Will we see the market begin to improve in 2019?
It’s difficult to predict what will happen in a real estate market each year but a close look at local statistics provide positive clues. In addition to these clues, both market history and foreseeable changes in the economic landscape can lend support.
As for stats, beginning this year we’ve already seen sales outpace the last three years. *Technically, sales this January and February were lower than the same months last year but 2018 sales were abnormally high from the spill-over of buyers buying before the new mortgage rules took place.
Note, mortgage rules changed at the end of 2017 but buyers who qualified prior to January 2018 had a three-month window to buy. A buyer could have qualified in Oct but not purchased until January, while others qualifying in late Dec could have waited as late as March to buy. Because mortgage rules were changing substantially it was important to many buyers to make a purchase before they did.
The average price of homes sold can undulate from month to month but taking a closer look can hint toward a trend. Even though prices increased two months in a row, it’s not enough to gauge market direction, but when a two-month increase is accompanied by both the 4 and 12-month running average also increasing, prices might actually be increasing.
In Central Alberta, average prices dipped at the end of the year but through most of 2018 prices increased. These increases contribute to a healthier 12-month moving average. And the 4-month moving average had to include recent strong numbers to still increase after December’s price dip. We are seeing signs of
High inventory numbers have negatively impacted the Red Deer and Central Alberta real estate markets the last few years and I attribute it to low consumer confidence. Since oil price dropped in 2014 a number of people imagined the market would crash. What everyone should realize by now is how diverse the Central Alberta economy is. Yes, the oil industry’s strength has a substantial impact on our local economy but there are
Inventory number are looking better this year. Over the last few years, we’ve seen high inventory numbers along with low sales. High inventory (high supply) and low sales (low demand) and have a very negative impact on any real estate market. Each month at HomeScope.ca I calculate months-of-inventory for Red Deer and the smaller communities surrounding Red Deer and M.O.I. might be the most important variable to consider when buying or selling.
Months-of-inventory in Red Deer at the start of 2018 was surprisingly low but it climbed quickly in the first quarter. This year our M.O.I. started a little higher but is already lower than it was at this time last year. The main reason M.O.I. was low at the start of 2017 was because of the abnormally high sales in early 2017.
If sales numbers continue to move up even just slowly, and inventory totals remain reasonable, we could see prices increase quicker this year than they have the last few.
To summarize, sales number appear to be on the rise, average home prices in Central Alberta are climbing and inventory numbers are in check so far. The Central Ab real estate market has been essentially flat for the last few years and that alone can lean toward changes upcoming. Another positive factor that will influence our local real estate market
Check back at www.HomeScope.com each month for real estate news and information local to the Red Deer and Central Alberta real estate market. Sign up below if you’d like to receive the www.HomeScope.ca newsletter. Blake King is a local Realtor with Big Earth Realty hosting HomeScope.ca.