Are we close to a market bottom?
Investors participating in any fluid market try to time that market’s high as well as its bottom. This applies as well to the real estate market; investors want to take advantage of market gyrations to maximize their investment while the average home buyer wants to protect their investment in perhaps the largest purchase that they will ever make.
Statistics are one tool that we can use to analyse and anticipate market trends. Other factors that often come into play are intuition, news media, emotion and ‘here say’. Even with all of the analytical tools at hand it is understood that timing any market perfectly is not at all an accurate science. Inherently, when we realize that a bottom or a market high has been reached, that point (high or low) has been passed and is now relegated to a historical statistic.
So if we can’t really perfectly time a market, then what? Well, if we can at least take action close to a market high or market bottom the desired end result is to all intents and purposes achieved.
In looking at recent statistics in the Calgary real estate marketplace it would appear that we are approaching a balanced market. Take for example the fact that we have:
With record low borrowing rates and increased affordability for home buyers, we are definitely experiencing a trend towards the return of a balanced market. Homes that are priced properly are selling quickly as consumers are realizing that they can now own their own home for about the same cost of renting. This trend in increased sales activity, combined with decreasing inventory levels will start to effect upward pressure on housing prices if it continues.
Are we close to a market bottom?
First-time buyers driving force in Canada’s residential real estate markets, says RE/MAX
Entry-level purchasers are now the engine driving home-buying activity in almost every major centre in Canada, according to a recent report released by RE/MAX.
The 2009 RE/MAX First-Time Buyers Report, highlighting first-time buying activity in 32 residential housing markets across Canada, found that improved affordability is prompting many first-time buyers to get off the fence, out of the rental, and into the market. While a sense of caution still prevails, more and more first-timers are finding it hard to pass up the chance to become homeowners in today’s buyer-centric real estate climate. Increased inventory and longer days on market, coupled with the lowest lending rates ever, are presenting opportunities that have not been seen in almost a decade.
While the current economic crisis has caused some first-time buyers to either take it slowly or apply the brakes, home ownership remains a top priority for those who are able to take advantage of reduced carrying costs, rock bottom interest rates and lower house prices. Affordability has greatly improved and buyers are firmly in the drivers’ seat in just about every market we surveyed. The new reality is that homeownership remains well within reach for most first-time buyers.
Although the year got off to a slow start, February home sales were well ahead of those reported in January. The upward trending is expected to continue as more and more first-time buyers enter the market in the weeks ahead. The flurry of activity in the lower-end may also serve to kick-start sales in the mid-to-upper end of the market, which have, as expected, been relatively sluggish in recent months. While inventory and days on market was up virtually across the board, it’s noteworthy that several markets reported tighter conditions in the lower end of the market, where demand and buyer activity remains quite healthy.
Canadian markets from coast-to-coast are ripe for a reawakening as the weather warms up. First-time buyers seem more acclimatized to economic factors, even though the barrage of bad news continues to flow. Those who are secure in their jobs, have accumulated good down payments, and have acceptable credit ratings are continuing to venture forward, undeterred by tighter lending criteria.
According to the RE/MAX Report, buyers are clearly in control in most Canadian markets. Of the 32 markets surveyed, 22 (69 per cent) remain firmly in buyer’s market territory. These include Vancouver, Surrey, Port Coquitlam, Chilliwack, Kelowna, Victoria, Edmonton, Calgary, Saskatoon, Regina, Ottawa, Peterborough, London-St. Thomas, Niagara Falls, Mississauga, Metro Toronto, Northern GTA, Kingston, Windsor, Hamilton-Burlington, Barrie, and Halifax-Dartmouth. Ten (31 per cent) report more balanced conditions: Winnipeg, Kitchener-Waterloo, Sudbury, North Bay, St. Catharines, Saint John, Moncton, Fredericton, St. John’s, and Charlottetown.
Forty per cent of markets offered single-detached homes priced under $200,000, including Charlottetown, Saint John, Moncton, Peterborough, Niagara Falls, St. Catharines, Windsor, Fredericton, Halifax-Dartmouth, London, North Bay, Kingston, Saskatoon and Winnipeg. More than two-thirds (71 per cent) offered condominiums starting under $200,000, (Moncton, Fredericton, Halifax-Dartmouth, Sudbury, North Bay, Peterborough, Mississauga, Burlington, Niagara Falls, St. Catharines, Kitchener-Waterloo, London, Windsor, Surrey, Chilliwack, Victoria, Kelowna, Edmonton, Saskatoon, Regina, and Winnipeg).
The most affordable markets for detached homes, based on starting prices are: Moncton ($115,000), Charlottetown ($120,000), and Saint John ($130,000) in Eastern Canada; Windsor ($75,000), Niagara Falls ($119,000), and St. Catharines ($125,000) in Ontario; Winnipeg ($185,000), Saskatoon ($190,000), and Regina ($210,000) in Western Canada.
RE/MAX is Canada’s leading real estate organization with over 17,000 sales associates situated throughout its more than 670 independently-owned and operated offices across the country. The RE/MAX franchise network, now in its 36th year, is a global real estate system operating in more than 70 countries. Over 6,800 independently-owned offices engage nearly 100,000 member sales associates who lead the industry in professional designations, experience and production while providing real estate services in resident, commercial, referral, and asset management. For more information, visit: www.remax.ca
RE/MAX of Western Canada (1998) Inc. First Time Buyers Report, issued March 11, 2009.
Lower home prices and shifting demographics mean first-time buyers could lead a rebound in Canada's real estate market, experts said Wednesday at a real estate conference in Toronto.
This wave of the children of baby-boomers begining to look at entering the housing market in addition to the number of immigrants entering Canada will assert some positive influence on our local real estate markets. Low mortgage rates, softening home values, new government incentives to first time buyers combined with large numbers of active listings have created a true buyers market here in Calgary. What we are seeing now is that more first time buyers are realizing that they can purchase their own home for very close to what they are currently paying out in rents.
With a significant number of single family detached homes now selling at and around the $300,000 mark some 'echo-boomers' are able to get into their first home for around $1250 per month. This makes a lot of financial sense considering the fact that many young couples are paying rents anywhere from $1100 - $1500 per month. We are also seeing a larger number of enquiries about condominiums from young single professionals that are wanting to be close to their place of work in the city center. With the 'over-built' condo market, these single professionals are out looking for a bargain.
Craig Harding
RE/MAX Real Estate ( Central )
Calgary, AB
Calgary RE/MAX Central Realtor
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
Powered by the ActiveRain Real Estate Network
© 2009 ActiveRain Corp. All Rights Reserved
