How deep will the 'softening' of the market be? Deep enough that the Industry has begun shifting from 'training' the buyers to 'educating' the sellers.

Last Wednesday we introduced you to Shaun Kimmins, the latest realtor who has taken to telling you about the way the market is truly suffering as opposed to the standard industry spin.

Kimmins went a step further, venting his frustration at the misleading statistics being put out by the REBGV and how a much rosier picture is painted for his downtown condo market that is in complete contrast with reality.

Kimmins message to his customers right now?

"Sales volume is down considerably. Sharpen your prices if you want to sell."

Now that's a message many of his clients probably don't want to hear from him. Kimmins, no doubt, must spend considerable time and effort justifying that message.

And it's doubtful he's alone.

Perhaps that's why BC Magazine was moved last week to come out with an article headlined: Realty Check: B.C. Realtors Not to Blame For Softening Market.

Despite rumours to the contrary, real estate agents are just the messengers when it comes to Vancouver’s volatile home prices.

Agents do not drive the price of the real estate market.... There is no collusion or price fixing. There is no “propping up” of price points. The reality is Realtors will help sellers decide a price threshold for a property, but the seller approves it. In many cases, the seller will dictate the price.

When a home doesn't sell, the seller, if actually motivated, will drop the price to the point where the market finds it attractive. Seller's thoughts on prices vary greatly from the buyer's perspective. The cumulative mass of buyers and sellers create the market. Agents don't set the market — the consumer does. An increase in product (listings) with few buyers creates a buyer's market.

When sellers don’t lower their price to meet the market’s perception of value, those houses sit unsold and are joined by other listings, creating a build up that result in softening prices as those sellers all lower their prices to meet the market’s expectations. 

Now we have the question of the day: How deep will the market soften?

Hmmm... sounds to me like realtors are taking a lot of flack from prospective property sellers and the 'education' of sellers has begun.

Is a shift in the R/E propaganda machine underway?

For years now, media stories have been 'training' buyers that they have to get on the property ladder, they have to find ways to scrimp and save, have to take on that excessive debt or "be priced out forever."

Is this the first sign of a teutonic shift in tactics?

Has the offensive begun in an effort to now 'educate' sellers to be receptive to realtor suggestions to lower expectations and asking prices?

It seems they have. Note how BC Business answer's their rhetorical question about how deep will the market soften:

Apparently, pretty deep.

David Madani, economist with Capital Economics, has forecasted a 25-per-cent price drop in the next two years. Chinese investment dollars are gone. U.S. agents are seeing record numbers of Chinese buyers who are enjoying the rock-bottom prices of new construction in Miami, Los Angeles and New York. We still have consistent immigration to B.C., low inflation and high employment to celebrate, but the lack of interest rate increase and the new borrowing thresholds for insured mortgages will not jumpstart price increases (or sales) anytime soon.

The softening of the market is a harbinger of what is to come.

This isn’t the fault of organized real estate.

Thus the lesson ends for today: Don't blame the real estate agent for a market where properties don't move... lower your asking price.

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Email: village_whisperer@live.ca
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Wilfully blind, voluntarily ignorant?

Two days ago we told you about an article in BC Business Magazine that heralded "The Real Estate Mania is Over."

The article observed.:

History shows that Vancouver has always been a real estate boom-and-bust city. Now that the most recent mania appears to be over, with sales falling and prices threatening to follow, there's no reason to think that's going to change.

They told us...

Fear and worry are rampant in Vancouver these days: the mighty real estate market is struggling. Whether it is in a tailspin or due for a monstrous crash is the subject of endless dinner conversations, office cooler chats and online messages.

But ultimately BC Business Magazine dismisses the inevitable crash saying:

Was this a massive bubble? Slightly. When prices rise that much, we’re nudging bubble territory. But bubbles imply resulting crashes, and I don’t believe we’re going to have one. Of course, prices will drop a bit, but an American-style catastrophe isn’t going to happen.

All the evidence and the author concludes 'I don't believe we're going to have a crash'?

There's a moral here.

The doubters will only believe it's a bubble if we have a crushing crash.

Until the crash occurs, no manner of charts, theories, or tales of congruent circumstances (leading to this very outcome in other countries) will convince them until prices actually collapse. To them... real estate always goes up.  It may have 'little pull backs', but it always goes up.

Always.

Nothing personifies this wilful blindness like realtor Mary Cleaver. Introduced to us yesterday via Garth Turner's blog, Mary is one of those who have swallowed the Kool-aid in pitcher sized gulps.

For your enjoyment pleasure, two videos from Ms. Cleaver.

The first is from January 2012 and Mary explains why buying real estate is far better than the stock market:

Next, our pixacious airhead attempts to counter the 'housing crash' stories on CBC's National back in May by insisting Vancouver isn't in an overheated market. From the youtube video description:

Contrary to general statements made regarding the real estate market in Canada, the Vancouver housing market is far from over-heated. April stats tell a story of lots of inventory and fewer sales than in both March of this year and April of 2011. With the exception of parts of East Vancouver, much of the city is in a balanced market and trending toward a buyer's market. Buyers find themselves with plenty to choose from, time to make a good selection, prices in many areas stable or even lower than in the last year or two, and historically low interest rates. For Greater Vancouver statistics for April, go to www.dexterrealty.com. For more information and to contact Mary, go to www.marycleaver.com

And now the video...

As I said, until the crash occurs no manner of charts, theories, or tales of congruent circumstances will convince people like Mary of what is coming until they see, with their own eyes, prices actually collapse.

And when they do, you can bet all Mary will be able to muster is: Who could have known?

Maybe we need to do our own youtube or car cam video to explain it to her?

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BC Business Magazine says "Real Estate Mania Is Ending", but a long hot summer remains before it does.

BC Business Magazine is out this week with an article that headlines: "Real Estate Mania Is Ending"

Seems everywhere you turn these days the message is being hammered home via the mainstream media.

The article starts off with a succinct observation.

History shows that Vancouver has always been a real estate boom-and-bust city. Now that the most recent mania appears to be over, with sales falling and prices threatening to follow, there's no reason to think that's going to change.

Indeed.

But if there is one thing we know for sure, few in the Village on the Edge of the Rainforest are students of history.  If they were, we wouldn't be in this situation right now.

BC Business makes another observation...

Fear and worry are rampant in Vancouver these days: the mighty real estate market is struggling. Whether it is in a tailspin or due for a monstrous crash is the subject of endless dinner conversations, office cooler chats and online messages.

Ahh yes, that is certainly the topic of conversation these days in a City where real estate is almost sport.

But are 'fear and worry' rampant yet?

The answer, at least in this blog's opinion is 'no'.  Certainly not on a level that's possible come the Fall.

BC Business Magazine ultimately dismisses what we believe is coming:

Was this a massive bubble? Slightly. When prices rise that much, we’re nudging bubble territory. But bubbles imply resulting crashes, and I don’t believe we’re going to have one. Of course, prices will drop a bit, but an American-style catastrophe isn’t going to happen.

There's a moral here.

The doubters will only believe it's a bubble if we have a resulting crash. And no manner of charts, theories, or tales of congruent circumstances (leading to this very outcome in other countries) will convince doubters until they see prices fall here - significantly.

Summer will probably not provide either side any answers.

Typically we see listings pulled in the summer as vacations take priority.  Meanwhile current sales are boosted by the rush to beat the new mortgage rules deadline. A curiously large number of recent reported sales are still pre-July 9th.

And as the Vancouver Housing Blogger has noted:

New listings have fallen sharply in last 10 days. The 7-day MA on Juy 9th was 284. Today 225. No sign of panic among sellers.

Market observers are speculating that we are in a standoff between buyers and sellers.  A sentiment echoed by realtor Larry Yatkowsky who asked yesterday, "Are Vancouver home buyers and sellers stubborn?"

The answer is 'Yes'.

Buyers are having their beliefs about a collapsing market reinforced daily. Sellers are adamant that they will not accept less than what they believe their properties are 'worth'.

It's all shaping up to be a long summer for both sides.

Will there be an event that triggers panic for either sellers or buyers in the Fall?

Finance Minister Flaherty and Bank of Governor Carney came back from the G-20 concerned enough to reiterate their warnings to Canadians.

Should you put any worth in their admonishments?

We shall see.

Unlike BC Business Magazine, we believe a catastrophe will happen here.

And then it will be clear to all and sundry that not only are we in a bubble... but we will be ground zero for a collapse unlike anything any of us have ever seen.

That's when 'fear and worry' truly will be rampant.

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Email: village_whisperer@live.ca
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Please read disclaimer at bottom of blog.