Financial Group says housing starts in Alberta as well as the number of homes sold will retreat in the next 2 years as the country on the whole experiences a cooling trend in the residential real estate industry.

Also, the yearly pace of resale home price growth in the province will slow down substantially from the highs recorded in the past two years.

"A soft landing is anticipated", said the report about the Canadian housing market. "This moderation will reflect the fact that the past rapid price appreciation has eroded affordability and has encouraged additional supply from new listings and new home construction. A weaker domestic economy will also contribute to the cooling."

The report said total housing starts in Alberta will decline by 16 per cent this year and a further 7.7 per cent in 2009. It said the number of existing homes sold will drop by 18.2 per cent this year in the province and another 4.6 per cent in 2009.

And the average resale home price growth will be five per cent this year and another 3.5 per cent next year following yearly increases of 12.1 per cent, 30.8 per cent and 24.8 per cent in the past three years respectively.

Richard Corriveau, regional economist for the prairies and territories region for Canada Mortgage and Housing Corporation, said the agency is now revising its forecast for 2008 / 2009. The CMHC's new forecast from 3 months ago predicted housing starts in Alberta would be down18.3 per cent in 2008 and 4.4 per cent in 2009, while resale numbers were expected to decline by 6.2 epr cent and 2 per cent this year and next year. The average resale price growth was originally forecast for 3.9 per cent in 2008 and five per cent in 2009.

"The evidence to date certainly cannot be ignored", said Corriveau, of the agency's revised forecast coming out in May. "Resale demand is retrenching in the face of weaker migration and escaleting prices from previous years. And our forecast revisions will be downward sharply."

The major cloud on the horizon is the huge number of listings on the market right now, said Corriveau.

"If some of this inventory disapears, then it bodes well for future price growth, but because we have such a major overhang, the prospect of price growth remotely comparable to even what we achieved in the early 2000s is off the table," he said.

As of Thursday morning, the Calgary Real Estate Board website indicated active listings for Mls single family homes in Calgary metro are at 6.476. There have been 1.389 single family homes sold in hte past 30 days with an average sale price of $470,044.

"Canada's major housing markets will experience cooler conditions over the course of 2008 and throughout 2009," said the TD Bank report authored by Craig Gauthier, economist.

"However, this moderation is not expected to lead to a housing downturn. Instead the deterioration in housing affordability from the past outsized price gains combined with additional supply from new listings and continued elevated housing starts amid a weaker domestic economy should gradually let the heat out of the real estate markets."

You're in... PROPERTY "published in GQ British february 2008"

2008-03-12T18:53:00.000-07:00

You're in... Property

The property market has been a one way wager for the past decade and rising prices have meant fortunes for many. Now the market is cooling, all bets are off.

You're EARNING...

Jobs in this area include estate agency (28.000 pounds) and commercial property development managers (40.000 pounds). Top estate agent's bonuses rose with the market: last year some of Savill's staff received more than 1 000 000 pounds.

Your MENTOR SAYS...

1) The way to make money is to create value, that is to say with places that need upgrading.

2) Buy to let is going to drop. I wouldn't get into this now.

3) Do your homework. Hire the right legal team and look at the downside of what you're getting involved in.

4) You need a good building team, and work to fixed price, turnkey scenarios.

5)Identify assets the big operators want.

6) Do business the right way. Be straight.

7) although there is still money to be made, you might want to sit it out for a year or two.

Andrea Panayiotou founded the ability Group in 1996. From its small beginnings in east London, Panayiotou created a company and worth more than 1 bn pounds.

Property: Phil Spencer on Housing Market hopes and fears over the next year.

2008-03-11T14:51:00.000-07:00

Last year was a remarkable one for property. There was unprecedented demand at the top of the market and record prices. The influx of foreign money coupled with the strong financial markets in the first half of the year created a new level of demand at the top end, the like of which has never been experienced before. Even with the downturn in the economy in the latter half of the year and sensationalist headlines in the press about "booms" and "busts" _ the top end of the market remained relatively untroubled.

The numbers provide the perspective: the five major house price indices (halifax, Nationwide, RICS, Land Registry and Hometrack) show an average of a ten per cent growth rate for the market as a whole; whereas the market for 5m-plus homes has grown by 48 per cent. Everything else falls in between. Seeing as the average house price is around 230,000.00 livre, the more you invested in one property, the greater should have been your return. The top end has been leading the field by a mile and it shows just how polarized the market has become.

The financial turmoil that began in August took the froth out of the market as concern over interest rates and the introduction of Home Information Packs undermined sentiment. Confidence has been diluted, but there is no evidence of the cataclysmic market collapse that was predicted.

The dynamics behind the whole market have turned upside down. The housing market in this country has traditionally been pushed from the bottom; first-time home buyers joined the bottom rung ans pushed things along. But over the few years the market has been stretched from the top. There's been an explosion of wealth and this had let to serious rise in demand. This factor, coupled with the fact that most of us aspire to live in the same types of homes means that there's an increased number of people chasing a finite supply of top quality homes.

In 2008, I expect we'll see a slowing in the rate of growth, as opposed to an actual decline. In the first instance a slowdown usually affects the sentiment of sellers as they wait for better conditions before putting their homes up for sale. This means supply of fresh stock to market decreases, which in turn increases the demand for each available property. This is the ever-shifting see how between supply and demand that either drives or restricts our housing market.

We should try to remember that it's not possible to understand property markets simply by looking into the numbers. Housing is a place to live, it provides shelter and a roof over our heads; where we live has a bigger impact on our quality than any other expenditure. It follows that the behaviour of homeowners doesn't lend itself easily desktop analysis by academics or economists.

Finnaly, caution is the watchword if you're in the market early in the year. Contrary to popular punditry, it is perfectly safe to be buying at the moment-so long as you're doing so for the right and with a slightly longer term view than in previous years. Most economists are saying interest rates have peaked, so it seems there is little to be gained by waiting a few months. While I believe prices will rise across the year, the market will certainly not be racing away- which means there is no pressure for buyer to reach decisions, Concentrate on finding quality, You can expect a greater choice of property going into the spring, but that will bring competition from other buyers... If you can find what you're looking for before that happens you'll stand a better chance of a better deal.

Building permits continue moderate trend ( March 3, 2008)

2008-03-06T12:38:00.000-08:00

(Red Deer, AB) Once again, fewer residential building permits were issued in February compared to last year. This downward trend in single family housing construction reflects the slowdown of housing development across the Province. Commercial permit vakues remain steady with numerous ongoing tenant improvements.

"Althought residential permit numbers appear low for this period, developers have indicated to the city that expectations of a great year is ahead of us for building in 2008", states Joyce Boon.
"Over the past few months there have been numerous building permit applications applied for in the commercial sector which will serve to bolster building stats in the near future".

How to get a quick, fair sale on your home, published in "Calgary Herald" the 01/03/2008

2008-03-06T10:42:00.000-08:00

As the srping real-estate season approaches, there are a number of things you can do to improve your chances of selling your property at the best price and under the best terms.

- Choose the right agent: you want to see your house advertised weekly in the newspaper. The agent you're considering prefers to work his or her Rolodex. You expect to be updated after every visit. She / he commits to one update a week. Are these differences you can live with?
You don't have to be best friends but you do have to work together.
Expectations_should be clear from the beginning.

- Be wary pf "stars": We've all seen them, those confident faces beaming from big ads that proclaim "I'm no 1!" What that tells you is that super Agent is able to generate transactions. Bravo! But will this agent be too busy to take your calls or show your gouse? Will he be too busy to get you the best price? If you want personal service, a top agent might not be for you.

- Price your house correctly: Some agents will promise you the moon to get the listing. Don't be dazzled. Interview several candidates before selecting.
An experienced agent will present you with a market analysis showing the sale prices of comparable properties in the area in the last year. You might be surprised to discover that the neighbour who bragged about the killing he made on his house inflacted the actual sale price. You might discover that the house that sold next door has a new heating system and, thus, really is worth more than yours.

- Don't take it personally but... Who needs funky pet and cigarette odours when you're trying to woo buyers? Clean sells better than dirty. Tidy sells better than cluttered and fresh sells better than fusty. Consider hiring a stager to rearrange the furniture and remove clutter. Two hundred dollars worth of paint could translate into $5,000 more on the sale price.

- If the price is right, stand firm: Once you agree on a listing price, don't be too quick to knock that price down if a buyer comes in with a lowball offer.
Ther's an old saying in real estate that the first offer is often the best offer. True, but not of the offer is way off the market value. A $5.000 drop in price translates into a $300 drop in commission to your agent. Ask yourself who really pays the price for a lowball offer?

- What's in it for the other agent? Your agent asked for a seven per cent commission and you talked him down to six. Way to go1 But there' one more question you should ask. What is the other agent's cut?
If you think that isn't your concern, think again. If your agent is keeping the lion's share of the commission, why would another agentwant to snow your house to prospective buyers?
If necessary, spell the commission split out in your brokerage contract.

-Let your agent do the talking: No matter how much of a people person you pride yourself on being, this isn't the time to be chatty with buyers.
Be prepared for the pointed question wrapped in a velvet compliment.
"This is such a lovely home. Why are you moving?"
No matters how innocent the answer, you don't want to cloud the potential buyer's enthousiasm by mentioning how much work the yard is or that you need more space. It goes without saying that serious issues like divorce, financial difficulties and illness or death in the family are nobody's business.

-An open house for whose benefit? Showcasing your homecan be a great idea, if you live in a hot neighbourhood where demand outstrips supply.
A smart agent might hold back on visits until an open house is scheduled as a way to create competition among bidders. More often, an open house offers rubberneckers a free pass.
They are, however, a great way for agents to meet new clients.

-Tell the truth: every house has its defects.
The problems begin when you tryto hide defects from potential buyers. If there is a defect, declare it up front. You'll sleep better knowing you won't be slapped with a lawsuit by an aggrieved buyer.

Alberta Home listings surge nearly 43 per cent, published in " Calgary Business" the 03/01/08

2008-03-05T14:45:00.000-08:00

Average price increases despite slide in sales.

MLS sales in Alberta plunged 24.8 per cent in January compared with a year ago but new listings soared by a staggering 42.9 per cent, the Canadian Real Estate Association reported Friday.
Dollar volumewas also down by 17.9 per cent, but the average sale price increased by 9.2 per cent.
The association's report said new national MLS residential listings surged to a record in January, making the resale housing market more balanced than at any point in the past seven years.
Across the country, new listings were up 8.5 per cent from a year ago in January and sales dropped by 8.6 per cent. But the average price increased by 9.6 per cent _ the smallest year-over-year price increase since April last year.
In January, the average sale price of a home in Alberta was $357.574 while in Canada the average was $309.448.
"The overall increase in new listings stemmed mainly from a jump in listings in Western Canada", said Gregory Klump, chief econmist for the real estate association.
Association president Ann Bosley said weather also had an impact on Markets in January and pointed to a different housing picture in the US.
"The Mls residential sales report for January again shows the differences between the Canadian and US markets," she said.
"In january, there was an 8.9 per cent drop in the year-over-year housing price index in the United States. That was the largest decline in 20 years, while the average residential MLS price in Canada rose just over nine per cent on an annual basis."
In Alberta, the dollar volume of sales for January was $1.4 Billion, sales were 4.021 units and new listings were 11.567.
Nationally, total dollar volume of sales for January, up 0.1 per cent from a year ago. Sales were 27.465 units and new listings were 72.749.
Also on Friday, a report by TD Canada Trust said individual women homeowners in Calgary and Edmonton are more driven to get a foothold in the real estate market than in any other major city in Canada.
Two-thirds of women in the Alberta cities cite wanting to get into the housing market as a reason for buying their fisrt home, compared with an average 54 per cent of women respondents across Canada, says the Women and Home Ownership Poll. More than half of Calgary and Edmonton women (54 per cent) say they wanted to buy a home while it was still affordable compared with an average of 36 per cent across country.
Nationally, more women chose condos (42 per cent) over houses (34 per cent) for their purchase. Other choices were townhouses ( 13 per cent) and duplexes, triplexes and fourplaxes ( six per cent).
But in Calgary and Edmonton, the condo-house choice was more closely split, with 31 per cent opting for condos and 33 per cent for houses. Other options for individual Calgary and Edmonton women buyers were townhouses (23 per cent) and duplexes, triplexes and fourplaxes (10 per cent).
The poll was conducted by Ipsos Reid.

Vacation properties double as nest egg," Published Thursday, December 13, 2007"

2008-01-29T13:39:00.000-08:00

Profit meets fun in world of investment.

As baby boomers look toward retirement , many are investing in real estate, often purchasing vacation properties.

According to an Angus Reid Stategies poll conducted in May, one in seven Canadians owns a vacation property and one in four would like to purchase recreational real estate in the future. Forty-one per cent of vacation property owners surveyed are over the age of 55, at the top end of the Baby boomer bracket.

Analysts anticipate that peak baby boomers will go on buying vacation homes until the end of the decade, while the next group of boomers is likely to continue the trend until 2014 or later.
"Luxury recreational property sales are set to soar as affluent baby boomers drive demand for upscale product from coast to coast," says the 2007 RE/MAX recreational property report.
The trend is similar in the US, notes the National Association of Realtors:"Baby boomers in their peak earning years are igniting demand for second homes near beaches, lakes, ski resorts and golf courses."

According to former association chief economist David Lereah, "We're seeing the Baby boomers nearing retirement age, and we're seeing real estate play a more prominent role in their investment planning because of their memories of the stock market declines."

Particularly for the most prosperous boomers looking to invest their wealth, concerns about stock market fluctuations are among the main reasons they choose real estate, says Ottawa-based ScotiaMcleod director and senior investment executive David Cork.

A boomer himself, Cork specializes in the impact of demographics on social and econmic life. Co-author of the bestselling The Pig and the Python: How to prosper from the Aging Baby Boom, he says, "The stock market blows ereal estate markets out of the waterover time, but doesn't work out for a lot of investors because they see its volatility and don't handle it very well. With real estate, it's out of sight, out of mind, and you get to hang out in it, too."

Other factors also steer the boomers toward the lakefront property or ski lodge. "It's a natural time for people to want to owm that cottage and they can afford it," says Cork. "It is also a time when boomers" parents are starting to pass away, That obviously has negative emotional implications, but it has positive implications from a financial perspective, in that they are starting to inherit.

"Significant amounts of wealth have been created in this country since the end of the Second World War and we are now seeing the results. A massive wealth transfer is taking place. So, there's the element of wealth storage. When you have excess wealth, what do you put your money into?"

He says the four main investment possibilities are cash, bonds, stocks and real estate.
"Obviously, some of your money goes into RRSPs, but that brings you no joy," says Cork. "I work in this business and I don't think people are able to build a family outing around their RRSPs."

But, with cottages in particular, "there is the element of building that generational place, where families stay connected and memories are retained. Ther is no doubt that boomers are puttingsignificant pressure on the market, especially given the common wisdomthat there is a limited supply of wonderful lakefront property."

RE/MAX realtor John Roberts, who specializes in properties in Constance Bay and other parts of Ottawa's far west, says many of his client are boomers. Often, they are seeking lakesidecottgaes with the intention of concerting them into high-end permanent homes when they retire.

"Then they sell their other home in the city," he says. "Their profit depends on the market at the time, but real estate is a very stable place to put money and their vacation property has given them plenty of enjoyment in the meantime."

RE/MAX Western Canada regional director Elton Ash says, "Baby Boomers are investing in the furture from both a lifestyle perspective and an economic standpoint.

"Tremendous equity gains have been realized in recent years as demand for recreational properties across the country swells. Given the aging of the population, this trend is expected to continue for at least the next five to 10 years as baby boomers move throught the cycle."

Monthly Statistics-December 2007 Red Deer Market.

2008-01-29T13:27:00.000-08:00

Sales:
City Residential: 94 $27,028,669

City Residential Sales:
December-07 94 sales
December-06 130
Jan. 01/07 to 31/07 2.241
Jan. 01/06 to Dec 31/06 2.042

Decrease in city residential sales from:
December 2006 to December 2007 -27.69%

Increase in city residential sales from:
Jan-1 - Dec 31/06 to Jan 1-Dec 31/07 9.75%

Real Estate boom eases but not done "by Harley Richards, Advocate Business editor"

2008-01-23T14:58:00.000-08:00

Central Albertans looking for a financial home run probably won't find it in the residential real estate market this year.
But, says the president of the Red Deer and District Real Estate Board, homebuyers should still earn a good return on their property this year.
Randy Weind said on tuesday that he expects the residential real estae market to appreciate five to seven per cent in 2008. Those numbers aren't as attractive as the double-digit price jumps in recent years, but should represent a good balance for buyers and sellers.
"The days of the 40 per cent (encreases) are gone, but five to seven is very healthy and that's what I'm projecting, is healthy and stable."
Weins offered his outlook for 2008 after annoucing that home sales in the region last year narrowly set a new record.
His predictions were preceded by a review of a number of factors.
Weins expects oil prices to continue their upward trend and stimulate qctivity in the Alberta oilpatchand Central Alberta's service sector.
'The result should see additional movement of families into the area for good paying jobs. This translates into additional housing requirements."
He also thinks the local industrial and commercial sectors will enjoy a good year, further boosting employment and demand for housing. And Weins believes there will be a strong migration of medical professionals into the province, and lower interest rates.

Area real estate sales set record, By Harley Richards (Advocate business editor)

2008-01-23T08:55:00.000-08:00

Real Estate Board says processed 2007 home sales best ever.

Despite a slowdown during the final months of the year, residential real estate sales in Central Alberta reached record levels in 2007.
Statistics issued by the Red Deer and Distric Real Estate Board on Tuesday revealed that home sales processed throught the board's Multiple Listing Service numbered 5.075 last year, up six from 2006, when the prvious record was set.
The combined dollar value of those sales reached $1.4 billion the preceding year.
In the city of Red Deer, 2.241 residential sales qccounting for $688.8 million were completed in 2007, up from 2.042 sales worth a combined $510.3 million in 2006.
Residential listings processed by the board during 2007 reached a record 8.594, a 32 per cent jump over 2006.
Randy Weins, president of the Red Deer and District Real Estate Board, said during a news conference on Tuesday the market was especially hot early in the year, with prices climbing rapidly, many people moving to Red Deer and inventory runing short.
But then the supply-demand balance started to shift.
"The foruth quarter of the year, compared to what we had been throught the previous two years, was very poor" said Weins.
One reason for this was a decline in the number of buyers in Alberta and this region.
"The oilpatch had a slow year in 2007, so a lot of people went home."
Weins said the slowdown did create a more balanced market, with both first time buyers and move-up buyers benefitting. It also brought some welcome relief to those working in the industry.
"We needed a bit of a breather." But, he added, statistics show that prices actually remained quite strong throughout the year.
A comparison of average and median prices for single-family homes in Red Deer indicate the quarterly figures for 2007 were higher than for the same periods in 2006 and 2005.
"Even thought the market relaxed in the fourth quarter, the median price of a single-detached dwelling in the city of Red Deer was up $19.000 over the fourth quarter of 2006," said Weins.
Meanwhile, the number of single-family homes sold in Red Deer during 2007 topped the corresponding numbers for 2006 and 2005 in every quarter but the foruth. In that quarter, 2007 sales were 243, compared with 290 in 2006 and 243 in 2005.
"A quartely picture using single-family dwellings really gives you an idea of what's happening in the marketplace, because everything else is relative to it," said Weins.
In the final month of 2007, the median price for a single-family home in Red Deer was $314.900, down from $312.000 in December 2006.
In the surrounding region, the median price for a single-family dwelling last month was $267.500, slightly more than the $267.000 recorded in November and well ahead of the $246.900 for December 2006.
For townhouses and condominium townhouses, the median price in Red Deer last month was $210.000, as compared with $204.500 12 months earlier.
Elsewhere in the board region, townhouses and condominium townhouses sold for a median price of $220.000 in December, while its November median was $230.500 and the December 2006 figure was $215.000.
The Real Estate Board cautions that average price information does not indicate actual prices for houses in the area.

Region's Housing Market will boom in 2008, " Newspaper: Red Deer Express"

2008-01-21T15:38:00.000-08:00

Red Deer's real estate market is undervalued compared to other Canadian regions and will continue to boom in 2008, says Randy Weins, the president of the Red Deer & District Real Estate Board.
In a state of the region address yesterday to Red Deer media, Weins said despite the pause during the second half of 2007 from earlier dramatic and record setting levels in the market, the Red Deer region will experience overall gains in 2008 of between 5% to 7%.
And even thought the average price of a single family dwelling in Red Deer in the last quarter of 2007 was $337,000 it is still a bargain when compared to other markets, said Weins.
"I believe we are still undervalued. Based on our economy, and what the province of Alberta has, it is still a bargain," said Weins.
He noted the average price of a single family dwelling in Vancouver is now hovering around $1 million while in Toronto it is about $700.000, and in the $400.000 range in both Calgary and Edmonton.
The average MLS house price in the Red Deer region in December was $258.993. By comparison, the provincial average residential MLS price for the same month was just over $321.000.
Weins told members of the media the slowdown in the market during the second half of 2007, which included dramatically higher inventory levels, was due to a continued slowdown in the oil and gas industry, speculation buying no longer appearing as lucrative, and a steady increase in the number of citizens moving to other markets outside Alberta.
However, while there was a slowdown in home sales in the fourth quarter of 2007 the average and median prices finished just ahead of those for the same period of 2006.
Weins said that althought the market encountered a "restless" fourth quarter in 2007, the Red Deer area still ended up setting another annual record for listings, sales and prices.
"The market sustained a bit of a turndown adjustment, and lived throught it just fine," said Weins, noting inventory levels have now started to move back to a more healthy and balanced state.
Weins said he expects a slight improvement for the Red Deer market in the first quarter of 2008 compared to 2007 fourth quarter results.
"When things turn downward, it shakes people's confidence a bit,' said Weins. "It will take a few months to get things going again."
He predicted the market would start to boom in the third quarter with an improved performance from the oil and gas industry and commercial and industrial projects moving ahead.
"I think this will be the strongest quarter of the year, setting new records in most every range of the housing market," said Weins. "I am expecting average prices will increase by five and six per cent, to set the new records and again beat inflation."
Weins predicted 2008 fourth quarter results will be better than those in 2007, and 2008 will end on an "optimistic note - healthy and strong"

Housing Prices among Factors "Migration to Alberta expected to Decline", Published: November 24,2007 in Calgary Herald

2007-12-02T16:39:00.000-08:00

Althought Alberta's economy remains solid, the number of people moving here is declining because of higher house prices and strengthening economies in other provinces, delegates to a one-day conference were told.

After reaching a record 85,911 people in 2006, net migration into the province is expected to total 65,000 this year before declining further to 58,000in 2008, said Richard Corriveau of Canada Mortgage and Housing Corp.

As Prairie region economist for the federal agency, he spoke at the recent Housing Outlook Conference.

"Despite the solid economic performance, the province's ability to attract migrants is diminishing in response to Alberta's escalating housing costs and improved economic conditions in British Columbia and Saskatchewan," he said. "Many recent arrivals from these provinces are now mooving back home".

Net migration is the inflow of people minus the outflow.

Saskatchevan has gone from "near recession" to one of the stronger economies ib the country, says Corriveau. But there is a downside to Saskatchewan's situation, he says.

"Despite an aggressive marketing campaign to bring people into the province, thought, the milk is starting to sour there" he says. "House price gains in Saskatchewan are leading the country."

The average price of resale homes in Alberta has gone from about $285,000 to a forecast of $355,000 this year. The price will likely climb to $379,000 in 2008, says CMHC. In terms of new homes, construction will likely pull back from a predicted 47,750 this year to 42,250 by the end of 2008 _ again in response to reduced demand and higher prices.

Corriveau said Ontario is now the largest contributor to Alberta's migration, in part because of the downturn in the fortunes of the eastern province's manufacturing sector.

Alberta will also have to rely more on offshore migration, he said.

"What we gained from B.C and Saskatchewan a year ago, we've given back because of the economic growth in those provinces," said Corriveau.

The expected revitalization of energy projects off the East Coast and the recent visit of a trade mission to Calgary could lure some people to return home.

While wages lag behind Alberta levels, housing prices are much lower.

He calls Alberta's net migration for 2006 an anomaly and adds the "significant" decline forecast over the next two years will bring migration back to more historical levels.

But Alberta will likely maintain the lowest unemployment rate in the country at 3,5 per cent, leading to additional wage pressure and a high rate of full-time job creation _ considered a beneficial factor for the province's housing sectors.

However, with the weakening migration and a record number of Albertans employed, businesses in the province will likely have a difficult time matching the payroll expansion of the last two years.

Healthy gains of five per cent last year and this year will be cut by more than half in 2008, says CMHC, with employment growth limited to 2,1 per cent _ the second weakest in 15 years.

"In fact, employment, migration and the rate of economic growth are all past the peaks and we will now see a return to 10-year averages," says Corriveau.

That will likely mean job growth of two per cent annually, migration of 40,000 to 50,000 per year, and economic growth in the mid-three-per cent range.

Housing market pace predicted to decrease, published: November 24, 2007

2007-11-28T09:28:00.000-08:00

The markets for both new and resale housing in Alberta are likely to decline this year and next, said a federal agency. The decline will be led by single family homes, which will continue to feel the impact of rising construction-related costs, lower migration of people to the province, and a dramatic increase in resale listings, said Richard Corriveau, Prairie region economist for Canada Mortgage and Housing Corp.

"The recent escalation in production costs will be a dominamt factor pushing single-detached housing starts lower, althought weaker net migration and a strong rebound in active resale listings will also contibute," he said.

Net migration is the inflow of people minus the outflow. Corriveau spoke to 650 delegates at the annual Housing Outlook Conference held recently at the Roundup Centre in the Stampede Grounds.

Following a record 31,835 construction starts of single-family homes in Alberta last year, there will likely be a decline of 12 per cent to 28,250 by the end of this year, says CMHC.

By the end of 2008, a further io-per-cent decline will bring the total down to 25,250 _ the lowest total in four year, it says.

"Fuelled by homebuyers seeking less expensive alternatives to the single-detachecd market, multi-family housing starts will climb to a 26 year high of 19,000 units this year," said Corriveau, adding that 2,000 fewer will be built in 2008.

Despite the expected dcline, the proportion of multi-family housing starts to total starts will likely hold at 40 per cent, the same as expected for 2007 and the highest proportion since 1982.

In terms of resale housing, a surge in activity in the firts half of this year will likely place this year's expected total of 74,000 sales close to last year's record of 74,350.

Sales peaked during the spring of this year as buyers bought in anticipation of further price increases and higher mortgage rates.

But it didn't work out the way.
"Since then, a surge in listings has slowed the rate of price growth considerably and buyers have become increasingly resistant to the recent runup in prices," said Corriveau. "Consequently, sales are now on a downward trend _ and in the face of weaker migration, this trend will continue in 2008, with sales falling five per cent to 70,000."

Following large double-digit price hikes for the past couple of years, price increases in Alberta's resale market are likely to slow in 2008, said Corriveau.

In 2006, there was a record gain of 31 per cent. It is expected to be followed by a 24 per cent jump this year _ most of that attributed to sales earlier in 2007 _ bringing the average price to $355,000.

Due to the number of active listings in the marketplace, combined with weaker demand, price growth in 2008will likely be limited to seven per cent, bringing the price to $379,000.

In Calgary, construction starts of single-family homes will likely slip to 7,250 in 2008, down from 8,000 this year, with the average price likely to climb to $550,000, up from this year's expected average of $475,000.

Meantime, multi-family construction starts will dip from 6,250 this year to 6,000 next year.

Construction of single-family homnes in Edmonton is expected to decline to 6,700 starts, down from this year's likely total of 7,800, while average prices will likely increase $60,000 in 2008 from this year's forecast of $440,000.

Multi-family construction is expected to decline to 5,700 units in 2008, down from this year's expected total of 6,750.

Hot Properties "VACATION", published: November 24, 2007

2007-11-28T09:15:00.000-08:00

Almost brand new and only a block off one of Alberta's best beaches, this $439,900 listing in Sylvan Lake was built in 2006, but it has a real cottage feel to it with stone pillars and a verandah out front and vaulted ceilings inside.

The two-storey has 1,456-square feet of space with a large master bedroom on the main floor. The ensuite has a jetted tub.

The stylish kitchen has dark maple cabinets, stainless steel appliances, black granite countertop and bamboo flooring.

There are three more bedromms upstairs, ample room for all the guests you you get when you purchase this resort town home.
MLS#269895

_Compiled by Michele Jarvie, Calgary Herald

City housing market to cool published: Friday, Nov.2, 2007

2007-11-28T08:29:00.001-08:00

CMHC predicts drop in housing starts and existing home sales provincewide in 2008.

Red Deer's housing market will lose some of its sizzle in 2008, predicts Canada Mortgage and Housing Corp.

The national housing agency is forecating a decline in both residential construction starts and sales of existing homes in the city next year _ a trend expected to occur provincewide.

CMHC is projecting that the number of housing starts in Red Deer will reach 1.700 this year. Of these, a record 1.0125 will be single-detached homes, with 575 to be units in multi-family projects.

These figures are up from 2006, when there were 1.095 single-detached starts and 334 multi-family starts for a total of 1.429.

For next year, CMHC expects 1.525 housing starts in the city: 1.050 single-detached and 475 multi-family. That would represent a 17 per cent decrease in multi-family housing starts and a 10.3 per cent decline overall.

"The reason for the drop-off in multi-family starts is most likely due to the lower net migration we're seeing across the province," said Lindsay Kendall, CMHC's market analyst for the Prairie and Territories region.

Speaking from Edmonton, where CMHC was conducting its annual Alberta housing outlook conference on Thursday, Kendall explained that newcomers tend to rent or buy lower-priced homes in multi-family buildings. So as their numbers decline, so does the incentive for developers to invest in such projects.

Kendall said Alberta has been drawing many people from Saskatchewan and British Columbia, but with a strengthening of the economies in those provinces, people there are staying put. And those who previously moved to Alberta might be tempted to return to their home provinces.

Relative to other mid-sized cities in Alberta, Red Deer is probably less afected by this phenomenon, said Kendall. That's because of its desirable location between Calgary and Edmonton.

"We're seeing a strong population growth as well as employment growth, especially with full time job creation, which is supporting this strong housing demand."

As for the resale market, CMHC anticipates that 2007 will end with a total of 5.400 multiple Listing Service sales of residencial properties in Red Deer. The average price of these will be $204,977.

The high 2007 sales volumes have been fueled by a scarcity of residential land in Red Deer, which is pushing buyers into used market. Also boosting sales have been the high selling price, which attracted a lot of homes onto the market.

Looking forward, CMHC expects MLS sales to decline slightly to 5.350 transactions in 2008. But the average selling price should continue to climb, reaching $297,500 next year.

The decline in MLS sales in Red Deer next year is expected to be one of the smallest decreases in the province, said Kendall. She pointed to the city's advantageous location as a big reason for this.

"It's been a destination of choice for migrants entering into the province, so you'll still see that strong housing demand."

Calgary Herald article

2007-09-14T04:31:00.000-07:00

Housing crisis could spread: bankers
Alister Bull, Reuters
Published: Saturday, September 01, 2007

Weakness in the U.S. housing market could trigger an international slide in home prices that depresses the sector for years, a top housing specialist warned central bankers Friday.

"The United States, as the premier example of a capitalist economy, has the potential to lead price expectations down in many countries," said Robert Shiller, in a paper presented at the Kansas City Federal Reserve's monetary policy conference in the mountain resort of Jackson Hole, Wyo.

"It is not improbable that we will see such large real price declines extending over many years in major cities that have seen large increases," Shiller said.
Unpredictable U.S. housing prices "could reverse and head back up," says Prof. Robert Schiller.
Unpredictable U.S. housing prices "could reverse and head back up," says Prof. Robert Schiller.

Central bankers, economists and academics from around the world have gathered here to discuss the relationship between housing and monetary policy against a backdrop of global financial turmoil.

Fears about contagion from troubles in the U.S. subprime mortgage market have hit credit availability and threaten to slow economic growth.

Shiller, a professor of economics and finance at Yale University, said the dramatic rise in house prices witnessed in a number of advanced economies created serious challenges, and it was very tough to predict what lay ahead.

"The implications of this boom and its possible reversal in coming years stands as a serious issue for economic policy-makers. It may be hard to understand from past experience what to expect next, since the magnitude of the boom is unprecedented," he said in prepared remarks, released to the media prior to delivery.

The decline in U.S. house prices picked up speed in the second quarter, falling 3.2 per cent on the S&P/Case-Shiller national home price index, after a 1.6 per cent drop in the previous three months.

A big part of the problem for policy-makers was the role of psychology in driving up house prices, leading to a speculative bubble that was much more prone to a swift correction impacting a number of otherwise unconnected housing markets.

"Speculative markets are inherently unpredictable, and . . . the incipient downturn in the United States could reverse and head back up," said Shiller.

He cited the experience of the London property market, where prices doubled between 1983 and 1988 and then went into freefall, losing 47 per cent by 1996.

However, prices there then took off again, pausing briefly in 2004 and 2005 before resuming an upward march that defeated forecasts and has defied explanation.

© The Calgary Herald 2007

Interesting article in the Calgary Herald on Saturday, March 24th

2007-03-29T15:20:00.000-07:00

Road to real estate wealth paved with research

Budding moguls need good advice

Rakshande Italia, CanWest News Service

So, you want to invest in real estate and get rich fast? You're living in an infomercial. Experts say the secret to successful real estate investing is research, research, research.
Review your moves, get good advice and look for clues in sources such as the new Canadian census data. The payoff is twofold: ongoing cash flow and capital appreciation.
Herewith, 10 steps to becoming a real estate mini-mogul:
1. Evaluate your current exposure. "People who already own a house should make sure they evaluate the percentage of real estate exposure already in their investment portfolio and then decide if they want to invest more," says BMO economist Michael Gregory. "Evaluate whether the benefits you earn from tax breaks on your second house are worth the risks associated with investing more."

2. Identify what is it you want from the property. "Do you want to make a quick $30,000 in a very short period of time or would you be happy with earning $800 to $1,000 a month for the rest of your life?" asks Ozzie Jurock, former president of Royal Le Page and a Vancouver- based real estate author and TV personality. Jurock says investing in smaller towns is a good bet because even if the property doesn't substantially appreciate, one can always be assured of a fixed income for life through manageable rents.

3. Ignore national statistics. Focus on the numbers and trends that directly affect your market. Check if population growth, average income and job creation are faster than the provincial average, say experts. Also key is whether a major transportation improvement is occurring nearby. And don't let a single booming industry (such as automotive) or one high-growth sector (such as oil) influence long-term investing decisions.
4. Is the area's affordability index in the hot zone (between 25 and 39 per cent)? RBC puts up a free affordability index chart on its website that can help investors. Experts say you don't want the property to be too expensive or too cheap: Too cheap and the renters become buyers; too expensive and property values may stall.

5. Buyer beware is still the golden rule, says Maria Britto, former president of the Brampton Board of Trade, and realtor at Remax Realty Specialists Inc. brokerage. Keep on top of real estate rules by contacting the governing bodies in the industry, such as the Canadian Real Estate Association, says Britto. For example, recent rule changes mean agents now need to sign contracts with buyers in an arrangement similar to what they do with sellers.

6. Use an experienced broker. Once you get your research done, use a broker who specializes in buying and selling houses for real estate investing.

7. Start small. For the first-time investor, Britto recommends trying a free-hold townhome (which doesn't have maintenance fees). "These are not only affordable, but there's always a good supply and demand for them and they can give you an affordable income," she says. This holds true in bigger cities such as Toronto, Vancouver, Montreal and Calgary, where immigrant populations are high. New immigrants prefer to rent for their first few years in the country and they tend to choose locations close to transportation systems, malls and grocery stores.

8. Is the location forward looking? Don Campbell, author of 97 Tips for Canadian Real Estate Investors, says it's crucial to determine whether the provincial and local political leadership creates a "growth atmosphere." One way to tell is by looking at whether the region's economic development office is helpful. If it's difficult to deal with, you can assume it will be the same in its dealings with potential employers looking to move to the area, says Campbell. Also, check to see whether the area's infrastructure -- sewers, commercial and industrial space -- is being built to handle future growth.

9. Is the area attractive to baby boomers? Check whether there are lifestyle options such as parks, recreation or water facilities nearby. The 2006 StatsCan census data shows that places such as Wasaga Beach and a neighbouring Ontario township called Tiny have seen an increase in population of 21 and 19 per cent, respectively, since the last census as baby boomers move in.

10. Think suburban. The 2006 census report talks of the suburbanization of Canada. Larger lots and lower real estate prices are drawing more people to the suburbs and bedroom communities that are mushrooming across the country. For example, Chestermere, outside Calgary, has grown by 148 per cent.

© The Calgary Herald 2007 Published: Saturday, March 24, 2007