Today on Global news there was a story about yet again how bad the market is because activity has fallen significantly yet again in January for the fourth straight month.
First remember this, it was totally expected. Yes activity dropped 51% BUT inventory also dropped over 30% again. If demand AND supply are dropping then the market is balancing. Stop trying to make it all bad.
Here was the funniest part of the story, well besides when my colleague Daryl Marsden’s mug was on the TV, but there was a realtor who went and got a job and is now a “Part-Time” Realtor said “Sellers can’t do anything, there are no buyers…it doesn’t matter what you do, you can’t sell your house with no buyers”. Sigh.
My faithful readers know how to answer this, wait for it…How about price your home at the market or slightly below NOT above the market hoping against hope that the market will go up to meet your price.
Remember this GOLDEN RULE…EVERY HOUSE SELLS, EVEN A COCK ROACH INVESTED LEAN-TO, IT IS ALL A FUNCTION OF THE PRICE AND THE LENGTH OF TIME YOU HAVE TO MARKET.
Actually the best part of this story is that that guy is now a Part time realtor. Do us all a favour and just give it up…turn your licence in and stay out of our way.
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By Chris, February 4, 2009 @ 9:17 am
Hi Greg,
Your articles are great, but I’m just wondering on what criteria are you claiming that the inventory has dropped over 30% ?
Inventory (End of Month) January 2008: 3997
Inventory (End of Month) January 2009: 4056
That’s year over year, but even if you were doing a month-to-month comparison…
Inventory (End of Month) December 2008: 3860
Inventory (End of Month) January 2009: 4056
From what I’m seeing, inventory is pretty similar to last year, maybe slightly higher.
By Greg, February 9, 2009 @ 7:31 am
Calgary Real Estate Board statistics for single family homes in Calgary Metro.
I was really commenting on the amount of inventory since the peak in early summer 2008. The purpose is to counteract the media propensity to report 50+% drops in activity every months without also talking about the drop in inventory in the market.
June 2008 total inventory = 6,534
January 2009 total inventory = 4,040
62% decline
Sadly you point out that more inventory has to come out of the market to stabilize prices if activity continues to decline like it has.
By Chris, February 9, 2009 @ 9:38 am
Ah, I see. I just don’t think you’re comparing apples to apples when you compare inventory in June (which is typically just after the peak of the real estate year in Calgary) to the inventory in January (which is only one month after the December low).
I mean, there’s *always* a huge gap between January and June, that’s just seasonal fluctuation.
By Greg, February 9, 2009 @ 12:52 pm
I agree with your thinking. However the purpose of this post was to combat how the media only lately reports the drastic drop in activity from the peak so I was trying to also show that inventory has dropped from then to.
You are right when you say “but inventory always drops from then”.
In fact you also correctly point out that the inventory may be normal for the time period and sales are definitely not normal.
As I have been saying we need the new listings added to stay below the historical average and consequently overall inventory to drop some more, or else we will see continued decline in median price.
By Chris, February 9, 2009 @ 3:08 pm
Thanks Greg, fair enough.
Yes, from what I’m seeing, the sales numbers are the glaring stat here. Inventory is approximately the same as last year, maybe slightly less. (February ’08 ended with around 4900 SFH I believe, and right now we’re at 4200, and on pace to end the month at about 4500). So, approximately an 8% decrease from last February’s inventory numbers.
But sales for SFH (this month) appear to be on pace for about 700. In Feb ’08 there were 1252 such sales (with approximately the same amount of inventory, as noted above).
So, we’re on pace for about 56% of last February’s sales. I believe January’s sales numbers were similar.
Will seller’s hold firm? From the demand side, I’m struggling to think of a single factor right now that would increase demand. From the supply side, it should be interesting to see how many seller’s give up and decide to ‘wait it out’. Or will unemployment make that decision a little easier?
Definitely interesting times.
By Greg, February 9, 2009 @ 5:57 pm
The ONLY thing and it is a maybe that could spur on demand locally would be “breaking from the herd” and grabbing bargains. But before that happens I think there has to be some more positive information.
For whatever reason people don’t readily break from the herd.
Great Discussion Chris, Thanks for that.
By Jason Dodd, February 10, 2009 @ 9:43 am
I will touch on some different points on this blog. I can already see previous clients from mid 2007 to early 2008 calling me back. Prospective and often in my own personal experience young buyers are smart enough to see the opportunity. Lowest prices we have seen in some time, lowest historical interest rates and great selection of homes. In my mind a perfect storm for people searching for a home. Breaking from the herd is happening in pockets and those people who lock in near 4% for 5 years will be high fiving themselves in 2 years for buying during this time.
The part time realtor making comments-I am fortunate to work as a Mortgage Associate in a very succesful Real Estate office. I see how hard some of those FULL TIME agents are working to move inventory and come up with innovation to service those clients. For all those buyers and sellers out there, you should be rewarding those agents who are full time and committed to their career and devotes all their efforts to selling your home. This is a good time to weed out the people in our industry who capitalize on good times and turn a blind eye when things get tough. The cream will always rise to the top so lets support that.
By Greg, February 10, 2009 @ 10:08 am
Well said.
Greg