August 13, 2015

A Bit Of A Rough Patch

The Edmonton Sun reports from Canada. In June, this column reported on Metropolitan’s Edmonton’s ‘Goldilocks’ economy, which, despite the calamitous drop in oil prices, continues to chug along. But if oil prices stay low, City of Edmonton chief economist John Rose warned at the time, ‘we could be in a real pickle by this time next year.’ I disagree. Rose’s ‘real pickle’ is not conditional. Residential vacancy rates in Fort McMurray are at an alarming 9%. One year ago, beds were so scarce that workers were sleeping in their trucks. Fort McMurray house prices are down 9% to 10% from 12 months ago.”

“In Metro Edmonton, the sale of homes worth over $650,000 has considerably slowed down. Overall in Alberta, luxury vehicle sales are down, as are vehicle sales in general. Net migration within Canada to Alberta has dropped like a rock. No one knows when a recession will come crashing down. Who knows when and why a few loose pebbles turn into a landslide.”

The Leader Post. “Regina’s housing slump continued in July, as home builders started work on 185 housing units, down 47 per cent from 348 during the same period last year, according to Canada Mortgage and Housing Corp. (CMHC). ‘Regina’s total housing starts are still expected to end the year lower than in 2014 as weaker economic conditions and elevated inventories of new homes add downward pressure to new construction over the remaining months of 2015,’ said Lai Sing Louie, regional economist for CMHC’s Prairies and Territories region.”

The Prince Albert Daily Herald. “Prince Albert’s housing market has hit a bit of a rough patch according to the latest report from the Canada Mortgage and Housing Corporation. Communities in oil-producing regions like Estevan, Weyburn and Lloydminster were hit the hardest, with seven, zero and 12 new single-family housing starts respectively. Last year at this time, Estevan had 24 starts, Weyburn had 18 and Lloydminster had 65. ‘I’m not sure if we’re worried. I see oil prices have dropped to the lowest it’s been in six years today, so that’s something that affects the Canadian economy directly in a lot of areas,’ said John Guenther, the director of planning and development services with the City of Prince Albert.”

The Terrace Standard. “Real estate sales dropped here for the first half of the year compared to the same period in 2014, according to statistics from the BC Northern Real Estate Board. Sheila Love from the Terrace office of Remax Coast Mountains noted that there are not a lot of homes on the market at the lower end of the price range. That may be a partial reflection of more new or newer homes up for sale. ‘Prices were once in the $200,000-$225,000 range but there is not a lot there now and I don’t think we’re going to see those [prices] again. For a three-bedroom house in the Horseshoe with a full basement, you’re now looking at close to $300,000,’ she said.”

“Love added that prices for mobile homes and rowhouses have also increased over the past several years. This year’s housing market is also different from last year because the number of single family homes for sale has increased. ‘This year we have 52 listings in that [average] price range, at least double from last year,’ said Love. ‘It’s definitely a buyers’ market out there.’”

The Calgary Herald. “Prices for repeat home sales in Calgary dropped in July, according to the latest Teranet-National Bank National Composite House Price Index. The index said prices in Calgary were off by 1.9 per cent from the previous month and down by 2.3 per cent from a year ago. Prices are also off by 4.6 per cent from their peak in October 2014, said the report. Mike Fotiou, associate broker with First Place Realty, said it was the largest annual decline in Calgary since June 2011.”

“‘Although overall sales volume is down, prices are sustained and new condo sales are up. Buyers are flocking towards the new shining condos forgoing a little size for a sense of luxury,’ said Christina Hagerty, a realtor with RE/MAX Realty Professionals. ‘Prices over the years in Calgary although have increased at sustainable rates unlike the spikes and losses we have seen in more speculative markets in Toronto and Vancouver. Sales volume is down to substantially but so is desirable inventory. Listings are holding onto their prices. If they do not obtain a sale price within the range that they’re looking for, they simply won’t make the move.’”

“Hagerty said she has not witnessed any panic sales in the city as interest rates remain low and people can afford to stay in their homes.”

From 660 News. “Calgary’s rental market is feeling the fallout from a weak economy as vacancy rates continue to rise in the city. Gerald Baxter, executive director at Calgary Residential Rental Association, said layoffs and new construction are contributing to what has suddenly become a renters market in the city. ‘Not as many calls from prospective tenants when properties are being advertised, tenants come by and look but they’re being selective and they’re shopping around, a year ago it was pretty much if you found somewhere that was available, you took it,’ Baxter said.”

“The Canada Mortgage and Housing Corporation reported a six per cent increase in rental rates but that number is a reflection of stronger demand late last year. ‘People are losing their jobs and moving out, and others have lost their jobs and have moved out of the province so we’re seeing a lot of people who have become unemployed and have had to leave the province,’ Baxter said.”

“It is a stark contrast to last year at this time when the CRRA was fielding calls from students panicking because they had no place to live. Baxter said he has had no such calls so far this summer.”

Bits Bucket for August 13, 2015

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