So where is real estate going?
We've seen the benchmark price of houses on the west side of Vancouver drop $91,000 in one month (from $1.679 mil to 1.588 mil).
We've seen downtown realtors call on prospective seller's to recognize, in the current market, they must cut their asking price if they want their property to sell.
We've seen Vancouver property flippers dismiss the current malaise as a temporary fluctuation of the market and put on a brave face.
And we've seen Okanagan property developers accept the reality of a real estate paradigm shift and heavily discount inventory by 40%.
I suspect we will see the R/E machine gear up in a replay of 2009 and attempt to fortify 'consumer confidence'. We have already started to see signs.
Andrew Pyle, of ScotiaMcLeod, came out on July 6th on CBC news and commented on sales drops and possible price drops saying, “this is probably more of a ‘one-off’ rather than something we have to be concerned about for the rest of the year into next year.”
But having watched Bob Rennie initiate a 40% slash-and-burn condo sale in Kelowna, I suspect those seriously underwater pre-sale Invue owners are not comforted nor reassured by Pyle's optimism.
Nor will they find comfort in Royal LePage President Phil Soper's statement that the declines in sales and prices "should not be interpreted as a severe correction but rather a natural reaction to the market having peaked quite early this year.”
As Rennie said, the reality is pricing has to be repositioned. The economic collapse eroded consumer confidence and as stimulus and emergency interest rates give way to tighter mortgage standards and higher rates... that elusive 'consumer confidence' vanishes.
So look for the real estate P/R machine to ramp the propaganda by drawing on those pages from the media manipulation playbook that focus on 'consumer confidence'. I envision a flood of articles on creative first time buyers finding ways to 'take the plunge' and commit to their future by finding creative ways to don the massive mortgage chains so crucial to greasing the real estate wheels of upward property mobility.
Consumer confidence and astute first time buyers. I can almost see the pre-written media package stories of a young couple (one of whom will be a realtor) taking the plunge now - stories that magically appear with a local twist in every major paper across the country.
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