Red Deer, AB

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Red Deer's Real Estate market has done it again and made some record breaking milestones for 2007 despite the shift in the market! The rapid increase in prices began to soften in the middle of the year after we had a large amount of new listings come on the market for sale in March ‘07. Although the demand for housing continued to stay strong through out the year, the amount of new listings continued to increase at a quicker pace than the demand, thus shifting Red Deer's market from a sellers market to a much more balanced market. With this change, prices softened and buyers had more to choose from, giving buyers more time to make decisions.

With that said, it was still another busy year for 2007 even though it took many properties longer to sell. There were a total of 2,157 single family, half duplex, townhouse and condo homes sold through the Multiple Listing Service® which is a 12% increase over the 1,929 that were sold in 2006! The record breaking sold price for a resale home was in June '07 with a price of $1,020,000. It took just 20 days to sell the 2,294 sq ft beauty located in Anders on the Lake. (See Page 2 for details of the highest priced houses sold for 2006).

Another new record set in 2007 was the number of houses that sold over half a million dollars. There were 97 homes in 2007 compared to 29 homes in 2006, 6 homes in 2005 and 4 homes in 2004. A strong indication of just how much housing prices have increased over the last 3 years!

This Article Relates to the market in Red Deer, Alberta, Canada.

"I am going to wait to see if the prices continue to drop." Yes this is a common statement we as Realtor's are hearing from buyers these days. And it got me thinking it could be the start of another cycle. What cycle is that you ask? The cycle of too few listings and too many buyers and maybe, just maybe, it will be the buyers to blame if the prices go up again. How could that be? Let's think about this. If buyers are waiting for the prices to go down and sellers are not willing to drop their prices, what happens? Sellers decide not to sell their property and take their house off the market. They either decide not to move or they decide to rent the property instead of selling it. If this pattern continues, there will be less and less available to buyers and what will happen? Buyers will be scrambling to buy whatever they can, prices will increase and multiple offers will become the norm with sellers enjoying what is referred to as a "sellers market."

So how do buyers try to prevent this from happening? Don't wait for that magical day when you think the prices are going to drop to nothing before buying. Historically, if you look at the long range trend of housing prices, there has been an upward incline. Even cities such as Vancouver, where prices have a history of falling and rising, the historical trend is an upward increase.

You have to be willing to "ride the wave" so when prices are softening, you might want to avoid selling. History shows that regardless of when you buy your property, if you are committed to real estate long term, you will benefit.

Real estate purchases should be viewed as long term investments. The popular term of "flipping" which evolved with the abnormal market we experienced over the last few years, should be done with caution. Flipping works in a very hot market where prices may be increasing at a rate of 2-4% per MONTH. But in a stable market, prices typically experience a 2-4% increase per YEAR. With an increase of 2-4% per year, the average property would need to be held for 2 years in order to cover the commissions and breakeven. For example, if a home was purchased for $350,000, a 2% increase each year for 2 years would equate to just under $15,000. This would typically cover the commissions for the sale of this property and allow the purchaser to break even.

Like any investment, you must be committed. The longer the property can be held, the more financial benefit you will experience.