Wed post #1: What constitutes a price drop?

As we pointed out yesterday, Ozzie Jurock advised his followers that the recent 'adjustment' in average Vancouver prices is far worse than the spin would have you believe:

The real estate market is down 12% on the average price - July over July ... but down a whopping 20% in price over May 2011!!!

July 2012 - $669,000 to July 2011 - $762,000: down 12%

July 2012 - $669,000 to May 2011 - $834,000: down 20% !!

Volume is down too. Listings are higher.

As Ozzie succinctly notes, the average is down 12% on a simply year to year comparison, but go back a couple of months more and the reality is that the average is down a full 20%.

It is in this milieu that some sellers, those hoping to ride the bubble frenzy, are forced to come to grips with reality.

No blog is better for charting this that Vancouver Price Drop.

One faithful reader termed the site 'price drop porn' and it's an apt description as we watch wild real estate speculation crash on the shores of market reality... a trend with are seeing at all levels of the market as asking prices begin to melt to assessed value levels (or in the case of Richmond, often below assessed value).

One can only imagine how huge the drop end up being if we were charting the plunge from asking price to what a property actually sells for.

Take, for example, the land in the outlying suburb of Maple Ridge.

Promoted as a potential high rise site in the town core, the asking price on June 14 was $3,900,000!

Currently the asking price is $1,750,000... a 55% drop.

The assessed value of the property is only $898,000. 

If this property eventually sells at, or near, the assessed value... the asking price will have fallen an astounding 77%. 

If we do have a significant property value correction, this property could conceivably drop over 90% from it's June asking price.

Such is the breadth and depth of the wild speculative mania in our housing bubble.

Ultimately the true measurement of the collapsing of the bubble will be measured by what people paid for a property at the height of the mania vs what they end up selling the same property for once the mania fully implodes.

In the meantime, the blog Vancouver Price Drop is like watching a train wreck.

You are simply mesmerized by what you see.

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