With all the news about mortgage rates and the spin from VREB and REALTORS it is easy to overlook RE market trends and be influenced by what happened in one month - April.
So here are some facts and questions for my fellow bears:
May is going to be an interesting month. It is usually the peak month for sales and new listings (see graphs above). After that sales taper off every month but inventory continues to grow until the end of summer. Once we get to June and July the RE industry will not be able to hype sales; they will be sliding.
- April sales were up significantly from March but are still lower than the levels seen in recent years These lower 2009 sales were with record low interest rates and associated hype. If you take a look at 1st quarter sales you will see that they were dismal. So low interest rates have driven the recent market. Will this continue?
- There is no disputing that SFH prices have increased somewhat in the last few months but it is the price trend that puts things in context. One or two good months in the peak sales season is not a trend reversal.
- Even VREB has stated that many sales are taking place at the low end. Oak Bay high end sales have shown typical increases in recent months. Here are the average and median prices but look at the rolling averages and where they are heading.
- People sell for many reasons but one of the main drivers of any RE market is move up buyers. I believe this crowd is sitting tight because new listings are not showing the big monthly spring increases of previous years.
One REALTOR told me that he believes the buyer pool is getting thin. How many FTB's with a good credit history and 5% down are still out there? Fixed bond rates are starting to move up and fixed mortgage rates will likely follow in a few months.
So stay focused on trends and not be swayed by peak sales season hype.
Tuesday, May 5, 2009
Follow the trends, not the hype
Roger always has great analysis of the monthly numbers. His April stats package, of course, raises the bar higher. In the last post, he made this comment, which deservedly needed to be moved to the front page: