The year-to-year market increases need some explanation right now

Each month I take the stats from our local board and put them into a spreadsheet to produce a graph that shows what the long-term trends have been in our market here in southern Ontario, Canada.

This graph shows the trends over the past 15 months -

You can see the decline that took place last fall, the resurgence we had in the market due to pent-up demand last spring, and the up and down results we have had since last April as the market tries to deal with both good and bad news about the economy.

One of the standard measures used to look at trends in the real estate market is "How well are we doing compared to a year ago"?

The difficulty with using this measure right now, is that you need to consider what was happening a year ago and see that it was anything but a normal market. The economy of the US, then most other nations, started a decline that ran right through until January 2009 in our area. Many markets are still waiting for recovery, but by July of this year we were pretty much back to previous levels in our market.

So, as the statistics come out for the next months, through to January 2010, we will likely hear about year-to-year increases over last year's figures, but is this a result of how good thing are now, or how bad they were a year ago?

The answer has to be - a little of both. We are very fortunate to have an economy that has shown good recovery, but if we are told that prices are up by 5 or 10%, this is a good time to ask, "Compared to what?"