Real estate’s cycles hard to predict - Best to time home purchase to your own needs

EDMONTON - Spring is officially here and with it comes the real estate season.


“Spring is definitely the busiest season for both buyers and sellers,” says Doug Singleton, 2012 president of the Realtors Association of Edmonton. “We see a lot of activities and transactions from March to June every year. Land titles are busiest at the end of June and July because of all the activity that happens in the real estate market in the spring. July and August tends to slow down because of holidays and vacations. Things tend to pick up again in September, October and even November but then activity generally slows down again in the winter.”


In fact, the March-to-June period accounts for almost half the sales in the entire year.


This year, the statistics suggest that February was an unusually strong month for real estate federally, provincially and here in Edmonton. But does this stronger winter season mean a slower spring? March statistics seem to suggest otherwise.


According to data from the Edmonton Real Estate Board, sales and listings by were up last month. Listings were up 23.5 per cent from February and sales were up 24.5 per cent. The average price of a single family detached home in Edmonton was $380,083, up 1.3 per cent from February. The average price of a condominium in March was $231,629, down 1.4 per cent from the February price.


While our market appears to be quite calm, other places like Toronto have red-hot markets where unconditional offers and multiple offers are common place.


Fear of rising interest rates


There’s continued speculation that interest rates will rise, making it tougher for Canadians who are leveraged too much. Will Canadians try to get their purchases in before these rates come? Will this mean more activity? Or will higher interest rates make it more challenging, particularly for first-time homebuyers? Of course, interest rates may remain unchanged, given Mark Carney’s reluctance to raise them in fear of massive debt levels in Canada.


Is there a best time to buy or sell?


March’s sales-to-listing ratio was unchanged, usually a signal for market stability. Singleton says that the seasonality of the real estate market changes the number of both buyers and sellers, and therefore both supply and demand. In spring, there is more demand for real estate, but also typically more supply, so we don’t usually see spikes in prices. The opposite occurs in a typical winter, when there are fewer houses for sale, but also fewer buyers.


Basic economics suggest that prices go up when there are more sellers than buyers and prices go down when there are more sellers than buyers. If there is an increase to both buyers and sellers you can have an increase in activity but not necessarily an increase in price.


Don’t try to time the markets


Buying real estate can be similar to buying stocks or mutual funds, from the perspective that it should not be about timing. Just as no one knows what will happen to the price of stocks, no one really knows what the spring will hold for the price of real estate. Maybe February stole some sales from March and April and prices will not increase as a result. Or maybe, the data from February and March were just a sign for higher activity in the spring. Who really knows? Only time will tell us the direction of real estate prices.


Buying a place to live should be about fundamentals, not timing or forecasting prices. If you think about it, there are always good reasons to buy real estate and always reasons why it may be a bad time to buy. If you’re in the market, remember to keep your focus on the things that matter, and try not to worry about the factors you cannot control or predict.


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