December is normally a somewhat slower month for real estate sales, as many buyers and sellers take time out to enjoy the holiday season. As a result, prices often drift a bit lower toward the end of the year and into the first week or two of the New Year. So far this December, however, prices are holding up very well, in fact they are higher than in November! While prices will likely fall a bit over the next two weeks, as thoughts turn increasingly to sugarplums and snow tires, this shows that the market is retaining exceptional vigour, and bodes well for a strong spring market in 2011.
This is the time of year when everyone loves to make predictions about the coming year. Most of these predictions are calling for a more or less stable market in both 2011 and 2012, with sales volumes returning to historical norms and prices continuing to rise but at a more sedate pace, in the range of +3% per year. These predictions are based upon steady but slow recovery of the economy together with interest rates that will rise gradually but remain at historically low levels for a long time.
Another important factor, though, is the inventory of homes for sale. Back during the summer months, it was widely expected that there would be a flood of new listings during the fall and that this would put a damper on prices. After a very brief flurry during the week after Labour Day, however, the flow of new listings abated to a mere trickle, and the inventory of homes for sale has remained in “sellers’ market” territory, less than three months’ supply. It’s certainly possible that we will see the long-awaited inrush of new listings in the spring, however, if this doesn’t happen, the market could start to overheat again. I’m going to go out on a bit of a limb and predict that 2011 will actually look like “2010 Lite”, with a stronger-than-expected spring market and a bit of a pull-back in the second half of the year, much like we saw this year but less extreme.
Comments and contrary opinions always welcome!