Sunday, June 3, 2012

Sun Post #1: Vancouver has "too many sellers trying to cash in at the same time."


The falling Vancouver market continues to make news in the mainstream press.

Yesterday it was CBC with a story lamenting that Vancouver has "too many sellers trying to cash in at the same time."

The Mother Corp tried to balance the negativity by looking for the silver lining in a market with a huge decline in sales and a massive increase in listings.

But the best they could do was headline the bad news by saying, "Uncertain fate for Vancouver real estate prices".

While the fate of the current downward trend may be uncertain for CBC, they do tell us exactly what you have been reading here on an almost daily basis:
Vancouver's real estate market has taken another interesting turn, with listings up and sales down during what is usually a busy time of year.

In May, average prices for houses have dropped about $150,000 compared to one year ago. That 12-per-cent drop wiped out two years of price increases.
The reason appears to be that too many more sellers are trying to cash in at the same time. Listings are up by 23 per cent, but fewer are buying: sales are down 24 per cent.

Probably, on average, about a 150 or 160 homes in Vancouver are reducing their price every day in the hope of catching, getting ahead of the train and maybe get out before they can't," said realtor Larry Yatkowsy.
Reality is starting to set in.

The Spring Market is not going to arrive this year. Sellers are starting to slash their prices.  The Boomer Trigger is being pulled.

Is the market starting to crash? We will see. As economist Tom Davidoff, of UBC’s Sauder School of Business says,
"It’s going to take several months of data-confirming of what we seem to be seeing before I would be anywhere close to be prepared to say, 'That's it, we had a bubble and now it's bursting.'”

But if you're a Boomer sitting on the sidelines who plans on relying on the bubbilicious values for your retirement fund... do you wait to see?

Or do you jump in, list your house with the others and pull the trigger by slashing your selling price aggressively before another 12% evaporates from the market?

And what of the ones already listed but watching a market drop while listings stagnate? Time to cut and run?

We shall see.

The video from CBC...


==================

Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.
Please read disclaimer at bottom of blog.

6 comments:

  1. The guy from UBC "a couple of months before we know if the bubble has burst". I guess education for some is not that useful..
    It would not take much for a first year statistics student to confirm the bubble has burst.
    Denial....and why?

    ReplyDelete
  2. I was looking at a house to rent and the owner was very evasive and nervous when I asked for his long term plans for the property. I suspect as an amateur landlord he is spooked and will run for the exits when it becomes apparent the market is toast. He also dropped his rent asking price by $75/month voluntarily to get me to take it before I walked away. I told him I'd think about it.

    ReplyDelete
  3. The CBC article was a little misleading... average SALES prices are down 12%, not benchmark prices.

    Averages sales prices can go up or down depending on whether more or less higher end units are selling. Since fewer high end homes are selling YOY, the average price of what's selling is lower. That doesn't mean that average values have come down 12%. The average boomer hasn't lost 12% of his value.... yet.

    The pressure is there, but those kind of drops have yet to happen.

    Welcome the headline though, if boomers do think they've already lost 12%.

    ReplyDelete
    Replies
    1. The CBC article was correct.

      According to the data put out by Larry Yatkowsky (which we posted on Friday), the average price of the detached single family home is down 12%.

      Delete
    2. If the benchmark prices you refer to are the new index they recently created... well I don't know if that's really a very accurate reflection of the market. Point taken though.

      Delete
  4. The chart on Larry's site says "Average Sale Price". I assume that is correct.

    If so, that means the average price of homes that are selling is lower than last year. It doesn't mean that the average cost of a home in Metro has dropped 12%. There is a difference. As much as I would like the average price of a home to come that much, or more, it hasn't happened yet.

    ReplyDelete