March took another dip as sales for the month dropped 30% over March last year. Our local real estate market appears to struggle under the cloud of uncertainty as fallen oil prices continue to put Alberta Buyers on hold. Up until the third quarter of 2014, Alberta Buyers made up 18.8% of the Okanagan Buyers. Lower interest rates forecast for most of this year will keep local Buyers in the market but will there be enough of them to make up for the lack of Alberta Buyers? Read on for more details.
Sales - The total sales for the 12 months ending March 2015 was at 993, still up 28% from the 12 months ending March 2014. Although the recovering market appears to be loosing some steam, this is still the highest volume of sales in the last 7 years since 2007 and at par with last month’s 28% increase.
Inventory - The average monthly inventory of single family homes dropped 13% to 536 for the last 12 months ending in March 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 again, slightly less than last month’s 14%. Are Sellers thinking this could be the year to sell their home even though we have fewer Buyers at the moment?
Prices - Average median prices are still flat right now. At $344,627, average median prices for the last 12 months ending in March 2015 are virtually unchanged (up 1%) from 12 months ending in March 2014. This is another indication that the market appears to be stagnating. I will continue to watch 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 still 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 dropped slightly compared to last month. The average absorption rate of 14.97% over the 12 month period ending March 2015, is still the highest in the last 7 years but down from last month’s 15.36%. At the end of March 2015, there was 9 months of inventory available on the market, down from last month’s 12. This is considered more of a balanced market favouring neither Buyers or Sellers as the market continues to waffle.
From these numbers, it will be interesting to continue to watch how the spring market unfolds. The federal bank’s decision to cut interest rates was a direct attempt to stimulate the economy and we will see how that works over the coming months. I spoke with Tanis Yawney, a mortgage specialist at RBC who said that when the interest rate cut was announced, her phone started ringing and has not stopped.
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 slowly rising prices. Prices will rise when consumer confidence gathers momentum and brings with it more Buyers.