Patrick Galesloot

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

Saturday May 31 I had the pleasure of speaking to the attendees at the community breakfast.  There were approximately 60 residents in attendance.  The topic of discussion was that of an economic update with myself being asked to give a Real Estate update.  

I'm always happy to discuss real estate and changes in the market place with home ownes so I enjoyed the opportunity to do so. 

The house prices in the area have risen substantially over the years.  Our data from the MLS board goes back to 1989.  Back in 1989 the average house sale price in Penhold was $57,071.  Springbrook was still operating as CFB Penhold.  Penhold was and still is an affordable alternative to the larger City of Red Deer.  Red Deer's average sale price in 1989 was $95,459.  

Jumping to the first recorded MLS sales data for Springbrook in 1997, the average home sold for $61,425 in Springbrook.  At that time the sales consisted of townhouses and half duplexes.  Penhold's average sale price of houses was considerably higher at $86,432.  Still more affordable than bigger brother Red Deer.  Red Deer's average sale price for single family homes in 1997 was $131,499.

In 2000, sales and new development were occurring in Springbrook, as we entered into a prosperous new Millennium.  Springbrook's single family homes sold for an average of $112,777 in 2000.  Very close to the level of the more established Town of Penhold's average house selling price of $115,257.  Again Red Deer maintained that $40,000 difference with sales average in 200 reported at $157,993. 

So from 1989 to 2000 or the 90's, house prices in Red Deer climbed 65%.  This is pretty substantial growth during a time when we were not in experiencing a "boom".  Penhold's prices doubled over that same decade (101.95%).

For the whole story please visit my blog located here.  You can subscribe to updates to my blog by clinking here: 

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Patrick Galesloot

Frustrated selling in a buyers market? Understandable emotion. Perhaps a more closer look at the weekly stats, and market place numbers and comparing them from 2006 to now will help.

In Red Deer, May was/is , and not your typical movie fare, but when it comes to new listings 2008, is a block buster of a year.

It wasn't that long ago we were in a heated seller's market, we only have to look as far back as 2006. Then we started transitioning out of that frenzy in 2007 to today's buyer's market. Each market has it's good points and bad depending on the side of the transactional fence you are sitting. For those sitting on the selling transactional fence it can be tough pill to swallow. many are scratching there heads wondering what should I do, or what can I do to sell my house.

Sales are still strong this year there is no doubt about it. Interest rates are quite low and despite the sub prime crisis south of the border many Canadian buyers are still able to take advantage of buying zero down. I you are buying today you have much to be thankful for. I think it's important to look at how we got to where we are with this increase in inventory otherwise known as excess supply in the supply an demand world of economics.

In 2006 the weekly market of new listings and those being sold had a very narrow gap. Often the number of homes sold surpassed new listing coming onto market. In the height of things at least two buyers were available for every home. The average home owner (looking to own a home to live in) and the speculator (buying for an opportunity to sell for a quick profit).

To read more complete with statistical graphs visit my real estate blog, click here,

Your Friend in Real Estate,

Patrick Galesloot

Good. Sales were down from record 2007 sales volume, but well above 2006 numbers.

Here at Century 21 Advantage, we led the way with listings sold in Red Deer. Out of the 220 properties sold in April Century 21 Advantage sold 56 which is a little over 25%.

How does this compare to what the market is like or what is every one else doing? Well today we see a total of 785 properties available in the City of Red Deer with 70 of those with conditional offers. That is great selection for buyers, and increased competition for the sellers who are striving to be part of the 220 sold. The number of sales is down from the 242 in April 2007 (-9.09%).

We expect the story of increased selection for buyers to dominate the real estate landscape here in Central Alberta for some time. We are still in a buyers market, and what a buyers market it is. Now is a great time for people to buy. Interest rates have decreased a full point since early March. Oil prices and crop prices are high creating economic conditions favourable to those industries. The products available for buyers 25, 30 and 40 year mortgages are readily available as well as there still are zero down mortgages available through CMHC. The vacancy rate is less than 2.5% in Red Deer which is great for investors.

So if you are buying you can buy with confidence in my opinion. You have the luxury of selection, low borrowing costs, and negotiating power. The sellers should not be in a panic however patience and grounded expectations should be the norm. 2007 sales volume was a record, we may be down but we're far from out.

April Sales volume comparison:

2006: 176 properties

2007: 242 properties

2008: 220 properties

More on the Red Deer Real Estate market please visit www.patrickgalesloot.com or my Red Deer Real Estate Blog