For those who follow the real estate bear blogs, it is a well known practice.
In an attempt to hide seller desperation, property listings are pulled and re-listed with a new MLS number. It helps hide the number of days a property has been on the market, not to mention some of the price drops a property has had. Because let's face it, when buyer's sell desperation, the lowballing intensifies.
In an attempt to hide seller desperation, property listings are pulled and re-listed with a new MLS number. It helps hide the number of days a property has been on the market, not to mention some of the price drops a property has had. Because let's face it, when buyer's sell desperation, the lowballing intensifies.
Vancouver Observer noticed this practice over a year ago on his excellent site, Vancouver Price Drop. So prominent is the practice that Observer now tracks all old MLS listings for a property to give us a true insight into the selling history of a property.
In this weeks Vancouver West detached spotlight, the top property for price reductions is at 1010 West 57th:
1010 West 57th pulled it's listing on January 16th, 2013 and relisted with a new MLS number on January 25th, 2013. This move helps hide 291 days of market availability as well as $1,000,000 in price reductions.
This property, however, is a very minor example of the relisting phenomenon. Observer has made several interesting posts in the past charting relisting champions.
Interestingly realtor Arnold Shuchat also touched on this phenomenon in a post on his blog today charting this week's biggest price declines in Richmond.
Publishing these price reduction blogs on a regular basis is time consuming. But this week's Price Reduction report was even more so. I have observed that for almost every week that the price reductions are published, the average reduction is between 4-5% regardless of property type, give or take 1%. Under a hypothesis that those averages do not really tell the whole story, I conducted a search of every price reduction listing to review the price history from the time it was first listed. The results yield a completely different story as I suspected. I am not going to undertake this every week, but as an eye opener and to make a point of what's really going on I did it this week. The numbers speak for themselves and here is the summary:
The average price reduction since originally listed is 11% instead of the most recent 5%. But, if we take the top 10 price reductions since listed, the average is approximately 20%! And, the properties are not yet sold!
The real estate industry official line is that price reductions are minimal and that sellers are holding firm with their prices. The industry insists any price declines are only minimal.
But anyone conducting a proper, detailed analysis is uncovering quite a different story.
Surprised?
==================
Click 'comments' below to contribute to this post.
Please read disclaimer at bottom of blog.
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
Even the 11% average decline will not likely strike most people as being too big a deal. The mind of the consumer is so attuned to discounts of 25, 30 and 40 percent that 10% sounds like a negotiation point and nothing more. Heck, most now expect five points off when it comes time to make a home deal anyway(bringing the real decline after a sale to a whopping 16% points off original ask). The reality of falling prices is far different from retail shopping when it comes to homes as opposed to consumer goods of course. We all know that an average decline of 35% across the US led to millions of people losing homes and becoming unemployed. Millions more now subsist on food stamps and a wide variety of social programs and income supports that do not even exist in Canada. Damn those statistics and fractions and percentages! We should never underestimate the damage that a seemingly small double digit decline can yield. More so if the declines continue as expected. If Capital Economics is correct in their assessment of a national fall averaging 25% then we are indeed headed for hell in a hand basket. For now markets are surprisingly resilient having defied all the negative assessments and estimates of the bears, mine included. Seems pretty obvious most of us don't know what we are talking about even if we have the general idea! As far as I am concerned it is all for the best. Nobody sane wants to see a crash anyway. Nothing would make me happier than to see a soft landing. Lets all hope the bankers are right.
ReplyDeleteFarmer
"social programs and income supports that do not exist in Canada"are you serious?At least in Vancouver we have social housing in prime real estate areas such as Granville Island and downtown and the rent is approximately 30% of income.You can look in the parking lots of some of these buildings and you will see mostly newer cars,it kind of makes you wonder.You can come to Canada as a refugee and the government will support you financially for 2 years ,and if you don't like it here ,will pay for your return airline tickets to your home country.
DeleteBack to real estate,you don't want to see a crash yet how do you justify house prices tripling and quadrupling over the past ten years when wages have barely moved up.I own a condo I bought ten years ago, and hope the price drops to what I paid then.I can upgrade to a house and my mortgage will be less than making the move today.
What about if someone lost money in investments or the stock market?Do we feel sorry for them,are we responsible for their greed?Everyone chooses the financial risks they want to take in their lives,such as speculative real estate mania. No one goes to jail in this country for declaring bankruptcy,I know people that lost their houses in the 80's with the high interest rates ,and today own property that is paid off.
BTW ,how did we survive and where did people work 10 years ago before the big boom?
On the issue of social programs:
DeleteAsk yourself this: Does Canada have a national SNAP program offering food stamps? Do we have a government that is open to virtually unlimited benefits for the unemployed once they have passed the cutoff dates? Do we have national subsidized housing or opportunities for relief from mortgage and interest burdens? Do we have a system that permits rates to be locked in for the full term of a mortgage whether it is 20 or 25 or even 30 years?
All of these are social benefits that accrue to a nation with the reserve currency but do not exist in our country. They are NOT affordable and will not happen either.
On the issue of a soft versus a hard landing.....are you nuts, man? Nobody in their right mind wants a crash. Who will that benefit anyway as hundreds of thousands of jobs are swept away and the retail sector is gutted along with profitability in the whole of the FIRE economy?
I really do not get you people who think a crash is the right answer to our troubles. It is utterly idiotic and selfish that you think it is socially acceptable to be a beneficiary of other peoples loss when the story goes coast to coast.
You better get a grip and pray this all holds together. Let me just repeat.... we WANT a soft landing.....we WANT the banks to be correct that this will work out. We want do not want a crash.
You obviously were not around for the recession in the early 1980's. Let me tell you it ripped the heart right out of most peoples lives if they were not employed or could not handle their debts.
It is fine to be bearish. Quite another to be ignorant about the consequences of what lies ahead if we actually crash.
Farmer
You are talking like a realtor or you are heavily invested in real estate.Yes I was around in the 80's when you could earn 18% interest at the banks .If you are able bodied you can find work before your EI runs out(even lower paying job for starters).If you are disabled you collect disability payments from the government.If you are lazy you collect welfare.
DeleteI know people living downtown and paying $400 rent (parking included)Granville Island $300
rent.Its called government housing or co-ops. The reason the US has food stamps is so they don't buy drugs and booze with the money ,here we give them cash so they can party.
My question to you is how can anyone afford to buy a house here when a teardown in the cheaper part of town goes for $700000?These places in 2002 were selling for under $250000.How does the average person earning $60000 a year even save for a down payment?
Nope. I am not a Realtor and neither am I "heavily invested" in Canadian real estate, Mr Anonymous at 2:19 PM.
DeleteYou are wrong on both counts.
I am merely a commentator like you who has seen the problems but also recognizes the situation may not be so severe as first contemplated.
It is not important by the way that YOU cannot afford a Vancouver house, only that SOMEBODY can afford to buy them.
Fairness is not even part of the equation.
I will admit some of us in the bearish camp may have been wrong about how this would all play out. I have been reconsidering the case from the other side of the camps for a change and admittedly it has merit.
Look at the US market for housing as an example of what I am getting at. Prices are on the rise again, bidding wars are now the theme of the day in major centers and all-cash offers in the hundreds of thousands of dollars are quite common. One article I read said up to a third of homes bought in California are now cash transactions.
So what does it all mean?
One thought is that the US markets will eventually return to their pre-crisis highs. A second is that Canadian real estate might just skirt the damaging effects of the US crash by virtue of having avoided the collapse in the first place and then secondly by still standing while the US housing market returns to norms.
What is happening down South is a stunning development and it lends credence to our own valuations. We will see where it goes in time but I am more optimistic this spring than I was last fall.
More optimistic by a long mile.
You keep referring to the US,perhaps you should follow the blog on greaterfool.ca for a better analysis of Canadian real estate and where we are heading.
DeleteNo thanks.
DeleteI follow the gulf islands. 45 properties de and re listed last weekend - every single one at a lower price. Observer should take a look! Craig Sterling
ReplyDeleteIt's too bad the Real Estate industry does not have any ethics or professionalism. If they worked for the good of all people; buyers and sellers; and presented honest data, we would all be better off. They are just digging themselves a hole, and it will be payback time someday.
ReplyDeleteSome of us worked in industries now long gone to China. Resource extraction has sucked the blood out of our low Canadian dollar economy of yesteryear. Do I want it back? Now in my 50's, life changes again... What I want, is to stay out of debt ... and challenge the profligate spenders and peak experience actualizers that rode the commodity boom on the back of RE appreciation, to do the same. Can they pay off their financial commitments? Can they declare: Been There, and Done That?
ReplyDeleteSo the days on market and sale price % of asking data is completely false? Cheeky buggers. I'm surprised they're allowed to get away with that practice. Where's Steele On Your Side when you need her?
ReplyDeleteShuchat is doing a great job. It is good to see not all realtors are phony. I hope he keeps telling it like it is.
ReplyDeleteThere is no possible way we are going to avoid a Real Estate crash in Canada. Look at what it took to get us where we are today, then look at what the Feds are doing to unwind it. We are basically going back to late 90's levels of debt rules. The only thing different is interest rates and where they are going is anybody's guess. Show me a chart of any credit driven market that has gone parabolic in a short period of time and has not reset to the mean in just as short a time frame and I may believe in a "soft landing", but until then I still say: look out below.
ReplyDeleteIt is better to have a violent correction which will force people to learn and provide an immediate feed back look as to why there is such a pain, than a protracted 'soft landing' (aka, decades of stagnation and malaise. See Japan for what it is like).
ReplyDeleteIn both cases everyone will suffer but, in the case of quick crash the fools will be forced to bear the brunt of the shock. There is absolutely nothing wrong if it dessimates RE industry and it will
be forced to become modest, transparent sector of economy. Hopefully, this will sway our dear leaders to make this sector more transparent (in terms of information provided, statistical data etc.).