Archive for July, 2015

July 15 2015 – Market Update

Tuesday, July 28th, 2015

Lacombe Market Update – A very strong start to the month in Lacombe with sales well above last month’s total for the
same period. In the meantime, the number of active listings would be considered below normal, keeping the market in
seller’s territory. Sales were spread evenly across the entire price spectrum and should remain strong to the end of the
month based on the number of pending sales.
Sales in July and August normally tend to be a little slower. We aren’t sure exactly what is driving the market this
summer, but expect that it could be back to normal if oil prices maintain their current slide.
The Bank of Canada dropped its lending rate last week by another 0.25% to 0.5% which put downward pressure on the
Canadian dollar. In the meantime, the US Government brokered a deal with Iran that would see some of their financial
sanctions eased and allow them to start producing and selling more oil into the world market. That agreement was
probably at least partly responsible for oil prices dipping very close to the $50 mark.
It seems the economy was adjusting well to $60 oil. $50 may not be high enough to keep oil companies investing in new
projects. Many of the workers laid off in January have been trickling back to work, but a protracted spell of much lower oil
prices could put them back on the sidelines. There is still much good news out there however. The Treasury Branch
article below provides proof that the Alberta economy is not solely dependent on oil prices.
Construction activity holding up – Todd Hirsch, Alberta Treasury Branch
Despite the economic downturn, the roar of bulldozers, jackhammers and cement mixers was just as loud over the second
quarter as it’s ever been in Alberta. The total value of non-residential spending was $2.73 billion from April to June,
essentially unchanged from the first quarter. Compared to the second quarter of last year, spending is actually up five per
cent.
Commercial projects—one of three non-residential building construction categories—slipped to $1.86 billion. That’s down
from previous quarters, but not dramatically so. Commercial building projects include office towers, hotels and shopping
centres, and account for the largest share of total non-residential spending. Given the current pace of construction in
downtown Edmonton and Calgary, it’s not surprising that spending on commercial projects has yet to see much pullback.
Government and institutional spending rose slightly to $512 million, the highest level since early 2011. Industrial projects
were essentially unchanged at $359 million.
While non-residential building activity has held up remarkably well during the current economic downturn, it is expected to
slip further as the year progresses. Many of these projects, particularly the large commercial office towers, were planned
and started well before oil prices started to fall a year ago. Once started, construction spending generally continues until
the project is completed—which sometimes takes several years.
Even with more pullback expected in the coming quarters, spending on commercial projects is likely to hold up reasonably
well—especially compared to the much sharper downturn in 2009.

July LA Graph

July 5 2015 – Market Update

Monday, July 13th, 2015

Lacombe sales continued a strong pace in May while the number of active listings remained stable and kept the relationship
between supply and demand balanced. The market was exceptionally active in the middle of the price spectrum ‐ from $300,000 ‐
$450,000. It appears that some local owners are taking advantage of a bit slower high end market to move up.
In most of the central Alberta communities we serve, the market is slower this year compared to last. However, comparisons
between the 2014 and 2015 markets can be a little misleading. The 2014 market was the busiest since 2007. In fact, the active
listing and sales counts this year are quite normal when compared with 2012 and 2013. We don’t want to minimize the impact that
lower oil prices have had on the economy, but so far we aren’t seeing it in a large way in the housing market.
Since dropping to about $45/barrel, oil prices have recovered to the $60 range. The consensus among the experts seems to be
more of the same for the rest of the year with a slight improvement in 2016. The one thing that isn’t clear is how that will impact
our economy and the housing market. It certainly won’t be as bad as it would be with $45 oil, but it would be foolish to assume
that it will be as good as it was last year. We are looking forward to a stable market for the rest of the year.

Dawn Parent, RE/MAX REAL ESTATE CENTRAL AB.
#1, 5265-45 STREET, Lacombe, Alberta, T4L 2A2
Tel: 403-782-4301 Fax: 403-782-2285
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