Has the Calgary Real Estate Correction Bottomed Out?
This is a very good question - and certainly still a very common topic of discussion. Depending on which media reports you follow, our economy can either be stabilizing or looking as though we will continue this path of uncertainty.
Home buyer’s seem to be following the more positive outlook on the state of our economy! As noted several times over the past few months, first time buyer’s or entry level housing has been dominating our sales in Calgary. Through the month of March, we saw an increase of sales in the $375,000 to $425,000 range compared to previous months - this means the sales in the lower price brackets is beginning to spill upwards to the higher end ranges. We also saw more investors confidently buying.
Most importantly, the key number to pay attention to is the list to sell ratio - how many homes being listed for sale versus how many homes are selling and clearing the market.
From about June/July 2007, the list to sell ratio began to slide from our market surge. In the late summer and early fall of 2008, the list to sell ratio plummeted downwards to the 30% (meaning for every 100 homes listed for sale, 30 sold) range as we struggled into the winter months. In contrast, our March 2009 ratio was hovering at the 50% range and April is expected to be slightly higher (stress slightly).
Historically, approximately 65% is where we need to be to have a "normal" market with "normal" increases of value. With the percentage of homes selling increasing, our inventory levels are dipping forcing a price stabilization. We can see already in many price brackets the home values have maintained themselves for several months now.
As you can see, we still have room to move for the price ratio’s to be "normal" - what is evident, is the downward price correction has pretty much ended - though I am unable to confidently say that home prices will start to go up by the historical average of about 5.5% annually - that will take some time yet.
Another very important key piece of information here are the hundreds of properties on the market right now that are simply priced too high for what is actually selling. Lots of homes are selling, and there are lots of buyer’s out there ready to buy! These seller’s simply have to get up (or down!) to speed with the current pricing for their community - and their home will sell.
What you can expect over the remaining of 2009 are more signs of stabilization - slightly less inventory, more ‘sold’ signs and possibly (stress possibly) a very slight increase in values for entry level housing.
For those buyer’s waiting for home prices to hit rock bottom - well - now is your time to shine! Get out there and buy that home as it will not get any less expensive!