Here is a great article that was passed my way regarding our Central Alberta housing market. Have a look through it paints a good picture of our marketplace. Red Deer advoate was the source of this article. ENJOY!! As always you can contact me at anytime with questions.
Red Deer Advocate
CMHC expecting improved market
aon Reed of Jaygo Construction of Lacombe works on a house in the Clearview subdivision in Red Deer on Wednesday. The industry is looking good says Reed who estimates he and other builders in the area are much busier than they have been in a long time.
Regine Durand suggested reasons for optimism this week when she discussed Red Deer’s housing market with lenders, Realtors, builders, appraisers and others active in the residential real estate industry.
A market analyst with Canada Mortgage and Housing Corp., Durand was among those who presented at CMHC’s Housing Outlook Conference in Calgary on Tuesday. She explained why the national housing agency is anticipating more construction, more resale activity and lower vacancy rates in Red Deer.
The conference followed last week’s release of CMHC’s fourth quarter Housing Market Outlook report, in which it projected that 2010 will end with 680 residential construction starts in Red Deer: 410 single-detached homes and 270 units in multi-family developments. For next year, CMHC is forecasting 415 single-detached starts and 265 multi-family projects in the city, for a total of 680.
These figures are improvements over 2009, when there were just 497 housing starts in Red Deer: 333 single-detached and 164 multi-family.
Speaking to the Advocate the day after the conference, Durand said lower inventories of completed and unsold homes, slower price growth and job gains are all expected to contribute to a rise in residential construction activity in Red Deer.
“Inventories of singles are now down 15 per cent (from last year), inventories of multis are now one-third of what they were last year at this time.”
As for prices, she pointed out that the cost of purchasing a single-detached home spiked 29 per cent in 2007, as compared with 13 per cent the following year and seven per cent in 2009. This year’s five per cent price growth should entice prospective buyers into the market.
In the case of job gains, Statistics Canada has calculated that there are 50,200 people working in Red Deer, said Durand, about 7,000 more than a year ago. This should also encourage more home purchases.
CMHC’s latest forecast projected that 2,900 Central Alberta homes would be sold through the Multiple Listing Service this year, and 2,950 in 2011. Both figures would be down from the 3,770 sales recorded in 2009.
The average selling price is expected to be $270,000 this year and $273,000 in 2011. Last year it was $264,417.
Durand noted that the resale market started out strong this year but then fizzled in the face of tighter mortgage rules and higher mortgage rates.
She expects that some people who were unable to qualify for a loan to purchase a home this year will be able to do so in 2011. And the Bank of Canada’s decision to hold firm on interest rates has already reduced mortgage borrowing costs.
In Central Alberta, said Durand, the monthly mortgage carrying cost has come down two per cent.
CMHC’s projection that resale prices will only rise one per cent next year reflects the fact that listings exceed demand, she said, citing a sales-to-new-listings ratio in Central Alberta of 34 per cent.
“Back in ‘07 when we had the double digit price growth, it was over 60 per cent.”
Finally, CMHC’s forecast of lower vacancies and slightly higher rents when it comes to rental accommodations is predicated on an increased migration of people into the province and local job gains, said Durand.
“It’s good news in the sense that demand for rental housing is getting stronger.”