Central Alberta's Commercial Real Estate

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October 15, 2015 - Market Update

Posted on November 2, 2015 at 4:35 PM

The question we are asked most often lately is “How is the market? Are prices going down? Where is the market going? To answer the first question, the market so far this year has been very normal when compared to the last five years. Answers to the other two questions are a little more difficult.

There are two major components that make up every real estate market – Supply (sellers) and Demand (buyers). There are many factors that influence those two components, but the economy is the most important. Most people rely on the media to tell them how the economy is doing. The way the media represents the economy can influence consumer confidence. When consumers are confident in the economy, they make buying and selling decisions. When they are not confident, they tend to delay making those decisions.

The federal election campaign has no doubt impacted consumer confidence. Every political party has been telling us that if the other guy wins, we are doomed. Whichever one you believe, if you aren’t convinced they are going to win, it’s possible your confidence is low.

Sales so far this month in central Alberta have been generally normal for this time of year, but we have noticed that the number of pending sales are down, suggesting that the market has slowed a little just recently. It is certainly possible that the election campaign and the uncertainty of the result has caused people to hold back until the election is over.

We can’t predict whether prices will go down or where the market is going. The relationship between supply and demand will determine what prices do. We do know that it takes much longer for prices to go down, than it does for them to go up.

ATB Business Beat: Optimism drops, but businesses still happy, by Nick Ford, Economist at ATB Financial

ATB Financial’s third quarter Business Beat survey shows a decline in the number of small- to medium-sized businesses that believe Alberta’s economy will be stronger in six months. When asked about the province’s expected general economic performance, the index fell from 39.0 in the second quarter of the year to 25.2 in the third quarter.

This was the sixth consecutive quarter that there was a falling-off in the ATB Business Index, too. This particular measure of future business performance sat at 46.6, nearly seven points lower than the last round of polling and about 24 points lower than this time last year.

There’s no doubt that falling optimism is related to uncertainty clouding the energy sector. This last round of surveying was conducted in August, the month that saw the price of oil fall to around $US 38 per barrel. Given this, the drop in optimism is not surprising.

But, this latest version of the Business Beat survey focused on happiness, and despite the tension and frustration overshadowing our province’s oil and gas sector, over half of small and mid-sized business owners in Alberta report being pretty happy with nearly a quarter reporting that they are very happy.

So while oil prices remain suppressed and continue their battle in the marketplace, small- and medium-sized business owners in our province remain pretty happy.

 

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Reply KelBlople
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