The strongest fall market in the last 6 years cooled off due to a variety of reasons. Although sales continued to rise,inventory continued to fall and prices continued to firm up, uncertainty caused by falling oil prices combined with the holiday season to slow our local real estate market. 2015 still looks like the right time to get your home sold. Looking at the early January month-to-date numbers, we see that the market is cooling off with the colder winter temperatures and all that snow. Read on for more details.
Sales - The total sales for the 12 months ending December 2014 was at 1,021, up 30% from the 12 months ending December 2013 and still the highest volume of sales in the last 7 years since 2007.
Inventory - The average monthly inventory of single family homes dropped 12.7% to 549 for the last 12 months ending in December 2014, the lowest average inventory we have seen in the last 7 years. Inventory has not been this low since 2007, the year before the start of the recession triggered by the US banking crisis.
Prices - Average median prices continue to rise slowly. At $345,038, average median prices for the last 12 months ending in December 2014 rose 2.2% over average median prices for the 12 months ending in December 2013. This increase is for average median prices across the board and is largely due to the fact that prices on higher end homes have been reduced so much (some by as much as 25%) that sales of higher priced homes are now starting to recover and are pushing up average median prices. This is causing the illusion that prices are increasing in all home categories and that is definitely not true.
For instance, right now some price ranges in some neighbourhoods are starting to rise slightly but other price ranges have just stabilized or are still dropping slightly. Therefore, overall average price in any given marketplace cannot accurately predict what is happening. I have found that using an HPI (Home Price Index) works best. This HPI considers all the sales of a typical house in a certain area and compares them to the same type of houses sold in the previous years. We find when we do an HPI that house prices are doing different things in different areas and in different price ranges. I would be happy to do an HPI evaluation on any property you have or want to buy. Simply give me a call or
send me an email.
Absorption Rate - The rate at which our inventory is being absorbed by sales continues to rise. The average absorption rate of 15.17% over the 12 month period ending December 2014, is now the highest in the last 7 years. At the end of December 2014, there was 8 months of inventory available on the market, the same as last month. This is still considered a balanced market trending towards favouring Sellers over Buyers and will eventually put more upward pressure on prices as inventory tightens.
From these numbers, it looks like we can expect an early start to the 2015 market. Sales for the first week of January 2015 are down 27% from sales for the same time period in January 2014 which may suggest a short cooling off period as winter and record snow falls set in.
It is still expected that the market over the next 6 to 12 months will be characterized by continued increasing sales and lower inventory moving more rapidly towards a market that favours Sellers with more competition from Buyers and higher prices. Prices will continue to rise as consumer confidence gathers momentum and brings with it more Buyers.