Thurs Post #2: In Vancouver, "something has affected the psychology"

News media stories on the abysmal June 2012 real estate sales data continue.

The Globe and Mail is out with an article titled, "In Vancouver, the seller's market recedes."

The Globe tells us that prices in Vancouver, the country’s most-expensive real estate market, remain stable... but activity has dropped sharply. They also note that economists welcome the decline in sales as an early sign that a correction is taking root, and said prices are likely to follow suit.

But what caught your faithful scribes eye, was an examination of the public's current mindset.

While there is anecdotal evidence that foreign investors are losing their appetite for real estate in the Vancouver, experts remain perplexed as to exactly why the city is seeing such a decline in transactions right now.

Toronto-Dominion Bank deputy chief economist Derek Burleton, who is calling for price declines of at least 15 per cent in both Vancouver and Toronto... (says) Vancouver’s slowdown is “striking, because nothing has really fundamentally changed in the market. It’s hard to pinpoint. Something has affected the psychology."

You don't think that 'psychology' might be the fact that people are beginning to understand that we are in a real estate bubble, after all?

Perhaps this explains another element of our current market which is confounding the 'experts.'

Eugene Klein, president of Real Estate Board of Greater Vancouver (REBGV), is perplexed in the days leading up to the changes in the the maximum length of insured mortgages from 30 years to 25.

The Globe notes Mr. Klein said he expected to see indications of a rush in activity prior to the changes taking effect, but hasn’t seen any so far.

“We thought that people would see a fervour of activity from people trying to get in under the line of the due date, but members haven’t been telling us that that’s the case. So we don’t know if the information is really out there, if consumers really understand it.”

Perhaps the problem is that they do understand it all too well.

Now who do you suppose might be responsible for that? Perhaps Bob Rennie has an opinion.

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