Tuesday, June 4, 2013

Sellers "living off hope of a turnaround"

Richmond realtor Arnold Shuchat is out with with Richmond real estate market report for May and an interesting quote comes with the data:
I draw a few conclusions from this and other data that I have published recently in this blog:

1. There are less buyers for more expensive single family homes and relatively more for attached properties; 
2. Many of the frustrated listings are ones that have been purchased since 2010 and had high original purchase prices. Those sellers can't bring themselves to realize a loss. Hence the stagnant listings, expireds and terminateds. They live off hope of a turnaround.
Stagnant listings and sellers living off hope of a turnaround.

Poignant words that summarize the real estate market right now.

Vancouver Realtor Larry Yatkowsky described it this way:
Tumultuous changes to real estate occurred last year and in the first days of June Active listings hovered near 27,000. It was a temporary! Active listings rocketed to an unprecedented 28,000 units by the end of the month.

This year June’s early Active Totals reveal a barely perceptible difference as the total active listing count hovers around 26,500 units. Uncertain is what the crystal ball will deliver in the weeks ahead. We anticipate that Active listings will continue to... climb to equally bloated totals in the latter part of June 2013.
What will it take for the market to move? Shuchat thinks that:
Once sellers get it in their heads that their properties are only worth what buyers will pay regardless of what they paid for their properties, the ratio will start to descend further. I believe that time is coming although it will take time for the required volume of sales to diminish the outstanding inventory.
Is the market about to break downward?  Interesting how the stagnating market is now spawning news articles like this one in the Toronto Star: 7 reasons your house may not be selling.



Email: village_whisperer@live.ca
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  1. Note to Arnold: check the spelling before hitting enter.

  2. Sellers always try to hold out for better market conditions when a national housing bubble is bursting. This happened in the US in 2006. The most stubborn sellers were eventually punished as the US market crashed.

    Sellers were holding out in 2009 when Canada's housing bubble burst and the crash was in its beginning stages. However, we all know that a massive intervention turned the Canadian housing market around in a flash and pushed prices further into bubble territory. Sellers were bailed out in 2009. This time there will be no such intervention and no such bail out.

    Greedy sellers who are currently holding out for better market conditions will be punished this time instead of rewarded the way they were in 2009.

  3. Whispers,

    Thanks for the quote. There was a Bonus.
    I found a typo as a result of the re-read. :)

  4. stay liquid. you'll be able to hold off far longer than those idiotic speculators and home owners wanabes can stay solvent. the boomers who own outright their property but want to hold out for better conditions will watch in amazement how fast their net worth will evaporate when those who cannot afford their debt loads will probably have to take a loss or be finacially ruined.

    which btw many will. no doubt about that.

  5. Larry can't spell or construct a proper sentence either.

    1. Exactly. Quoting Larry is just shooting your blog in the foot. Uncertain is what Larry will say next (lol).

  6. Don't any of you wonder what the looming stock market correction will do to the psychology of the Vancouver real estate market when it arrives?

    With gold and silver in a long downtrend (19 months and counting) and the TSX suffering as the resource sector has taken such a hit during that time, the baffling strength of the housing sector will soon be tested.

    Remember what happened last time the stock market crashed during the Global Financial Crisis in 2008? Five years later and US equity markets appear to have peaked despite all the QE's and may now be set for a sharp decline.

    By Bye pension money?

    You see, that is the point of the most leverage against housing price performance right now as mortgage-free property is owned primarily by the Boomers heading for retirement and their parents who have long since joined the list of those in their golden years.

    That is to say that the same people most heavily invested (even dependent) on pensions and equities are also the same group that owns most of the mortgage free property.

    It is that connection that will have the most impact in the event of a stock market bust as owners make decisions to liquidate and rotate to safety.

    It is the potential hit to wealth in the form of pensions held by mutual equity investments or related pension plans that will drive the decisions to sell homes in the near future.

    Do not harbor any doubts about how these two major sources of wealth and income are now related when it comes to decisions about selling out of real estate and hiding in bonds to weather the storm (not that I think bonds are a good place to be anymore but the logic of the herd cannot be argued).

    So keep an eye on equities. During the GFC the reaction was a swift 15% decline in average home prices in Vancouver and it is possible a repeat will be experienced as it is now so obvious the top in homes is past.


    1. So @Farmer, are you suggesting that there might be a "temporary" run up in bond prices as these assets unwind?

      Or are you still of the notion that PMs are where things will run?

      Of course working capital is probably where we should go, but I'm so confused by the current climate.