Dale Boddy’s Look at the 2008 Red Deer Real Estate Market
January 2009.
SO THAT’S WHY THEY ARE CALLED PEAK PRICES! THEY “PEAK” THEN FALL!!
By year-end 2007, I noted prices declined to look “normal” compared to June 2007s peak prices. While 2007 was a record year; the market was changing—rapidly. Optimistically, I hoped for modest gains in 2008. What 2008 delivered were modest declines. Average MLS prices increased 0.3% overall to $308,442 from $307,408 in 2007. For single-family homes prices declined 1.8%, $348,593 from 2007s $355,142. For building activity, the decline was brutal! Residential building permits crashed from1076 in 2007 to 372 in 2008—65% less. Further, the issuing of building permits fell two straight years. Less building led to a fall in dollar volume of MLS sales and Building Permits--19% to 662 million from 821 million.
2008 was a good year in Red Deer MLS real estate, our 2nd or 3rd best year ever--but not if you bought in 2007 or 2008. And it is clear that using averages to price individual homes has huge flaws. See why! LIES, DAMN LIES, AND STATISTICS! “There are three kinds of lies: lies, damned lies, and statistics." Mark Twain made the saying famous but the quote was from a British Prime Minister. It applies here. Average prices for single family homes declined 1.8% from 2007 to 2008 but most people know that sales come only after bigger price reductions. Median or middle prices show the same lack of reliability. Plainly put, houses that sell now are better homes than they were in 2007. They show better. They are priced better. Or they don’t sell! Pricing a home requires a careful look at the past and future. For most of 2008, buyers had both a strong economy and great choices: 735 listings in May 30, 2008 versus 326 in 2007 versus 81 in 2006. We have gone from 0.46 months supply in 2006, to 1.33 months in 2007, to 3.4 months in 2008. And by December 2008, 9 months. Ouch! Clearly, the seller’s market has changed to a buyer’s market. At the same time, the economy went off the rails. Prices had nowhere to go but down. Politicians everywhere are trying to spend us out of a recession. Canadians are told that we are better off than others, specifically America. But we need Americans to buy our products. In the big picture the collective spending of individuals end recessions. But individuals need reasons to spend—optimism about the future. Governments, businesses and individuals face big challenges. May we all be up to it! Want more information? Call
Ask for Dale B: phone 346-6798 @ home, 318-2402 @ cell or 346-0021 @ pager or dale@reddeerproperties.com. 2009/01/27 Information supplied by members of the Red Deer and District Real Estate Board. While sources are believed reliable, verify before relying on it. Dale Boddy's Real Estate OUTLOOK: Red Deer; Current Edition. Dale Boddy's Real Estate OUTLOOK: Red Deer March 2007. Dale Boddy's Real Estate OUTLOOK: Red Deer November 2006. Dale Boddy's Real Estate OUTLOOK: Red Deer 2008. Dale Boddy's Real Estate OUTLOOK: Red Deer 2007. Dale Boddy's Real Estate OUTLOOK: Red Deer 2006. Dale Boddy's Real Estate OUTLOOK: Red Deer 2005. Dale Boddy's Real Estate OUTLOOK: Red Deer 2004. Dale Boddy's Real Estate OUTLOOK: Red Deer 2003. Dale Boddy's Real Estate OUTLOOK: Red Deer 2002.
