What’s going on out there?
The second quarter of 2011 was a very strange period in Dawson Creek real estate. Supply is high, demand is tepid, yet the median price of a home in the area is up to record levels. So what exactly is going on out there?
At the end of the quarter the number of homes on the market was up 23% compared with last year to 224 homes in and around the region. The strongest moving price category was between $250,000 and $300,000 where the sales-to-listings ratio was 37%. However, this was the first time since I began doing this deep analysis of the market that no price category had a sales-to-listings ratio of at least 40%.
Demand in the second quarter was a tale of two markets – the rural market and the market within the city limits. The rural market ran close to record numbers with 17 transactions (the record for second quarter rural transactions was 18 – set last year). Rural sales made up 26% of the market. At this time of year rural properties account for an average of 17% of the market. Perhaps most notably, 4 of those sales were for over $550,000 (with 2 more in that range currently pending).
The market within the city limits, however, has been floundering. There were 45 sales in the second quarter – which is very low for this time of year. This has led to 28% of homes currently listed dropping their price since they hit the market. Of the 65 total sales that were completed the same proportion, 28%, dropped their price in order to effect their sale.
Contrarily, local prices have risen to a median value of $260,000 for all of the houses in the region. That’s a 12% increase over last year at the same time. In town that number was $262,000. This will probably balance out over the next quarter as sellers realign their expectations with their motivation level. The number of recent price adjustments also points to a slight price correction in the near term.
So to summarize, Inventory is up, transactions are down, and prices are up. In my opinion, the strength in median price relative to supply and demand dynamics suggests that we are facing a lull in the market as opposed to an actual downturn.
Interest rates are still awesome and our national economy is still among the strongest in the developed world. Locally, it would appear that despite the botched deal between Petro China and Encana, activity in the energy sector should continue to be strong and getting stronger going forward. The fact that Cal-Frac finally confirmed that they are setting up a $20 million operation in our community points strongly in that direction. The first major mover is always the hardest to find and we now have it. More large companies will most likely follow suit and set up shop here. This inevitably leads to an increase in population
So what does this mean to you a Dawson Creek home seller or buyer? If you are buying, now is the time to make your move. You have plenty of inventory to choose from no matter what price category you are shopping in. That gives you the room to make deliberate decisions. If you are selling, it is a question of motivation. If you need to sell relatively quickly, get your price in line with where the market is today. If you have time on your side, I think that patience will pay off in the long run.