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December 2012: Are Prices at a Maximum?

Posted December 17th, 2012 under market updates.

The market has stabilized somewhat, with a sales-to-listings ratio above 60%, which is typical for December. However, I still expect to see an adjustment in 2013.

I believe we have reached maximum price levels. Usually there is an interplay between detached homes and entry-level homes: when one category surges ahead, the other catches up, driven by the perceived difference in value between the categories. However, prices have not risen over the last six months for any category of home, and I believe this is because all categories have pushed prices as much as the market will bear.

An adjustment is inevitable. Some time in 2013, the banks will announce interest rate hikes, though it's impossible to say when. At that time, we will likely see one last boost as buyers who have been sitting on the fence make their move. However, expect a cooling effect immediately afterward.

Regardless, I still expect a brisk spring market, as there are many potential buyers looking for homes.

Want to know more about the state of the market? Just ask me, I'll be happy to help.