2007 Opening Remarks
Here we are at the beginning of another New Year. The thrill of new plans being laid out, reviewing how old plans played out, and the anticipation of all the upcoming opportunities that will shortly be presenting themselves. The first couple of months into the year always tend to cause a bit of excitement for us and hopefully for you as well.
With the start of 2007, we will have many challenges to watch for in the Real Estate world. Some of the major challenges include; the shortage of workers for all the jobs in Alberta, the shift of power from the Eastern manufacturing provinces to the resource-rich Western provinces, and the effect on the Alberta infrastructure of the past few years unprecedented growth. All of these, and many other factors, will help determine how 2007 will play out.
A repeat of the 2006 boom in values appears ready to be repeated this year, but at a much smaller level. No one expected the increase in values that exceeded 40% in 2006 instead, increases were forecasted at 15-20%. For 2007, we have seen forecasts from respected sources like CMHC (Canadian Mortgage and Housing Corporation) as low as 10%, to other sources projecting 15% growth. With any luck, our current 10-15% forecasts will turn into a strong 20-30% growth for the year, due to the conservative nature of forecasters. Having to fall back on only 10% growth ends up being a bit disappointing; best try telling that to your other friends who don’t invest in Real Estate.
Statistics 101
As we are bounding off into the New Year we are seeing some interesting events starting to take place.
Let’s start with listed properties Days On the Market (DOM) statistics. As we have discussed previously, this is the number of days that a property takes to be listed and then sold. We had hit a low time frame of about 14 days in April/May of 2006 and since then we have steadily crept up.
With the close of December, the latest numbers show an average DOM of 42 days in the Northwest and Southeast and just over 46 days in the Northeast. This is triple the amount of time we had previously seen and this tells us buyers are not making snap decisions, but are instead looking around a lot longer before purchasing. The lower the average DOM is, the more it becomes a seller’s market, consequently, the higher the DOM, the more it becomes a buyer’s market. An even market is closer to the 30-35 day range, although other factors can affect this.
Another interesting statistic is the Average Sales Price versus Listing Price. In a perfectly balanced market, properties sell for the same price they are listed at. Or more accurately the selling price is usually a few percent below the asking price as people negotiate back and forth. During last spring when the market was so heated, we hit a peak of 101.03% for the Selling Price versus List Price. This has tailed off as the market slowed and we are now sitting at a very healthy 97.45% for December or about a $2,550 reduction for every $100,000 of value. This shows us that pricing, on average, is now quite accurate for the market place and much of the price gouging should have disappeared.
Hopefully these explanations help clarify how these important statistics affect the market. Being familiar with these numbers over several months or years allow you to start to see trends, which can also aid in forecasting what is going on with your local markets. If you would like more information on this or other information, please contact me.
Thanks to the Superstars
Just to start the year off we think it is important to say thanks to all of the great people who have helped us out over the last year. We rely on many people who help make our business grow. We wouldn’t be where we are now without their hard work. So with this issue, we would like to express our gratitude to those who have influenced us so positively.
Realtor Stef Lukas has been exceptional, as always, helping us buy and sell several properties. This along with his focused knowledge of the Calgary market has been a definite boon to us. We have recommended him to several of our friends and acquaintances and always get great feedback from them regarding Stef’s work.
Mortgage broker Richard Anderson has also been a huge asset (thanks to Stef for recommending him). With his ability to help us get financing in place quickly and when we need it, Richard has enabled us to continue to move KatSid Housez forward by adding properties and more investors into our portfolio.
Terry Leonard’s Law Office has provided all of our legal advise and contracts. Lori and Jaimie go above and beyond, from helping us with custom contracts to rushing through closings in a timely manner.
Allan Cox is our Appliance Mechanic extraordinaire We can always count on him to look after us and all of our problem appliances we have inherited in rental properties.
Our team of superstars has helped us become better and better each year. Without their continued support, we would never have reached the heights we are currently at and our heartfelt thanks have to go out to these people. There are also many more in the background who I have run out of space to thank, but you know who you are!
In Closing
January 2007, it’s hard to believe another year has flown by. We hope you all had a great Christmas this year and that 2007 ends up being exceptional for you.
We love to get your feedback and meet with you, so if you have any questions regarding Real Estate, our thoughts on the economy, or even just some insights into how mortgage rates may affect you personally, send us an email or call us.
Happy 2007,
Bill & Karen Biko
KatSid Housez Inc.
www.housez.caCalgary, Alberta 403-870-4663
