The local real estate market has flatlined since the beginning of the year, but it’s not dead, and in fact economic forecasters see reason for increased activity in 2012.
“The improving economy will support continued growth in 2012,” said Richard Goatcher.
The senior market analyst for Canada Mortgage and Housing (CMHC) pointed out that as Alberta’s overall economy improves, more people are migrating to the province. That will translate into a more buoyant housing market.
“There was more migration into the province than last year and the labour force in the Edmonton area increased by 22,000 jobs,” he said.
During October, 46 single-family dwellings sold in St. Albert, a number that clearly reflects a slower market than a year ago, when 63 houses sold. In 2009 a total of 70 single-family dwellings sold in October.
This October the average selling price was $427,868. That selling price hasn’t varied much since January, when the average single-family selling price was just over $400,000 and a total of 30 homes sold.
Goatcher expressed disappointment in the resale market because his expectation had been that the influx of newcomers would start to put pressure on the need for more housing by the third quarter of this year.
“That hasn’t happened and it’s a bit disappointing because by mid-summer there was a net increase of 22,016 people to the province compared to the previous year when 13,876 people migrated into the area. We’re waiting to see when it will start to balance out, but it’s still a buyers’ market,” he said, adding that the basic economics experienced by newly employed workers is the answer to the puzzle.
“Typically when the new workers first arrive they move into rental accommodations. The incentive to buy a house comes after they are a bit more established. Or that incentive (to buy) happens as there are fewer places to rent and consequently rents go up,” he said.
CMHC will not release its fall rental report until December and did not have specific numbers for the St. Albert area. But throughout the Edmonton area the apartment vacancy rate declined over the course of the year.
“CMHC anticipates a (Metropolitan Edmonton) vacancy rate this October of close to 3.8 per cent compared with 5.2 per cent in April 2010,” Goatcher said, adding that CMHC also anticipates rents will increase by approximately $15 per month by next year.
CMHC’s Housing Market Outlook for October put the current average rent for a two-bedroom unit at $1,030.
The new-home building market should also improve, once the newcomers become confident in the stability of their jobs, Goatcher said.
“Strong full-time job creation this year, combined with persistently low mortgage rates and continued economic growth going forward, should bolster demand for homeownership in 2012. The builders may be waiting for that shift,” he said.
