Mid-month Market Update May 15, 2019

Central Alberta sales in the first two weeks of May kept pace with the same period in April, but Red Deer sales didn’t.  The number of active listings is up in every market we track except Blackfalds which remained steady.  Generally, inventories in central Alberta are well below last year’s levels.  Lower inventory levels means movement toward a balanced market and less choice for home buyers, although it is still a buyer’s market in most price ranges.

We have noticed more activity and a higher confidence level in the last few weeks and are hoping it will translate into firm sales going forward.  Recent decisions by the Senate on Bills C69 and C48 have the potential to further boost confidence in Alberta.  On a gloomier note, the Bank of Canada seems convinced the mortgage stress test is still appropriate for the whole country which probably means the federal government will leave it in place.  That makes it more important than ever for the Alberta government to see what they can do here.

Blackfalds Market Update May 1, 2019

After a good start to the month, the trend continued, and April MLS sales in central Alberta finished up 44% compared to March.  Our prediction that the election would trigger a surge of confidence appears to have been accurate as we are seeing evidence of an improving market on a daily basis.

The large banks are now starting to put public pressure on the federal government to remove or at least adjust the mortgage stress test.  They have admitted that the unintended consequences are massive withdrawals of first time buyers from the market as well as a dangerous trend from conventional mortgage funding sources to alternate lenders who charge higher rates but don’t follow the stress test rules.  That pressure just before an election may encourage some consideration for the rest of Canada that didn’t need the rule in the first place.

What we need now is for the new Alberta government to fulfil its promise to work with Alberta financial institutions to remove that massive stumbling block as well.  Every real estate transaction contributes about $55,000 to the local economy.  Fixing the inequities in the mortgage process could provide a very quick and effective boost to an Alberta economy that still badly needs help.

Blackfalds Market Update April 1, 2019

March sales improved compared to February’s in most central Alberta markets while year to date sales are up in some markets and down in others.  The majority of sales in March were at the lower end of the price spectrum.  On the supply side, active listing counts are below last year’s levels in most markets.  Activity in the past few weeks has been encouraging and it feels like the market could finally be within sight of turning the corner.

In order to see real improvement, we need a couple of things to happen.  First, the provincial government needs to instruct the Alberta Treasury Branch to remove the stress test from their mortgage lending criteria.  It’s critical that we have an Alberta solution since the federal government refuses to fix their mistake.  Second, we need an announcement that construction will finally begin on at least one, but hopefully all three pipelines – Line 3, Keystone and Trans Mountain.

These two measures would transform the Alberta economy and housing market in very short order.  The winner of the April 16th election must immediately change mortgage rules for Albertans.  Obviously getting pipelines constructed is more difficult and requires cooperation from other governments but we believe it will happen in the next year.

Blackfalds Market Update March 1, 2019

The residential real estate market in central Alberta continue to languish with the number of sales in the first two months of 2019 down 15% compared to the same period in 2018.  In fairness, 2018 started out with optimism for a pipeline approval that didn’t happen.

We are always looking for reasons to be optimistic our hopes for 2019 are based on potential outcomes for two, very important elections.  With the right outcomes, consumer confidence in Alberta could take a big jump which would have immediate, short term benefit. A strong and growing economy is necessary for long term recovery.

Another potential positive outcome of both the provincial and federal elections might be the easing of crippling mortgage rules that have removed first time buyers from the market and hampered owners wanting to move up.  Those measures had the desired effect in Toronto and Vancouver and unintended consequences in the rest of the country.  Opposition parties have promised to provide relief if elected which would provide an immediate and substantial boost to our local market.

Blackfalds Market Update Feb 1, 2019

One year ago the federal government finalized the last step in a two year process that requires homebuyers to qualify at a mortgage rate 2% higher than the actual rate they can borrow at.  The policy was put in place to help cool heated real estate markets in Toronto and Vancouver.  Unfortunately, it was a blanket policy applied to the entire country when there certainly weren’t (and still aren’t), any heated markets in Alberta or most of the rest of Canada for that matter.

That policy has severely impacted the average Albertan’s ability to purchase a home.  A large number of first time homebuyers no longer qualify and those that do have had their borrowing capacity reduced by as much as $80,000.  And it’s not only buyers that have been impacted negatively.  Slower markets caused by government manipulation drive prices down, effectively stripping homeowners of their equity.  After all, their mortgage balances don’t drop when prices go down, only their equity does.

The government tells us it knows what’s best for us and is keeping us from getting too far into debt.  Of all consumer debt, isn’t mortgage debt the very best kind?  Home ownership is many Canadian’s sole savings vehicle and when they aren’t making mortgage payments, they are paying rent, and paying down their landlord’s mortgages instead.  That’s a funny way to help out “average” Canadians.  It’s time governments stop meddling and let free markets find their way.

Blackfalds Market Update

It’s human nature to want to start the new year off full of hope and optimism and we believe 2019 certainly has the potential to be better than 2018 in many ways.  Alberta’s economy has been struggling since January 2015 when oil prices crashed, finally recovered, and then crashed again because of the crippling price differential we experienced this past year.

What can change in 2019?  No one can argue that Alberta’s economy is energy based and any energy related improvements are good for our economy.  The Line 9 pipeline to the U.S. should be completed.  The Trans Mountain pipeline could be approved.  And, there will be provincial and federal elections that could have an impact on a number of energy projects.  Any of these events will have a positive impact on our economy and more importantly on consumer confidence which is the precursor to a better economy.

Finally, the punishing mortgage rules inflicted on all of Canada as a solution for heated housing markets in Toronto and Vancouver have piled on top of the energy crisis to create a perfect storm for our housing market.  Alberta homebuyers have lost tens of thousands of dollars of borrowing power as a result.  The federal government could easily create regional policies that apply only to the markets that need them.  A move like that would immediately have a positive impact on our housing market.  Here’s hoping!