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Pronounced Buyers Market
You may recall the summer news letter reporting a slightly greater than 3 month supply of listings for sale in the Guelph MLS system, tipping the market every so slightly into a buyer's market. As of the end of October we have a 4.1 month supply, making the buyer's market more pronounced. The sky, however, is not falling. As you can see from Figure 1 sales for 2006 are below 2005 for most months, particularly September (down 18%). But 2005 posted some record sales volumes. So being lower than such a banner year of sales does not a catastrophe make. Houses are still selling if priced correctly and if the sellers are patient. Rare anymore is the story of selling in a matter of days. Six months is not out of the ordinary.
All this "to and fro" with slightly higher, slightly lower sales simply points to the reality that the boom market of the past 1/2 decade is sputtering, and the proverbial "normal" market is returning. This contrasts with the American housing market that is being described by some analysts as a "rapid deterioration" or "falling like a cheap roof". The US market currently has a record 7.3 month supply of listings (3.6 million homes) country wide and by some estimates is in danger of an implosion.
Lay offs in the softwood lumber industry in Quebec are blamed on the declining new housing market south of the border.
Why is it assumed that we will weather the storm better than our southern neighbours? Many market watchers feel that, because our market was not as hot as the US market (particularly Florida, California, La Vegas and parts of the East Coast), we will not have the huge whipsaw effect that is being predicted south of the border. In addition, fewer Canadians have borrowed as heavily on their home equity with variable interest rates to finance speculative investment housing purchases or consumer goods accumulation. With many Americans doing so, analysts feel that with rising interest rates south of the border many could find it impossible to service the higher monthly costs.
It is no secret that jobs, especially full time jobs, are very important to housing demand as newly employed individuals gain the financial means for owning a home. Over the last year, Guelph's economy has created over 5,000 full time jobs. This strong job growth has added to local housing demand helping to buffer the otherwise cooling trend in sales.
Predicted moderate inflation and a strong Canadian dollar will help keep Canadian interest and mortgage rates stable over the next year. Remember real estate is a long term investment. So if you want to buy, buy. If you want to sell, sell. If you want to do both, do both. The ebb and flow over the long run will be inconsequential. If you try to time the transaction to maximize profits you are speculating - the same principle asthe stock market. And that is a whole different game with a whole different set of strategies, and risks. As long as you are buying and selling in the same geographic location, do so without worry. If you are selling in Guelph and buying in Edmonton, call me. We need to talk!
