Indicators of a Slowing Market?

I put together a listing presentation today for a potential seller living in beautiful Panorama Hills and noticed a variety of indicators that may very well be pointing us toward some interesting trends over the next little bit. At the time I wrote this blog there were 80 homes for sale in Panorama Hills. From January to the end of May there were 137 sales in the community and a whopping 36 (26%) were sold in May alone. So far this month (June 10th to be precise) there have been six firm sales and there are 11 homes that have been posted as conditional sales. These are all great indicators for us as a seller, it would certainly seem that the market is in an upward trend.

Let’s look a little deeper at both the inventory as well as sales so far this year. Of the homes that are currently active in the community, 36% have been on the market for less than a month. 28% of the active listings have been on the market for between one and two months and 31% have been on the market over two months. It is interesting to see that so many homes have been on the market for such a long period of time as we have seen an average of just over 27 sales per month, pointing toward a fairly balanced market in the area. It would seem to me that a good portion of those homes that have been on the market for such a significant amount of time need some major changes in their listing strategy to get the job done.

 

I believe it is also paramount to point out the price breaks in relation to actual sales and active listings:

So far this year 32% of the sales were under $450k whereas only 12% of the listings are in this price category today;

27% of the sales were between $450k and $500k and only 16% of the listings are within this range;

41% of the sales were over $500k and now over 70% of the listings are asking for this price range!

The real kicker here is where the sales are so far this month... there is one firm sale over $500k and four pending sales that could possibly be in that range (29%); there are possibly five sales between $450k-$500k (29%); and seven under $450k (41%). These numbers are deviating significantly from what we have seen up to this point this year.

 

With the numbers becoming so far apart between what a seller would like to sell for, and what the typical buyer is looking for in the community, we could be in for some very interesting times indeed! If the buyers cannot afford any more than the previous sales are showing – perhaps they cannot qualify for the higher mortgage – we can expect a variety of things to happen in the next few weeks… homes will stay on the market longer and longer, and eventually we will see pricing slowly move back to the ranges we have seen in the early part of the year. Alternatively, buyers may need to re-qualify for a larger mortgage or find more cash to put toward a purchase. In my experience, finding additional cash to close is quite difficult, and unless mortgage regulations are altered, finding that higher mortgage limit will also be difficult if not impossible.

 

I hope these observations within this micro market of Calgary are not indicators for the entire city, however, I would keep close attention to these ratios and sales figures.

I put together a listing presentation for a seller in beautiful Panorama Hills today and noticed some interesting trends moving forward. At the time I wrote this, there were 80 homes for sale in Panorama Hills. From January to the end of May there were 137 sales in the community and a whopping 36 (26%) were sold in May. So far in June there have been six firm sales and there are 11 homes that have been posted as conditional sales. These are all great indicators for us as a seller, it would certainly seem that the market is in an upward trend.

Let’s look a little deeper at both the inventory as well as sales so far this year. Of the homes that are currently active in the community, 36% have been on for less than a month. 28% of the active listings have been on the market for between one and two months and 31% have been on the market over two months. It is interesting to see that so many homes have been on the market for such a long period of time as we have seen an average of just over 27 sales per month, pointing toward a fairly balanced market in Panorama Hills. It would seem to me that a good portion of those homes that have been on the market for such a significant amount of time need some major changes in their listing strategy to get the job done.

 

It is also interesting to point out the price breaks in relation to actual sales and active listings.

So far this year 32% of the sales were under $450k whereas only 12% of the listings are in that category;

27% of the sales were between $450k and $500k and only 16% of the listings are within this range;

41% of the sales were over $500k and now over 70% of the listings are asking for this price range!

 

With the numbers becoming so far apart between what a seller would like to sell for, and what the typical buyer is looking for in the community, we could be in for some very interesting times! If the buyers cannot afford any more than the previous sales are showing – perhaps they cannot qualify for the higher mortgage – we can only expect one thing… homes will stay on the market longer and longer, and eventually we will see pricing slowly move back to the ranges we have seen in the early part of the year. Alternatively, buyers may need to re-qualify for a larger mortgage or find more cash to put toward a purchase. In my experience, finding additional cash to close is quite difficult, and unless mortgage regulations are altered, finding that higher mortgage limit will also be difficult. It will definitely be interesting what the rest of the year has in store for us!

Pricing appropriately in any market!

There was an interesting article in the Calgary Herald this morning that I thought I would address:

Luxury home sales hit record as market reaches new high (The Calgary Herald, June 4th, 2013)

The bottom line is that the Calgary re-sale market has hit record highs last month, surpassing our peak numbers back in 2007.  That is great news, and we have certainly seen reflection of these numbers throughout many communities in Calgary.

 
Yesterday I sent out an email to a client looking at higher-end properties that are over 3,000 square feet with reference to a variety of price reductions over the weekend. Some of these homes are absolutely stunning, as a matter of fact, I use some photos on my Interesting homes in Calgary Facebook album

Price Reduced! $1,075,000 220 Aspen Summit Heath HE SW 3 Bedrooms, Status: Active. Residential

Price Reduced! $1,075,000 5 CRESTRIDGE VW SW 3 Bedrooms, Status: Active. Residential

Price Reduced! $1,849,000 2030 6 AV NW 5 Bedrooms, Status: Active. Residential

Price Reduced! $1,450,000 4 SPRING WILLOW PL SW 4 Bedrooms, Status: Active. Residential

Price Reduced! $1,375,000 27 STRATHRIDGE GD SW 5 Bedrooms, Status: Active. Residential

Price Reduced! $1,095,000 61 SIMCREST GV SW 5 Bedrooms, Status: Active. Residential

Price Reduced! $1,175,000 78 VARSITY ESTATES CL NW 4 Bedrooms, Status: Active. Residential

Price Reduced! $1,145,000 46 CHAPALA CL SE 7 Bedrooms, Status: Active. Residential

 

I guess the point I’m making here is the fact that homes that are priced appropriately are selling very quickly, homes that are over-priced are not. Being aggressively priced means pricing appropriately in the current market. I would also question how long the current market will last, I would suggest that the current trend is not necessarily sustainable at the pace we have set this year. Typically the real estate market in most sectors in Calgary slow considerably in the summer months, which are quickly approaching.

Another interesting listing that certainly supports the theory of pricing aggressively is a home currently listed in Mount Pleasant. This home was listed in December 2008 and was listed as high as $549,999 in that period. Yes, you read that right, at the time of this writing, it has been on the market for 1,617 consecutive days, wow! As a matter of fact, this particularly property has been listed as far back as 1999 and has no “sale” history on the MLS, the current listing price is $399,999.

736 17th Avenue NW
This would probably be the best example of a “stigmatized” property that I could find. What is the first thing that comes to your mind when you read about this? Most probably something along the line of “there must be something wrong with this property”. That may not be the case with this specific home, however, the thought process certainly leans to suspicions, which will lead it to becoming stigmatized. Although this is an extreme case of this phenomenon, any home that is on the market for a prolonged period of time in its current state could very well fall into this dilemma, something that can devalue the property.

In any market, especially one as volatile as our own, it is paramount to make well educated and strategically supported decisions both in purchasing, and marketing your real estate asset. An experienced Realtor can assist you with that process with statistics and intrinsic information.

If there is anything I can do for you, please do not hesitate to ask.