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:

• A year over year increase of over 25% in Calgary Metro-Single Family Home sales to new listing ratio for March 1 – 25th (49% as compared to 39% for the same period in 2008)
• A year over year increase of over 31% in Calgary Metro-Condominium sales to new listing ratio for March 1 – 25th (46% as compared to 35% for the same period in 2008)
• A year over year decrease of over 61% in Calgary Metro – Single Family Home listings added for March 1 – 25th (1749 compared with 2860 for the same period in 2008)
• A year over year decrease of over 59% in Calgary Metro – Condominium listings added for March 1 – 25th (755 compared with 1277 for the same period in 2008)
• A year over year decrease of over 77% in Calgary Metro – Single Family Home inventory for March 1 – 25th (4,569 compared with 5930 for the same period in 2008)
• A year over year decrease of over 78% in Calgary Metro – Condominium inventory for March 1 – 25th (2153 compared with 2741 for the same period in 2008)

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?