The Altario Quarterly (January, 2014)

Click HERE to read the entire January, 2014 newsletter, including graphs

The Camrose Housing Market in Q4 2013

When I last did this analysis pertaining to Q2 2013, I said that one good quarter does not a market make.  In Q2, the indicators finally rose above the narrow band in which they had been situated since 2007-08 and there was reason to be optimistic but it seemed to be in everyone’s best interest to see whether this ostensible momentum had staying power.

Well, it seems that it does. 
The push is subtle and not necessarily evident on a quarter-to-quarter basis but, when we consider the rolling 12-month average and some other indicators, it seems that the gains are solidifying over an extended period.  As I noted earlier in the newsletter, I think that the rolling 12-month average gives us a clearer idea of longer-term trends and the fact is that Q4 2013 shows the highest rolling 12-month average ever, with a price of $277,822 (relative to a median price for Q4 itself of $265,000), that my tracking has ever shown.  Let’s drill a bit deeper.

Highlights

 

·        The Q4 2013 number of sales, at 75, is the highest ever for any 4^th quarter that I’ve tracked since 2003 (this time, I’ll be more careful and point out that there might have been stronger 4^th quarters on an absolute basis but, on relative terms, this is likely the best one); the next-highest is 61 in Q4 2008.  More interestingly, perhaps, is the average number of sales per quarter this year is 95, which is also the highest it’s ever been among the sales I have; the next-highest is 93 in 2006.  For the sake of comparison, the number of sales in Q4 2012 was 55, while the average number of sales per quarter last year was 78 (2011 was very similar).
 

·        The Q4 2013 median price of $265,000 is up from Q3 2013 ($256,000) and from Q4 2012 ($255,000) but down from the very robust Q2 2013 ($280,313).
 

·        The Q4 2013 rolling average sale price of $277,822 is 1.75% higher than Q3 2013 and 5.19% higher than a year ago.  This price is marginally higher than the previous rolling high in Q1 2008, so it seems that people can stop thinking that prices in general are still somehow down from their previous highs during the boom.  For all intents and purposes, that discussion is over.
 

·        There were 35 sales of over $400,000 during the past year, vs. 22 in 2012, 25 in 2011, 16 in 2008, and 28 in 2007.  Moreover, there is some new development occurring at the $600,000+ level, with indication that there is certainly sufficient interest at this price point, provided that the properties are made available on the basis of a controlled roll-out (average absorption over the past two years at this price level has been approximately one property per quarter).  This tends to suggest an increasing overall price level and continued confidence in the economy by people with means, many of whom make their living directly or indirectly from the oil and gas industry. 
 

There’s not much doubt that these are all increasingly good signs for the Camrose housing market.  With an average housing price that’s more than $100,000 below Edmonton’s, Camrose continues to be an affordable market, depending on supply at any given point, and that’s where this becomes even more interesting, as I will discuss below.

Residential rents are a different issue (unfortunately for tenants), with CMHC’s overall apartment vacancy rate in Camrose in October, 2013 being 3.7% (this includes a 0.0% vacancy rate for bachelor suites and 3-bedroom apartments).  CMHC’s average monthly rent for Camrose in October is $812, which represents a 4.37% increase over the previous year.  However, CMHC’s figures take the whole Camrose apartment universe into consideration:  newer 2-bedroom suites are commanding as much as $1,100/month and this doesn’t even take into account the increasing trend of renting apartments to two or more individuals on a per-person basis, with the resulting total revenue being far higher than that for which the apartment would normally rent.  Single-family housing commands rents in a wide range but the upper band of the range is well in excess of $1,700/month.

There is positive news in the Camrose building stats as well.  The table below (thank you once again to the fine people working for the City of Camrose for this information) shows that there was almost $10 million dollars more residential construction in the Camrose market in the year ending November, 2013 than there was in the year ending November, 2012.  Many of thousands of new people are moving to Alberta and it only makes sense that Camrose will see its share of these.

As I write this, there are 97 residential properties on the market in Camrose via MLS (on the Central Alberta board and the Edmonton board combined), excluding vacant land.  If we consider this relative to the average of 95 sales per quarter that occurred in 2013, the market would seem to be more or less in balance, but the continuance of this will depend on how much more supply is made available in Q2 2014, the second quarter almost always being the busiest quarter of the year.  If the available listings and new construction do not meet the demand, we can expect to see a further appreciation in prices and significantly shorter exposure periods.

Overall, we’re seeing what should be a good combination of events for the Camrose marketplace:  rising prices (albeit not steeply so, which is a good thing overall) on strong, consistent volume, coupled with a relatively tight supply.  There are always other, unforeseen factors that have the potential to come into play and render this or any other forecast obsolete in very short order, but early indications are that 2014 is shaping up to be a positive year in Camrose.

Other highlights and comments
 

·        In 2013 in the small towns of the area we track daily (as far north as Ryley, Holden, and Viking in Beaver County, as far east as Hughenden in the MD of Provost, as far south as Veteran in the County of Paintearth and as far west as Bittern Lake), there were 239 sales vs. 201 in 2012 2012.  It’s an unscientific comparison, but this represents a 19% increase in value in the past year.
 

·        We recorded 109 acreage sales in 2013 (in all of Camrose and Flagstaff Counties, as well as in the north part of the County of Stettler, the east part of the County of Wetaskiwin, and the southernmost part of the County of Beaver), while there were only 77 during all of 2012.
 

·        Agricultural land sales continue to be very strong, with an unconfirmed sale of $3,750/acre near Rosalind representing the high water mark.  It remains to be seen whether values at this range are sustainable (there aren’t going to be bumper crops every year, you know).
 

·        Camrose has no industrial land in its inventory at present.  It’ll be interesting to see what options the new City Council chooses in addressing this.