Not your typical movie fare, but when it comes to new listings 2008, is a block buster of a year.
It wasn't that long ago we were in a heated seller's market, we only have to look as far back as 2006. Then we started transitioning out of that frenzy in 2007 to today's buyer's market. Each market has it's good points and bad depending on the side of the transactional fence you are sitting. For those sitting on the selling transactional fence it can be tough pill to swallow. Many are scratching there heads wondering what should I do, or what can I do to sell my house.
Sales are still strong this year there is no doubt about it. Interest rates are quite low and despite the sub prime crisis south of the border many Canadian buyers are still able to take advantage of buying zero down. If you are buying today you have much to be thankful for.
I think it's important to look at how we got to where we are with this increase in inventory otherwise known as excess supply in the supply an demand world of economics.
In 2006 the weekly market of new listings and those being sold had a very narrow gap. Often the number of homes sold surpassed new listing coming onto market. In the height of things at least two buyers were available for every home. The average home owner (looking to own a home to live in) and the speculator (buying for an opportunity to sell for a quick profit). The market looked like this: (click on photos for larger sizes)
For the first 5 months in 2006 there were 818 properties listed for sale on the local Red Deer MLS. For the same time period 793 sales were reported. Just about everything that was listed for sale sold.
Then in 2007 the market started to shift back to "normal". Normal market provides listings available for buyers to look at with a timely sale for sellers. Some quick and some perhaps a bit longer. Rather than 99% of listings being sold normal would be closer to 77%. For those same first 5 months in 2007 the Red Deer MLS recorded 1369 new listings and 1058 sales reported. The first 5 months of 2007 looked like this:
The gap between sales and listings left on market clearly beginning to widen. If you talk to real estate professionals many would be inclined to say the market "peaked" in May 2007.
So here we are today. End of May 2008, and we have seen new listings soar to levels that for many are unprecedented. A few of the "old timers" will tell you this is how it used to be 10 years ago. We'll examine that theory in another post. For now lets look closer at 2008.
So far we have had 1702 new listings on market in the city of Red Deer. You may have noticed the local newspapers filling up with house for sale ads. Definitely more advertising taking place to attract buyers to listings today than in recent years. Those ads have attracted 832 Sales so far on the Red Deer MLS. So close to half of those new listings are selling (49%). That doesn't account for the left over from the weeks before. Take note of the gap between listings and sales below for 2008. This increased inventory is to the delight of buyers, and if you are selling you can clearly (or clearer) see the reason for the change in the market.
What's happening that last week in the MLS market place? That's a good question. It's a little early to jump to conclusions as to what that indicator is with that sharp decline. It could be incomplete data reported, or it could point to further slow down. It may also point to a decline in new listings coming on and a "light" at the end of the listing tunnel. It also important to note that the weather in Central Alberta has a direct impact on activity.
I don't think we are in a state for alarm in Central Alberta, or Alberta for that matter. We are still a province driven by Oil and agriculture. These commodities are at record highs leading to increased spending and investment. The cost of borrowing is low, and the availability of mortgage dollars and terms is still vast. Buyers today can buy with confidence and affordability.
Here is the weekly comparison for the i5 months
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