Gerald Tostowaryk

Commercial and Residential Real Estate

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Here is the AREA market report on the Alberta real estate market. AREA is a REALTOR® organization providing services to its members. A valuable resource for REALTORS and their clients, it provides great market information such as this report. A link to the actual report is at the bottom of the article, enjoy!


Alberta home sales down year-over-year in April; listings near record high


Residential sales activity reported through the MLS® Systems of real estate boards in Alberta numbered 5,017 units in April 2018. This was down 7.9% from April 2017.


The provincial average price for homes sold in April 2018 was $386,939, down 4.9% from a year earlier. The more comprehensive year-to-date average price was $389,164, edging down 2.6% from the first four months of 2017.
Nationally, home sales activity was down 13.7% from year-ago levels in April 2018. The national average price, by comparison, fell 11.3% on a year-over-year basis to $495,100 in April 2018. Sales of all property types in Alberta numbered 5,280 units in April, down 8% from April 2017. The total value of all properties sold was $2.1 billion, decreasing by 12.4% from last year.


A total of 1,895 home sales were recorded through the MLS® System of the Calgary Real Estate Board in April 2018, down 20.8% from a year earlier. The combined value of home sales activity in Calgary was $875.8 million, down 23% from year-ago levels.
There were 1,842 home sales recorded through the MLS® System of the REALTORS® Association of Edmonton, down 1.6% from April 2017. The total value of home sales in Edmonton was $682 million in April 2018, down 4.9% on a year-over-year basis.


Across Alberta, monthly residential average prices were up from year-ago levels in Lloydminster (+5.8%) and Alberta West (+5.6%). By contrast, average prices declined in Grande Prairie (-0.5%), Central Alberta (-2.4%), Calgary (-2.8%), Edmonton (-3.4%), Lethbridge (-3.7%), Medicine Hat (-5.9%), South Central Alberta (-7.2%) and Fort McMurray (-17.1%).


Active residential listings numbered 33,516 units at the end of April. This was an increase of 15% from the end of April 2017 and marked the second highest-ever levels for this time of the year after 2008.
The dollar value of all home sales in the province in April 2018 was $1.9 billion, decreasing by 12.4% from the same month in 2017.
The dollar value of all home sales in Canada fell 23.7% on a year-over-year basis. The months of inventory ratio (total inventory / monthly sales activity) continues to be an important market indicator, comparing the number of months it would take to sell current inventories at the current rate of sales activity. This ratio can suggest if the market is moving quickly or slowly, and how long the average property may stay on the active market. The April months of inventory ratio was at 6.7, up from the 5.3 months recorded at the end of April 2017 and above the long-run average of 4.2 months for this time of year. A score of 6.4 is still generally thought of as a “balance market,” not favouring either the buyer or seller.


Here is a link to the AREA website and the actual article


https://albertarealtor.ca/post/market-report-april-2018

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Our sources for this edition are all the usual suspects and one or two extra; Govt of Alberta, City of Edmonton, Realtors Association of Edmonton, ATB “The Owl”, CoStar

 

Oil Prices Up

 

The price of West Texas Intermediate ended 2017 at over US$60

 

Oil Is Up, So Are Railway Carloads of Bitumen - Near Record

The amount of Alberta bitumen moving by rail is up from lows of under 5000 cars/month back in mid 2016 to over 12,000 in November, nearing the record high of 15,000 back in parts of 2014/2015. Over the 12 month period ending in November, the number of rail cars of oil was up 28% from the previous 12 months.

 

Bitumen up - Construction down

While the movement of Alberta bitumen is on its way up, construction is on its way down. According to StatsCan, the number of building permits issued by Alberta municipalities dropped 11% from November to December.

Housing starts in Edmonton were down 32% in Q4 2017 from Q3, dropping from 2430 to 1646.

 

Construction Down - Employment Up (in Edmonton)

In December 2017 employment in the City moved up by about 1500 positions. The gains were entirely in part-time sectors (construction, education, logistics). Losses were experienced in manufacturing and professional services. The unemployment rate dropped from 7.8% in November to 7.5% in December, but part of this was people dropping off the debatable “actively looking for work” category.

The national unemployment rate also dropped, from 5.9 to 5.7%, the lowest since comparable data began being collected in 1976.

 

Employment Up - Inflation Down

 

The inflation (on an annual basis) rate dropped noticeably in Edmonton from 2.7% in November to 2.2% December. Gasoline prices moved lower while shelter costs and electricity moved higher.

 

Inflation Down - GDP Up

 

Alberta GDP turned around in 2017 from several years of negative growth (I love that word “negative growth”, I guess it sounds better than “shrinking economy”), while final number is not known yet it is expected to be a very healthy 4.1%. GDP growth for 2018 is currently being predicted to come in around a reasonable 2.3 or 2.4% for the year.


Office Vacancy Rates Still High

 

Calgary’s overall office vacancy rate ended the year at around 15.8% while Edmonton’s ended off a little lower, around 10.8% after spiking briefly to 11.7% due to new product entering the market.

 

Industrial Vacancy Rates Mixed

Calgary’s Industrial vacancy rate dipped to 6.7% while Edmonton’s moved up to 6.3%. Naturally this was reflected in slightly increased asking rates in Calgary ($9.36 average) and slightly lower rates in Edmonton ($9.51).

 

Edmonton Residential Market on the Upswing

In February Edmonton area the average year over year price for all residential sales rose 3.9% to $374,361 while single family was up 3.7% at $442,206 and condos were up 1.48% at $236,808. Listings are up 8.6% from this time last year to 6,797 and sales are up 2.4% to 1,941 for the year to date. Average days on market are similar to last year’s numbers, 65 days for all residential, 59 single family and 75 for condos. Average days on market numbers are a little higher than long term averages which one would expect given that the sales/listings ratio is 44% which is on the low end of average. Anything between 40-60% is generally considered within the realm of a reasonably balanced market.

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Bits n’ Bites is my regular column providing a few details on various happenings in the wonderful world of commercial real estate and the economy;

Information is sourced from the Realtors Association of Edmonton, the Institute of Real Estate Management, Alberta Treasury Branches, and the City of Edmonton.

Enjoy!


Edmonton Inflations Stays Stable

The City of Edmonton reported that the CPI (Consumer Price Index) stayed stable at an annual rate of 1.1% growth in August, up very slightly from 1% in July. Rising natural gas and gasoline costs were offset by falling food and rental accommodation costs. Inflation is expected to remain within 1 – 1.5% in the coming months.


EI Payments continue to fall

June was the eighth month in a row in which EI payments in Alberta fell. There were 69,740 benefit cheques issued, 15% levels one year ago. It appears that most of the drop is due to folks finding work, but remember our governments (quite conveniently) don’t count you as unemployed anymore once your benefits run out.

They did bump back up again in July to 71,460 so the next few months will be interesting to watch.


Demand for Medical Office Buildings Could be Steady through 2055

The US Census Bureau projects that the number of Americans 65 and over will double to 92 million by 2055, comprising approximately 33% of the nation’s population. Needless to say, the medical office sector continues to perform well everywhere.


5 Tips to keep Renters for the Long Term

The Apartment Association of Greater Dallas lists five incentives they believe to be the top five in keeping renters in your building longer. Drum roll please…No. 1 – Reserved Parking, No. 2 – Paint and Cleanliness, keep it looking “new”, No. 3 – Give long term residents more upgrades and updates as a reward, No. 4 – Become a Part of Their Routine. Here they suggest things like the management office offering free premium coffee to residents in the morning.

No. 5 – Establish a sense of community through simple events and social gatherings.

Ever notice how the best ideas are so common sense?


Alberta Rents Coming Down, Especially in Calgary

No surprise here, with our recent economic downturn and resultant rising vacancy rates, rental costs are coming down. Interestingly, Calgary’s rents, when compared to 2002 levels, are much lower than Edmonton’s. Edmonton is at 140% of 2002 rents while Calgary is only at 125%. Remember though that actual rents are generally higher in Calgary, this is just compared to each city’s 2002 level.


Balanced Residential Real Estate Market in Edmonton in August

The Realtors Association of Edmonton reported a sales to listings ratio of 52% in August which is pretty much equally balanced between sellers and buyers. The average sale price YTD is $376,950 which is basically unchanged over the last 4 years, about 3% higher than in 2014.


Oil patch hiring, but paying less

Oil and gas sector average weekly wages fell to $2172 in June. Of course that’s still nearly double the provincial average for all workers ($1132) but it is down over 9% from the peak. The patch is hiring (over 17,000 new jobs last year) but is paying less.


Alberta Exports Continue to Slide

Most Alberta exports, not just petroleum products, have been on a slide since 2014 although they have recovered as of late. While we are still well below 2014 levels (around $10B annually then versus about $7.6B currently), exports have risen significantly since bottoming out in spring of 2016 at around $5.5B.

Amazon looking for new headquarters

Amazon is going out for bids from major North American cities for it’s “HQ2” second headquarters that could offer as many as 50,000 new jobs. Cities with over 1 million metropolitan area inhabitants, an international airport, good mass transit and a good hockey team (okay just kidding about the hockey team) can bid for the project. Edmonton?


Millennials Value Flexible Workspaces

Amazon will do well to pay attention to this study. A Work Environment Survey from Capital One found that 85% of professionals feel they work better in flexible work spaces with options like nursing rooms, artwork, natural light, and environmentally friendly programs. 80% said they don’t care about innovating unless their workspace is innovative also, and 70% don’t care about local culture.


Building Permits Continue to Slide

For the second month in a row, building permits have fallen throughout Alberta. In July, just over $1B in permits were issued, down 7% from June. Compared to last year we are down 9%.

The good news for Edmonton is that the majority of work took place here. Our activity level fell 1.4% in July compared to 13% for Calgary.

Residential permits were up in Edmonton in July by 4% and governmental/institutional activity was up over 4 times, but commercial activity continues to slide.


Alberta Language Characteristics from Census Canada

No surprise, 76% of Albertans have English as not only their sole mother tongue (first language learned). Only 1.8% list French as their sole mother tongue, compared with 21% nationally. 23% of Albertans list an immigrant mother tongue, higher than the Canadian average of 22.3%


Alberta Oil Production on the Rise Lately

Oil extraction in Alberta rose by almost 6 million barrels (7.6) from April to May. The last 12 month period was a whopping 40% higher than the previous one, of course the Ft. McMurray fires contributed significantly to that. Unfortunately the U.S. continues to pump out oil at near record highs, contributing to the lower prices.

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Data is deemed reliable but is not guaranteed accurate by the REALTORS® Association of Edmonton.
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