Red-underlining correct contraction words

It is flagging the contraction because you introduced an introductory dependent clause (In Temple Gardens) that must be separated from the rest of the sentence (e.g. it's snowing.) by a comma.

In Temple Gardens, it's snowing.

When you make that correction, the contraction will lose its red grammar underscore in Pages v7.2.

In fact, if you deselect the sub-menu items in Pages : Spelling and Grammar : Check Spelling While Typing, Check Grammar With Spelling — that solves the annoying red warning interruptions. If instead, you just choose Spelling and Grammar : Show Spelling and Grammar, it will flag the contraction, and tell you that the word may not agree with the rest of the sentence — with the contraction selected in whatever Highlight color you have chosen from System Preferences : General : Highlight color.

I would be inclined to turn off all spelling and grammar checks until I was at a good stopping point, and then select the recent block of content to check both issues. Gives you a productivity edge while writing, without disrupting your creative thought flow.

Pages v7.2 does not use a green squiggly underline for grammatical errors, as did Pages '09 v4.3 on older versions of OS X (e.g. Mountain Lion).

If you happen to have a Grammarly acount, there is a free Safari extension that would allow you to copy/paste Pages content into it, and there is also a free Grammarly Mac application for the same purpose. I didn't care to setup yet another online account where my privacy could be at risk, so don't use Grammarly myself.

The only thing that you can do is simply turn off Pages spelling and grammar features, which are woeful, even for a free application, and use a more rigorous external tool that provides helpful information. Apple will continue to deprive Pages of the more advanced features found in Grammarly, or Linguisoft's Grammarian Pro X2 — because then they would have to reverse themselves and start charging for Pages again.