Home sales jump in May

Jim McLeod June 7, 2011

There was a sharp uptick in real estate activity in Central Alberta in May, according to Multiple Listing Service statistics issued by the Central Alberta Realtors Association.

The association reported 179 home sales in Red Deer last month, a 19 per cent jump from the 151 deals in May 2010. In the surrounding area within the association’s jurisdiction, the year-over-year jump was even more pronounced — increasing to 225 sales this May from 178 a year ago, or a 26 per cent change.

In April, MLS house sales in Red Deer numbered 126 and in the outlying region the tally was 185.

The average price for homes of all types sold in Red Deer last month was $291,396, a five per cent slide from $306,012 last May. Outside the city, the average selling price was $252,263, almost the same as the $252,816 a year ago.

In April, the average selling price was $282,140 in Red Deer and $225,749 outside the city.

During the first five months of 2011, there have been 649 residential sales in Red Deer and 830 outside the city. Those figures are up 3.5 per cent and 14 per cent respectively over the same period last year.

Brenda MacKay, broker-owner of Advance Mortgage Inc. in Red Deer, believes the 2011 sales figures would be higher were it not for some uncertainty about current mortgage rules.

In January, the federal government reduced the maximum amortization period for government-insured mortgages from 35 to 30 years. It also set the minimum down payment for revenue properties at 20 per cent, and the required equity on refinanced residential properties at 15 per cent.

These latter changes have been “very confusing” for some buyers, said MacKay.

“They’re thinking they have to come up with at least 15 per cent.”

Instead, pointed out MacKay, the required down payment to qualify for a mortgage is much less.

“As long as you’re living in the house and it’s your residence, it’s five per cent down,” she said, adding that in some circumstances the down payment could even be as low as zero.

MacKay believes many prospective home buyers are not taking advantage of current low prices and interest rates because they don’t think they can qualify for a mortgage.

“If we’re getting calls on a regular basis from those people who are confused, how many people aren’t even bothering to call?”

Incorrect reports in the media are partly to blame, she said, with these in some cases also containing misleading information about applicable mortgage interest rates.

“I think the market’s been compromised by some inaccurate information to some degree.”

Last month, the number of homes being added to the local MLS database strengthened. In Red Deer there were 331 new listings — three per cent fewer than in May 2010; but in the surrounding region, the 744 new listings marked a 29 per cent improvement over the previous year.

For the year to date, Red Deer listings are 13 per cent lower than a year ago, and in the outlying area the tally is down five per cent.

Extract from the Red Deer Advocate

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