You can almost smell the desperation - buyer's once again told prices will not be coming down

It was back in the middle of October that Tsur Somerville first admonished home buyers who were sitting on the sidelines waiting for housing prices to come down.

Tsur Somerville, who holds a real estate foundation professorship at the University of B.C., expects prices to stay flat for a while “because our prices are high relative to what people think they should be,” Somerville said. “Our price adjustment will come from prices being flat for awhile and letting income catch up to where prices are.”

If fact it was just after this that Somerville came out and tried to halt all concerns and worries about a possible collapsing of prices by infamously declaring you can't burst a bubble that isn't there.

“Most people don’t have to sell their house,” he said. “You bought it for $200,000. The price is now $150,000. Unless you have to, why would you sell it?” 

For prices to go down ­significantly, contended Somerville, “You need people who have to sell, either because the economy has collapsed and they don’t have any income or developers have built a whole bunch of units that are unsold and the bank is screaming at them or foreclosing or something like that.”   

None of those conditions appears imminent. 

Somerville said it would take “some negative shock,” such as an ­economic meltdown or mortgage interest rates jumping from four per cent to nine or 10 per cent, to trigger lower prices.

In that October post we profiled some Vancouver westside properties that have dropped their asking prices to between 10%-23%, with no buyers in sight.

The response of Somerville et al?  Prices are flat... there is no decline.

Two and half months later, with the market still suffering with the start of the Spring Market looming, Somerville is back with BCREA Chief Economist Cameron Muir to trumpet the same message: Vancouver real estate buyers waiting for a price collapse in 2013 could be in for a long wait.

While prospective sellers are waiting, the numbers indicate that prospective buyers are a bit shy as well. “The market right now is both slow and tentative. There are a lot of people out there being very tentative because they’re not really sure where things are going,” Somerville said. “I can’t say how many buyers are in the market — I want to differentiate between that and the prices they are willing to pay. Maybe there are people who are actually interested in buying, but they’re either waiting for prices to be at a certain point, or they’re making offers that aren’t being accepted. I can’t differentiate between those things.”

And this is the frustrating thing for the industry right now.  They know there is an incredible amount of pent up demand - demand that knows the market is overvalued and they are prepared to wait for it to come down.

Hence the message:

“To get prices to really tank, you’ve got to have something happen. Either you’ve got to have overbuilding, or you’ve got to have some big change in the world of finance, such as large movement in interest rates or a financial disruption, or you’ve got to have a real negative economic shock,” Somerville said. “You’ve got to have some combination of those, or one of those to make prices drop dramatically.”

Overbuilding of single-family homes in Metro Vancouver is difficult because land is so limited, Somerville said.

It was left to Muir to deliver the R/E message of import:

Cameron Muir, B.C. Real Estate Association chief economist, thinks if buyers are waiting, they could be waiting a long time.

“Three years ago we saw the largest financial crisis since the Great Depression and an ensuing global recession. If that’s wasn’t enough to trigger a correction in an asset bubble, I don’t know what is,” Muir said.

“The condo market in Vancouver has not been ‘hot’ since 2009, and perhaps even earlier than that. Prices on the condominium side have been relatively flat for three years, so that doesn’t signal any kind of asset bubble welling up,” Muir said. “There has also been little speculation in the marketplace over the past few years and home builders have been kept in check in terms of their total units in production.

You almost have to fall out of your chair with laughter here.

• The condo market in Vancouver hasn't been hot since 2009? 
• Little speculation in the market place? 
• Home builders have been kept in check in terms of total units in production?

Riiight.

Wasn't it just last August that ScotiaBank declared the Vancouver market was in a full blown correction  and warned:

the risk of a more difficult adjustment will increase if builders do not soon begin to slow the pace of new construction.

Faithful readers will recall back in February 2012, Ozzie Jurock made reference to the exploding condo inventory on his Face Book page and described the spring/summer condo market as:

"a market that will have a lot of units for sale and more coming on stream."

In an OpEd piece in the Vancouver Sun, Jurock noted:

As of Feb. 29, 2012, there were 6,000-plus condos for sale through the Vancouver Real Estate Board - up 15% compared to the previous year.

At the same time, sales of used condos were down by 18%.

Add to this the fact that - according to MPC Intelligence - there are some 8,000 pre-sale condos being launched in the first six months of this year.

Ultimately Somerville and Muir are going for the soundbite... for the headline.  That's how you mould public opinion.

The problem is their target market - the buyer sitting on the sidelines - is not like Joe Q. Public who browses the media and pays half hearted attention to those headlines.

The buyer on the sidelines is keenly aware of the what is going on.

The buyer on the sidelines is keenly aware that prices have been coming down.

And the buyer on the sidelines is keenly aware Somerville and Muir are full of it.

Which is why they are not biting at those listings currently asking 25% below assessed value.

They are willing to wait.  And it's going to take more than Somerville and Muir berating them for waiting, to get them to buy.

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Email: village_whisperer@live.ca
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That's Gold Jerry! Gold!

The Internet can be a wonderful thing.

Ideas can be shared and, as realtors have found, it's a fabulous way to spread your message to intended clients.

But sometimes it can make you look foolish. Bloggers know this all to well.

Make a prediction that's wrong... and people can go back and bring it up for years to come.

Give investment advice that is wrong... and people will hold it against you for years.

A good example is our recent post about a hotel condo at the Blackcomb Lodge now selling for 65% off it's 2005 launch price.

One of our faithful readers, pipewrench, responded to our post and shared a link he had come across from a Whistler realtor from February 2010.

A realtor named Lillian was boldly (and publicly) wagging her finger in admonishment at potential buyers who might be sitting on the fence about a real estate purchase in Whistler.

She said:

"For people expecting the real estate prices in Whistler to drop after the Olympics, I’m afraid you’re going to be sorely disappointed...The message is, if you’re waiting for prices to drop before purchasing property in Whistler, you may be too late. The time to buy is now."

Ah yes, the'buy now or forever be priced out'mantra.

On full display then as it is now, despite the fact the realtor acknowledges that (at the time of the posting) the Whistler market was "already 15-25% lower than previous prices in 2007" and that "current prices in Whistler are down to 2001 levels."

It came, of course, during a series of articles talking about how real estate prices had collapsed post-Games at other Olympic venues.

Realtors, naturally, told you it was different here.

It's a relevant theme to touch on because as we noted on May 18th, the local real estate cabel has been attempting to dissuading people locally from believing all the negative mainstream media articles about a looming real estate crash and that buyers shouldn't be expecting a significant correction in our local housing market.

As Tsur Sommerville said:

"To expect across-the-board 10%, 15%, 20% drop in house prices, I think that being rather, er, hopeful, for a buyer to expect that."

Hmmm.

For real estate bear blogs who are watching the current Whistler Real Estate market crash hard... the 2010 posting is pure gold.

Here you had a realtor telling you in Feb. 2010 that "with a high level of inquiries and good prices, Whistler is considered good value in the resort market."

Whistler was over priced then. And it's over priced now - hype notwithstanding.

The same goes for real estate in Greater Vancouver.

Here, for your viewing pleasure, is a screenshot of the blog post (click on image to enlarge):

Now... I would love to link directly to the post so you can go and see it for yourself.  But I can't.

A curious thing has happened since pipewrench posted the link in the comments section last Monday.

Another faithful reader, Makaya, picked up on pipewrench's comment and reposted it over at the excellent real estate discussion site, Vancouver Condo Info.  

VCI seized on it's newsworthiness and, under the heading Whistler's Nasty Collapse, made it yesterday's main story.

However, about 8 hours after the post, VCI's readers suddenly came up on a dead link... the embarrassing article had been removed. Clearly some realtors were unhappy with all the embarrassing attention.

But not so fast.  

VCI contributor, patriotz, quickly accessed Google cache and retrieved the article.  Another contributor, The Ant, collected screenshots and posted the content of the article for posterity.

Real Estate Value In Whistler Best In 9 Year
Posted by: Lilian Feb, 2010

For people expecting the real estate prices in Whistler to drop after the Olympics, I’m afraid you’re going to be sorely disappointed.

According to George Klimock from The Whistler Real Estate Company, property prices in Whistler today are already 15-25% lower than previous prices in 2007. In fact, current prices in Whistler are down to 2001 levels.

With a high level of inquiries and good prices, Whistler is considered to good value in the resort market, with, for example, a 2 bedroom condo is now listed at $ 519,000 as opposed to the more expensive $ 630,000 a few years earlier.

According to the 2010 Whistler Report from Landcor Corp,the average price of a condominium has started to climb recently, back to the $400,000 mark, first established in 2002. Since 2008, the condominium market has flattened. But, new ownership types, including quarter share ownership, have been introduced into the market, increasing affordability. This likely has helped to keep assessed values stable at or close to the $400,000 level. Townhouses in Whistler, typically priced between condominiums and single detached units, ranged from $650,000 to $750,000 from 2001 to 2007, but dropped below $600,000 during the recession.

Those looking to step into the Whistler market for the first time under the notion of a lower price, may be disappointed. Whistler homeowners receive good cash flow from renting their properties out most of the year and as such are not as motivated to sell as homeowners in other areas. Whistler is considered to be near the bottom end of pricing when compared to other resorts such as Sun Valley and Aspen, with price adjustments as low as they were in 2001-2002.

“The mistake many people make when they look at prices of property in Whistler is to compare [prices] with the price of properties in their city. You can’t compare Whistler to Vancouver because Whistler is a destination resort, designed for people to own secondary and vacation properties, not their primary residences. In order to get an accurate picture of what prices are like for resorts, you have to look at other resorts like Sun Valley, Park City and Aspen. In fact, Whistler is currently less expensive than Sun Valley and Aspen and Park City is higher priced.Whistler is currently a good buy for resort property,” says Klimock.

Klimock predicts that the current sales volume in Whistler will continue throughout the year with a fairly active winter season. He believes the Olympics will be good exposure for the resort, but through the long term rather than the land rush that occurred in 2002 because speculative buying due to the Olympics has been virtually non-existent. The market will take 6 to 8 months to increase in sales, with more destination travelers arriving to the resort in March and April; after the Olympics, but prices may increase after next year.

Ultimately, Klimock believes that sales volume in Whistler will gradually increase, but Olympic success is a non-issue. “Buyers are still interested in Whistler, with or without the Olympics. As a world-class resort, Whistler has unparalleled world access and is in close proximity to a major city, Vancouver. No other resort in North America can claim that. Having the Olympics is great marketing for Whistler, but I don’t think it would have any major effect on prices or the amount of people buying.”

The message is, if you’re waiting for prices to drop before purchasing property in Whistler, you may be too late. The time to buy is now.

Kudo's to the blogging community for their quick action.

And to paraphrase that famous line from the Seinfeld episode, all I can say is... That's Gold pipewrench! Gold!

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Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.