Expecting the sales drop.

Over at the CBC they’re talking about the expectations of lower sales across Canada, but a magic kind of lower sales that doesn’t really lead to much in the way of price drops:

“It comes down to the different psychology that exists between buyers and sellers. Buyers are very quick to adjust to a down market and sellers are very slow to adjust to a down market. Sellers stubbornly hold onto their perception of what their home is worth, whereas buyers turn on a dime.”

Soper expects to see sales decline dramatically from last July’s near-record activity, but predicts there will be little change in home prices when the Canadian Real Estate Association releases its monthly sales figures Monday.

Seasonally adjusted home sales fell 8.2 per cent in June from the month before and shrunk 19.7 per cent compared to June 2009. However, the average Canadian home price sat at $342,662 compared to $326,689 in 2009.

“You would think prices would come down more rapidly given the drop in sales,” said Sal Guatieri, senior economist with BMO Capital Markets.

Guatieri expects to see as much as a 35 per cent year-over-year drop in July home sales. He projects monthly sales figures will be around 32,600 homes, which would represent the weakest July since 2001. However, he says price increases will weaken just slightly, and only because they were so high last year.

“It’s only in a so-called buyers’ market, where there are lot more listings on the market than sales, that buyers have some bargaining power and sellers are more willing to ease up on price, that we would see prices actually falling,” he said.

Read the full article over at the CBC.
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leesh0222
leesh0222
10 years ago

Who knows? As the bulls argue, the price may go up again. However, one certain thing is that it is a VERY RISKY time to buy a real estate property.

I have a few friends in the U.S. who are now screwed becaue of the market crash. I can't take the chance now.

jesse
10 years ago

@FlipFlop: "Call Rennie and the gang and tell them it’s time to change their copy."

Haha. Yeah right. I'll just tell my friends and family to stop calling it a "buyer's market." The more people ignore what RE pumpers have to say the better off we will be.

Heck I don't call the BC Liberal's "fiscally conservative" either. Even though that's what they claim they are.

FlipFlop
FlipFlop
10 years ago

Patriotz said: OK lets talk about the individual buyer. The ONLY objective measure of the relative power of a buyer and seller is the market price, i.e. the price agreed between them. The market price is down 3% from the top, so the power of the buyer is almost at an all time low. If anyone can up with any other measure that makes sense, let’s hear it. How do you figure? Prices have fallen, so there is less room to negotiate down? Does that mean when prices are on the way up, a buyer has more room for negotiating under list? Maybe in a perfect economic model, but the sellers of today are driven by emotion. When prices are on the way up, it's greed. As prices start to fall, it will become fear. In a sellers market, sellers… Read more »

patriotz
10 years ago

@Dave:

The ‘no’ in question was in reference to your assertion that I claimed buyers would pay more than they are willing

Come on off it. That's reversing the order of the comments. Do you think we can't read?

Dave
10 years ago

@patriotz:

The 'no' in question was in reference to your assertion that I claimed buyers would pay more than they are willing. Again, I never made that suggestion. An individual buyer will only pay what they are willing and able to pay. But… the same goes for a seller. They will only sell for what they are willing and able to accept.

The cumulative interplay of buyers (demand) and sellers (supply) is what determines the equilibrium price. You are ignoring one half of that equation, not to mention centuries of economic theory and observations.

patriotz
10 years ago

@Dave:

I never made that claim or suggestion and I am not sure how or why it is relevant to this discussion.

Really now?

post 101: patriotz: "The sale price of all housing, new and used, is determined by what buyers are willing and able to pay."

post 103 dave, in response to post 101: "No, the price of housing is determined by the interplay of supply and demand."

That "no" means you were claiming that the price of housing is NOT determined by what buyers are willing and able to pay.

jesse
10 years ago

@FlipFlop: "I still stand behind the fact that a buyer today has far more leverage over a seller "

I have no disagreement on this point. I just think they should call it something different. Say I can negotiate $50K off the asking price of a typical Vancouver property. So what? It's still a bad deal. My negotiating skills may be second to none and the seller has no bargaining power but I will still lose money. Buyer's market indeed. How about "falling knife market?"

Teddybear
Teddybear
10 years ago

@Boombust: LOL Oh, come on! Vancouver vs. NYC!!?? How can anyone compare a town of 600 thousand people to a world class city! Some people prefer living in small towns, in which there is no highways, city squares, companies' headquarters (except for Lululemon which no one has heard of east of Hope) etc., and good for you! – but please, please, do not ever compare this cute town to a megalopolis, which NYC is!

Dave
10 years ago

@patriotz:

I never made that claim or suggestion and I am not sure how or why it is relevant to this discussion.

My point is simple and is supported by basic economics. Either you don't understand supply and demand or you being intentionally misleading.

patriotz
10 years ago

@FlipFlop:

I still stand behind the fact that a buyer today has far more leverage over a seller (especially a desperate seller) than they did when we were setting sales volume records.

OK lets talk about the individual buyer. The ONLY objective measure of the relative power of a buyer and seller is the market price, i.e. the price agreed between them. The market price is down 3% from the top, so the power of the buyer is almost at an all time low.

If anyone can up with any other measure that makes sense, let's hear it.

FlipFlop
FlipFlop
10 years ago

jesse says: My point was that shills using euphemisms to describe the health of the market is misleading. How can there be a “buyer’s market” when there aren’t that many buyers? Why don’t they call it a bear market? Because that would guarantee scaring off the bears! LOL Haven't these same 'shills' referred to the market as a 'sellers market' when people were fighting for their place in line for new developments, and making multiple over ask offers? I can' recall them referring to it as a 'bull market'. patriotz says: Buyers always have more power than sellers (collectively) because nobody has to buy but somebody always has to sell. Thus buyers collectively control the market price. We're not talking about collective power, but you almost make my point in what you say. A few years back, a seller would… Read more »

patriotz
10 years ago

@Dave:

No, the price of housing is determined by the interplay of supply and demand. Buyers are only one half of the equation

How can a property sell for more than someone is willing to pay for it?

Remember, nobody has to buy. Ever.

Boombust
Boombust
10 years ago

"I was reminded last night as I flew into NYC how small a shithole Vancouver is."

It may be small, but it isn't a shithole like the Greater NYC area.

I was there in July. You can have it. Please.

Dave
10 years ago

@patriotz:

No, the price of housing is determined by the interplay of supply and demand. Buyers are only one half of the equation.

realpaul
realpaul
10 years ago

"Where have all the buyers gone Long time passing Where have all the buyers gone Long time ago" Sing to the tune of 'Where have all the flowers gone'. Its a fitting requiem for the poor specuvestors who according to 'The Plunge Meter' guy are getting screwed to the tune of thousands a month in 'depreciation'. WTF!!!!!!! Can RE actually go down in price????? Tell me it ain't so. Theres no justice. It seems the Tamil Tigers have been caught flat footed by the cold shoulder they've received after arriving. I guess we were supposed to greet them with welfare cheques. They're supporters are desperate to change public opinion by pimping the media every day about how we're the bad people and they're really really good. http://www.vancouversun.com/health/Tamil+migrants… I was reminded last night as I flew into NYC how small a… Read more »

patriotz
10 years ago

@oneangryslav2:

Will developers simply have to swallow the cost of the HST?

Yes. The sale price of all housing, new and used, is determined by what buyers are willing and able to pay.

Period.

patriotz
10 years ago

@fixie guy:

“Helsinki, Finland: 100,000″

If I recall strongly socialist gov + North Sea oil, the latter now past peak.

Finland is nowhere near the North Sea nor does it have any oil.

Try Nokia.

oneangryslav2
oneangryslav2
10 years ago

@Inventory: Here's the crazy thing about the HST. On a 500K n new property, you are paying a whopping $24,000 to the government. But if this is tacked on to the amount outstanding on the mortgage (that is, if the purchaser has to finance the cost of the HST) s/he will pay about as much again in interest on the payment of the 24,000 dollars. Where do I sign up?

So what will happen? Will developers simply have to swallow the cost of the HST? Their price points should be lower now given that they can apply tax credits to many of their inputs. If the price of new construction comes down about 12% or so, what does that mean for older housing? I think we all know the answer to that question. Where's the popcorn?

Inventory
Inventory
10 years ago

HST… HST… HST!!!

August Van. West – NEW units sales (homes, condo, townhouses)

1994 = 53

1995 = 72

1996 = 148

1997 = 220

1998 = 72

1999 = 144

2000 = 57

2001 = 90

2002 = 56

2003 = 89

2004 = 85

2005 = 138

2006 = 99

2007 = 96

2008 = 30

2009 = 94

2010 = 6 ***Aug 17

vreaa
10 years ago
Renting
Renting
10 years ago

Headline on CTV Vancouver news tonight:

"HST takes the blame for real estate nose dive"

Too funny.

Dub
10 years ago

This is all I have to say about Finland http://www.smilespedia.com/finland-be-afraid-be-v

fixie guy
fixie guy
10 years ago

"Helsinki, Finland: 100,000"

If I recall strongly socialist gov + North Sea oil, the latter now past peak.

http://en.wikipedia.org/wiki/Economy_of_Norway#Oi

Anonymous
Anonymous
10 years ago

@Best place on meth: Try this link: http://en.wikipedia.org/wiki/List_of_cities_by_GD

They esimtate Montreal's GDP at 51,000/per capita. They don't have an estimate of Vancouver's GDP/per capita, but I calculated it to be about 46,000 (about the same as Tampa, FL and St. Louis, MO).

Seattle's by comparison is estimated to be 87,000 per capita.

Ohter notable US and Canadian cities:

Toronto, ON 53,600

Edmonton, AL 94,100

San Francisco, CA 92,000

New York, NY 81,000

Chicago, IL 65,500

Los Angeles, CA 53,800

Washington, DC 75,000

Boston, MA 90,000

Houston, TX 77,700

Take at look at this, however:

Stockholm, Sweden: 56,000

Helsinki, Finland: 100,000

I'd take all of these with a grain of salt as I'm not certain that they're comparing apples-to-apples.

Boombust
Boombust
10 years ago

"That’s nice. That’s the way you’re supposed to sit."

Unless you're Ben Dover. He he.