The traditionally busy spring real estate market is fast approaching – it’s time to take a close look at what we can expect. Whether or not you will think the news is good or bad will depend on whether you are a Buyer or a Seller. The only exception to this rule is when we are in a balanced market. We’re not; and my analysis reveals exactly who will benefit in this market.

Real Estate Buyers or Sellers; in 2008 who will be the winner?

Without question, it will likely continue to be a buyer’s market for the balance of 2008. A look at the data will tell us why.

First, short-term interest rates will fall significantly throughout the year, making your real estate purchases more affordable and/or allowing you to purchase something that was out of reach a mere year ago.

Secondly, the current Calgary real estate year over year has significantly slowed.

The Facts:
Inventory is more than double what it was a mere 12 months ago.
• January 2007 inventory = approximately 3,300 listing
• January 2008 inventory = almost 8,000 listings
• Janurary 2007 sales = 10% increase over January 2006
• January 2008 sales = 31% decrease over January 2007
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The bottom line is that with supply more than doubling, and sales down by 31%, prices can only do one thing…go down.

Thirdly, we have been in a steady decline since November of 2007, and the sales trend is most definitely downward.

The Facts:
• December 2007 sales were down 28% year over year
• January 2008 sales were down 31% year over year

Fourth, according to a Royal Bank Study on real estate affordability, affordability levels for Calgary are now comparable to levels reached in the late 1980’s at the peak of the housing market bubble. The result? Buyers will force prices down.

Lastly, and probably the most telling of indicators, is found when you analyze the absorption rate. For those of you who don’t know, the absorption rate indicates the average selling time for real estate. As the time on the market increases, sellers drop prices to sell faster. The Calgary Real Estate Board defines a balanced market when the absorption rate is between 2 and 3.5 months.

In January, the absorption rate was 5 months, and in February we dropped to 4 months. If the absorption rate is below 2 months, then historically 79% of the time the price increases. If it is above 3.5 months, prices drop 100% of the time.

So there you have it. The Doctor does not lie – and as of right now it looks like we are facing declining prices and therefore a Buyers market in the foreseeable future.

So what to do?

If you are a buyer…stop waiting. Jump in! There are, and will continue to be good deals in the market.

If you are a seller, you need to do two very important things. One, make sure your home shows very well. This means repairing any blemishes, removing clutter, and make for a very warm and inviting showing. Secondly, be patient. Consider putting your property on the market 4 – 6 months before you need it to sell. This is not the time to leave it til the last minute. The alternative option is not to buy a home until you sell your current one. As mentioned, Buyers don’t have to worry.

There you have it. If you have further questions or need mortgage advice, I encourage you to contact your Mortgage Planner to revisit your mortgage strategy. Perhaps this year would be a good year to look at refinancing your home rather than selling it to take advantage of our declining interest rates. In that same vein, if you are selling a home now might not be the right time to go it alone. Rather, enlist the services of an experienced realtor who can get the job done.