What is a split market???
Serge: Hi Sam...
Sam: Hi Serge... So Serge what is happening in the Edmonton real estate market.
Serge: Sam I am glad you asked. We have a split market which is something I haven't seen in a long time.
Sam: So what is a split market?
Serge: That's a great question. For a segment of the market we are in a balance and even a seller's market with upward pressure on valuations while in another segment we are in a buyer's market where we are seeing downward pressure on valuation.
Sam: To you expand on that?
Serge: Well Sam currently there were 3,398 single family homes listed for sale in Edmonton proper.
In the previous 30 days we sold 726 single family homes with an average selling price of $434,200 This would theoretically give us an over all market a listings to sales ratio of 4.68:1 which gives us a false reading of a neutral or balanced market.
Sam: Is this split market what is giving us this false reading?
Serge: Exactly Sam. The reason being is that a significant portion of the transactions are all occurring under that $450,000 price point being driven by the first-time buyer market. As soon as we cross that $500,000 threshold the storey changes very quickly when we start seeing the listings to sales ratios rise from 4.96:1 to as high as 22.33:1 meaning there is over 22 months of inventory on the market.
Sam: What is causing the market to be driven by the first-time home buyer?
Serge: Well for one thing Covid-19 has changed how people look at their homes. With people spending more time in their homes they are putting more importance to what their home offers them. A good example of that is with more people working from home as a result of Covid - 19 now they are wanting their homes to have the ability to have a home office. Another reason is with mortgage interest rates being as low as 1.74% making it so affordable to buy now it is enticing that first-time home buyer to take the plunge and purchase their first home.
Sam: So Serge with all that being said what should we be advising our clients?
Serge: Well if you are a first-time home buyer with upward pressure on valuations you might want to buy sooner than later. But, if you are a seller with a home with a value of over $500,000 you might want to sell sooner than later.as there continues to be downward pressure on valuations, which means by waiting you might end up having to sell at a lower price than you could get today. Unfortunately, I don't see changing for those higher price ranges until sometime in 2023... but my reasoning for that is better shared in another show.
Sam: Well thanks for sharing your 35 years experience with us today...
Serge: Thanks Sam... if anyone of you out there are thinking about buying or selling a home please contact Sam and I and we'll help you with your real estate goals.
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