Was I Right? (A Review of 2008)

At more or less this time last year I completed a review of Edmonton’s real estate market for 2007 and offered my humble opinion on what I thought 2008 would have in store for the market. The following post is a review of the market for 2008, a look at how close my predictions for the year were, and what I believe is in store for 2009.

You can find last year’s review here; including what I thought should happen, may happen, and was likely to happen. In brief, I felt the market should begin to pick up in 2008, cautioned it may remain flat, but overall felt it was likely to make modest gains by the end of the year.

Before dissection begins (just like last year’s review) let’s start by looking at snippets from the REALTORS® Association of Edmonton Monthly MLS® Reports; specifically the average single family dwelling price and corresponding press release headline:

• January |$379,567|
• February |$381,965| Resale Housing Sales Strong in January
• March |$387,632| Housing Prices Unwavering So Far This Year
• April |$386,033| First Quarter Results Show Housing Prices Are Stable
• May |$383,167| MLS® Housing Sales and Prices Remain Stable in April
• June |$381,384| Never Been a Better Time To Buy a Home, Says REALTORS® Association
• July |$379,224| Dynamic Tension Between Buyers and Sellers In Edmonton Market
• August |$369,190| MLS® Sales In July Up 14% Compared To Last Year
• September |$362,097| August Residential Sales Up 18.6% Over Last Year
• October |$363,274| Edmonton Resale Housing Market Sizzles In Third Quarter
• November |$362,757| Edmonton Resale Housing Market Maintains Stability In Uncertain World
• December |$351,870| Housing Buyers React Cautiously In Local Markets

Does all of the above look like gibberish to you? Click here to see what it all looked like graphically.

So what does it all mean? As far as my predictions go, I was about half right. Recall I stated what I thought should happen, may happen, and was likely to happen.

I correctly predicted that the market should begin to pick up in February/ March: “…with an increase in listings, sales, and (possibly) small gains in market value.” The average price for a single-family dwelling in 2008 actually peaked in March.

I also correctly predicted the market may stay flat: “…with an increase in listings, slower sales, longer days-on-market, and little or no increase in market values.” Inventory peaked at over 11,000 midway through the year, average days-on-market was up to 65 days by the end of the year, and the average price for a single-family dwelling was more-or-less the same in July as it was in January.

I missed the mark when I said I felt the market was likely to follow a ‘normal’ cycle with: “…a reasonable gain (3-5%) in market values with a reasonable exchange/ turnover between listings and sales.” In fact, from January 2008 to December 2008, the average price for a single-family dwelling dropped by almost 7.3%, and the total number of residential sales was down by 15.25% compared to 2007.

So what about 2009? I would expect a return to a more balanced and normal real estate cycle with the usual seasonal influences apparent. Inventory appears to have stabilized at somewhat normal levels and the prices seem to have landed at a point that encourages buyers and sellers to come together. Having said that, I must caution you again that anybody that tells you they know for certain what lies ahead for our market is either full of a prohibited pharmacological substance or full of…you get it.

I am attending the 2009 Housing Forecast Seminar on Thursday and will summarize their predictions in a new post later this week or early next week. Stay tuned…

///…CP