“Sellers will commonly say, ‘I’m going to wait until the spring, when the market is better.’ And I warn them that it could be worse. And buyers are saying ‘It looks like things are bad, I’m going to hold off until the market drops another 10 or 20%.”

“While the national housing market appears to be retreating in an orderly way, the data show pockets of sharper slowdown, particularly in the western Canadian cities of Vancouver and Victoria, which once led the hot housing market.
“Personally I don’t see any revitalization of the market in the near future,” said Victoria real estate agent Tony Joe, noting that investors have left the market.
Residential sales fell 8.3% in September from a year earlier in Victoria and were down 32.5% in Vancouver, according to the local real estate boards. Prices were down 2.6% in Victoria and 1.4% in Vancouver on the year, according to the Teranet report.
The price declines are far smaller than the plunge that hit U.S. homeowners during the crash. Still, buyers are hesitant, wondering if they should wait until next year to purchase.
“Sellers will commonly say, ‘I’m going to wait until the spring, when the market is better.’ And I warn them that it could be worse,” said Joe. “And of course buyers are saying ’It looks like things are bad, I’m going to hold off until the market drops another 10 or 20%.”’
Joe, a 21-year industry veteran, does not foresee such a drastic decline, simply because Canadian lenders have been prudent and interest rates are not going up soon. Sellers will pull houses off the market rather than accept a price drop.”

– from ‘Canada braces as housing slowdown takes hold’, National Post, 5 Nov 2012

51 responses to ““Sellers will commonly say, ‘I’m going to wait until the spring, when the market is better.’ And I warn them that it could be worse. And buyers are saying ‘It looks like things are bad, I’m going to hold off until the market drops another 10 or 20%.”

  1. I wonder if this guy wants lower prices only to increase the pool of buyers. I don’t have the heart to tell him it doesn’t work like that.

    • Yeah.
      And anybody who expresses the belief that “Sellers will pull houses off the market rather than accept a price drop” is simply displaying their woeful ignorance of how markets work.

      • How real estate markets work. The normal textbook supply demand curve seems to suggest that lower prices will increase demand but in speculative bubbles, at least initially, the exact opposite occurs. Those who are sticking to their “lower prices will increase demand” argument aren’t checking their history.

      • Exactly.
        Once the premise of rising prices is removed, speculative demand completely disappears.
        And real demand only comes in a price levels vaguely in the vicinity of those supported by fundamentals; which, for Vancouver is a long way below.

  2. If I hear about the prudence of Canadian banks one more time I’m going to scream. The banks are prudent, the borrowers are prudent, all the way up to 163% income-to-debt. But it’s prudent debt. Used to buy thing we really, really need. Like soap and toothpaste and milk.

    • Agreed. This mantra about prudent banks is very annoying and a lie, of course…

    • Its a convenient catch all meme that fills the inferiority complex most Canadians subconsciously retain while giving them permission to join the herd and override their usual pathological paralyzing fear of risk investment.

    • actually, the cdn banks are more prudent … in the sense their de facto bailout for bad lending decisions is pre-approved (via cmhc) and that they do not have exposure to things like 30 yr mtgs at current rates … cdn banks are in a much stronger position relative to homeowners

      • Like the US banks were, through Fannie Mae.

      • hmm … all the players in the cdn RE bubble had a great view of the us RE bubble and all the others ww – a great opportunity to watch and learn something … as it turns out, looks like the banking sector ‘got it right’, figured out how to get in on the game, then harvest more ‘profit’ and with lower risk to themselves … i think by extension one should have conclude the herd turns out to be nearly the dumbest on the planet … smarter banks + dumber(est) herd = biggest valuation bubble (presto!) … makes perfect sense

      • Harper & Flaherty knew exactly the type of inferiority complex they had to work with when they cynically enacted their fiscal policies that ignited the Canadian ponzi scheme of gluttony. With the commodity surge artificially inflating the currency they could inflate the paper wealth of the middle class and give them that wealth feeling that would would separate them from the “other” (renters, unionists, anyone who couldnt afford a new f350) and get their majority government.

      • bubbly – congress still had to approve financial bailouts after everything melted in ’08 … with cmhc the risk transfer is already done – if they drain their reserves, i understand taxpayer is already on the hook

      • 4SlicesofCheese

        That logic does not fly.

        If I were to go on a spending spree and find out I cannot pay, and then go to my parents for a bailout, does that make me prudent?

      • Doesn’t matter what the congress had to do. Everyone in the banking industry assumed (correctly) that bailouts will happen.

      • @Bob – the pre-Harper governments are just as guilty. Prices started their rapid rise in 2002. Stupid policies that ultimately lead to it were enacted even before that.

      • bubbly – yes i think many assumed correctly the implicit guarantee for fnm bonds would hold if tested … eg. pimco famously bet heavy on this (and i owned a lot of pttrx) … but i still recall the scale and scope of the bailouts was very much in doubt and could have ended up being much smaller, forcing creditors to absorb bigger losses … my pt was just the situation for canada is more certain with less risk to financiers and more risk to public (4soc – this is how they are ‘more prudent’ … the scalp is taken … now who is already set up to bear most of the fallout?) … will be interesting to see how much real public resistance materializes when loss reserves are gone, to what extent can/will cmhc pursue underwriting fraud, etc. …

        in the us, trending up … private equity is taking advantage of low rate environment to buy foreclosure property wholesale on the cheap … effectively, to rent back to all those people who lost their homes and savings in the bubble … nice huh? maybe an ‘improved’ version of that in the future up north

      • Naked Offical #9000

        bob, funny you should mention the f350

        a buddy worked at ford, said he couldn’t believe how many of these 60,000k trucks (harley davidson models specifically) flew off the lot to anyone who got approved, being a (late model) ford, most of them are lemons and back within a few years due to bad design/poor maintenance (apparently they don’t understand how often the oil has to be changed in a diesel)

      • UBCghettodweller

        Bob- yeah, I had to buy a Ranger rather than an F350. God Damn middleclassers!

      • @bubbly – during the Liberals reign there was an uptick in Kits housing. From 375k to 500k from 1999-2005. It was the sick and twisted 40 year / 5% down that ran them up from 500 to 2mm from 2006-2011
        @UBC – A Ranger? you peasant. obviously destined for a job that pays 38k a year that will ensure you will never spend 75k on a kitchen reno nor will your invite to the royal order of water buffalo and political bribery be forthcoming 😉

      • Bob, please stop campaigning and look at the actual data: https://vreaa.files.wordpress.com/2010/04/2010-mar-rebgv.jpg

        Average detached price in 2002 – $400k
        Average detached price in 2006 – $800k

        Prices doubled in the 4 years between 2002 to 2006. It was an obvious bubble back then already. Conservatives only added fuel to a raging fire.
        (PS: I am NOT a fan of Cons nor Libs or NDP)

      • talking about bank prudence.. i forsee a lot of helocs being wiped out in bankruptcy.. is this covered under chmc as well? are there any numbers on the banks exposure to helocs?

    • Naked Offical #9000

      it’s propaganda, nothing more – that we allow it to happen is the major failure of the CRTC and Canadians not writing more letters to the broadcasters for lying to us.

      kind of like the OIL COMPANY commercials constantly blaring through the television after THE ECONOMIC ACTION PLAN commercials – if i see one more Oil Company PR rep swinging on a swingset watching a soccer game, i’m going to lose my shit.

  3. Washington State Ballot Initiative 502 legalizing marijuana another nail in the coffin for the BC Ponzi real estate scheme.as triads, viets, bikers and east indian gangs have less drug profit to wash in BC economy and less drug profit to buy political influence in BC

    • Because the only buyers of BC marijuana were Washingtonians?

      • Also just because an initiative gets enough votes doesn’t mean that it will become law. There are thoughts the federal government has jurisdiction for outright legalization so if they do institute this law it wil (in my view)l be in legally sneaky ways like in California. Not that I know much about it.

      • “Not that I know much about it.”
        -exactly, if this is the logic and research you used to play in RE. explains why the whole thing is in trouble

      • -Because the only buyers of BC marijuana were Washingtonians?
        Are you being obtuse on purpose? I obviously did not say that, i said gangs will have LESS profit, not zero. As to business that the gangs do in Washington. I think we can assume with an estimated 4 billion $ a year generated for the bikers, east indians, triads and viets etc in BC from marijuana cultivation that some of that pot might be making its way across the 687km shared border with Washington State.
        – be in legally sneaky ways like in California.
        Not sure what lawbook you got this definition from. But in California it was made legal for medical marijuana sales by a state ballot. 1000 feet from school, licensed etc. The feds in the form of the DEA and Justice said from the get go before the vote they would not respect the state law. And they have and havent depending on the region and whoever the US attorney is and what bug is up their ass. Some busts, some shutdowns and in other places absolutely nothing and people with prescriptions purchase pot with no trouble.
        -The Ballot initiatives that passed in Washington and Colorado last night went beyond medical marijuana and said do you want straight up Legalization for marijuana for persons 21 and older and at the same time make driving while stoned illegal. Both states said yes. Oregon had the same ballot and it failed. Washington will see I-502 called for a 25 percent excise tax at each stage from the growers on until it is sold in stores to adults 21 and over. They could buy up to an ounce of dried marijuana; one pound of marijuana-infused product in solid form, such as brownies; or 72 ounces of marijuana-infused liquids.
        State financial experts estimate it could raise nearly $2 billion in tax revenue over the next five years, with the money going toward education, health care, substance abuse prevention and basic government services. and out of the hands of Canadian Organized Crime Syndicates.
        – So there is no wait and see. It was voted by the people of the State. 400 million a year in much needed revenue and attendant lowering of policing and court costs will go a very long way for the state to tell the feds to take a long walk off a short pier.

      • Naked Official #9000

        rather prickish…

  4. “Sellers will pull houses off the market rather than accept a price drop”

    Sure they will, buddy. Unless of course, they have to sell due to health reasons, a job loss or move, a crushing mortgage that they can no longer afford or any other reason that won’t let them just pull that sucker off the market. Yes, a percentage of these people may try to rent their property out rather than taking the hit, but that’s just prolonging the agony.

    As for a prudent bank, that’s about as common as an honest realtor.

    • You forgot to add the sleeping giant of forced sales. Divorce. As the HELOC $ runs out and flash cars and first class trips become less frequent watch the divorce rate skyrocket in the Lower Mainland. Another dire social consequence brought to you by short term greed.

      • UBCghettodweller

        The effect of HELOCs and the general exuberance of “I’m money poor, but house rich because it’ll always appreciate in market value,” has poisoned pretty much everything in the lower mainland. The Vancouver of the 1990s and early 200s was a very, very, different place than the Vancouver of today. Back then it felt like just a slightly more expensive, more rainy but warmer part of Canada. Now it doesn’t seem very Canadian at all.

      • An interesting phenomena seen in the US was a DROP in the divorce rate due to being financially unable to manage the separation! Must make for some frosty relationships, and him on the couch.

      • Great, so people in Vancouver will be even more unfriendly. Even more reason to leave.

      • I’m fascinated with marriage because it in some ways is a doppelgänger for real estate investment. What I mean is that people often go in to a contract with emotions usurping rational thought.

        The dissolution rate is of particular interest because by the nature of these unions they cannot be forecast to fail in advance by the participants (but usually by the families LOL). Further there are few, if any, means available to hedge against dissolution.

      • There is a hedge against marriage default. Its called a pre-nup. But too many men fall for the “what, dont you love me honey” line and forgoe it. the other problem is when people get married when they are young and accumulate their assets during the marriage. Thats when it gets ugly. Working husband stay at home mom. She wants half.. hes like .. why did i work 50 hours a week 50 weeks a year for the last 20 to give that b*&^% half of everything…etc etc. Speaking from first hand experience as the child in this situation. Daddys hiding assets mommys hiring private investigators and the lawyers make out like bandits as emotion and revenge drag a divorce into three four five years

      • Jewelery is supposed to be marriage insurance, an old Yiddish joke I think. One wonders why some ask for the authenticity cert with that 1.5ct diamond ring, well now you know.

  5. Other “must sell” situations:
    Death, divorce, marriage (what do you do with two condos when the rent you can get doesn’t cover the mortgage, never mind all the other costs?), a new baby on the way and the one-bed just won’t work anymore, you closed on that new move-up dream house before selling the starter townhouse.

  6. “Joe, a 21-year industry veteran, does not foresee such a drastic decline, simply because Canadian lenders have been prudent and interest rates are not going up soon. Sellers will pull houses off the market rather than accept a price drop.””

    Just one more proof of how small is the understanding that Canadians have of the situation. A punch hurts twice as much when you don’t see it coming. People really don’t have a clue…

  7. Have you ever wondered what the “Actual Bill Of Sale Value” of real estate would be if that was the actual value number used to was the committed Promise to Pay worth of related Real Estate. The bill of sale + the actual improvements + leverage against the property.
    All separate of course.
    not the implied, unproven value leading that has lead to the increase value of the property assessments, and not the current limited cherry picked market sales,
    but the real actual money committed.
    What percentage of people have not changed the value of their property and why do they not count in the “balanced” formula’s…
    what is it… some 50-60 thousand properties change hands a year…
    Out of what some 500,000 thousand plus in the gvrd….
    One sale in 8+ alters all the properties value????


  8. Error… should read
    Have you ever wondered what the “Actual Value” of real estate would be … if the actual assessed value used was the “Promise to Pay” worth of all the related/comparable Real Estate.


    • Naked Offical #9000

      je ne comprends pas!

    • a philosopher asks questions like this … and feeling philosophic – an indulgence? … maybe what silver means is suppose one applied a different valuation metric … instead of taking a few recent transactions from a very distorted period in history … what if we took the actual amount people paid whenever they bought, plus improvements whenever they did them, minus depreciation and inflation-adjusted – wouldn’t that be more robust? … if you could actually manage that calculation, probably and maybe it would be another way to tell everyone paying current prices, they’re crazy … but then, doesn’t that fail to discount how the neighborhood, or city, or country, or world may have changed? … how to model that? … i used to ask people questions like ‘what does it really cost?’ when i first wandered into the domain of finance … now i know better

      a little thought experiment? … say take this brand new 1oz silver round on my desk … what is this disk of metal really worth? … paid about $8 a while back when that got a fast food lunch … now, i could find someone to give me $30 for it and get a nice meal … or, i could put it away, forget about it for a few more years and maybe get 2 or 3 such meals … aside: try doing that with $30 … what if i’m abandoned somewhere hostile and uninhabited? … then it might be worthless … what if a plane all of a sudden appears in the sky? … now, that bright shine might be worth everything …

      excuse the loopy example (cabernet overload) … this philosopher’s point being value derives from context, price is not value, price/value disconnects are opportunity – and that makes the world go round

  9. Real Estate Tsunami

    If one would calculate all the costs relating to owning RE,
    one would realize what a crappy investment RE really is.

    • Naked Offical #9000

      heresy! back to the basement with you!

    • you could take the most convincing, easy to follow cost breakdown showing that RE is a terrible investment and put it in front of your average house horny joe/jayne and I guarantee that they would look at it and almost immediately say “yeah, but you gotta live somewhere…”

      tsk, tsk , tsk…

  10. Pingback: Real Estate: “Buyers” versus “Sellers” Market predictions |

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