The new year started with a whimper as sales fell 18% over January last year. Uncertainty caused by falling oil prices combined with seasonal factors to slow our local real estate market 2 months in a row. January was a short month when the heaviest snowfall in over 50 years closed everything down for the first week. Let’s see what February’s thawing weather brings. 2015 still looks like the right time to get your home sold. Lower interest rates will keep Buyers in the market. Read on for more details.
Sales - The total sales for the 12 months ending January 2015 was at 1,013, up 26% from the 12 months ending January 2013 and still the highest volume of sales in the last 7 years since 2007 but down slightly from last month’s 30% increase.
Inventory - The average monthly inventory of single family homes dropped 15% to 543 for the last 12 months ending in January 2015, again, 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. The 12 month average dropped more than last month’s 12.6% likely due again to the season.
Prices - Average median prices are flat right now. At $343,475, average median prices for the last 12 months ending in January 2015 are virtually unchanged (up $785) from 12 months ending in January 2014. This is another indication that the market is cooling. The later spring numbers will tell us if this was a seasonal adjustment or if indeed global economic concerns are causing our local market to cool. I will be watching the statistics over the next 3 months with great interest.
Using an HPI (Home Price Index) is still the best way to determine the value of your home. The 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 was flat compared to last month. The average absorption rate of 15.15% over the 12 month period ending January 2015, is still the highest in the last 7 years though down slightly from last month’s 15.17%. At the end of January 2015, there was 11 months of inventory available on the market, up from last month’s 8. This is considered more of a Buyers’ market favouring Buyers over Sellers with more inventory to choose from and Sellers having to adjust their prices down to affect a sale.
From these numbers, it will be interesting to watch how the spring market unfolds. The federal bank’s decision to cut interest rates is a direct attempt to stimulate the economy and we will see how that works over the coming months. Sales for the first week of February 2015 are down from the same time period in February 2014 which may suggest a short cooling off period as winter, record snow falls and economic uncertainty continue to slow the market.
At this point we still expect that the market over the next 6 to 18 months will be characterized by increasing sales and lower inventory moving towards a market that favours Sellers with more competition from Buyers and higher prices. Prices will continue to rise when consumer confidence gathers momentum and brings with it more Buyers.