About Heartland, AB

AREA predicts decrease in prices and sales for real estate 2009.

I'm in Banff today, at the Banff Western Connection Conference. A conference geared towards Realtors and Real Estate Associations from Western Canada. It is also open to Realtors from all over not just the western provinces. While it is not surprising that we are hearing a prediction regarding a decline in real estate as that has already been happening for a while now. If you've been reading my posts you already know this. Each week I've been posting "Weekly Real Estate Updates", and many of those updates in the last 4 months have illustrated the direction Real Estate Transactions and price have been taking.

Being from Red Deer and somewhat of a stats guy (I love looking at the numbers), I was perked up at the point of the presentation regarding sales etc... The forecast for BC and Alberta were/are for declines, and these declines are predicted to be larger in BC and AB than the rest of Canada (2 - 5% decreases in price). No real basis for that other than because real estate shot up so dramatically in 2006, and 2007. A natural correction to supply and demand I suppose. I was disappointed in the lack of regional content. The data centred on MLS data from Calgary and Edmonton and an Alberta average or index. Real Estate is Local, show me local stuff or regional stuff. Alas nothing was produced. It was all at national and provincial levels. Really nothing new that you haven't already been ready or getting from watching news.

I repeat, Real Estate is Local.

Red Deer has always been insulated from the dramatic swings that the two larger cities experience. Calgary is usually the first city to experience rapid increases and decreases when they occur. The wave follows the QE2 north to Red Deer losing momentum along the way. Edmonton has Calgary envy or something because a few months after Calgary it's like they all say "oh yeah we can do better than that". Increases in Edmonton shoot up and the capital city is booming and at a rate higher than Calgary. Unfortunately when that happens they see a bigger drop too. The folks here in Red Deer just bob up and down a little bit and let the two bigger brothers (or sisters) create the drama.

You don't have to take my word for it you can ask the Realtors in Red Deer that are still around after 25 years and they will tell you the same thing. My mom, has told me that as she has seen these shifts occurring for 30 years. From the national energy crisis, and the recession of the 80's. I happen to think we're a tad more conservative and laid back in Red Deer. We watch the trends happening, and enjoy the upside, but we're also more prudent and cautious as we rise so when we back off the drop is a gentler one. Leave the thrill ride to the big city slickers i guess.

• Local Real Estate predictions for 2009?

• What's your predictions?
  

The beauty of predictions are they are educated guesses. Much like your educated guesses in school on the multiple guess exams, one answer is right, one less right, one more wrong, and one really wrong. I'll ponder my 2009 prediction this week and let you know soon. Until then email me yours.

Your Friend in Real estate,

Patrick Galesloot.

I’ll tell you, it’s a good thing. A rate drop means that borrowing money to buy a house or that line of credit is cheaper. Those home equity lines of credit with variable rates are looking pretty darn good these days. Now this budget delivered today would have us getting credits and reductions. Putting more money into our pockets to buy the things we need. This combined with some of the best buyer selection for real estate in many years equates to now being a good time to buy.

The rates:

A 50 point drop means to you or me a savings. Right now 5 year rates can be had at 4.39%. Look at the 7 year rates and they are 5.87%. At first glance that tells me that long term rates are expected to rise. 1 year rates are at 3.5% so short term money is cheap, long term the cost of borrowing is going up. (visit www.regionalmortgage.ca) for Current rates and calculators.

A $300,000 mortgage amortized over 25 years on the three different terms clearly shows the monthly payment savings to be had.

I know an extra hundred or two hundred dollars would help my family, how about yours?

Question is, can you afford to have prices go up and interest rates?

The budget highlights and what they mean to you and I?

For individual taxpayers, the government promises to boost the basic personal amount – which would allow people to earn more before they have to pay federal tax. The basic amount would go from $9,600 to $10,320, retroactive to Jan. 1.

The government also plans to raise the upper limits on the two lowest income tax brackets. The upper limit for the 15 per cent bracket would go to $40,726, while the upper income limit for the 22 per cent bracket would rise to $81,452.

A new home renovation tax credit would give up to $1,350 in tax relief on home improvement projects. The eligible expenses must be at least $1,000, but not more than $10,000, and the work would have to be done between Jan. 27, 2009, and Feb. 1, 2010.

So at the end of the day we should have more money on our pay cheque to deposit into our accounts, and to fix up properties and increase fuel efficiencies we can do so with less financial pressure. Visit CBC.ca for more detalis on the budget.

Your Friend in Real Estate,

Patrick Galesloot

Budget source and highlights www.cbc.ca

My earlier blog post I asked you 4 questions and to email me your thoughts. http://www.century21.ca/patrick.galesloot/Blog/2008_Red_Deer_Real_Estate_Market

• Where do you see house prices going long term?
• How long do you plane to live in that house?
• Should you wait?
• Can you afford to wait to buy based on past price trends?

In follow up I received comments that got me thinking some more about the questions and the responses. The response was a definitive "YES" real estate values will go up long term, but overall people are apprehensive about doing so in a "down" market.

There are different factors influencing your decision to buy and sell.

If you are a first time home buyer the numbers speak for themselves in my opinion. Long-term, home ownership is the way to go. Look at Grandma's house. Grandma paid less for her house than you pay for a car these days in many areas. Grandma is probably mortgage free by now and accumulated hundreds of thousands of dollars along the way. If grandma were to sell today and have a handful of cash that cash, from her personal residence, is tax free. The single largest tax break for most Canadians is that we do not get taxed on capital gains on our personal residence.

So should you be trading up today? Absolutely! Increasing the size of your home and its value should be part of your retirement strategy. When you are 65 and ready to downsize into a 1 bedroom condo and a motor home, you could benefit from the same equity gains as grandma has. Can you afford to do so? It is best to consult your Realtor and your mortgage specialist.

• Do you have enough equity built up to leverage to trade up?

• How much equity do you have today?

You Need a Current Market Evaluation of your home. A great Realtor will help you analyze your situation and advise you of your options.

For the full article visit my Blog at www.patrickgalesloot.com or click here.

Wishful thinking today as it is cold, very cold -27C plus windchill. Brrrr From Red Deer, Alberta

 

From Red Deer

 

 

 

The numbers are in and we've been reviewing the 2008 Red Deer real estate market quite a bit here at Century 21 Advantage.

Quite a journey it has been with highs and lows in financial markets, and changes to price frequently. There were a lot of sales in the City of Red Deer. The graphs below are compiled form MLS data provided by the Central Alberta Realtors Association.

The average price for 2008 when combing sales for all product types (mobiles, apartment condos, townhouses, duplexes, and single family homes) was $301,363. That is certainly where the spike of the graph is.

On a month by month basis the sales volume rises and falls depending on the season, yet the grouping stayed mostly the same. The average for the year bumped up and fell in certain months but overall you can see that the most purchases are in the same grouping.

I think the monthly or seasonal sales of real estate is best demonstrated by plotting the sales numbers and comparing to previous years, such as this graph:

2008 is the line in green. We started the year off with exceptional sales volumes. For most of the year 2008 recorded the 2nd highest sales volume on record. By the summer we were equal to and greater than 2007 which had the highest sales volume. Then September came. I know it wasn't that long ago, but if you recall the fall of 2008 was the biggest economic free-fall we have seen in decades. Oil has come crashing down from $140/barrel to $37/barrel. As Oil plummeted in price so did sales volume. Yes Red Deer is in the thick of Oil and Gas country and when Oil takes a nose dive so do pay cheques and buying power. This also pushed prices down, and more value is to be found today at $350,000 than a $350,000 home in 2007.

I point out that the sales volumes rise and fall with seasons. This year we added political turbulence, financial market meltdowns, and dropping commodities to the mix. Financials powers also responded by increasing credit requirements and eliminating buying options such as "zero down". Short term wise we are felling them as are many people and industries across the country. This should not deter you from buying. Unlike previous declines in real estate markets, the interest rates or borrowing costs have remained low.

Buy today as you have lots of choices and the cost of borrowing is low. We may be at the bottom today. The only way to know for sure where the bottom of the market occurred is by looking back. SO that moment in time has based. No different than buying at the peak. If you knew you were buying at the peak would you? The answer is NO. However this is what many of us did. In a sellers market we can't stop the buyers from buying. Buyers are lining up as fast as sellers are available. Then in a buyers market the buyers are actually sitting on the fence while the best buying conditions pass them by.

This is not a sit on the fence market. It is a buying market.

Did you know that in 1956 house prices in Red Deer were $5,000 - $9,000, then in 1972 they were $25,000 - $30,000. in 1989 the average house price was now (1989) $86,387. The 80's had interest rates of 18%, the country was in a recession, and the national energy program brought economic activity to a virtual standstill in Alberta. Jump forward to recent years and the picture looks like this:

I ask you 4 questions email me your thoughts.

• Where do you see house prices going long term?
• How long do you plane to live in that house?
• Should you wait?
• Can You afford to wait to buy based on past price trends?

Unfortunately I do not have a lot of data prior to 1989, but does this change your answer?

I don't know what the market will look like at the end of 2009, but based on the above data I'd feel confidant in buying a home today.

Your Friend in Real Estate,

Patrick Galesloot