June Real Estate Market Update
The June Real Estate market’s numbers are out and they are interesting to say the least. There are a couple statistics though, that seem to be drawing all the attention.
The one getting the biggest headlines is about the increase in sales versus last year’s numbers. In the single family market, there was a 32% increase in the number of homes sold for the month. This is quite a significant increase and is a very good indicator that the mood of the buyers out there has shifted.
The other interesting number that accompanies this increase is that while sales were up, the average price of a home for the Calgary region dropped marginally. The drop itself wouldn’t even really be of note, as it was one third of a percent decrease, if it wasn’t for the sales increasing so much.
So what’s behind these numbers? Obviously, the stability of the economy has played a big factor in buyer’s confidence. As the prospect of long term employment and growth in our economy continues to look rosy for the province, it’s providing more buyers with the confidence to enter the market.
There is also the concern that interest rates may start rising again, potentially as early as the fall, which is likely putting pressure on people. Perhaps more importantly though, the weather started participating!
The rain actually let up for several days at a time, the city and surrounding area looks greener than it has in years and the fair weather home buyers started to get out more and to look at properties. Properties with lush grass and blooming flowers that instantly became more appealing.
In a normal year, April and May are significant months due to the spring buying fever and although they were fine this year, many purchases were likely pushed back due to the gloomy wet weather. This likely pushed many of this current crop of buyers back into June and contributed to the surge in sales.
The slight decrease in median sales price and average sales price also indicates that many of these buyers were also purchasing properties in the starter category or more properly defined as affordable homes. Much of this relates directly back to the renewed confidence in the economy around us and the optimism that accompanies it.
The big question coming up though is whether this will be a continuing trend or was June just a pleasant blip in the market. July and August tend to be much slower markets around here. With so many summer distractions like kids, holidays, and other activities there is less time for home shopping and this usually shows in the sales numbers.
On the plus side though, we have also seen a trend of lower inventory levels of properties for sale this year compared to last year which has helped the market transition closer to being balanced. Obviously, this has helped contribute to the activity as well, but we are now seeing more and more for sale signs pop back up in neighbourhoods.
As more sellers jump into the market and test the waters, this could also slow down activity as it pushes inventory levels back up. I would really like to see July and August continue to grow, but more likely things will return to normal for a couple of months at least. Come September though, we should be seeing even more optimism, more activity and more happy headlines.
So now what, should the investors take the summer off and wait until September? Well, if you are thinking of buying an investment property summer may be a great time for you.
As the inventory levels creep up due to slower sales, there may be some great opportunities for the good negotiators out there. If properties are languishing on the market during a slower summer prospective sellers may be easier to work with, thus becoming motivated sellers. And in this business motivated sellers are far easier to deal with than someone testing the waters!
Junes jump in sales is likely just the early signs still of our next growth spurt, so there is plenty of time to take action if you want to profit from a long term Real Estate strategy.