Archive for December, 2013

December 15 2013 Market Update

Monday, December 23rd, 2013

Lacombe sales in the first two weeks of December were slow but there is hope for a good end to the month and the year with 8 sales currently pending. That’s a surprising amount of activity considering the incredible winter we’ve experienced so far. All but the most serious house hunters would normally be home where it’s warm.

The number of active listings is down again this month and is rapidly getting so low that buyers will have problems finding a suitable home. The articles below offer an explanation for the state of the current market and point to more of the same for 2013.

Alberta Apartment Vacancy Rates The Lowest in Canada – Todd Hirsch, Chief Economist, ATB Financial

Alberta is likely the best place to be in Canada if you’re looking for work. But if you need a place to live along with that new job, you might run into some problems. According to the latest Rental Market Report from the Canada Mortgage and Housing Corporation (CMHC), Alberta has the tightest rental accommodation markets in the country.

In October, the vacancy rate in Calgary was a mere 1.0 per cent, down from 1.3 per cent in October of last year. That was the lowest rate among any major municipal market tracked by the CMHC. Edmonton had the second lowest at 1.4 per cent. The strong in-flow of interprovincial and international migrants into the province is the primary driver of the low vacancy rate in Alberta’s two major cities.

Strong population growth benefits the general economy—boosting retail sales and personal services—but it puts pressure on the rental accommodation market. Typically, migrants rent before they decide to purchase a residential property. The spillover effect of such a low vacancy rate is higher rent. Unlike certain other provinces, there are no restrictions on the monthly rents that landlords can charge in Alberta. The tight rental market may therefore lead to higher costs for renters. Hopefully better job opportunities and the highest wages in the country will help ease that pain.

 Oil and gas extraction tightens up – The amount of spare capacity in the Canadian economy shrank a small amount in the third quarter of 2013. Much of this tightening came as a result of a higher capacity utilization in oil and gas extraction. The industrial capacity utilization rate, as reported quarterly by Statistics Canada, is the ratio of an industry’s actual output to its estimated potential output. The higher the percentage, the more available resources are being utilized and the higher the rate of economic output.

Canada’s all-industry average was operating at 81.7 per cent during July, August and September, up about 0.6 percentage points from the previous quarter. That is one of the higher readings since the end of the recession in 2009. Leading the charge was a sharp rise in the capacity utilization of oil and gas extraction. It moved from 85.1 to 87.5 per cent capacity in the third quarter—its highest rate in a decade. The figures reported are for Canada as a whole and are not broken down to the provincial level. Alberta—along with Saskatchewan and Newfoundland and Labrador—is home to a great proportion of the country’s oil and gas extraction activity. The rising utilization rate in this sector is a strong reflection of the rapid overall growth that Alberta is experiencing.



November 15, 2013 Market Updates

Monday, December 2nd, 2013

Lacombe sales in the first half of November continued very strong compared to last month and the first half of November 2012.  If the current trend continues for the rest of the month, the Lacombe market will have moved rapidly into a place where the seller has the advantage.

The number of active listings continues to drop and will likely have a negative impact on the market before enough new lots are available to allow builders to bring inventory levels back to balance.  Lacombe currently has very few lots for new construction available, especially for starter homes.

The lack of new home lots in Lacombe is likely driving buyers north to Blackfalds where there is an abundance of lots available.  New construction there is booming and it makes sense that some of those people are working in Lacombe and area.

The most active market in Lacombe this month is still in that “starter home” price range from $200,000 – $350,000.

The long term forecast for Alberta remains strong as we continue to lead the country in growth.  That growth should support a good real estate market going into 2014.

Building permits inch higher – Todd Hirsch, Chief Economist, ATB Financial

Construction activity is an important driver of Alberta’s economy, and over the last few years it has remained remarkably steady. New information released by Statistics Canada suggests this trend will continue in 2014.

Alberta’s total building permits are an excellent indicator of future construction activity. In September, they rose 5.2 per cent over the previous month, to $1.43 billion. However, residential and non-residential permits moved in opposite directions.

Residential builders took out $954 million in permits in September, a steep jump from August and the second-highest single month on record. (The all-time record of $978 million was set in June of 2007.) The rising value of residential permits suggests that home builders are reacting to strong demand for new homes. This is consistent with other residential real estate indicators, such as home sales and rising prices, for both new and existing homes. It also makes sense given the steady inflow of interprovincial migrants to Alberta this year.

The increase in residential permits was almost completely offset by a drop in non-residential permits. They tumbled 18 per cent month-over-month to $475 million. That’s a nine-month low. The size and scope of some non-residential construction projects, including office towers, shopping malls and industrial complexes, makes them much more volatile month to month.

Combined total building permits in Alberta continue to rise. Over the last twelve months, permits are 19.7 per cent higher than the previous twelve months. This bodes well for construction spending and employment in the near-term.


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