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Inventory, Numbers, Figures - Who Cares?

Blog by Sara Kalke | March 26th, 2010

Inventory, Numbers, Figures - Who Cares?

If you are concerned about Edmonton home prices, market trends, inventory numbers, and are generally unsure of when to buy or sell a home, remember this: a home is a place to live, and when you own a home, you are making one of the best investments you can make.  If you need to make a move, do your research, get the best advice possible, and hire a REALTOR to market your home in the best possible way, to get the highest price.  Check out my 25-Point marketing plan at http://bit.ly/ctijEL to see how I will help you get the most money for your home.

Now, to get to your questions. Why do I follow, publish and graph Edmonton Real Estate inventory numbers?

1) Inventory numbers - who cares? 

Well, when we talk about the "real estate market", we are talking about a market much like the stock market or the market for lumber or say, really expensive handbags. Going back to Econ 101, the most important words in a market are SUPPY, DEMAND and PRICE.  Here's a Wikipedia article if you want to learn more about supply and demand: http://en.wikipedia.org/wiki/Supply_and_demand. Inventory of homes in Edmonton = SUPPLY in the market.

The inventory of homes on the market is controlled by sellers, buyers, and as stated by the granddaddy of economics, John Meynard Keynes: “The markets are moved by animal spirits, and not by reason.”  For real estate, we're referring to:
-  time of year (who wants to go house shopping, let alone move when it's minus 40?),
-  economic conditions (i.e. job security - reference the US housing market),
-  economic news (i.e. interest rates are predicted to rise in 2010, CMHC introduces tighter mortgage regulations, etc.), and
-  the general necessity to upsize/downsize/relocate for work, etc.

What is significant about inventory is that it CAN be an indicator of where prices are going to go for Edmonton real estate.  If supply skyrockets (such as in the summer of 2009), prices drop. If supply is seriously small (such as the major real estate boom in 2007), then prices skyrocket (in Edmonton by about 50%).

2) Inventory is on the rise - should I be worried?

Yes, No and Maybe.  Inventory has just passed what the President of the REALTORS Association of Edmonton referenced as a preferred number for balance in the Edmonton market - 6,000 (see my blog entry from March 18).  Inventory has been climbing steadily since the beginning of 2010.  This could mean:
- there's nothing to worry about - this is the usual surge of homes for sale in the spring, or
- we could be experiencing a "balanced" market - i.e. buyers and sellers do not have an advantage over each other, or more likely,
- we could be heading towards a buyers market, and lower prices.

If you are a seller, now is a great time to sell, especially as inventory continues to rise, it is better to sell now than wait for more competition to hit the market. If you are buying, yes, now's also the time, but for a much different reason: interest rates are at record lows, so buying now is a great long-term decision. Waiting will probably mean that you will be paying more interest, and more interest on a home loan makes a HUGE difference in the long run of how long you are paying for your mortgage, and how much money you can get approved for.

Following these figures closely will help determine how you should market and price your home. But hey, it never hurts to have the an excellent marketing plan, with the BEST photographs, high-end feature brochures and professional advice.  Thinking of buying or selling your home? Know someone who is?  Call me today at 780-710-7669 or toll free: 1-877-462-7878.