REAL ESTATE MARKET SLOWS

By Harley Richards - Red Deer Advocate
July 14, 2010 6:21 PM

Optimism about the local residential real estate market fizzled last month as sales dropped and the inventory of listings grew.

The number of Central Alberta homes sold through the Multiple Listing Service in June totalled 313, including 133 in Red Deer and 180 in the surrounding region. That marked a 32 per cent decline from the same month in 2009, when there were 213 sales in the city and 247 outside, for a total of 460.

The sluggish activity in June, normally one of the busiest months of the year, helped pull the region’s residential sales tally for the first half of this year below the figure for the same period in 2009. From January to June 2010, there were 1,667 deals processed through the MLS system — 760 in Red Deer and 907 in the outlying area; during the same six months last year, 1,839 deals closed — 883 in the city and 956 in the surrounding area.

Randy Weins, the broker at Weins World Real Estate Inc. in Red Deer, said the second quarter was the worst since 2003. May started out strong, he said, but ended slow and gave way to an even weaker month in June.

“That’s usually the quarter for the year,” he said, adding that such a drop-off heading into the slow summer season has created anxiety for sellers and Realtors, and concerns that buyers might now be tempted to wait in hopes of lower prices.

Sandi Gouchie, president of the Central Alberta Realtors Association and a Realtor with Royal LePage Lifestyles Realty in Lacombe, said the poor performance to end the spring came as a bit of a surprise.

“We had some pretty positive news coming out early, kind of in the first quarter, and we thought that we would kind of just zip along.”

Market indicators remain strong, she pointed out, with continued low interest rates and a good selection of reasonably priced properties. Buyers are looking, but don’t seem to be in a rush to sign on the line.

“They’re just not being pressured to buy really quickly.”

Weins said he’s noticed a drop in first-time buyers — which may be the result of tighter mortgage rules introduced by the federal government in February. Some lenders are also more risk-averse, he added.

Another factor could be that buyers closed deals earlier in the year in anticipation of rising interest rates and prices, said Weins.

But ultimately, the biggest problem might simply be the state of the local economy.

“We’re primarily a gas service sector in the energy industry, and that hasn’t been all that robust the last year,” said Weins.

Not only are new jobs not being created, but some people who are working feel insecure. Red Deer’s population growth has also slowed, he noted.

“If you’re not increasing your population, where are the homebuyers?”

Labour force statistics compiled by Alberta Employment and Immigration indicate that the unemployment rate in the Red Deer area in May was 8.4 per cent — the highest among the eight provincial regions. Last month, however, the jobless figure fell to seven per cent — still above the provincial average of 6.8 per cent but lower than the Calgary region (7.3 per cent), the Edmonton region (7.2 per cent) and the Lethbridge region (7.2 per cent).

New listings were up in Central Alberta last month, as compared with June 2009. Weins believes that also reflects a shaky job market.

“I really think that the bottom underlying element of all of this is the job situation in Central Alberta.”

However, Gouchie and Weins observed that prices are holding steady despite the reduced sales.

“That means there aren’t a lot of urgent, must-sell situations out there to deflate the marketplace,” said Weins.

Still, said Gouchie, it’s probably a better time to be shopping for a house than selling one.

“It’s a buyers’ market for sure.”

 

Campbell's Recipe for Success

April 16, 2010 Brantford Expositor

To paraphrase Mark Twain, the reports of a housing bubble in Canada are greatly exaggerated.

The reports have been circulating since early this year -- reports I found unconvincing, which is shared by Don R. Campbell, author and president of the Real Estate Investment Network (REIN).

"There's not a bubble, but there are over exuberant markets in Toronto and Vancouver, especially in condos," said Campbell during a stopover in Calgary last week. "Those markets have superseded the economic fundamentals that are supposed to support them, but it doesn't mean the market will collapse."

Campbell has launched his new book, 81 Financial and Tax Tips for the Canadian Real Estate Investor, from which he makes no money -- Campbell's forwarded all royalities toward Habitat For Humanity. Coupled with contributions from REIN, they've raised more than $525,000 to build homes for those in need.

"My wife and I make our money in real estate," he said. "And about 90% of our holdings are in Alberta."
For me that's enough reason to seek his advice about buying properties for profit.

"Always do your homework. Not every neighbourhood and property is a good investment," said Campbell. "It's more than a property. You're buying a business and renting the air between the walls to a customer who happens to be a renter.

"You have revenues and expenses like any business and you have to run it that way."

When's the best time to get into real estate?

"People think real estate is about timing, but, in fact, that is not right," said Campbell. "If that was right, you would have bought when your dad bought, when houses cost $30,000 or $40,000. An investor has to look at long-term trends. Give yourself a minimum of a five-year window, have a plan for five years.

"Look for long-term economic fundamentals and where they are pointing. Look into the future, not the past. Look for a region where migration, jobs and incomes will be strong.

"Look for major transportation changes that will give better access to neighbourhoods. These are factors that really drive real estate markets."

Campbell doesn't think new mortgage regulations coming into effect April 19 will have much effect.

Any other tips?

"Never invest based on tips, which is ironic coming from me," said Campbell. "You can use tips to augment your strategy, for example, if you hear that your brother's sister-in-law says her dad is buying in such and such a neighbourhood, do your homework before joining in, especially if someone is trying to sell you properties."

It's all about the homework, or as Mark Twain said: "The trouble with the world is not that people know too little, but that they know so many things that ain't so."

Campbell's books are available online at all major bookstores.

Resale Home Pace Expected to Grow

By Marty Hope, Calgary Herald April 8, 2010

With the Canadian economy bouncing back stronger than most experts expected, resale housing activity is predicted to increase along with it.

Due to continuing affordability, the Canadian Real Estate Association (CREA) is calling for a national sales increase of more than 13 per cent this year compared to 2009.

It predicts about 527,300 resale homes will likely change hands this year -- a total that would surpass the existing 2007 record by 1.2 per cent.

Across Alberta, the forecast is for slightly more than 63,000 sales, an increase of 9.1 per cent from 2009.

Diane Scott, president of the Calgary Real Estate Board, has called for an almost 18-per-cent hike in sales this year to 17,000.

Canada's economic health is improving at a faster pace that predicted, says deputy chief economist Doug Porter of BMO Capital Markets. "We're heading back to pre-recession levels on a number of indicators quite a bit faster than I think most people believed possible, despite concerns over how this would be a lacklustre recovery," he says.

Gross domestic product (GDP) was originally expected to grow by 3.7 per cent in the first three months of this year, an estimate Porter says could now be low.

Productivity is up 1.4 per cent and manufacturing sales are up 2.4 per cent.

"These figures suggest there's upside risk to that forecast and we could ultimately see something like we saw in the fourth quarter, when the economy barrelled ahead at a five-per-cent annual pace," say Porter.

In tandem with a resurging economy, consumers are taking advantage of low interest rates to get into home ownership, says CREA. Those low rates are expected to boost housing demand in the first half of this year, but will decline for the final six months because of expected hikes in mortgage rates as early as June.

The decline is expected to spill over into 2011, when sales could fall by just over seven per cent, says the association.

"Although interest rates are expected to rise, they will still be low enough to keep affordability within reach for many homebuyers," says CREA president Dale Ripplinger.

Indications are that rates will climb between 25 and 75 basis points (one per cent equals 100 basis points).

But Porter says "risks are growing" that the Bank of Canada will do more than hike by 25 basis points at each of its four meetings in the second half of this year.

Gregory Klump, CREA's chief economist, sees marginal increases.

"Fiscal restraint, a strong Canadian dollar and a subdued inflation outlook point to marginal interest rate increases over the next couple of years -- especially if the U. S, economic recovery proves to be weak and protracted," he says.

With sales activity pointing up in Canada, average prices will follow.

CREA numbers show a predicted 5.4-per-cent increase to the national average selling price to a record $337,500. In 2011, the price will likely slip back 1.5 per cent, again shadowing a decline in sales.