While local house prices continue to climb, Red Deer still lags behind most of the country in house sales.
It’s “unsettling” for Randy Weins, of Weins World Real Estate Inc., who fears house prices will go into a slump if demand for homes continues to be slow in the last quarter and into the new year.
Weins, past president of the Central Alberta Realtors Association, noted that only 298 single-family home sales were recorded in the third quarter. This is the lowest number in the past five years — some 26 per cent less than the 2008 record of 400 homes, and 13 per cent lower than in 2007.
So far, 895 single-family homes sold in Red Deer this year, compared with 1,141 for the same period in 2008 — a decline of 21.6 per cent.
If the demand for homes doesn’t grow, while the inventory either stays the same or increases, Weins predicts house prices will start to drop. “There will be downward pressure on values,” said the realtor, who added this follows the rule of supply and demand.
For house sales to increase, either new people would have to move to the city for work or renters would have to feel confident enough in their jobs to enter the housing market. Neither of these things is happening, said Weins, who blames the provincial government for not enough job creation.
While the rest of Canada is reporting good gains in home sales, Alberta is lagging behind. Weins said this is partly because comparisons are made to the “incredible” home sales and price increases of 2007 and 2008. But another reason is the decline in employment in the province.
Both the oilfield and the agricultural sector — Alberta’s biggest industries — are in a down cycle. Since the private sector remains cautious about hiring, Weins believes the provincial government should “pick up some slack.”
He hopes Premier Ed Stelmach, who is expected to make a televised address to Albertans on Wednesday, will come up with some job-creation strategies, such as a provincial infrastructure program.
On the more positive side, the median price for a single-family home in Red Deer was $320,000 in the third quarter of the year. This price, which increased for the third consecutive quarter, shows a good rise from the first-quarter median of $305,000.
When Weins compared third-quarter median house prices over a few years, he discovered the 2009 median is only three per cent below the 2007 record of $330,000 and only 1.3 per cent below last year. He believes this demonstrates some strength in the marketplace, but he also credits low interest rates for playing a big part.
Red Deer’s median house price is still far below that of Calgary and Edmonton homes, which are closer to $400,000. “We should not be $60,000 or $70,000 less,” said Weins, who would like to narrow this gap. But he believes Red Deer has developed softer prices because of this city’s narrower range of employment prospects.
The area outlook is similar to Red Deer’s. A few towns increased house sales in the third quarter, including Lacombe, Innisfail and Stettler. But these communities also showed slight declines in median house prices, which were $208,000 in Stettler (down 5.5 per cent), $294,000 in Lacombe (5.8 per cent down) and $266,000 in Innisfail (4.3 per cent down).
Sylvan Lake had decreased house sales but a better median of $333,000 (up 1.5 per cent). Blackfalds had lower sales but a median price of $295,000 (up 8.9 per cent), and Rocky Mountain House had lower sales and an unchanged median price of $284,000.