A blogpost submitted to the Calgary Herald yesterday stated that:
Although the average listing and sale prices have increased for the month of August, we have seen a gross expansion of the listing/sales price gap. Last month (July 2012) had a listing to sales price gap of $164,000. The previous month (June 2012) saw a gap of $161,000. This gap has drastically increased from the same time last year, when the price gap (July 2011) stood at the still rather high number of $116,000.
By comparing the average price of listings taken on the Calgary MLS versus the average price of all listings sold, we begin to see a compelling story between the expectations of sellers and the reality of what today’s buyers are actually willing to pay. The distance between these two prices will determine the pace of the current real estate market. For instance, the larger the distance between listing and sales prices, the slower the market will be as the price of the average seller wants for their home will be higher than what the buyer will pay. As prices are lowered and begin to meet expectations, we will see more inventory move off the market.
Is looking at overall listing average and comparing it the overall sales average really a good indicator of market health and activity? No. It doesn’t account for any activity shifts in different price ranges.
After speaking with CREB’s senior economist Ann-Marie Lurie on CREB’s assessment of the market, the following points are evident:
- Sales prices have been rising and the data shows the gap between sales price to list price have narrowed. This is consistent with the data showing that less supply in the market has caused sales prices to increase.
- The decline in inventories is related to demand and the balance between supply and demand impacts the price.
- Overall the data is showing that sellers are getting a price closer to their list price in the single family market, and because the sales to original list price ratio has also improved (You can view original list prices if you sign up for my “Sales of the Day“) One other stat that supports that people are getting more is the decline in DOM.
While we are not in a boom scenario, there has been price recovery in the market. Product is selling quicker and less supply combined with the improved sales to list price ratio indicate people are selling their homes closer to their list price. However, if a home is priced well above what the buyers are willing to pay it will sit on the market until the sellers adjust their expectations.