The long-awaited spring market has seemingly sprung. Flowers are blooming, birds are singing and the pothole crews are out in full force. Wait…what?
Ok, so none of that is actually true…yet. The only spring-like event that feels ‘spring-like’ is the amount of active clients seeking mortgage advice on my desk right now as they are looking to upgrade or enter the market.
Many realtors and new home builders are quite surprised by the amount of activity that’s sprung. They are all excited but are unaware of the answer as the national news only speaks of the slumps of the average home in Canada, and in Toronto and Vancouver, our “Centres of the universe.” it’s not going so well. Fortunately, we aren’t in an average part of Canada.
Our geographic location has provided our province with wealth unseen in many parts of the world and our people have found ingenious ways of obtaining these vast resources.
Fuelled by Alberta’s healthy labour market, Alberta’s population surged by 3.0% in the 12 month period between December 2011 and December 2012, which equates to 115,843 people, the strongest since 2006.
According to Alberta Finance and Enterprise (AFE), 2013 has already seen an increase of 42,000 new migrants, both interprovincial and international whereabouts.
And they all need places to live. The statistics below tell the story of how they are driving up the value of homes.
Conferring back to AFE, while 2011 had slumping ‘new home starts’ statistics, 2012 saw an increase of 29.9% from then, and so far 2013 is showing an increase of 7.8% above that figure. Average new home prices have increased 2.2% so far this year.
Meanwhile on the resale side, the average home is selling on the MLS, in Alberta for $373,800 which is an increase of 5.5% over this time last year.
Central Alberta is also firing on all cylinders with February 2013 MLS statistics showing single family homes have a median sale price of $339,000 compared to February 2012’s of $312,000 which equates to an increase of 8.5% over same time the previous year.
Now I’m not going to say that this value difference is significant to that fact all homes have risen by this amount; this is a historical look back of this statistic during that same month year over year. But looking at these figures does show that our homes have risen substantially over the previous year.
The strange thing is that our market has taken off before the spring run-up. Typically we don’t see the value increases until late March or April, however with the increased demand for housing from our new Albertans, this is the effect we get.
Now don’t expect that our houses will keep increasing like this, there’s only so much house that the average Albertan can afford. And we won’t ever be seeing any throwbacks to the housing rage of 2006-2008. These times are more stringent with tougher qualifying regulations, shorter amortizations and a government hell-bent on keeping prices at bay.
Regardless of any of the rhetoric from the past, our growth is more organic in meaning rather than in pure speculation such as the events of pre-2009.
With a healthy labour market attracting new people and a rosy outlook for the price of our commodities, Red Deer and Central Alberta’s home market will be showing gains for some time to come.
Jean-Guy Turcotte is an Accredited Mortgage Professional with DLC Regional Mortgage Group.