October is truly a season of change with harvesting done or in final stages, snow appearing and disappearing, leaves turning, and houses on the move.
We've officially entered the 4th fiscal quarter for 2009. So how are we doing? A recent article in the Red Deer Advocate would have you believe that the market outlook is quite flat and bleak. This week we've experienced market news that the Canadian Dollar is on the rise, and as a result so are interest rates. If I had a rate hold, particularly under 4%, I would be making sure I did not lose that rate and get shopping.
You might say, "Your a REALTOR Patrick of course you would say that". Well I don't know about you but I'd rather pay a mortgage at 3.9% versus 4.2% any day. You can anticipate more rate increase as things continue, just read or watch some of the news like this article in the Toronto Star or The Ottawa Citizen.
The headlines and market news has been quite positive lately for Canada and Alberta. We should be experiencing a rush of people buying real estate before the rates jump further. Will we experience that rush?
I think it is foolish to compare our real estate sales results to last year only, we really have to look at previous years. If we looked at 2009 vs. 2008 we are still down 20% in home sales but we also know that Q4 2008 the entire market really took a turn for the worse. In a strong recession are we really performing poorly or are we on track to march stronger when the recession is in our rear view window?
The Numbers:
September 2009 compared to 2008, the number of sales were down 33% yet the average sale price slid 3.6% from 2008 levels. If we looked soley at that the market does not appear to be looking that great. I say the real estate market is ripe with opportunity and the potential for favourable return is there.
As displayed above, the number of MLS sales in the city of Red Deer is below that of the 3 previous years. In fact the sales recorded are in between 2004 and 2005 levels. What sort of years were those, were they "growth" years? I say that obviously with a little tongue in cheek as we know that yes the economy was solid and performing well particularly here in Alberta. Now that we are in or leaving a "recession" I think we have much to be proud of an optimistic for. If the worst is indeed behind us we have weathered the storm quite well. Knowing that the "economy" is no longer in a steadfast decline but a gradual increase how does that effect your view on the market? I'm willing to wager you would like to get on the upward trend as it is developing rather than mid stride or at the end.
"Patrick, shouldn't prices come down more if sales have dropped?"
They have, but not at the same rate. Despite volume comparable to 2005 and 2004, the average sale price remains closer to 2007 and 2008 levels.
If you are selling your home today the level of success depends on price and location. In Central Alberta we are experiencing different rates of sales by town and city as well as by price range and or product (house) type. Real estate is a local. Don't get caught up in national or provincial changes to the market. The reality is Red Deer is far different than Edmonton, Calgary or Toronto. It would not be wise to base your market choices in real estate based solely on the information from any area other than yours. We've been a conservative market in Red Deer. The swings in prices and rate of sales experienced by Calgary or Edmonton are more subtle in Red Deer. It's a marathon not a sprint. Real Estate is a long term investment and to better see the movement take a step back and look at the big picture. Then consult your REALTOR about the opportunities in your market and price range.
Today inventory levels remain close to 600 properties for sale in Red Deer. If you've been following my Blog you will note that we have been close to or at that level for several weeks. I call that "stable" That is a reflection of a balanced market. September say a total of 122 sales in Red Deer and 271 new listings (**note new listings also contain re-listed properties**). With 600 properties for sale and a rate of 122 sales per month would indicate we have an absorption rate of 2.44 months. Less than 3 months is also a reflection of a balanced market, as would be the average days on market for those sold properties of 43 days. The average selling price today is 97% of the asking price. You may want to keep that in mind when you instruct your REALTOR to write and offer 10% below asking price and you have expectations of success.
Your Friend in Real Estate,
— Patrick Galesloot
twitter me: @pgalesloot
* All stats from the Central Alberta REALTORS Association.