Mid-Month Market Update October 15, 2020

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. 

Innisfail Market Update October 1, 2020

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.”

Mid-Month Market Update September 15, 2020

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.

Innisfail Market Update September 1, 2020

The housing market in central Alberta continued to rebound in August with sales up 21.6% compared to August 2019. Year to date sales have not quite caught up to last year’s, but are only down 6.4%, which is remarkable considering what was happening in April and May. In the meantime, the number of active listings in almost central Alberta market is down. The result is a return to balance or close to balance in most of those markets which will keep prices stable.

It’s important to understand that there are markets inside our markets. The vast majority of the activity in central Alberta in recent months has been focused in the under $400,000 price range. Multiple offers on those properties are not uncommon, while listings at the high end of the price spectrum may go months without even a showing. It takes time for activity generated by sales in the lower price ranges to filter up to the high end. That creates a tremendous opportunity to move up for those who have that option.

Historically low interest rates under 2%, massive government financial stimulus and attractive prices are driving the central Alberta market at the moment. It’s difficult to predict what the future holds, but we firmly believe that Alberta will survive to lead the county economically for the foreseeable future.

Mid-Month Market Update August 15, 2020

August is turning out to be another good month for real estate sales.  While central Alberta sales in the first two weeks in August haven’t quite kept up with July, they are ahead of last August so far.  And, the health of the market (demand relative to supply) is also getting better with inventories continuing to fall in most of the markets we serve.

Every cloud has its silver lining and this is it.  The opportunity to move up has never been better with strong demand in the lower price ranges and lower demand in the higher price ranges.  This is the time every buyer dreams of – to sell high and buy low.  And it gets even better with those very low, sub 2% mortgage rates. 

Innisfail Market Update August 1, 2020

Sales in central Alberta in July were up 23% compared to July 2019 while the number of active listings is down almost 29%. Year to date sales in central Alberta are down almost 10% compared to the same time last year but it was predicted to be much worse. A strong start to the year combined with a good recovery in June and July is rapidly erasing the losses experienced in April and May. Our individual local market results vary slightly but are generally similar to the big central Alberta picture. When demand goes up and supply goes down, prices are expected to go up, but it’s a little early to make that declaration until we see the trend continue for several months. Prices certainly haven’t fallen drastically as CMHC recently predicted and as long as our recover holds, they will stay stable. There are good reasons for first time buyers to enter the market and great reasons for people living in those starter homes to move up. Five year mortgage rates are hovering just under 2% and there are still plenty of great homes on the market at prices well below the peak of 2014.

Mid-Month Market Update July 15, 2020

The central Alberta real estate market continues to recover nicely in the first half of July with sales up 15% compared to the first half of July 2019.  The number of active listings is down 19% compared to last year and that decrease in supply coupled with the increase in demand means prices should remain stable. Forecasting the future is difficult without knowing what lies in store for our area.  Central Alberta continues to beat the odds when it comes to Covid infections, but it would be naïve to suggest we couldn’t have an outbreak.  That would almost certainly have a negative impact on the local real estate market. The other factor is the national and provincial economies and how well they recover.  We need jobs and the resulting economic security to ensure a long term stable housing market.  Albertans are resilient and tough and the experience learned from several downturns that will allow us to find solutions for today’s challenges.

Innisfail Market Update July 1, 2020

MLS sales in central Alberta recovered nicely in June, back to the levels we experienced in June 2019. In fairness, June 2019 sales weren’t spectacular, but it’s great to see how well the market has recovered from the Covid-19 shutdown. To put things in perspective, central Alberta residential MLS for the first half of 2020 are down 18% compared to the first half of 2019 and a whopping 48.7% compared to the first half of 2014.

We often are asked what has happened with prices over the past few years as well as where we think they are going in the coming year. Neither question is easy to answer but it appears that pre-Covid prices in central Alberta were down about 10-12% compared to the peak in 2014. It’s more difficult to identify what prices have done post-Covid. That would require finding similar homes sold before and after Covid and there just aren’t enough of those in our small market to accurately evaluate a price change. Our best guess would be 1-3% depending on the price range.

Where are prices going in the future depends on supply and demand. Some central Alberta markets moved close to balance in June because supply is low, probably because of Covid. When markets are in balance or moving toward balance, prices should stay stable. The unknown is how the Alberta economy is going to impact demand going forward.

Mid-Month Market Update June 15, 2020

MLS sales in the first two weeks in June continue to improve across central Alberta, up 38% from the first two weeks in May, but still down 20% compared to the first two weeks in June 2019. The month over month improvement in sales is impressive considering we are still coming out of the Covid shut down and experiencing low oil prices and high unemployment.

Some of the sales activity is likely a result of pent up demand after folks have been locked down for so long. And, the impact of the pandemic in central Alberta has been mild and people may be deciding to get on with their lives now. Others spent time fixing up their homes while they were at home and have decided it is a good time to move up or down or away. Whatever the reason, it’s good to see that housing is still top of mind for many central Albertans.

Good news! Mortgage insurers Genworth and Canada Guaranty have decided not to adopt CMHC’s damaging new mortgage qualifying requirements that were announced for July 1. Unfortunately CMHC continues to establish lending criteria based on the Toronto real estate market where prices remain inflated. Apparently they haven’t heard of a place called Alberta where their restrictive policies have already done serious damage.

Innisfail Market Update June 1, 2020

Central Alberta sales in May improved considerably over April’s, up by 32%.  That is good news, but must be viewed in perspective.  Sales in May 2020 were down 39% compared to May 2019.  The active listing count was down 17% June 1st 2020 compared to June 1st of last year which helps keep the ratio of sales to listings closer to balance.

Canada Mortgage and Housing recently made some dire predictions about the Canadian housing market – prices may go down 9-18% in most markets and as high as 25% in Alberta.  While we respect that CMHC’s economists make these predictions with all sincerity, they are working with data, while we work with real people.  Most of the sellers we deal with simply won’t accept a 25% reduction in the value of their homes.  They will refuse to sell or won’t be able to sell because they are under water with their mortgages.  There will be a few who have to sell, but as long as there are more buyers than desperate sellers, prices are unlikely to drop significantly.

The average sale price in central Alberta in May 2019 was $308,942.  The average price in May 2020 was $315,626.  The median price in May 2019 was $288,500 and in 2020 was $276,000.  Average and median prices are not pure indicators of value, but they give support to the idea that prices aren’t deflating to any degree yet.  That is probably because prices are already very low after 5 years of economic malaise in Alberta.