McClelland Minute - July 19, 2009

Tide is Turning

The residential resale market is coming alive across western Canada.  It never did slow down that much in Saskatoon and Regina (only 10% in year to year comparative sales); but with June a record month for MLS in Edmonton, the Lloydminster region is once again feeling the warmth of its neighbouring big brothers.  In fact these large centres are predicting that by the end of the year, the total number of homes traded will equal 2008. 

Real estate trends tend to trickle down from the large centres to the smaller ones; we are even seeing more people looking in the rural areas.  With a healthy inventory still available, it is too early for there to be any serious pressure on price but value priced properties in pristine condition, particularly affordable starter homes are getting a lot of attention everywhere.  This in turn prompts the owners of those properties to trade up in the same community or make a move out to an acreage.

The low mortgage rates don’t hurt either.  Unfortunately, some local financial institutions have become extra cautious, so credit is where you find it. This drive for fiscal restraint is also bringing pressure on appraisal firms; prompting some to subjectively adjust their valuations down more than can be substantiated through logic, a worrisome tandem behaviour.

We may be entering a time of relative stability, with unchanged values and progression towards a balanced market between buyers and sellers.  Personally, it can’t come too soon for me particularly when it becomes time to negotiate for my sellers.  I have seen too many offers from bargain hunters hoping to find a highly motivated seller who will dump their property at a discount.  Now most clients have a good grasp of market conditions and aren’t willing to throw away equity, but any attempt to counter offer by the seller will prompt this type of buyer to quickly move on, so it becomes a time consuming and frustrating exercise for all involved.

I have always felt that the key to real estate activity is how a person views the stability of their job or personal circumstances.  As people realize that their employment situation is solid then they start to think about the possibilities that a balanced market and low interest rates offers.  This rising consumer confidence applies to more than just real estate; ask the local car dealerships how sales are going.  You may be surprised!

As stated several times before in this column, if you are trying to time the market, you risk waiting too long.  There are some great opportunities out there, but I suspect not for long.  Our team monitors activity through a half dozen indicators – visits to our websites, phone calls, request for viewing appointments, etc.  All of these are up significantly from three months ago. 

And while I am careful to not confuse activity with results, there is just too much happening in the region not to feel that we may already be at the front end of an economic recovery.  Of course, history would also suggest that when governments spend more than they earn that inflation will result, meaning that housing prices have only one way to go, and that is up.  If you want to be a buyer, then this may be the best time to jump in.

Vern McClelland is associate broker with RE/MAX of Lloydminster.  If you have questions or comments on this article or other real estate matters, he can be reached at 780.808.2700 or through the McClelland Group website www.mcclelland.ca

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