Shadow Inventory – “I have two friends selling right now. They wanted to sell to cash out at the top. Guess what, no offers. Instead of dropping prices, they are both taking the properties off the market. Their theory? The Vancouver market is never slow for long.”

Properties that don’t sell and are taken off the market are ‘shadow inventory’. They will return  when price declines become established. -vreaa

SethM (aka Greenhorn) at RETalks 4 Jul 2010 11:47 pm

“I have two friends selling right now. These properties have more than doubled in value and their mortgages are very low. They wanted to sell to cash out at the top. Guess what, no offers, though the traffic at the open houses was fairly good. Instead of dropping prices, they are both taking the properties off the market. What a waste of time for the realtors. Their theory? The Vancouver market is never slow for long and can bounce back very quickly. Therefore, why throw money away with a price reduction?
This is an interesting strategy. 2 years ago, Bob Rennie advised vendors to take properties off the market if they didn’t have to sell and the market came back with a vengeance.”

5 responses to “Shadow Inventory – “I have two friends selling right now. They wanted to sell to cash out at the top. Guess what, no offers. Instead of dropping prices, they are both taking the properties off the market. Their theory? The Vancouver market is never slow for long.”

  1. As things go down, I wonder how many sellers will expect it to turn around “just like in ’08”. I suspect a certain number of buyers (knife catchers) will jump in at that point too, not wanting to miss out like on the previous downturn. The real panic won’t set in until we pass that previous low point with no signs of turn-around.

    • Agreed. We have written before of the importance of that support at the early 2009 lows. We’d expect a smallish bounce there, but once those prices give to the downside, we expect large drops.

  2. Sellers right now think they might have missed the peak so they might as well wait for the next one. Market peaks in Vancouver are like trains. One leaves the station every 5 minutes. If you missed a peak in Vancouver, wait for the next one that is around the corner.

    • specialfx3000

      Sure Jimmy. Only this time, the train will derail and your wait will be more than 5 minutes. Be sure to bring a good thick book while you wait.

  3. Who knows…maybe the government has yet another trick up their sleeves to stimulate demand in housing. Though we’re in a deficit right now so I’m not sure there would be much public support for something like that. Though things were surely bad in 2008, once the governments stimulus kicked in, people bought houses like heart attack victims heading to McDonalds’ after being released from hospital. This time, the victim may just be pronounced dead on arrival. The tap of government stimulus has run dry.

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