“Co-worker’s mom bought two units a year ago in a presale that is slated for completion next autumn. She bought 2 two-bedroom 1100 square feet units for around $500k each. One for her and one for her son. At the time they figured they would sell their 20 year old Richmond house for $1 million plus and pay off their brand new “upscale” condos. In the meantime they would rent and move into their new digs when it is completed.
So they put their house on the market about six months ago and I was getting updates from my co-worker. In the beginning they were showing the house to three or four interested parties during every open house. After about two months they got a low-ball offer ($150k under asking) but they rejected it.
Yesterday, I got another update and I asked how the house selling was going. He told me nobody came by to look for “a couple of weeks”.
I then asked if they were considering to lower their price. He responded, “Nope, my mom has to get a certain price before she will sell and we are WAITING FOR PRICES TO TURNAROUND.”
He continued to tell me that the completion date for their new condos was pushed up to early summer of next year; therefore, I asked: “What if you can’t get the price that your mom wants before your new condos are completed?”
He then gave me a (priceless) blank stare for about three seconds and said. “I don’t know, my mom will figure it out.”
So it seems there are still people out there that have not seen the light despite all the warnings out there. They turn into ostriches and just hope for the best. I figure by next spring they will start to panic and jr. will end up with at least a $200K mortgage instead of having his new pad all paid off.
I have been patiently waiting for a bubble popping moment but it seems like we won’t see that for at least a couple more months. I figure it takes at least 12-18 months from price peaks before the average joe realizes that the tide is actually turning and this massive bubble has actually popped.”
– Waiting to exhale, at VCI 30 Jun 2012 7:32pm
Prices are initially sticky on the way down partly because sellers just can’t believe that a property that they have come to cherish and believe and trust to be worth ‘x’ should possibly be ‘given away’ for ‘x minus y’. Especially when Mr and Ms ‘uvw’, got ‘z’ for their property, which obviously wasn’t as nice, and, besides, they didn’t even have a ‘qrst’. Not to mention that we need to get ‘x’ for the property, or else plans ‘efg’ don’t work out.
For some wonderful examples of sellers who are working to overcome their innate price inertness, see ‘Vancouver Price Drop’. A few specific case cited below.
- above three examples from Vancouver Price Drop 2 July 2012