February Real Estate Meta-Analysis

In the press release for February the Realtors association of Edmonton commented on sales falling 32% from last year and the increase in inventory:

“We predicted that sales would be on par with the last ‘normal’ year that we had in 2005. So far the market is behaving as we anticipated.” The number of available residential properties listed on the MLS® at the end of February was up 12.7% from the previous month at 8,284 properties. In February 2007 the inventory had just 2,120 properties.

Compare this to their forecast released less than 2 month ago:

The current inventory of residential properties is now 7,094 homes. The inventory will decrease through the year but the wide choice of properties will have a dampening effect on prices offsetting increased demand from in-migration and economic growth. Condominiums are expected to become a stronger option (especially for first time buyers) because of the lower price point.

The total number of residential sales in 2008 will probably drop slightly from 2007 levels. Perras expects that 19,100 residential properties will sell through the MLS® in 2008. There were 20,544 sales in 2007.

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From Edmonton Weekly Stats on Working Together

The “sales to listing ratio” remains healthy, which is what really matters for the Edmonton real estate market.

Sales to listing for the week was 239/601=39.8% which is on the line balanced and buyers market. For every 4 people that bought 10 people listed - It is a stretch to label that healthy.

No real shock to anyone, the number of new listings in Edmonton is much higher than it was for the same week last year, and the number of property sales is much lower. But last year wasn’t a typical real estate market, and we all have to stop measuring against it.

Last year the high level of sales was seen as soley being attributed to Alberta's boom. Some did predict that price increases would moderate, but did not questions the legitimacy of the demand during this time. Comparing current demand to last year illustrates that some of this demand may not have been justified.

Based on the last 3 months worth of sales, we have 6.62 months of Edmonton housing inventory for sale. That puts us into a very balanced market, as 6 months of inventory is considered to be a perfectly balanced market, and anything over 8 months is a buyers’ market. We aren’t even over 7 months yet, so I don’t think you have to panic.

On the same page there is a graphic:

more than six months is considered a buyer's market.
Less than six months is considered a seller's market

Andrew Kyle, a Calgary Realtor defines a buyer's market over 3.5 months of inventory. The CREB had defined it a similar way until adjusting charts.

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Consider the title of the Calgary Real Estate Board Statistics:

MLS® RESALE MARKET PICKS UP MOMENTUM IN FEBRUARY 2008

Single family Calgary metro properties changing hands in February 2008 were 1,252, an increase of 15.6 per cent over the 1,083 sales reported in January 2008 but showing a decrease of 35.5 from the same period last year, when the sales were 1,942.