Sunday, August 14, 2011

The shifting currents

Back in April we posted that the noose was tightening on the larger periphery around the Village on the Edge of the Rainforest.

The Victoria Times-Colonist reported that, "The first quarter of 2011 has proven to be a tale of two real estate markets in B.C. - the Lower Mainland and everyone else."

But as the dog days of summer arrive is the level of concern starting to rise in the Lower Mainland?

One local Vancouver realtor sent out the following comments in an email last week:
  • I hope you have been enjoying our summer and the sunny weather. Hopefully August will make up for the dismal summer we've had so far. I just looked at the weekly outlook and it looks very promising.

    Unfortunately, the same cannot be said about our markets today. Even as I type this, most major stock markets around the world has reacted quite negatively to the US downgrade by S&P. Talks of falling back into a recession dominates the news today. The major concern is not limited to the US Debt situation but also to the European Union and its sovereign debt crisis' amongst its members including recently 2 major powerhouses Spain and Italy and of all places, China. Yes, China seems to be struggling with the fallout of the US Debt crisis as well as internal problems surrounding rampant inflation and social unrest due to the growing gap between the poor and the wealthy.

    Locally, the looming financial/debt crisis may have begun to affect our real estate market in the sense of forcing some people to rethink their decision to buy in at this time. This change in sentiment along with the Summer doldrums has resulted in a decline in sales of ~21% from the month of June and a small overall decline in average prices by 0.1%.

    Anecdotally, I have heard from other realtors in the Real Estate Industry having a slow summer with the exception of just a few higher end markets targeted by a specific group of Buyers.

    Is this the beginning of the long awaited 'correction'? I don't know but it is not a bad idea to get your finances in order as soon as possible because there seems to be more and more cracks forming in both our financial and real estate markets. In 2008, we were saved by emergency quantitative easing by the Bank of Canada. This time around the Bank of Canada have a limited ability to do the same simply because we are already at very low rates. Sorry for the doom and gloom but you know me, I try to tell it like it is.

    I hope you'll have a great August and enjoy the awesome weather we are having. Feel free as always to comment or ask questions. I would love to hear from you. Take care and keep in touch.
Not exactly a Tony Robbins moment, is it?

Another Vancouver Realtor, Larry Yatkowsky, has also chimed in with less than bullish comments on the current state of the market:
  • In this community snapshot the number of sales alone – almost half of the previous month, would suggest that the Vancouver west market is staggering. A case can also be made that suggests prices are falling – at least for now.

    There was talk back in May and June that we could expect a scenario like this to develop. Vancouver Realtors call it the ‘summer doldrums’ – a slow period of real estate activity typically usurped by hazy summer days of fun and sun. Though some whispered about the potential for another global financial crisis humans by their nature, have a glass half full mentality. No one expected the U.S. to blink. Fewer still, anticipated that they would be thrown into another round of that chaos so quickly.

    Real estate does not react as quickly at the financial market place and the numbers here suggest that something different is going on as it began prior to this last go round in the financial markets. However, it seems reasonable to expect that in the weeks ahead as the losses are calculated, one could expect to see the fall off on the west side continue and begin to ripple through to other communities.

    ... should that continue and the calculated losses prove greater than now known, the fall season of Vancouver’s West Side party invitations will have a new twist asking you to come to a pot luck. Don’t be surprised if the invitation includes the obligatory BYOB.

    If this proves true, expect to hear post introduction conversations that begin with these words: “wow... can you believe the decline in Vancouver’s real estate!”
Across the Georgia Straight the Capital City continues to feel the pain.

The Victoria Times Colonist reports that "for the second straight month, the number of homes for sale remained at 15-year highs while the average selling price dropped in all categories."

There are now nearly 10 months of inventory (generally 6.5 months of inventory is considered balanced).

Conditions have lead one Victoria area Realtor to state that the consensus among his R/E colleagues is that offers are coming in well off the listing price.
  • "It will be up to the sellers to come to grips with that reality. The buyers aren't lowballing, they are saying that's what they will pay."

Could it be that the tide has finally turned on the Canadian West Coast?

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