Wow! Prices are rising and it's time to buy again...

...if we go by the conclusions of the usual suspects. Btw, Bob you are doing a great job in providing the numbers and it's all much appreciated, even though we may not agree with your conclusions!
Bob writes a list of reasons why the prices are going up- Here's a list of reasons given:

1. We're just pulling these numbers from thin air, and they don't make sense when you do that.
2. Buyers are insane.
3. Buyers haven't found out about the bubble blog.
4. Calgarians have too much oil money to throw around.
5. We want to be different from the U.S.
6. We could be in danger of having year-over-year price decreases next month, so we're happily paying more for houses to avoid that embarrassing scenario.
7. People have a lot of confidence in Calgary's future. Justified or not.
8. With the rise in prices over the past three years, affordability has been eroded, and that may account for the lower sales.

Well Bob, I'll make things easier for you-there's perhaps another reason and it's called a change in Sales Mix. That is, possibly, there were fewer lower end properties sold and more sold at the higher level. Such a scenario would easily push up the median and average prices even though the prices did not actually rise for the typical property.

This is clearly illustrated in the Edmonton numbers where we see falling $/sq ft numbers for SFH and stagnant for condos. Despite this, the median and average prices for both Condos and SFHs actually rose.
So while Edmonton prices have risen, its most likely due to a change in sales mix and most likely not due to the start of another buying frenzy.

Of course, affordability is a valid point, but it has been valid point for quite a while. Affordability was certainly lower in March, April, May, June, July and August 2007, yet the sales were a lot higher. And whatever happened to the 40 year mortgages with zero down?

The big number is of course the massive fall in Sales. Comparing sales to 7 year old numbers is just a statistical convenience- why not compare to a 20 year average and show that 2007 sales were stronger than a 20 year average (if at all)?

So despite the spin, the reality is quite different-

• Sales volumes are at multi year low for this time of the year.
  
• Inventory levels are at all time high for this time of year and near all time highs.
  
• Sales to new listing ratios are at lowest levels for this time of the year, perhaps closer to all time lows for this metric for this month of the year.

Last summer, prices kept on rising for a while despite the massive surge in inventory. So while it's entirely possible that the market turns around from here and we attain new highs(never underestimate the potential for market irrationality) this summer, it's quite unlikely given the massive inventory levels and new listings rapidly being added.