The good news is we are off to a good start this year!
It does look like we are in for an interesting year in Calgary this coming year. In the first quarter of 2012 we are seeing decent sales, and our inventory is growing slowly. We do need to keep an eye on the inventory levels as we may very well see a dramatic increase in the next few weeks. Last year many homes that were listed did not sell - many of those listings have been terminated or have expired. As a matter of fact, in analyzing communities across the city I have seen that rate as high as 50% - that means HALF of the homes that were listed last year DID NOT SELL! I suspect a good portion of those expired listings will be coming back on the market for the spring rush. I would also suggest that many of these Sellers are going to be more aggressive in their pricing, how they approach marketing their homes and how they deal with offers. This could set the pace for values right across the board.
There is also a huge inventory of properties that has been on the market for many months and many listings have been on for YEARS! I found one listing recently in Mount Pleasant that has been on for 1,170 consecutive days! How long can a Seller hold onto a property without sustaining considerable losses, both financially and otherwise? One of the best examples of this is a beautiful property out in Bearspaw that was purchased back in 2007 for $6.35 million, a real gem! Two and a half years later it came back on the market, listed for $5.35 million. It has been on the market ever since (849 days) and the listing price has been in steady decline. You can pick up this home today for $3.85 million!
Have prices dropped 40% since our peak in 2007? Absolutely not, this is an extreme case of a declining value and there are a select few buyers with a budget over $2 million... however, this is a reality jolt, and a true fact. It does go to show that we do need to be very cognizant of the current market... and where it is headed!
I would be cautious of how sustainable this new activity these first few weeks into 2012 is on a long term basis. In Calgary and the surrounding area we should be selling around 2,000 properties per month, a little higher late spring, and a bit less in the cold months. We have been below this plateau since August of last year. Perhaps that pent up demand will carry us through a couple of months in the spring, again we need to be very aware of why we see the higher sales, and how long we can sustain those numbers. The next three months will be paramount in seeing any kind of gain in values in the area. Typically we look at the official opening of the Stampede as the "hump" in the market… school is out, the summer is officially here and many Calgarians head to cottage country and to summer vacations.
Having said that, I would suggest that if you are considering selling this year, there is a narrow window of opportunity in the next couple of months to ride the wave of the buyers who have been sitting on the fence for the past six months or so. Once that pool of buyers dries up, we will probably see much of what we experienced through the past year, a lethargic pace at best.
If you are not considering selling your house in the next year or so, I would suggest we will do well in the next three to five years. Once things start to work themselves out with the global economy... our superior economic and political position and the location of Calgary will certainly make itself more and more apparent, and we should see a steady pace of future growth.
If you are considering buying in this market I would suggest this may very well be the best time in many years for a purchase. With interest rates at historical lows - and the opportunity to lock into these rates for long-term periods - there may not be a better time to move into a new home. The inventory of available homes typically is at its maximum in the next two or three months giving you LOTS of choice. That in combination with the softening attitudes of sellers in general will lead to a competitive and healthy marketplace.
I would be happy to discuss your posibilities with you, and to put together a strategy with you to help you achieve your goals. Please do visit my web pages to find out more about the market, and what we can do for you.
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