The Altario Quarterly (July, 2013)

The Camrose Housing Market in Q2 2013

CLICK HERE to read the entire July, 2013 newsletter, including graphs

Wow.  When the market decides to make a move, it doesn’t kid around.  For many quarters now, I’ve been decrying the saw-tooth that has basically characterized the Camrose residential market from Q2 2007 to Q1 2013.  Now, I realize that one good quarter does not a market make, but the indicators have finally smashed through the narrow band in which both prices and sales volume have been situated over the past six years – at least for now!

Highlights

 

·       The number of sales, at 140, is the highest ever for any quarter, absolutely smashing the previous record of 117 in Q2 2006.  It’s the first time sales have hit triple-digits since Q2 2009 (110) and it’s significantly higher than either the 62 sales in Q1 2013 or the 99 sales in Q2 of last year.

·       The median price of $280,313 is the fourth-highest it’s ever been (the record is $285,000 in Q2 2010), up significantly (8.02%) from Q1 2013 ($259,500) and up 12.13% from Q2 a year ago.

·       The average sale price of $291,562 is the highest it’s ever been, 5.89% higher than last quarter and 14.64% higher than a year ago; the previous record was in Q1 2010 ($284,567).

·       There were more sales of over $400,000 (16) in Q2 2013 than ever before (11 in Q3 2012 and Q3 2007).

There’s not much doubt that these are all encouraging signs and that Camrose would no doubt eventually begin to experience the spillover effect from an increasingly stronger Edmonton market.  It seems there’s a fair bit of confidence in the economy, as the sales of over $400,000 would tend to suggest.  Add to that the fact that increased mortgage restrictions have finally worked their way through the system and people’s thinking (it seems), and we have the recipe for the kind of performance we saw in Q2.  We are certainly experiencing that increased market participation first-hand on the residential side of our own business.

However, some notes of caution is still necessary before breaking out the bubbly (which more realtors can now finally afford again!).  One is that Q2 is frequently a very strong quarter of the year.  As I said, one quarter is not a trend, a point that shows itself very clearly in the rolling 12-month averages that I track (but which are not included in the newsletter for risk of making the graph there unreadable).  The rolling 12-month average remains in the narrow band in which it settled at the beginning of 2008 and we will need to see at least another three quarters that are well  ahead of their counterparts from the previous year before making any definitive declarations about market momentum. 

Another red flag is the ominous potential for rising interest rates.  Household debt is still exceptionally high in Canada and a trend toward increasing rates will definitely have an impact at some point.  If rates rise significantly and/or for a prolonged period, all bets are off. 

The final note of caution is the table on Page 3, which shows Camrose building statistics (thanks to www.camrose.ca for posting this).  There doesn’t appear to be any real upward push in new construction at this point, although Q2 did see a large number of vacant parcels sell, which is a good sign.  There is a somewhat different dynamic at play in the non-residential sectors but, overall, supply and demand in Camrose appear to be in balance in all sectors.  It’s only when demand outstrips supply that we’ll see more quarters in the housing sector lake the one just completed.

More items of note:  There are currently 276 residential properties still on the market, including vacant land (vs. 275 at the end of the last quarter and 263 at the end of 2012).  The spread between sales and listings has tightened significantly in this past quarter and it should therefore come as no surprise that prices have risen.

Every trend has to start somewhere, but do we know for certain whether we just witnessed the start of one?  Only time and hindsight will tell but the waiting is sure made easier in the meantime.   We’ve all been waiting for a sign that we’re turning the corner so we may as well appreciate it for however long it’s here.