“The Greater Victoria real estate market hit the brakes in 2011, recording the lowest total number of unit sales in 11 years.”
…
“Overall it was a very flat year,” said Pemberton Holmes real estate agent Nicole Burgess, noting one of the continuing trends in 2011 was the gap between buyers and sellers. “There is definitely still a divide between sellers and buyers on price expectation and I’m not sure where that is going to go,” she said. “I don’t see any real downward pressure on that, I see sellers wanting to hold out and buyers also holding out.”
- from ‘Home sales tumble to 11-year low’, Times Colonist, 4 Jan 2011
This time around, the sellers will blink first. – vreaa
Maybe a little world turmoil. Markets have already started 2012 nervous about the euro and european banks.
Human psychology can be at the same time very strong and very weak. Facts and figures can jump out at you from the page. But it is emotion – fear and greed that infects markets at their turning points.
When the herd suddenly stops and checks and a few start to move the opposite way, then suddenly they are all running.
If sales are the worst in 11 years is it fair to call the market flat?
If buyers are holding out for lower prices won’t that provide downward pressure on prices?
Is the girl stupid, or is english her second language?
I think buyers can hold out a LOT longer than sellers. Unless the seller doesn’t need to sell, a seller will have to lower their price in a stale market. On the other hand, unless the buyer HAS to buy quickly (because of a transfer), they can hold out for a very long time. Also, if there are many more sellers than buyers, price drops can happen very quickly. The bottom line is: things are shifting.
No objection here, but I want to point out that this is only true when prices are significantly higher than fundamentals. In some places in the US the fundamentals for buying are sound but buyers are holding out and paying a premium in rent to do so. It may work out for them, but this is a gamble. Holding out in Victoria is not.
It’s still a bit early to really tell, but it looks like something big is happening on the market this month… Have a look at paulb’s numbers at VCI. It could (finally) be it!
The race is on: What side will stamped the heard first? Either CMHC pre-announces a change to rules (plus Carney pre-announces a rate increase) to bait buyers into jumping in, or, the economy has a major shock that impacts local consumer confidence (that’s gonna take more than Euro wobbles). Whatever happens first will push people off the fence, one way or the other. Last year at this time (with same thing happening in Victoria and elsewhere) CMHC/Carney came through with aces.
I agree, something will come up but the question is if the move is enough to stimulate most of Canada to act (or forever be priced out, as they say) is it enough to prevent Vancouver moving? Let’s say mortgage minimums are increased or amorts dropped to 25yr, maybe this will kill the FTB which goes up the chain and kills the market?
I hope the only change is a 25 yr amort and it is done quickly; no 8 month implementation. This won’t hurt existing owners (in theory, ha ha) but will stop the speculation at the entry level.
You can’t get money people don’t have, so there is a limit to this pump and dump strategy. The median real disposable household income is dropping. That signals “game over”.
Just to add the experience of Europe again: everything I’ve read in the last few days here sounds as though YVR is headed towards the “2007 moment” in UK – just don’t expect the property prices to halve. Over here, they’ve gone down by 15-20% over 4/5 years and are pretty much flatlining now – I wonder if that’s the kind of break we’ll see in YVR? Of course, the difference is that here, prices only ever reached 5-6x annual earnings, whereas I understand it’s 11-12x earnings in YVR. So maybe…?
How much did UK prices run up in terms of rents, income, and GDP?
http://www.economist.com/node/21009954
Quite a bit, I’m afraid. Only the US has returned to anything approximating fundamental value. It looks like crazy government subsidies can prop up the market and permanently transfer wealth. The cost is a “generational time bomb”
http://www.guardian.co.uk/business/2011/jan/19/youth-unemployment-heads-towards-1-million
Oh, and please note that Japan did the same thing. Eventually young people could not get careers and did not start families. After multiple “lost generations” and deflation Japan can no longer afford to support its aging population and the birth rate is too low to fix the problem. The only solution now is to default or flood the country with immigrants.
My advice to young people in any country that adopts such a policy – LEAVE!!!!
Vancouver makes the Vegas run up look puny.
Thanks for the Economist links, rp1.
These charts generated there, comparing UK and Canada (nationwide numbers… a Vancouver-London comparison would be interesting).
i’ve seen a version of that data in one of the imf reports where the baseline is a long-term historical avg. canada is more extreme than shown in these charts. a 15%-20% correction at the national level would translate to roughly double that in gta and gvcr.
couldn’t find that one. but here is another, maybe you have posted already?
http://www.imf.org/external/pubs/ft/scr/2011/cr11365.pdf
p.7 and p.17 for a couple interesting charts
I don’t know what the ownership & mortgage laws look like in the UK, let alone demographic trends, but I wonder if they’ve actually seen the worst of their downside, yet. Looking at Tokyo’s housing prices, there was a 3 year plateau between the first shorter leg down and the final long descent to fundamentals (plateau between 89 and 92). Of course, price/income and price/rent are a different metric than the stats at dr.housing on Tokyo & there are always local factors in play … but I’d not be surprised if there is more downside to come.
Real Estate is local. The Income vs House price chart above needed to be looked at a city-to-city comparison.
Vancouver People will be sooooo happy if we got Toronto prices here. If that happens I will buy tree, no I mean 3.
Parts of the Island are approaching 2004 prices in real terms. There was a crash there, just nobody wants to talk about it. Not so for the inner parts of Victoria area, but it’s Wile E. Coyote running off a cliff there from what I see. Inventory is too high and sales too low to be sustainable at those valuations.