“Last month I pointed out that the active listing volumes for detached Westside houses actually exceeded the highest volume during the credit crisis. In June the number of houses actively listed was even higher at 1078. During the credit crisis, the active listings of detached homes on the Westside never exceeded 1053 houses. Keep in mind also that the three year average number of active detached homes listed on the Westside between January 2009 and December 2011 was only 589. This is a very serious situation.” …
“Vancouver’s real estate market is getting and is going to get hit from both ends. So, now that you are thoroughly depressed, here is the bright light: IF YOU SELL NOW, YOU WILL STILL BE SELLING NEAR THE TOP OF THE MARKET. If you plan to sell, you will need to price BELOW the most recent comparable sales prices. If you don’t do this, your listing will stagnate.”
– Images, and text excerpts, from ‘July Market Update: Am I Too Late to Sell?’, by Sam Wyatt, Vancouver Westside realtor, at samwyatt.com 5 July 2012
Sure, Sam Wyatt stands to gain if his sellers price sharply, but we happen to agree with his take on the market.
Prices are headed down, and the only way for sellers to get to the front of the queue is to lower their prices.
This is the process by which price drops progress.
This also demonstrates why it’s impossible for anything more than a relatively small number of sellers to get out near a top.
Those who do so will look very fortunate in coming years.
Posted in 16. Missed The Boat?, 27. Seller Panic
Tagged Anecdotes, British Columbia, Bubble, Canada, Housing, Real Estate, Realtors, sellers, Sentiment, Vancouver
“A friend from Toronto is in town, we met up with her at her brother’s house yesterday. They live in a BC box in North Burnaby. I went prepared not to talk real estate because the house is for sale. They are asking $820k, the ad on MLS describes it as a “great starter home”. Which it is, but with the price tag of a mansion. The realtor is my friend’s other brother. So you can see why I kept my mouth shut. Even without my prodding, talk turned to real estate. They are expecting a third child and want to move up to a bigger place. The wife figures they listed two weeks too late (they listed in April). The husband make a comment about his realtor not being able to sell the place (a good hearted dig at his brother). Then they set about discussing the relative merits of the other houses for sale in the area. Lot size differences, western backyard exposure vs eastern, etc. I realized for the first time why everyone is blind to this bubble, they are obsessed with minutiae. I have never before seen a more accurate manifestation of the rearranging deck chairs on the titanic analogy. These folks believe it will just take time to get their price and they are prepared to live in the current house with another kid for awhile. I hope this doesn’t cause a rift in the family as the coming debacle won’t really be the brother-realtor’s fault. And these guys should have a ton of equity and if all they really want is a bigger place, then selling and re-buying should work out regardless of what point they do it. They are probably too deep in to real estate mythology to do the really smart thing which is to drop their price, sell fast and rent for a few years. But I’ve come to realize, that’s asking just to much from the Vancouver home owner with small children.”
– Lexlimo at VREAA 8 Jul 2012 9:46am
“Last week I talked to a couple I was acquainted with about the current market hazard. They kept obsessing about their lot size compared to the neighbors, how it had different zoning, why it had value because it was hand-hewn blah, blah…….and I am looking at them chase their tails on a discussion of irrelevance ahd shake my head in wonder. They had just finished telling me they bought the place (on the bald flat prairies) just 10 years back for 40k and now it could easily fetch 220k and I am thinking that these stunned monkeys really don’t get it at all. They know it went up in price inexplicably but just cannot seem to fathom it falling back to what it was…….the madness of crowds.”
– Farmer at VREAA 8 Jul 2012 at 10:05am
“Speculation is rife that Vancouver real estate is sliding down the drain.
Wondering, YatterMatters Tweeted this question: “With thousands of listings on the market why are Vancouver home sellers selling?
In what seemed like the mere passing of seconds came a response that wasn’t from a Vancouver home seller.
“The rats are leaving the ship” followed by this adjunct saying, “I am fairly confident this is (partly) what is going on. Can’t wait to pick up the wreckage…”
These words are bold! So bold that you begin to question if these words are representative of a current mind set for Vancouver home buyers. If so, what does this foretell current Vancouver home sellers and does this mind set explain ‘in part’ the limited number of Vancouver home sales?
My surprise at reading these words rests in the fact that I am acquainted with the respondent in real life. The words “can’t wait to pick up the wreckage” seemed at odds with the person whom I respect as a thoughtful, well published local economist. What I didn’t anticipate was the fierceness of their words carrying a tone of carnage. It was something I had not anticipated!”
– Larry Yatkowsky, local realtor, at his blog ‘yattermatters.com’, 5 Jun 2012
The post at Larry’s site provoked good discussion. At one point Larry himself commented:
“In 1990 people were buying at about the same ratio as today but today they are not buying at 3.09%/5year rates versus 14% – WHY?
Is it job security, income/mortgage payment ratio, world economic balance, price difference, fear?
What am I missing?”
Some RE bulls imagine thousands of ‘thoughtful’, measured prospective buyers ready to line-up to buy Vancouver RE at 10% or 15% off.
In a similar vein, they can’t imagine thousands of upright owners deciding to sell at the same time. (“Why would they sell a depreciating asset?”, they ask.)
So, yeah, if you don’t really understand the dynamics of a bubble (fresh air between stratospheric prices and fundamental support far, far below), if a 15% pullback is the most you can imagine, you’re going to be a tad surprised with the effects of a deflating speculative mania.
Previously orderly demand/supply dynamics go ‘non-linear’.
Buyers sit on their hands (even those who thought they’d step in).
Sellers come to market (even those who didn’t previously think they’d be sellers!).
The crux is that the fantasy of ever-increasing home prices leaves the building, and that changes everything.
Posted in 01. He Said, She Said, 08. Overextended Buyers, 09. Delaying Buying, 11. Regrets about Investing in RE, 16. Missed The Boat?, 27. Seller Panic
Tagged Anecdotes, British Columbia, Bubble, Canada, Housing, Real Estate, sellers, Sentiment, Vancouver