It's been interesting to watch this year, I follow a few blogs and throw my $0.02 in from time to time.
Around January, the number of single family homes for rent took a real nose dive, by about 25%. I know this because I use the rentfaster.ca database to track the number of properties and the median price of rents.
At first I thought it was seasonal fluctuation, but it started becoming very obvious that those houses were being put up for sale on MLS. Often they were up for rent and for sale on MLS at the same time. That chunk of rental inventory remains missing to this day. Median price of rent is up about 50 bucks, after dropping throughout most of 2009 and then flatlining in the last 4 months of '09 and the early part of '10.
The sale price of homes never really changed though, and rose a bit as it usually does in the spring. Overall, nothing really exciting in that department.
Then for the past few months, we've started to see large month-to-month increases in the levels of inventory. The last time this happened was 2008, and it went like this:
Jan -> Feb ~ +24%
Feb -> Mar ~ +19%
Mar -> Apr ~ +15%
Apr -> May ~ +3% (finally peaking at 7,099 SFH on the market)
From there, prices started to nosedive. Then emergency interest rates came into play, sellers retreated from the market, and the bleeding stopped.
Flash forward to 2010, and we have....
Jan -> Feb ~ +24%, - 3106 SFH at month end
Feb -> Mar ~ +29% - 4014 SFH at month end
Mar -> Apr ~ +30% - 5100 SFH at month end (estimated based on current pace, we currently sit at 4700 as of today)
So, some of this is seasonal of course, during normal periods in Calgary, we often see about 500 additional homes added to the inventory each month, particularly in spring.
It's when we start adding 1,000 or more a month, that things start to look interesting. If we are to have another month or two of this, we'll be back to 7,000 SFH or more on the market, which as history has shown us, does not bode well for home prices in Calgary.
The other factor of course, is demand. Sales have been mostly blah so far. I thought there would be a bigger rush of people looking to 'get in before the rates go up'. It's looking like we won't even beat the number of sales in March (1396 SFHs sold), with 822 homes sold so far this month.
The number of pending sales seems to be flat lining, and the median price of 'sales pending' has taken a hit this month which is unusual for April, when it usually goes up.
This large increase in inventory is not just in Calgary, but nation-wide. Kevin over at Edmonton Housing Bust, someone who's opinion I respect, has called this the 'Death Rattle' ...
http://www.edmontonhousingbust.com/2.../death-rattle/
He's obviously a certified bear when it comes to real estate in Alberta, but he usually refrains from making predictions such as 'this is it, it's over.' But he's always maintained that the next wave of inventory was going to signal the end, so he's sticking to his guns.
Here's his latest graph, showing the volatility of month over month inventory change....
You can read it almost like an EKG heart monitor device of how 'excited' the market is which usually leads to something interesting in terms of prices.
Quote:
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The same story also appears to be playing out in markets right across the country this spring. Even the CREA acknowledged the massive wave of listings, almost 100,000 nationwide. We in Alberta has seen this show just three years ago, we know how it plays out… now the rest of the country is going to get unfortunate opportunity to find out for themselves.
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