Rob's Comment on CREB Stats Released February 2009, reporting on the month of January, 2009:
It is encouraging to see that the absorption rate has dropped from its high of about 11 months virtually in half to about 5.5 and a half months of inventory currently on the market. This is a significant change in the trend that we saw previously of increasing inventories relative to sales. Although we are still in very much a buyers market, this is an indication of a possible softer landing than was previously anticipated. Note that the absorption rate is still significantly higher than has been recorded at this time of the year since 2002, which is as far back as we have statistics for this indicator. The current average sale price is $415,568 and median is 375,000 for single family homes. This pricing reflects the current market is almost exactly at the same pricing level as may of 2006, but with a notable difference in the two markets. In February 2009, the average home on the market took 51 days to sell, where the average home that sold in May of 2006 was only on the market for an average of 14 days.
Rob's Comment on Calgary Real Estate Stats Released January 1,2009, reporting on the month of December, 2008:
The most recent Calgary real estate statistics released from CREB reported that there were 836 new listings. With inventories relatively high for this time of year, it is interesting to note that this is the lowest number of new residential single family real estate listings in December that we have seen for several years. The “dark side” is that sales declined about 50%, ouch! At the time of writing, total residential single family MLS month end inventory is up about 200 units and sales are holding steady at about the same rate.
The Absorption Rate is a “rule of thumb” market momentum indicator that measures the rate of turnover within the marketplace. If no additional properties were listed and sales continued at the same pace, the Absorption Rate is the number of months that it would take to sell off the existing inventory. Calgary RealEstate Board December data shows that the month ended with a residential single family inventory of 3,860 homes and sales of 449. This represents an inventory Absorption Rate of 8.6 months.
With supply outpacing demand, real estate is like any other commodity and the situation creates downward pressure on prices. As home owners, we feel secure when prices are rising and become concerned when they are in decline. Although there is always an emotional factor if you are not planning to move, in reality it really doesn’t matter. If you are thinking of a move, depending on your specific situation, today’s market could actually work to your benefit. Lower priced homes are holding their value better than the more expensive properties. This being said you could actually move up to a larger home and see a considerably lower price spread (increase in your mortgage) than if you were to do it at another time. In the end it’s that bottom line that you should be looking at.
Thinking about downsizing? This situation is a bit different, you can’t have it both ways but there are opportunities for you as well. The current Calgary condo real estate market will need to absorb an oversupply of units as new projects complete through 2009. According to our supply and demand rule this will push prices disproportionally lower and create a niche opportunity for move down and first time buyers.
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