Red Deer Market Update – Dec. 10/10
| Market Update to Dec. 9/10 Red Deer | ||||||
| Price Range | All
Active |
Pending | Active 1 Year Ago | Sold MTD
Nov. 30/10 |
Sold MTD
Dec. 9/10 |
Sold MTD
Dec. 9/09 |
| < 100 | 24 | 1 | 20 | 4 | 4 | 2 |
| 100 – 150 | 37 | 3 | 26 | 2 | 1 | 1 |
| 150 – 200 | 58 | 2 | 39 | 6 | 5 | 2 |
| 200 – 250 | 73 | 7 | 66 | 22 | 7 | 5 |
| 250 – 300 | 114 | 5 | 94 | 28 | 9 | 3 |
| 300 – 325 | 44 | 3 | 38 | 15 | 5 | 4 |
| 325 – 350 | 41 | 2 | 42 | 7 | 0 | 3 |
| 350 – 375 | 28 | 1 | 24 | 6 | 3 | 3 |
| 375 – 400 | 36 | 1 | 29 | 3 | 1 | 5 |
| 400 – 450 | 40 | 4 | 35 | 8 | 0 | 1 |
| 450 – 500 | 31 | 1 | 19 | 4 | 1 | 1 |
| 500+ | 53 | 1 | 52 | 8 | 1 | 1 |
| Total | 579 | 31 | 484 | 113 | 37 | 31 |
| Avg. Price | $321,356. | $329,239. | $309,608. | $273,516. | $296,084. | |
| Days On Market | 65 | 56 | 58 | 58 | 53 | |
The Average House Price is Up?
The Red Deer Advocate, CMHC, The Bank of Montreal and the Realtor’s Association of Central Alberta have all recently reported that average sale prices are up this year. Many folks who have been trying to sell their homes may be scratching their heads wondering why “reputable” sources would say something like that when their real estate associates are telling them that prices are down. It’s a shame some of the experts don’t explain their statistics a little better.
There is a simple explanation. In April of 2010, the rules for mortgage qualifying got a lot tougher. The Federal Government instructed CMHC (and therefore the banks) to make it harder to qualify for a mortgage to prevent Canadians from getting into a mess like the Americans are trying to clean up now.
Those rule changes most affected first time buyers and sales of “starter homes” (sale prices less than $300,000) dropped 25% in the first 11 months of 2010 compared to the first 11 months of 2009. In the same period sales of move up and high end homes also dropped, but only by 14%.
Surprise! Sales of homes over $500,000 during that same time frame increased by more than 30%!
So, if more high priced homes sold compared to low priced homes in 2010 compared to 2009, it only makes sense that the ”average” price is higher.
You really can make statistics say anything you want.
The real truth about house prices can only be found through direct comparison of similar homes sold during the different time frames. That process is not an exact science either, but it is likely more accurate than using mere averages.
An analysis of sales of starter and move up homes in Red Deer suggests that house prices in Red Deer are down between $10,000 and $20,000 (depending on the price range) from last spring before the government changed the rules and this fall.
The rule changes probably had a large influence on prices since activity in the housing market starts at the bottom of the price range and works its way up. When lower priced homes sell for less, those people have to move up to a lower price, especially when it’s harder to qualify for a mortgage.
Obviously the economy is another factor affecting house prices. While we are seeing signs that things are looking up, it may be a while before there is enough improvement to affect house prices. It took 8 months for prices to come down 3 to 4 percent and it will almost certainly take that long for them to recover that much.
This is the new normal. Make your home buying and selling decisions based on your family’s needs, not on your expectations for price inflation. It’s always a good time to buy or sell if it’s in your family’s best interests.
