Glut Today, Excess Demand Tomorrow January 3, 2009Posted by DustinRJay in Calgary real estate, supply and demand, Uncategorized.
Tags: Calgary real estate, inventory, supply and demand
A review of inventory trends and prices is useful for helping to understand what the future price trend will be for the Calgary market. From the following graph, some conclusions can be made:
- Falling levels of inventory generally lead to higher prices and vice versa.
- Inventory is dropping at the fastest rate since the Spring 2006 bull market rally. Inventory has fallen 41% since the peak inventory in May 2008 to December 2008.
- Inventory rose most dramatically in 2006, by a smaller amount in 2007, and even smaller amount in 2008. The implications is that resale inventory appears poised to fall on a year over year basis for 2009. As of September 2008, single family home housing starts are at the lowest levels since 1986.
- Recent major market events including the oil price decline, and Lehman Brothers bank failure have not increased inventory levels.
- Major sources of supply were in response to high prices, not foreclosures; that source of supply now appears to be tapped out.
- Calgary real estate market has crossed into a state of excess demand, after several years of excess supply.
- Current high levels of inventory require risk management to bring inventory in with long term trends.
Click above image to enlarge.