It's a question that is asked frequently these days. The answer depends on with whom you're talking of course; I doubt there is a consensus that we have or we haven't.
Market activity has increased as we move through the spring market, especially in the starter market. Sales figures for the month of May, 2009, will exceed May of 2008, and that is a positive sign with regard to activity. Last May (2008), 1368 single family homes were sold, and 577 condos sold in Calgary metro. In May of 2007, 1995 single family homes were sold in metro, and there were 877 condos sold, for comparison.
The average price (for what that's worth for evaluation purposes) for Calgary single family peaked in July, 2007, at $505,920 and the average price for metro condos peaked in May, 2007, at $332,237. Median prices were $435,000 and $308,000 respectively. I recall at the time that CMHC had commented about the SF average price in such a fashion to say that Calgary had essentially come of age - not that we had an impending housing crisis on our hands! So much for placing confidence in Government economic housing commentary, analysis, and forecasting.
Let's review some 2006 sales figures, and yes, we were in a strong market at the time. Metro SF in April: 2040, condos: 839; metro SF in May: 2040, the same, condos: 892; metro SF in June: 1948, condos: 875. In fact, the combined residential sales for May, 2006, set a new MLS record. It is worth noting the the average sale price for SF at the time was $415,815, and the median price sale price was $375,000, both in Calgary metro. The average price for condos was $273,407 and the median price was $257,000.
So, what's the upshot of all this? We are headed in the right direction, but is is essential to remember where we have been in terms of activity and prices. The market is far from reflecting normal numbers for a marketplace of just over one million people; and, it would be folly for sellers to expect another buying frenzy, driving up prices. For buyers, they might wish to note that an 8% reduction in price in our market is nullified by a 1% increase in mortgage rates. With those rates at record lows, how much lower can we go?
Common sense, and our economic situation, should tell us that housing prices have to remain affordable. Some builders are anxious to build, and with profits pared for now, sales are rebounding in some price ranges, to the extent that buyers perceive better value in that market.
Sunday, May 31, 2009
Tuesday, May 19, 2009
First time buyers seem to have high expectations?
I had occasion to read an article recently in one of the real estate trade magazines about the expectations of first time buyers. The content of the article was derived from a survey conducted by one of the large international franchise companies.
According to the survey of sales reps and brokers, over 80% of first time buyers consider move-in conditions to be most important when searching for their home, although affordability is the number 1 concern. That strikes me as somewhat of a contradiction, as it did the president of the company that conducted the survey. Only 7% of these buyers expressed any interest in finding a "fixer-upper" property; but investing some sweat - and dollars - in improving the property is an obvious way to build up some equity over a period of time.
We don't know the definition of "fixer-upper" in this context, but logic dictates that it could include improvements ranging from new paint to flooring, and updating electrical and plumbing features in the house.Conceivably it can go beyond that, to entail kitchen and bath renos, and exterior changes or repairs such as roof replacement. Many average' properties can use some landscaping improvements as well.
Another revelation is that 70% of respondents search for larger homes than they were ten years ago. It amazes me when reading articles about the home buying criteria for some of these buyers that they want such large square footage - 2000 square feet for example. I hate to admit it, but I remember the day when a 960 sq. ft. bi-level - on the main floor - was the average starter home. Developed in the basement efficiently, it served its purpose well, with or without young children occupying it.
Today, when planning your home search, it might be wise to consider future market trends, over the next four to eight years especially. The baby boomers are downsizing! Some of them are moving out of 1100 sq. ft bungalows, not only 2200 sq. ft. 2 stories. Who, then, will be buying the large 2 story homes that are so typical, and obviously popular, here in Calgary? Food for thought, because the next startling finding is that 33% of the respondents are buying their first home as an 'investment'.
Think about how we got to these market conditions today, May of 2009. The answer is greed, as buyers of all sorts became swept up in the notion that a principal residence is an 'investment'. An investment property generates revenue, be it a detached house with suite or an apartment building. Your principal residence is a roof over your head. You rent or you buy, and if you're smart about it, the house is paid off in 15 to 20 years. (There is no better way to build a tangible asset, tax free.)
The real benefit to owning is that it's yours to do with as you please, and yes,that it can be mortgaged, with sufficient equity. But far too many owners are tempted with equity take-outs. The foreclosure market is proof of that. Too many folks equate the housing market to the stock market. Both are cyclical, but you can't live in your stock certificates. When the stock broker says price dictates selling rather than buying, one is inclined to heed the advice. That's the basic difference - there's more common sense exercised in the stock market... a little more, not substantially more! It's another subject for another day.
According to the survey of sales reps and brokers, over 80% of first time buyers consider move-in conditions to be most important when searching for their home, although affordability is the number 1 concern. That strikes me as somewhat of a contradiction, as it did the president of the company that conducted the survey. Only 7% of these buyers expressed any interest in finding a "fixer-upper" property; but investing some sweat - and dollars - in improving the property is an obvious way to build up some equity over a period of time.
We don't know the definition of "fixer-upper" in this context, but logic dictates that it could include improvements ranging from new paint to flooring, and updating electrical and plumbing features in the house.Conceivably it can go beyond that, to entail kitchen and bath renos, and exterior changes or repairs such as roof replacement. Many average' properties can use some landscaping improvements as well.
Another revelation is that 70% of respondents search for larger homes than they were ten years ago. It amazes me when reading articles about the home buying criteria for some of these buyers that they want such large square footage - 2000 square feet for example. I hate to admit it, but I remember the day when a 960 sq. ft. bi-level - on the main floor - was the average starter home. Developed in the basement efficiently, it served its purpose well, with or without young children occupying it.
Today, when planning your home search, it might be wise to consider future market trends, over the next four to eight years especially. The baby boomers are downsizing! Some of them are moving out of 1100 sq. ft bungalows, not only 2200 sq. ft. 2 stories. Who, then, will be buying the large 2 story homes that are so typical, and obviously popular, here in Calgary? Food for thought, because the next startling finding is that 33% of the respondents are buying their first home as an 'investment'.
Think about how we got to these market conditions today, May of 2009. The answer is greed, as buyers of all sorts became swept up in the notion that a principal residence is an 'investment'. An investment property generates revenue, be it a detached house with suite or an apartment building. Your principal residence is a roof over your head. You rent or you buy, and if you're smart about it, the house is paid off in 15 to 20 years. (There is no better way to build a tangible asset, tax free.)
The real benefit to owning is that it's yours to do with as you please, and yes,that it can be mortgaged, with sufficient equity. But far too many owners are tempted with equity take-outs. The foreclosure market is proof of that. Too many folks equate the housing market to the stock market. Both are cyclical, but you can't live in your stock certificates. When the stock broker says price dictates selling rather than buying, one is inclined to heed the advice. That's the basic difference - there's more common sense exercised in the stock market... a little more, not substantially more! It's another subject for another day.
Subscribe to:
Posts (Atom)