September 2011 A Balanced Market?

End of September heralds in the fall market, and the closing of the third quarter for MLS® statistics.  Here in Red Deer residential sales have been positive for year over year growth and the supply side, namely listings, has decreased year over year.  When we started 2011 our expectations were for modest growth and a trend to a balanced market.  With the economic conditions in Alberta looking increasingly favourable we were anticipating a robust end to 2011.

So where are we at for 2011?

The average price seems to fluctuate month to month, but that is a function of where the sales have been occurring.  The table below indicates that sales are certainly more plentiful between $200,000 and $350,000.  The fluctuation price is largely in part due to the presence or lack of sales in higher end price ranges as that mid or median group seems pretty consistent.

Average Price Comparison to Number Sold
2011 100& Under 100-150 150-200 200-250 250-300 300-350 350-400 400-450 450-500 500-550 550-600 600-700 700+ Total Avg. Pr.
JAN 3 4 8 12 25 14 15 4 4 1 0 0 1 91 $285,785
FEB 3 5 13 22 24 15 8 8 2 2 1 0 0 103 $268,133
MAR 4 6 10 26 35 32 19 13 1 2 0 1 1 150 $291,408
APR 6 7 11 14 36 27 9 7 5 4 0 0 0 126 $282,140
MAY 8 6 15 39 34 20 31 10 7 1 5 1 2 179 $291,395
JUN 4 11 8 32 46 23 19 16 6 1 1 2 1 170 $290,373
JUL 8 5 14 21 36 28 13 11 6 4 1 2 1 150 $291,228
AUG 8 9 13 28 29 26 10 4 6 0 2 2 1 138 $272,959
SEP 5 4 4 16 31 22 20 9 1 1 2 1 2 118 $303,513
TOTAL 49 57 96 210 296 207 144 82 38 16 12 9 9 1225 $286,326
Information based on Red Deer Real Estate Board MLS Stats 2011 only.

Graphically it looks like this:

How does this compare to last year?

MLS® Year-To-Date Comparison–2009-2011 for Red Deer
Year-To-Date—2010
Total
# Listings
2008
Total
# Listings
2009
Total New Listings 2010 Total new Listings 2011 2008
Total
# Sales
2009
Total
# Sales
2010 2011 2009 Average Sale Price 2010 2011
JANUARY 305 218 267 222 106 62 85 91 239,821 276,381 285,816
FEBRUARY 310 276 250 229 171 113 115 103 300,465 304,745 268,133
MARCH 394 280 321 232 168 123 120 150 285,407 314,215 291,408
APRIL 410 305 323 281 220 178 156 126 295,447 321,008 282,140
MAY 388 331 334 299 214 197 151 179 309,492 306,011 291,395
JUNE 357 299 370 316 204 213 133 170 291,287 287,950 290,373
JULY 350 281 300 281 208 179 126 150 289,213 326,077 291,228
AUGUST 274 250 291 236 204 163 94 138 289,122 316,845 272,959
SEPTEMBER 272 269 249 241 184 122 121 118 297,656 300,488 303,513
OCTOBER 314 256 239 128 151 76 293,268 304,618
NOVEMBER 361 206 195 88 114 113 291,957 309,608
DECEMBER 103 124 119 58 85 99 298512 268818
Total 3838 3095 3258 2337 1953 1700 1,389 1225

We are fairing quite well compared to the two previous years.  We are certainly on track to record a better year than 2011 and we may be close to returning to 2009 sales volume levels.  It will be interesting to see how the final three months turn out.

It is important to note that real estate is hyper local.  The surrounding bedroom communities and areas have a slightly different result for the year than the City of Red Deer and as we’ve noted above, different price ranges are experiencing higher rates of sales than others.

The question on how well or balanced the market must include a look at the absorption rate which answers is, “Is the current inventory level shrinking or growing”?

Quite simply the absorption rate is a number shows the rate at which the inventory of homes for sale are being sold. A declining figure indicates people the inventory is decreasing as more homes are being sold than are coming onto the market. A rising absorption rate implies that there are more homes coming onto the market than there are buyers willing to buy at the market prices.

The absorption rate lets you know how well the market is absorbing the current inventory of listings.

Current Residential Absorption Rates:

Area: Current Active Listings Sales in September Absorption Rate
Red Deer 587 118 4.97
Blackfalds 70 19 3.68
Sylvan Lake 248 27 9.19
Lacombe 153 29 5.28
Penhold 29 4 7.25

Almost 5 months of inventory in Red Deer at the current sale rate.  The market with seemingly the best balanced conditions right now appears to be Blackfalds, while Sylvan lake continues to struggle with large inventory volume and low sales volume.

If you’re looking at selling The lower absorption rate would indicate a betetr chance or odds at selling than those communities with higher absorption rates and lower sales volume.

In Red Deer the inventory level is definitely shrinking:

Active Red Deer residential MLS listings as of September 30, 2010: 709

Active Red Deer residential MLS listings as of September 30, 2011:  591

In our supply and demand picture for real estate in Red Deer the supply of properties for sale has been declining throughout 2011.  An indicator that were have been and are transitioning from a buyers market to a balanced market.  Below is a look at weekly listing inventory levels for residential MLS real estate in Red Deer.

The other side of the equation being sales:

Sales have been stronger in 2011 and contributing to balanced market conditions.  Positive news for buyers and sellers.

 

Patrick Galesloot

Patrick on Twitter: @pgalesloot

**Note all stats are MLS® residential stats for the city of Red Deer, Blackfalds, Penhold, Lacombe and Sylvan Lake***

2 Responses to “September 2011 A Balanced Market?”

  1. Marc Perreault

    Great job on the stats Patrick, I really enjoy reading your updates on the market. Nice to see the listings coming down a bit. I was surprised when comparing the ave prices form 2010 to 2011, looks to be about a 7.5% drop? Once again thanks for putting these reports together!

  2. Thanks Marc,
    The price has been sliding. It’s all supply and demand related, and of course average incomes in the area. We can only support so much. The average seems to want to be around $300,000. You get more house for your dollar today.

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