Buyers market is a silly way to put it

What does ‘Buyers market’ mean to you?

Is it a market in which the buyer has lots of choice or gets a reasonable price?

..because they aren’t the same thing.

Now that prices are dropping from their record highs on Vancouver real estate, we’re seeing the term ‘buyers market’ bandied about in the media a lot.  And with a huge number of places for sale and actual transactions falling to a 10 year low there’s lots of choice.

But prices are still near record highs!

Real estate is a slow illiquid market, it takes LOTS of time for trends to move through.  Just take a look at the USA, there are some people thinking they’ve hit bottom in some markets after SIX YEARS of falling prices.  Don’t expect deals within a few months, or even a few years.

Real estate marketers will use the term ‘buyers market’ a lot in the coming years, because they make money off transactions.  If it’s not a good time to sell it must be a good time to buy right?

There is one nice thing happening with the shift in the local market though: the Vancouver Sun is starting to publish a bit more variety when it comes to RE market opinion:

Investors in stocks wouldn’t consider a drop in volume to be a buyer’s market in the absence of price changes. The adage that volume precedes price instructs investors to be patient. There’s no compelling reason for real estate buyers to act differently.

Bravo Vancouver Sun, Bravo.

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Bo Xilai
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Bo Xilai

I’ll know it’s a buyer’s market when Able Auction is auctioning off real estate agents’ repossessed E-Series Mercedes and the 7 series BMWs…

patriotz
Member

Since prices are always determined by the buyers, it’s always a buyers market.

The only difference is whether prices are determined by smart buyers or stupid buyers. We are still in stupid buyers mode, by a mile.

CanuckDownUnder
Member
CanuckDownUnder

Not sure how this got past the editors but it looks like Melbourne real estate might not be so hot after all:

“Property analyst Mark Armstrong predicted appreciation would be slowest for home owners in outer suburbs, who could see negative to zero growth in values for as many as 20 years.”

And there’s more!

“Lots of baby boomer parents who have made money out of property gave sage advice to children to pour their money into bricks and mortar because prices double every seven to 10 years. Young people who were sold that lie will find it very difficult to escape and it’s a tragedy.”

But wait you say, Australia has prudent lending standards!

“Despite the stockpile of a record 55,290 unsold homes in Melbourne in June, many developers are still offering 100 per cent finance, with no deposit to buyers.”

Read more: http://www.smh.com.au/money/home-owners-face-repayment-disaster-20120709-21qp4.html#ixzz207vvJnk9

patriotz
Member

@CanuckDownUnder:
Despite Because of the stockpile of a record 55,290 unsold homes in Melbourne in June, many developers are still offering 100 per cent finance, with no deposit to buyers.”

That’s better.

joe_blown_away_by_high_housing_costs
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joe_blown_away_by_high_housing_costs
specialfx3000
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specialfx3000

Another hit to our local economy.

http://www.cbc.ca/news/business/story/2012/07/09/qlt-job-cuts.html

“Vancouver biotech firm QLT is cutting 146 jobs.”
That apparently translates to about 66% of their workforce.

Piklishi
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Piklishi

Just like they say ” it is buyer’s market only if money is no object”

Ralph Cramdown
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Ralph Cramdown

I think it’s reasonable to characterize this as a buyer’s market, regardless of price/value. The meaning of the term in R.E. has traditionally been “Who’s got the negotiating power?”

You could ask another question: Are the auctions on the courthouse steps in Florida right now buyer’s markets? The deal is: Certified cheque or draft for the entire amount, proof to be provided before bidding, all properties as is and where is, no conditions. Some amateurs have been known to buy worthless second liens when they thought they were bidding on firsts.

joe_blown_away_by_high_housing_costs
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joe_blown_away_by_high_housing_costs

Globe and Mail’s “summer of dread” article forgot to mention the popping the real estate bubble in Canada. Economic woes in every country of the world except for the bleeding obvious one right here in Canada are discussed.

http://www.theglobeandmail.com/report-on-business/economy/summer-of-dread-dashes-recovery-hopes/article4398661/

JR
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JR
Consider some of the drivers for local RE prices. “Buy now” urgency, amateur investment (45% DT, 33% Van West and East, 56% UBC) on the part of those who have only known price increases, free money with liberal qualification and ridiculous terms, builders of all types going full blast with no perspective on supply/demand metrics down the road, wealthy immigrants etc. etc. While many of these dynamics feed on themselves on the way up, they will tend to cascade on the way down. There were markets in the US that saw the greater majority of their decline within the first 18 months, notwithstanding they are still dribbling down years later. I can see no compelling argument for a slow decline in Vancouver but many for a shorter term, significant drop – still like watching a train wreck from the driving… Read more »
VHB
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VHB

Happy July 9th, everybody!

Anonymous
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Anonymous

@Bo Xilai: …I’ll know it’s a buyer’s market when Able Auction is auctioning off real estate agents’ repossessed E-Series Mercedes and the 7 series BMWs…….

Never goingt to happen! They’re all leased! Just another peice of the swim trunks that will float away when the tide goes out.

joe_blown_away_by_high_housing_costs
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joe_blown_away_by_high_housing_costs
Check out this bullish comment from kidcanuck1 over at Globe and Mail: “I’m always leery of widespread predictions by pundits and so called “experts” because they usually don’t happen. It’s true that if one looks at traditional measures of affordability, housing prices are way higher than they should be. However, there are other factors these days that may be more important in the determination of current prices: -The foreign element. It’s very clear that there has been a huge foreign demand for housing in Canada’s major cities. We all know about the Chinese appetite for Canadian real estate, but if the Euro implodes there will be significant flows into properties from Europeans as well, looking to put investments in “safe” currencies. It’s hard to beat Canada on that score currently. -Interest rates. A $500K mortgage at 5% for 5 years… Read more »
registered
Member
registered

13 joe_blown_away_by_high_housing_costs quotes: “I’m always leery of widespread predictions by pundits and so called “experts” because they usually don’t happen…”

For a decade+ the overwhelming majority of pundits and so-called “experts” hailed an ever-rising and stable Canadian housing market, and the ‘reasoning’ provided is straight from the real estate pundit playbook. kidcanuck1 is a hypocrite and none too bright.

ArthurFonzarelli
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ArthurFonzarelli

In agree ent with Ralph…generally it connotes bargaining power at present prices. But it is misleading because it doesconnote good “value” which most of us agree is not the current situation.

According to Global “News” this morning we aren’t even in a buyer’s market…the drop to 25 years won’t have any impact. This, from somebroker whom I have never heard of. I loved his comment, in essence: nothing to see here, might slow things for a couple of months but then we wil return to…ummm… (he pauses) our umm normal trend. End quote. No facts, no logic, just happiness that it isn’t a big deal and will all be “normal” soon.

Anonymous
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Anonymous

@JR: “I can see no compelling argument for a slow decline in Vancouver”

Except the fact that is what we are seeing right now. We will see how much impact the new CMHC rules will have and if things fall off a cliff in the Fall (no pun intended). A European financial criss should also speed things up. I suspect the first 20% drop will come within a year and then another 30% in the next 3 to 4 years after.

Anonymous
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Anonymous

@joe_blown_away_by_high_housing_costs: “if the Euro implodes there will be significant flows into properties from Europeans as well, looking to put investments in “safe” currencies.”

Yes sure kind of like in 2008 when the US imploded. What we saw was US investors exit from Canadian real estate (Whistler, Okanagan, etc.) and a collapse in real estate partly fueled by this. The strong relative Canadian currency is a negative for foreign real estate investment not a positive. Funny how people get these things backwards.

Anonymous
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Anonymous
@joe_blown_away_by_high_housing_costs: Since when CAD is considered a safe currency? If something happens to the Euro zone, the USD, Japanese yen, or Swiss fran are still considered to be the safe currencies. Not commodity price dependant CAD. If you are a European, why would you want to own real estate in Canada? Health care? Democracy? Education system? Political stability? Human rights? Climate? Their needs aren’t the same as those of Chinese. US (Hawaii included) looks a lot more attractive right now. $2500 IS a lot of money for most people unless you are a two professionals with no kids. This kid should do some math to figure out how much income is needed to afford $2500. On top of housing costs, you still need set aside money for other things, such as RRSP, car, kids, trips, etc… I must say this… Read more »
Makaya
Member
Makaya

Coming back to the debate yesterday “when do we know prices start dropping?”, we have today a clear indication that this is happening in Vancouver today.

Check out the latest post of Vancouver Price Drop.

#5) Address:# 110 721 HAMILTON ST, Uptown, New Westminster

July 07 V960713 $189,900 $-60,000 -24%

Comment: Last June the unit #107, which has an assessed value of $15K less than this unit, sold for $212K

Assessment: $211,800

Here we are folks, get your popcorn, it just accelerates from here…

Not much of a name...
Member
Not much of a name...

@Makaya: I’m seeing similar things in NV at the moment. Condos that I’ve been watching (that have been sitting for quite some time) are now starting to show downward movement in prices. Particular ones that have caught our eye are now asking under assessed. These are units that are about four years old and are now at about the same price they were when first purchased (including taxes and closing). We looked at a unit yesterday and the last thing the realtor said was “the vendors are motivated”. Interesting times indeed.

Anonymous
Guest
Anonymous

@Makaya: “Coming back to the debate yesterday “when do we know prices start dropping?”, we have today a clear indication that this is happening in Vancouver today.”

I suspect we will see a lot of price drops over the next couple of weeks. Realtors will be pushing for price reductions using the new CMHC rules as justification to push their client into lowering their asking price. They will also push clients into accepting lower offers. Realtors have to eat and those that don’t do this wont be making any sales.

Best place on meth
Member
Best place on meth

@CanuckDownUnder:

““Lots of baby boomer parents who have made money out of property gave sage advice to children to pour their money into bricks and mortar because prices double every seven to 10 years.”

Selfish boomers are now using their kids as cannon fodder to keep their own property values inflated.

Assholes.

Who's Laughing Now?
Guest
Who's Laughing Now?
This was, by far, the greatest weekend of opens yet! Empty opens! Lowered prices! Great to see smiles finally wiped off of smug boomer faces, whose ongoing rhetoric has continued to say, if we (gen X) just worked a little harder, we would have what they have, too. The boomer on the news recently with the house listed at $2 million for two months that has not yet seen an offer? Ha ha ha. Should have cashed out earlier. On the north shore, have seen the condo prices here fall an average of $20,000 since the mortgage tightening rules. To the North Shore realtor that, only a year ago told us not to bother putting in a low offer because, quote, “we have a busload of interested Chinese” – HA HA HA. To quote the writer of an article printed… Read more »
patriotz
Member

@Ralph Cramdown:
“The meaning of the term (buyer’s market) in R.E. has traditionally been “Who’s got the negotiating power?””

The buyers, all the time, because somebody always has to sell, but nobody has to buy.

You might not have bargaining power because someone else may be willing to pay more than you. But that means you’re not the buyer, someone else is.

gokou3
Guest
gokou3

@Makaya: Went to an open house at a burnaby condo yesterday. When we buzzed the unit, no one answered. Called the realtor, was told that the owner was showing the unit himself. Buzzed a few more times before being admitted. Found out that the owner was actually taking a nap. Apparently we were the only visitors with the house opened for over an hour by then. The unit was overpriced compared to similar units in the same building. No wonder even the agent didn’t show up.

Oh, there’s another open house at another burnaby condo from 2-4pm. We saw the agent left at 3:30pm, apparently too bored. What a professional of good work ethics.

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