RED DEER HOUSING MARKET OUTLOOK

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1 RED DEER - JUNE 3, 2009 RED DEER HOUSING MARKET OUTLOOK Regine durand Market Analyst - CMHC Prairie and Territories

2 50,000 48,000 46,000 44,000 42,000 40,000 38,000 36,000 34,000 32,000 30,000 28,000 Red Deer City - Employment 50,000 people employed in April 2009 number of people employed 52,000 26, Source: Statistics Canada

3 Local & Provincial Participation Rates April 2009 Red Deer participation rate at 81.4 per cent participation rate (%) Canada Red Deer Alberta Source: Statistics Canada

4 units 1,600 1,500 1,400 1,300 1,200 1,100 1, Red Deer CA - Housing Starts Three economic cycles since 1988 Multi-family Single-detached Average annual housing starts: 330 Annual provincial economic growth: 3.7% Number of new jobs: 1,300 Average annual housing starts: 605 Annual provincial economic growth: 4.3% Number of new jobs: 5,900 Average annual housing starts: 1,363 Annual provincial economic growth: 3.9% Number of new jobs: 11, f 21% Source: Statistics Canada, CMHC, CMHC forecast (f)

5 units 1,600 1,500 1,400 1,300 1,200 1,100 1, Red Deer CA - Housing Starts After demographic cycle, growth to come back in 2010 Multi-family Single-detached Average annual housing starts: 1,330 Gains from migration: 1,780 Number of new households: 6, f 21% Source: Statistics Canada, CMHC, CMHC forecast (f)

6 Red Deer CA - New & Resale Inventories Drop in inventories warrant higher starts in 2010 new single-detached units Inventory (new single-detached) MLS listings-central Alberta 95 MLS listings-red Deer City Source: CMHC, CREA, Central Alberta Realtors Association MLS units

7 Red Deer City - New and Resale Prices average price $440,000 $410,000 $380,000 $350,000 $320,000 $290,000 $260,000 $230,000 $200,000 $170,000 $140,000 $110,000 $80,000 Price differential impacts demand for new homes MLS single-detached units New single-detached units - $36,236 -$22,403 $62,324 $26, Ytd Apr.09 Source: CMHC, CREA, Central Alberta Realtors Association

8 Red Deer City New and Resale Prices average price $440,000 $410,000 $380,000 $350,000 $320,000 $290,000 $260,000 $230,000 $200,000 $170,000 $140,000 $110,000 $80,000 Price differential impacts demand for new homes MLS single-detached units New single-detached units 13% 12% 21% 29% -2% -6% Ytd Apr.09 Source: CMHC, CREA, Central Alberta Realtors Association

9 Red Deer CA - Absorptions by Price Shift toward higher priced homes pulled the average price up % share of market new single-detached units $100K -$174K $175K -$249K $250K+ Average price YTD Mar.09 Source: CMHC 29% 13% 12% $400,000 $360,000 $320,000 $280,000 $240,000 $200,000 $160,000 $120,000 $80,000 $40,000

10 units 5,300 4,900 4,500 4,100 3,700 3,300 2,900 2,500 2,100 1,700 1, Central Alberta - MLS Total Sales Fifth best performance on record expected in 2010 MLS sales-central Alberta MLS sales-red Deer City f 6% Source: CREA, Central Alberta Realtors Association, CMHC Forecast (f)

11 Red Deer - Cost of Owning Vs. Renting Ownership premium decline will lead to higher sales monthly carrying cost*, rent $1,500 $1,350 $1,200 average rent (2-bdrm apt.) carrying costs (MLS condo) $1,050 $900 $542 $445 $750 $600 $450 $300 $150 $ * assumptions: 10% down payment, average 5-year posted mortgage rates, 25 years amortization Source: CREA, Central Alberta Realtors Association, Bank of Canada, CMHC

12 $2,250 $2,100 $1,950 $1,800 $1,650 $1,500 $1,350 $1,200 $1,050 $900 $750 $600 $450 $300 $150 $0 Red Deer City - Cost of Owning Carrying costs decline will lead to higher sales monthly carrying cost* MLS condo MLS all types MLS single-detached YTD * assumptions: 10% down payment, average 5-year posted mortgage rates, 25 years amortization Source: CREA, Central Alberta Realtors Association, Bank of Canada

13 Central Alberta - Cost of Owning Carrying costs decline will lead to higher sales monthly carrying cost*, MLS all types $1,950 $1,800 $1,650 $1,500 $1,350 $1,200 $1,050 $900 $750 $600 $450 $300 $150 $0 Central Alberta Red Deer YTD * assumptions: 10% down payment, average 5-year posted mortgage rates, 25 years amortization Source: CREA, Central Alberta Realtors Association, Bank of Canada

14 Central Alberta - MLS Average Price MLS average price to firm up in 2010 $310,000 $290,000 $270,000 $250,000 $230,000 $210,000 $190,000 $170,000 $150,000 $130,000 $110,000 $90,000 $70,000 $50,000 Average Price-Central Alberta Average Price-Red Deer City f Source: CREA, Central Alberta Realtors Association, CMHC Forecast (f)

15 Red Deer - Apt. Vacancy Rate Vs. Rents per cent Average two-bedroom apartment rents to level off in $1, avg. 2-bd apt. rents vac. rate $ $ $ $ $ $ f 2010f Source: CMHC, CMHC Forecast (f) Private Structures of 3+ Units

16 Red Deer CA - Forecast Summary f 2010f New Home Market Single-Detached Starts Multi-Family Starts Total Starts 1, Resale Market* Total Sales 5,075 4,214 3,550 3,770 Total Average Price $270,494 $278,040 $264,000 $267,000 Rental Market Apt. Vacancy Rate (all units) 2.6% 4.4% 4.5% 4.0% Average 2-Bdrm Apt. Rent $845 $876 $900 $910 Source: CMHC, *CREA, *Central Alberta Realtors Association, CMHC forecast (f)

17 RED DEER - JUNE 3, 2009 THANK YOU! Regine durand Market Analyst - CMHC Prairie and Territories