The end of the month is near, which means the Realtor’s association will be releasing the month end stats for Edmonton (I don’t know when this will happen…could be anywhere between Aug. 2-8). As always we’ll post them here as soon as we can, along with our own market trend reports. In the meantime we do have some thoughts about what the stats will show.
First off, we thought the price drop in June would have been higher than it actually was – about 5% instead of 2% – based on what we were witnessing "on the street." We realize now though that since so many properties listed in June didn’t sell in June, their eventual sale prices and number of days on market were not reflected in the June stats….those that sold in July will be reflected in the July stats which is why we are predicting a further drop in prices in July, most likely a larger drop than we experienced in June.
The other thing we expect to see is a very low list to sale ratio – probably in the 30-40% range – that will not accurately reflect the true state of the market. Why? The re-listing of properties… we suspect (but have no way to prove this) that 20-30% of new listings coming on the market, are actually listings that have been canceled and then brought on the market a second time, with the same agent, usually at a new, lower price. There are a number of reasons this is done:
- Every time a new listing comes on the market it is automatically e-mailed to hundreds of buyers registered with agents – buyers looking for a home in that area and price range. By re-listing they hope to make a new "splash" on the market.
- Some buyers may be fooled into believing it actually is a new listing, instead of just a price reduction which can have a negative connotation in some buyer’s minds.
- Re-listing resets the clock – the listing will appear as though it has been on the market for far fewer days than it actually has.
See our article on The True History of a listing for more information.
So, with all kinds of homes being listed twice, but only sold once, the list to sale ratio will be negatively affected.
Why is the listings to sales ratio so important?
This stat is used by analysts to define whether the market is a seller’s market (60% listings to sales ratio and up), a buyer’s market (40% and below) or a neutral market (40-60%).
While the Realtor’s association is working to dissuade the practice of re-listing homes the problem is far from solved, so don’t be surprised when the stats come out next week…they may reflect a worse list to sale ratio than we’re actually experiencing.
