The official Calgary real estate statistics have been released and the numbers spurred a series of articles and stories on the evening news. The price of oil and uncertainty of the energy sector has caused folks to take a second breath before making a purchase decision while some others decided they didn't want to delay listing their homes. The result has been increased inventory levels and reduced sales through January 2015.
Part of the drama comes in a review of year over year numbers. Last year in January we saw record low inventory and higher than normal sales so the year over year looks worse than it really is when compared to further years back. Don't get me wrong, numbers are still down but just not quite as dramatically as the year over year statistic portrays.
The more important information is future economic outlook and the supply and demand of housing. We are moving potentially from a year of 10% price growth, multiple offers, and low inventory, to a more balanced market where folks have the time to make solid decisions, potentially purchase on a 'subject to sale' clause when moving between properties. This balanced market shift may also unlock some folks stuck in the hot market of 2014.
From an investment perspective many will follow the thoughtful advice of Don R. Campbell, but even he states the tipping point depends on signs of economic improvement. Nobody today can really tell you the price of a home in 6 months.
With oil on the rebound the last few days and some pundits saying oil has reached the bottom at $50, we may be on the other side. We just don't know it yet. Rental vacancy is still critically low. The single family lot count of available serviced lots is at the lowest in years.
Todd Hirsch, Chief Economist at ATB Financial is quoted in an article updated a couple of days ago:
Talk to an economist. It’s not an original idea. Just ask ATB’s chief economist, Todd Hirsch. His phone has been ringing off the hook with people wanting reassurance that the sky is not, in fact, falling. “This is a very normal cycle,” he says. “It’s not that pleasant. But the biggest threat to the economy right now is not $45 oil, it’s fear.” Hirsch is all for household financial prudence but says irrational decisions — “such as ‘I’m not going to spend any money because I might lose my job’” — will lead to a downward spiral. And then, he warns: “It’s a self-perpetuating cycle, to the bottom.”
This isn't the time to allow emotions and fear to drive your decisions. Prudent advice, thoughtful review and current information will help you make your best move.
Contact me for any questions you have with respect to your real estate decisions. firstname.lastname@example.org