“Balanced Market” - A Euphemism for Things Are Changing…

The volume of listings in May was up by 25% compared to May of 2007 and the volume of sales was down 20% for the same period. This is a combined shift of 45%, a very significant number for any month. Year to date, listings are up 11% over the same period last year and sales are down 13%, a collective swing of 24%. These numbers indicate a very strong move away from the market we have enjoyed these last years, yet the average price has increased this year 8% over the same period in 2007.

Decreasing sales volumes, increasing listing volumes and increasing average sales prices do not seem to follow each other logically. The question is: how long can this continue?

Depending on which economist or industry sage you read there are some mixed messages out there. Some talk of the strong employment, after-tax income growth and short term interest rate cuts supporting housing demand. Others speak to economic concerns, fueled by negative Gross Domestic Product (GDP) growth in the first quarter and soaring energy costs as factors that are transitioning the market. We have had reports of some profit taking by investors in the market place leaving our balanced market for the still hot markets of Saskatchewan and Newfoundland Labrador.

This week the Bank of Canada did not lower interest rates as expected, in an attempt to hold inflation in check. This directly affects affordability. Affordability is the engine that drives the housing market along with a balanced demand and supply. Watching supply and demand over the next months will give us the future of our market place. The forecast for 2008 is for a 5.3% increase in real estate nation wide. We are well on our way to this already.

The market, although substantially slower than last year is still performing well as sales continue with sellers having to put in more effort to entice buyers. Curb appeal, interior condition and as always prudent pricing are necessary to affect a timely sale.

Should you want to further discuss the market, or have any question regarding your own Real Estate needs, I would be happy to be of service. Call me…Let’s Talk.