Real estate market slows

Optimism about the local residential real estate market fizzled last month as sales dropped and the inventory of listings grew.

Optimism about the local residential real estate market fizzled last month as sales dropped and the inventory of listings grew.

The number of Central Alberta homes sold through the Multiple Listing Service in June totalled 313, including 133 in Red Deer and 180 in the surrounding region. That marked a 32 per cent decline from the same month in 2009, when there were 213 sales in the city and 247 outside, for a total of 460.

The sluggish activity in June, normally one of the busiest months of the year, helped pull the region’s residential sales tally for the first half of this year below the figure for the same period in 2009. From January to June 2010, there were 1,667 deals processed through the MLS system — 760 in Red Deer and 907 in the outlying area; during the same six months last year, 1,839 deals closed — 883 in the city and 956 in the surrounding area.

Randy Weins, the broker at Weins World Real Estate Inc. in Red Deer, said the second quarter was the worst since 2003. May started out strong, he said, but ended slow and gave way to an even weaker month in June.

“That’s usually the quarter for the year,” he said, adding that such a drop-off heading into the slow summer season has created anxiety for sellers and Realtors, and concerns that buyers might now be tempted to wait in hopes of lower prices.

Sandi Gouchie, president of the Central Alberta Realtors Association and a Realtor with Royal LePage Lifestyles Realty in Lacombe, said the poor performance to end the spring came as a bit of a surprise.

“We had some pretty positive news coming out early, kind of in the first quarter, and we thought that we would kind of just zip along.”

Market indicators remain strong, she pointed out, with continued low interest rates and a good selection of reasonably priced properties. Buyers are looking, but don’t seem to be in a rush to sign on the line.

“They’re just not being pressured to buy really quickly.”

Weins said he’s noticed a drop in first-time buyers — which may be the result of tighter mortgage rules introduced by the federal government in February. Some lenders are also more risk-averse, he added.

Another factor could be that buyers closed deals earlier in the year in anticipation of rising interest rates and prices, said Weins.

But ultimately, the biggest problem might simply be the state of the local economy.

“We’re primarily a gas service sector in the energy industry, and that hasn’t been all that robust the last year,” said Weins.

Not only are new jobs not being created, but some people who are working feel insecure. Red Deer’s population growth has also slowed, he noted.

“If you’re not increasing your population, where are the homebuyers?”

Labour force statistics compiled by Alberta Employment and Immigration indicate that the unemployment rate in the Red Deer area in May was 8.4 per cent — the highest among the eight provincial regions. Last month, however, the jobless figure fell to seven per cent — still above the provincial average of 6.8 per cent but lower than the Calgary region (7.3 per cent), the Edmonton region (7.2 per cent) and the Lethbridge region (7.2 per cent).

New listings were up in Central Alberta last month, as compared with June 2009. Weins believes that also reflects a shaky job market.

“I really think that the bottom underlying element of all of this is the job situation in Central Alberta.”

However, Gouchie and Weins observed that prices are holding steady despite the reduced sales.

“That means there aren’t a lot of urgent, must-sell situations out there to deflate the marketplace,” said Weins.

Still, said Gouchie, it’s probably a better time to be shopping for a house than selling one.

“It’s a buyers’ market for sure.”

hrichards@bprda.wpengine.com