In typical January fashion, it wasn’t an overly busy month. Red Deer posted just 69 sales last month, down 6.7% from the same time last year, and inventory levels are down 5% from the same time last year. Any market where we’re only selling 12% of the inventory each month is always going to heavily favor buyers, however we have to remind ourselves that it’s January and we spent just over a week in sub-arctic temperatures. In my experience, people don’t buy anything when it’s that cold other than maybe firewood and groceries!
Looking through the detailed price points, buyers were all over the place in January. The $200 - $400k range was much less active than normal, whie the $400 - $500k price point only saw 6 sales despite 78 active listings. It’s rare to see activity under 400k this slow, meanwhile we saw 4 sales over $600,000 and I personally just posted the first sale over 1 million of the year on February 2nd. If I had to take a guess, I’d say most of the first time buyers are recovering from Christmas and probably trying to save up a little more cash for down payments, meanwhile if the lower end is slow then we’ll typically see lagging sales at the $400 - $600k range as the lower end sellers are usually the ones buying up the inventory at the higher price points. Buyers at the high end are typically cash fluid and just waiting for the right home or the right deal to come along, which there obviously was a few good ones out there!
It was a very slow month for condo sales, with just 7 total sales posted despite 134 active listings, a 5% sale rate. That’s 18.6 months of inventory at our current pace, meaning if there were no more new listings taken as of January 31, it would take 18.6 months to sell off all of the inventory at the current rate of sales. A balanced market is considered around 3-5 months of inventory for reference. Concerns over insurance rates and what’s happening in Fort McMurray could be holding back many condo buyers, with concerns that condo fees may go up, although I don’t think these issues will be a problem for Red Deer as we’re not surrounded by highly flammable forest like Fort McMurray is. Many condo buyers are 50+ people looking to downsize, and so their buying process doesn’t typically happen quickly. They have to de-clutter, list, sell, and then figure out where they’d like to go, and of course all of this can take many months and sometimes years.
The vacancy rate of listed homes came down slightly in January to 39% from 42%, which was the highest I’ve ever seen this stat. As more people start to put their homes back on the market I suspect that number will settle back down to around 35% which would be more consistent for where the market has been over the last couple of years. While I don’t think anybody is expecting prices to climb anytime soon, we’ll need to see that vacancy rate drop drastically before there’s any hope of that happening.
Despite these stats being somewhat depressing, we have to keep the time of year in perspective. Even in the hottest markets, December and January are always the two slowest months for sales every year. It’s cold, people are still recovering from Christmas, and many people are taking holidays. Sales should start to climb now as we move into spring, and March through August are always the busiest 6 months of the year for real estate sales.
Quick market snapshots for surrounding communities:
Red Deer County Acreages w/ Homes:
- Active Listings - 74
- Sales in Jan – 7
- 9% sales rate – Buyer’s Market
- Active Listings – 94
- Sales in Jan – 14
- 15% sales rate – Buyer’s Market
- Active Listings – 175
- Sales in Jan - 10
- 6% sales rate – Buyer’s Market
- Active Listings – 33
- Sales in Jan – 1
- 3% sales rate – Buyer’s Market
- Active Listings – 133
- Sales in Jan – 15
- 11% sales rate – Buyer’s Market