Is Covid part of the recipe for a strong real estate market? It appears so, with sales continuing to exceed pre-Covid numbers from last January across most central Alberta markets. There is no doubt there are other ingredients, including the lowest interest rates in history, but the market has been stronger since the relaxations came into effect after the first wave last June. And the latest restrictions on activity haven’t stopped people from buying and selling homes.
Central Alberta sales were up 50% in January 2021 compared to January 2020 (before the pandemic began) and when the future outlook was considerably rosier than it is today. Red Deer sales were up 45% in January and the only central Alberta markets that are down were Lacombe and Rocky Mountain House and only slightly.
“We’re going to put our house on the market in the spring” is a phrase we often hear, and in normal times it’s a reasonable decision. Spring is typically the busiest home buying time of the year. But, these aren’t “normal times”. Right now supply is low and demand is strong which means this is the right time to put your house on the market, especially if it’s going to be priced under $500,000 in the larger markets and under $300,000 in the smaller markets. Call your local RE/MAX Associate for details about your market.
Central Alberta residential MLS real estate sales are off to a great start in 2021, up 48% in the first two weeks compared to the same period in 2020. On the supply side, the number of active listings is down 31% compared to one year ago. When demand increases and supply decreases, prices will begin to firm up, but only when the sales to listings ratio goes well over 20%. Right now, that ratio is about 13% for all of central Alberta, so there are still some good opportunities for buyers out there.
The sales to listing ratios are important whether you are buying or selling and they vary from city to city and town to town and from one price range to the next. It’s important to get the real numbers for each area and price range you are interested in. Thankfully, your local RE/MAX Associate has this information at their fingertips for most central Alberta markets. Call us today for a free consultation.
To say that 2020 was an interesting year would be an understatement. We started out with high hopes that this was the turnaround year for the Alberta economy and the real estate market; and for at least a couple of months it looked like our hopes were valid. Then that unwelcome intruder showed up and our hopes dimmed dramatically. In June, when it seemed we were maybe at the end of the worst of it, things brightened considerably and while the economy didn’t improve much, those CERB payments and historic low interest rates were a boon for the real estate market which ended the year with the number of sales in Central Alberta just 5.6% behind last year’s total. In hindsight, it was a fantastic year when viewed from our April and May perspective.
Our crystal ball is a little foggy looking ahead to 2021. Making bold predictions is often a fool’s game, but we are going to step out and say that we expect this year’s real estate market to be much the same as last year’s. There is a slight difference at this point because we are starting out with much lower inventories than we’ve had in Central Alberta for many years. Lower inventories combined with robust demand should dictate price increases, but we believe that robust demand will encourage sellers who have been waiting for fair winds and an end to Covid to re-enter the market and keep things in balance. We believe 2021 will be an interesting year, but in a much better way.
We continue to be amazed. In spite of recent tougher Covid restrictions, the real estate market marches on with sales in central Alberta in the first two weeks of December up 71% compared to the same time last year. There is no question that low interest rates are driving some of the demand, but there has to be more. Could it be that consumer confidence is improving with a vaccine on the horizon in addition to some of the positive economic news we’ve been hearing lately?
While housing demand has been rising, supply has been shrinking in many central Alberta markets, especially in the $200,000 – $400,000 price range. Those projecting lower prices (including the self-esteemed CMHC) have been completely wrong so far this year. CMHC predicted a catastrophic price drop of up to 25% in Alberta and, like most eastern institutions, had no idea of the resiliency and determination of Albertans when it comes to their desire to own their own homes. We believe that desire will continue into 2021 and only get stronger as we move out of the pandemic and back to economic growth.
Alberta and Canada are back into a state of semi lockdown as the Covid virus comes roaring back to life. After an “almost” normal summer and fall and a nicely recovering real estate market, we are now faced with another potential economic slow down. The real estate market normally slows down over the winter months and it will almost certainly follow that trend again this year with some help from Covid.
We are impressed by the resilience and determination of Albertans to continue living and working normally as much as possible, which is reflected in our numbers. Year to date sales in central Alberta have surpassed the same time in 2019 by 3.16%. While that doesn’t seem like a large number, we would never have predicted this outcome in April or May. We have every confidence that we will get through this latest situation as well.
There are a lot of very positive economic events happening in Alberta and western Canada with three pipelines close to crossing the finish line, a massive natural gas pipeline under construction, recovering oil prices and more drilling forecasted for this winter, and one of the best years ever for agriculture and crop production. Alberta may be down at the moment, but we are far from out.
There are two very important things to note when it comes to the current state of the real estate market in central Alberta. First, the number of active listings continues to shrink, down almost 25% compared to Nov. 15, 2019. Second, month to date sales this November are up 56% compared to the same time last year.
So what does that all mean to the average homeowner? The relationship between supply and demand determines price. While CMHC predicted that prices in Alberta could come down as much as 18%, the reality is that prices could be poised for an increase if the current trend continues. The current numbers don’t put our market in balance yet, but we are much closer than we were a year ago and a balanced market creates price stability, if not increases.
While the media is focused on the negative – Covid, job losses, etc., we believe Albertans are more than ever focused on the positives – Alberta’s population increased by 60,182 between July 2019 and July 2020, $2.3 billion natural gas pipeline expansion announced in October, no matter the result of the US election, Alberta is likely to benefit by increased energy exports, and ATB Economics is predicting Alberta’s economy will grow by 3.3% in 2021.
If you pay attention to the news, the world is on the brink – the Covid 19 second wave, unemployment, failing economy, negative politics and more. Fortunately, it seems a lot of the public aren’t listening. Instead they are going about their lives pretty much as normal and we are seeing that in the housing market.
Our typically busy spring market was hamstrung by the pandemic but recovered nicely in June and has kept pace with 2019 ever since. Year to date sales in central Alberta are still down very slightly by 0.62% compared to last year. What’s very interesting is that 2020 sales since June are up 18.6% compared to the same period in 2019.
The active listing count in most markets is down compared to a year ago and the increase in sales has narrowed the gap between supply and demand. A couple central Alberta markets have moved just into balanced territory and most of the rest are still buyer’s markets, but much closer to balance than they were a year ago. It is important to note again that there are markets inside markets. The lower price ranges have been very active while the high end of the market still strongly favors buyers. Prices are possibly up a little in the lower price range, but still depressed at the high end.
Central Alberta sales in the first two weeks of October were down 17% compared to the first two weeks in September this year, but are up 28% compared to the first two weeks of October 2019. The number of active listings is down almost 25% compared to last year at this time. Supply and demand have moved closer to balance which is what supports a healthy market. There have been some positives for our economy in the news lately – the Line 3 pipeline to the U.S. won another court challenge, the Trans Mountain Pipeline is quietly progressing with more construction underway, and the Alberta Government recently announced a $45 million clean energy and organic fertilizer facility will be constructed in Lacombe. These aren’t earth shattering developments, but they are the tiny glimmers of light we are looking for as we move forward.
Central Albertans have demonstrated their enthusiasm for home ownership over the last four months. No one really knew what to expect as we came out of the Covid 19 lockdown, but our homebuyers knew what they wanted. Sales in central Alberta were strong again in September, up 22.5% compared to September 2019. And year to date sales to the end of September are off compared to the same time last year by just 3%. The Red Deer and Penhold markets have moved into “balance”, while the other central Alberta markets have moved closer to balance. Spectacular results considering what we were hearing in March and April.
The majority of sales activity continues to happen in the lower price ranges, but we are starting to see interest pick up in the higher ranges which is normal. Every recovery starts at the low end and gradually moves up. What is fueling the spike in sales? In our opinion, a number of things. Five year mortgage rates under 2% (the lowest in history) combined with the lowest prices in six years, maybe even since 2006 in some cases. Also, the federal government has pumped $350 Billion into the economy over the last few months and that money has to be going somewhere. Finally, it appears that many people are tired of Covid, tired of the lockdowns and restrictions and just want to get on with living and”where there is a will, there’s a way.”
Residential sales in central Alberta were up 4.4% compared to the same period in August while the number of active listings dropped by 4%. It’s difficult to explain exactly why the market continues to do relatively well, but there are three factors we believe are having an impact:
Mortgage Interest rates below 2% are very attractive to first time and move up buyers
The federal government has pumped $300+ billion into the economy – people are spending less on entertainment and travel etc. which means they have money to buy or upgrade their homes.
People are tired of Covid and want to get on with their lives and their plans
Whatever the reason, a strong real estate market is good for the economy. Every transaction provides work for lawyers, mortgage brokers, realtors, movers, property inspectors, banks, cleaners, home stagers, handymen etc.
In spite of a recovering market, prices are the lowest they’ve been for years. Those low prices combined with very low interest rates means there is still tremendous value for homebuyers. This is likely the opportunity of a lifetime.