October 2006 Volume 2, Number 10
In This Issue
· Market Talk
· Interest Rates
·
In Closing
Real Estate Links
Stef Lukas, our Realtor
Richard Anserson, our Mortgage Broker
The Real Estate Investment Network
An Online Listing Service
Another Online Llisting Service
The Multiple Listing Service
Contact Us
In This Issue
· Market Talk
· Interest Rates
·
Real Estate Links
Stef Lukas, our Realtor
Richard Anderson, our Mortgage Broker
The Real Estate Investment Network
An Online Listing Service
Another Online Listing Service
The Multiple Listing Service
Contact Us
Market
Talk
Over 6,400 listings are now on the MLS for the Calgary region, considering we were down to the low 1200's in the April/May timeframe, this is quite a turn around.
The real question being, how does this affect the Real Estate market, or more importantly the investment aspect of it? Let's see if I can take a couple swings at this.
Since there has been a huge increase in listings it is providing potential buyers with many more properties to choose from. Due to this the mad rush on properties has faded away at this point. As I mentioned in August the average days on the market for a property had jumped up to 28 days versus 14 days earlier in the year. We are now around 31 days on the market, but this could continue to increase as the MLS is adding 150-200 properties per day right now.
Due to these increases, some people are forecasting we could reach 11,000 listings in the next few months as the market slows towards December. With all these properties becoming available it really is turning into a buyer's market, at first glance.
What we have to remember is there are many properties that are well priced out there, and they are selling quite quickly. We are still experiencing a lot of gluttony out in the market and people who aren't paying attention are still trying to demand top dollar for sub standard products. They simply haven't noticed the market has changed.
If we look at the economic fundamentals as to why the prices increased so much, nothing has really changed. We are still seeing a huge amount of people migrating to Alberta every month and these people still need places to live. Whether it is rental property, or a home they wish to buy, the demand is still strong. Albertans are still earning more than their counterparts in any other province, so they can afford to spend more on their property than someone in a different part of Canada. The cost of living, while climbing, is still much less than the larger cities of Montreal, Toronto and Vancouver, still making it affordable to be here. These factors are causing the values to still stay on track even with all the increased properties.
From the seller's perspective it appears as the market is crashing down around them and everyone is selling. This has been working in our favor as we have been able to secure a couple properties at attractive prices. Many people with real needs to sell are becoming highly motivated and we have been able to see this with the amount of calls we receive from people looking to sell.
This type of pressure is likely to continue to fall upon sellers for the next few months and it looks like it may push all the way into the New Year. As the listings continue to increase and the number of days it takes to sell properties slowly climbs upward, motivation levels will continue to escalate.
If you are currently looking to buy a property, or waiting for our next
investment property to come on line so you can join in, things are looking
very good for you.
Interest Rates - Where are they going?
In July I had written about the current Dual Economy situation that has arisen between the manufacturing driven East and the resource rich West. The important aspect point being, how will it affect interest rates?
Well here we are several months later and more and more reports are starting to appear forecasting a reduction in interest rates next year. In September CIBC's World Market Chief Economist, Jeffrey Rubin, predicted four rate cutes for 2007.
Also in September Scotiabank's Global Economic Research Forecast Update is predicting lower interest rates starting in early 2007 with the Bank of Canada reducing by 75 basis points (.75%) for the year.
As we continue to see the banks make these predictions also watch how the US slowdown affects Canadian manufacturing. With a slower economy to the South of us, it could really affect the exports from Ontario to the US. This will further increase the pressure on the Bank of Canada to lower interest rates.
So my answer is watch for rates to lower in 2007, if you have a variable
rate mortgage and haven't locked it in, you are going to be very happy.
If you are looking at a new mortgage or refinancing 2007 will also be
a great time for you.
Happy Halloween to everyone and watch out for little ghosts and goblins!
Bill &
Karen Biko
Kat