The latest statistics for May are out for Calgary and area and there is some very optimistic news to be found in them, depending on how you interpret the numbers that is. Compared to May of 2008, the total amount of sales of all properties for May 2009 has increased over 10%.
The good part of the numbers is that sales of single family homes in Calgary increased by 15.79%, while condominium sales increased 13.17%. The bad part is sales for towns outside Calgary decreased by 6.97%. This currently isn’t quite as good for the surrounding bedroom communities (like Chestermere, Langdon, etc.), but is still a positive sign that the market is adjusting as it is better than it was.
The most promising part of theses recent statistics is a significant drop in the number of properties going up for sale this year versus last year. Combining this with increased sales is helping the market to achieve the coveted “balanced market” status. A balanced market is defined as only having between two and a half months to four months of inventory for sale.
During the winter months, we hit a peak of slightly over 11 months of inventory which turns the market into a complete buyers market. When those listings versus sales numbers become this unbalanced buyers become in complete control which leads to longer days on the market as buyers have more properties to choose from, lower prices due to increased competition to sell, more conditions set by the buyers and lower actual sales prices versus the list price.
The alternative to this was when we had less than a month’s inventory of properties for sale during spring of 2006 and 2007. During the craziest times of 2006, we had less than a couple weeks worth of inventory; this turned into the ultimate sellers market. As many of you remember, this resulted in bidding wars, huge price jumps, minimal if any conditions set by buyers and often conditions set by sellers and general pandemonium in the market.
Now as we are starting to dip into the equilibrium of a balanced market we will start to see a steadier, healthier market place. At least for now that is. Although I am quite optimistic about the market in general, I’m not sure we are entirely through the rough times yet.
As a trend spring is a much busier time of the year for Real Estate sales and that is one of the factors currently affecting the market. Yes, we also have incredibly low interest rates helping to make properties affordable, so we have a second positive factor kicking in as well. It’s whether we can maintain this momentum through the slower summer and fall months that will really tell us we are in a recovery or not.
If we stay balanced or close to balanced through the remainder of the year we should see a nice healthy 2010 with values once again starting to move upward. Although unlike earlier this decade, it will be a much more manageable single digit annual growth in values rather than the single digit monthly growth that occurred previously. So while the housing market is rebounding, we haven’t completed the rebounding, quite yet.
Bill,
Yes, the numbers in Edmonton, where I invest, are similar. Encouraged? Yes I am but we have to be mindful that this could merely be seasonal: sales always increase once the snow is gone. Lets see how the market does in June and, as you mentioned, the slower summer months.
The numbers you mentioned are nice but I’m looking to 2010 when the overall market is forecast to turn around due to all that bailout money filtering through the market.