Monday was my first official day back from the holiday season, but that doesn’t mean last week was much of a holiday.
I can’t pin point the exact reason why, but the first couple of weeks back from Christmas holidays are crazy busy. I’m going to say that a few reasons are renewed optimism, perhaps a little Christmas cash, maybe it has to do with clients’ goals coming to fruition or consumer confidence is high for good reason.
Fortunately, this time around there’s a lot of good timing attached to it. Buying a home in Central Alberta is a very safe and affordable place to buy your first home or buy a revenue property.
We have one of the strongest – surely one of the safest – economies on the planet along with low housing costs in comparison with our neighbours to the north and south of us. Due to tighter government mortgage regulations and more migrants moving to Alberta we currently have a very tight rental market, meaning vacancies are extremely low.
According to Alberta’s Treasury Board and Finance department our province grew 2.5% compared to the rest of Canada’s 1.1%, we have the lowest unemployment rate at 4.7% and the highest employment growth tuning in at 2.8% while Canada sits at 1.0%.
In 2011, this same department forecasted that Alberta was going to have a population increase of 32,000+/- new Albertans, and we ended up almost doubling that. The scary part is that in the same forecast in 2011, they were calling for about 35,000 new migrants moving to Alberta in 2013, whereas the revised forecast is stating they are expecting 95,000!
This news, timed with low single family home listings – which there are only about 160 right now in Red Deer – is swaying the market from a balanced market to a seller’s market.
With more people moving here comes a higher demand for housing. First will be pressure on rental vacancies (which we’ve been seeing since October), then consumer confidence kicks up a notch as housing prices move upwards because of low inventory and the seller’s market – especially with those that bought high at the end of 2007 early 2008.
Those folks have been trying to get back into the market since late 2010/2011 (39-month itch) and are finally able to list and have some equity to move into the upgrade market without enormous mortgage penalties that they’ve been wrought with as interest rates tumbled on them after their purchase.
Hopefully with any luck the market doesn’t swing upwards in a violent race to the top like it did in 2007/2008, and there are government measures in place that should keep housing prices affordable and not create a super-heated market, but in Red Deer, there is a lot of room for prices to move upwards, especially when you look at the Edmonton and Calgary markets.
My hope is that we see a balanced market, which is great for those entering the market and great for those moving up in the market. The numbers currently tell us we are unbalanced in a sellers’ market, but it’s kind of too early to tell where we are headed as it is still only the second week of the New Year, but if the government forecasts are any indication it’s going to be a crazy busy year in the housing and mortgage business.
Jean-Guy Turcotte is an Accredited Mortgage Professional with Dominion Lending Centres-Regional Mortgage Group.