House sales in central Alberta were “exceptional” in 2021, and local realtors remain optimistic about the market in 2022. (File photo by The Canadian Press)

House sales in central Alberta were “exceptional” in 2021, and local realtors remain optimistic about the market in 2022. (File photo by The Canadian Press)

‘Exceptional’ house sales in 2021 leave Red Deer realtors optimistic about 2022

But COVID and other factors make predictions tricky, said local realtor Dale Russell,

After a banner year for Red Deer-area housing sales in 2021, local realtors are looking ahead with optimism — and a little uncertainty at what 2022 will bring.

“There is some question about the effect of this latest COVID surge,” said Dale Russell a broker and owner of Re/Max Real Estate Central Alberta. But with the Omicron variant causing milder illness, “all indicators are that the economy will stay strong …and exciting things are happening in Alberta.”

Russell noted the province had a net gain of 5,000 people in the third quarter of 2021 — reflecting recovery in the energy sector with the rise in oil prices, as well as the exploration of alternative fuel sources, such as hydrogen.

He believes the pandemic also caused many people to re-think their priorities and move closer to family in this province.

While the Bank of Canada is set to raise interest rates in the second quarter of 2022 and higher mortgage rates tend to have a negative impact on the housing market, Russell doesn’t think this will be a serious problem.

Of more concern is the lack of housing inventory. “This is the lowest level it’s been in a long time,” said Russell, noting the current inventory is down about 25 per cent from this time last year.

New housing starts could close the gap between supply and demand, but there’s an eight-month lag time for construction, and Russell believes home builders are also being held back by various supply shortages and the high price of lumber.

The cost of building materials escalated after wildfires, hurricanes and tornadoes destroyed many U.S. neighbourhoods.

“The builders are catching up, but it could take years,” he said. “When you can’t get appliances and all kinds of things, it slows the process.”

January and February are typically slower for house sales, and Russell believes the cold snap of the past few weeks has not helped. But he expects the market to get moving again as the weather warms.

“I think we’re going to have a good strong year. But will it be as good as last year? I don’t know…”

2021 was the best year for house sales since 2014. And in terms of sales numbers “it was the best year, ever,” said Russell, who believes the demand for housing in 2021 was an expression of pent-up demand.

Many people who bought homes in central Alberta when prices peaked in 2014 were effectively stuck after the price drop of 2015, said Russell. But these people have since been paying down their mortgages and building equity, so many could enter the housing market again in 2021.

Russell called last year “exceptional.” Many home buyers had taken advantage of low interest rates. Others learned they can work remotely, so can live where they choose.

He added many smaller communities, notably Blackfalds and Sylvan Lake, had hotter housing markets than Red Deer’s, indicating that some people wanted to move out of the city. “There was a hot-bed of sales in Sylvan Lake as people were selling their properties in Arizona and B.C. and getting a lakefront property closer to home.”

Russell believes pandemic-related travel problems contributed to this mindset. “I don’t think (COVID) will be as big a factor going forward. I think most people are learning to live with it. I think they are kind of tired of it…”

Lindsay Olver, chair of the Central Alberta Realtors Association, told the Advocate last fall that as the pandemic recedes and the economy opens up, allowing people to spend more on travel and in other areas of their lives, the housing market could stabilize — especially with rising interest rates.

Inflation is expected to hike up food prices in 2022, and Russell believes it could impact the cost of new homes more than the sale of existing houses.

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