NEWS BULLETIN…Calgary Real Estate Stats for mid-May incredible
To follow up from my video analysis posted earlier about the April analysis of the Calgary Real Estate market the Mid-May stats are showing that we are continuing on a great turnaround. In the video I suggested to people that we are likely at the bottom of the market, and that Interest rates were at levels we may never see again. If you need a further push to consider getting into the market check these numbers out…
May 1 to May 15 2009 versus the same period in 2008
New Listings added 1,025 versus 1594 (55% drop)
This is important as you recall that the main reason we are seeing the recovery in the market that we are is that the level of inventory has dropped futher then anyone probably predicted it would. This is welcome news that during what would be the middle of the traditionally most active period of the market we continue to see new listings coming on the market at a reduced pace.
Sales are 619 versus 585.
This is obviously welcome news. We are for the first time in 12 months seeing year over year sales higher. a 6% increase is sales is modest, and the pessimists out there will want to say “comparing to May 2008 is not an accurate representation of the health of today’s market because the market was already starting to slide in May 2008. It would be better to compare to the historical average”
My answer of course would be that I have been trying to say this for months as the media and all the pessimistic bloggers were comparing year over year and reporting sales were down 35% etc. It is true that May 2008 was the statistical height of the market and was the beginning of the slide we are now in, but none the less, in the current market, make no mistake this is further evidence of the beginning of the recovery.
Sales to new listing ratio jumps to 62% versus 37% in 2008
Calling all pessimists!!! this is incredible evidence that the market is chewing up inventory. If 60% of all new listings added are being sold then inventory is not increasing, when inventory is not increasing what happens to price? Right, it goes up. (cue: loud clapping and cheering). In fact inventory month to date is flat. Inventory from March until now is FLAT in the busiest time of the year.
Interest rates are set to rise.
I have been reporting that the banks since the credit crunch took hold have increased their spreads on money by as much as 2.5 times “normal”. Well in the past month, but more specifically the past two weeks, the bond market has been rallying and bond yields specifically have risen steadily. Friday they sat at 2.15% so if you look at a discounted five year rate at say 3.69% that puts the spread at 1.54%. In normal times the spread was around 1.2% to 1.3%.
What does all this mean. If we see next week that bond yields continue to rise, and we do think that will happen, count on fixed mortgage rates rising. Better lock those rates in, my gut tells me once they start rising, and it will be slow, they will not come back to this level.
So, what to do? Either take variable which means that none of this means anything to you because variable rates will not start rising for a year, or grab these five year rates you have now, and imagine a time in the future when you are rocking in your chair telling your grandchildren about the unbelievable rates you locked in for in 2009 before they rose to “normal” levels.
