Central Alberta Realtors Association president Richard Pochylko says 2018 was a tough year for real estate but 2019 could be better. Photo by PAUL COWLEY/Advocate staff

Red Deer real estate had a tough 2018

House sales were down but hope for 2019 improvement

2018 started out promising for local realtors.

Richard Pochylko said the first two months were not the best January and February he’d had in 21 years selling homes, but they were in the top five.

Then March came.

“Then all of a sudden it started to slow. Everybody noticed a big slow down in the spring time,” said Pochylko, a Century 21 Advantage associate broker and the new president of the Central Alberta Realtors Association.

“Then in the last three months of the year the slowdown was even more noticeable. The volumes of sales dropped.”

In Red Deer, 1,331 homes were sold last year, down from 1,397 in 2017 and 1,522 in 2016. Go back to a good sales year — such as 2014 when the numbers of homes sold was 2,019 — and the difference is even more stark.

“That is a massive drop,” he said on Thursday. “Whenever you have a drop in volume like that you’re creating an inventory that doesn’t get sold and it creates a weight on prices and prices have to come down.

“The people that managed to get homes sold last year tended to be those that were willing to accept reality and willing to say ‘OK I’ll take what I can get and move on.’”

In the last few years, house values have been slowly eroded as the provincial economy has struggled.

“In four to five years, you’ve lost at least 10 or 11 per cent. That’s the minimum you would have lost,” he said. “But there’s a big possibility you lost 15, or as much as 20 per cent.”

Hardest hit are higher-end homes, which have a smaller pool of potential buyers. Pochylko knows of one home that was purchased for $805,000 in 2014 and sold this year for $665,000.

While that is an extreme example, even homes in the average price range of $370,000 would have likely sold for around $400,000 in 2014.

Pochylko believes several factors came together to take the wind out of real estate sales. New mortgage rules, including a tougher mortgage stress test that kicked in at the beginning of the year, forced many homebuyers to downgrade their ambitions.

As well, early optimism that 2018 would be a turnaround year for the economy began to fizzle as hoped-for good news story such as the Trans Mountain Pipeline fizzled.

The impact of fewer home sales goes beyond sellers and realtors, he said. A recent independent study found a home sold in Western Canada generated $54,900 in economic spinoffs.

For Red Deer, using that formula would mean nearly $38 million less money was injected into the economy last year, compared with 2014.

“When you see numbers like that you go, ‘Holy cow, that has a major impact.’”

Many economic forecasts are predicting Alberta will continue to face lean economic times in 2019.

Pochylko is not expecting a banner year in real estate but believes there will be an improvement in sales numbers, maybe to around 1,400 homes. There is some pent-up demand matched by buyers who have waited long enough and are now willing to sell at market price.

“I think we should start to see a bit of an up-tick, probably a bit later, through the spring and summer of 2019.”



pcowley@reddeeradvocate.com

Like us on Facebook and follow us on Twitter

Just Posted

Man dies after being shot in Lacombe

A man is dead after being shot, Lacombe police say. Early Sunday,… Continue reading

One person dies in hospital after house fire erupts in Calgary

CALGARY — The Calgary Fire Department says a person has died in… Continue reading

Jury finds former SNC-Lavalin executive Sami Bebawi guilty on all charges

MONTREAL — A former SNC-Lavalin executive on trial for fraud and corruption… Continue reading

Festival of Trees volunteers honoured at breakfast

This year’s Festival of Trees was able to provide the Red Deer… Continue reading

Fashion Fridays: A masterclass on H&M knitwear

Kim XO, helps to keep you looking good on Fashion Fridays on the Black Press Media Network

Your community calendar

Thursday Join us at the Senior Center Downtown House (5414 43 St.… Continue reading

Red Deer Optimist Chiefs split weekend series

CAC 4 Optimist Chiefs 2 After wins in seven of the last… Continue reading

Sales of electric vehicles plummet in Ontario after rebate cancellation

TORONTO — Sales of electric vehicles in Ontario have plummeted since the… Continue reading

Partway through first term, Quebec Premier Legault already planning his exit

SAN FANCISCO, United States — Political power has an expiration date for… Continue reading

Unifor announces boycott campaign against Co-op in refinery labour dispute

REGINA — The union that represents hundreds of locked-out workers at a… Continue reading

Defence minister says Canada ‘very fortunate’ to have Vance as defence chief

OTTAWA — Defence Minister Harjit Sajjan has come out in support of… Continue reading

Red Deer Vipers earn wild comeback win

The Red Deer Vipers needed a comeback to top the Mountainview Colts… Continue reading

Big Valley’s Zeke Thurston captures second world title at NFR

Zeke Thurston is quickly becoming one of the most decorated saddle bronc… Continue reading

Most Read