Modest Central Alberta real estate market ‘just fine’
Compared to the real estate boom of half a decade ago, home sales in Central Alberta last year could be described as modest.
That’s just fine with Ken Devoe, a Realtor with Century 21 Advantage and president of the Central Alberta Realtors Association.
“It was a solid year,” he said of 2012. “What we always look for is the small growth. We don’t want the boomerang effect.”
Devoe is familiar with that boomerang effect, having worked in the local market since 2006. He recalled the frantic pace prior to the overheated market plummeting at the end of 2008.
“It’s not a good lifestyle. You’re going seven days a week and you don’t see the family.”
Last year was more of a normal market, said Devoe, with sales increasing and prices moving up at a sustainable rate.
In Red Deer, the number of residential transactions processed through the Multiple Listing Service in 2012 climbed 9.4 per cent, to 1,707 from the 2011 tally of 1,560.
In the area covered by the association outside Red Deer, the increase was 11.2 per cent, improving to 2,453 from 2,207.
“That’s what you want to see,” said Devoe of this moderate growth in sales.
Average prices were up in both markets: rising 8.3 per cent to $310,722 from $287,022 in the city, and increasing by 12.1 per cent to $262,007 from $233,814 in the outlying region.
Devoe cautioned that average prices don’t provide a good indication of market trends, since they include homes of all types from a variety of neighbourhoods — a mix that changes from period to period.
He prefers to compare prices of similar homes in the same subdivision over time.
Devoe doesn’t think tighter mortgage lending rules deterred too many home-buyers last year, although he did note that sales of homes in the $250,000 to $300,000 range were down.
Instead, many people were spending $300,000 to $350,000 — a price that got them into an 1,100-square-foot bi-level house with a front-attached garage.
The number of residential listings processed by the Central Alberta Realtors Association last year was down in both Red Deer and the outlying area. In the city, it slipped 8.5 per cent, to 2,603 from 2,844; elsewhere, the figure dropped 10.2 per cent, to 5,124 from 5,705.
Devoe isn’t too concerned about the decline in listings.
“I think what you’re seeing is the over-priced listings not coming,” he said, describing how prior to the economic downturn many homeowners were putting their properties on the market at inflated prices.
“If it’s $50,000 over-priced it’s not going to sell in this market, whereas in 2007 people were picking their price and sometimes getting it.”
For 2013, Devoe is expecting a repeat of 2012. Sales and prices should continue to move up, he said, influenced by an influx of people to Central Alberta, affordable mortgage carrying costs, low vacancy rates nudging renters toward home ownership and resale homes remaining a cost-competitive alternative to new houses.
“I think builders are going to do well and I think the resale market is going to do well. It’s going to be a solid year for everyone.”
He acknowledged, however, that broader economic forces — such as unexpected drop in energy commodity prices — could change that picture.
Despite the improved numbers from 2011 to 2012, year-over-year residential sales activity in Central Alberta did tail off in December. The number of residential deals in Red Deer was unchanged, at 83, but outside the city sales fell 31 per cent, to 79 from 114.
The average selling price in Red Deer last month was $283,381, up five per cent from $269,829 in December 2011. In the area around the city, the average price in December jumped 11 per cent, to $261,894 from $235,832.
New listings declined by 16 per cent in Red Deer, to 84 from 100, and tumbled by 47.5 per cent outside the city, to 127 from 242.