“Another hole in the “people will just stop selling” argument is that most discretionary sellers are planning to buy another property, so if they decide not to sell they are also deciding not to buy” ~~Patriotz
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That was an excellent comment Patriotz. It is worth repeating it again even though 5 others already referenced it. I think you have keyed in on one of the most important reasons for coming weakness in homes sales and ultimately prices. Sellers withdrawing from the market and limiting supply do not hold up the market. None of us believe that tripe. The reluctant vendors will only end up reducing gross numbers of sales further.

Re #119 kevin is brave haha… After all many people have guns in the US

“No we’re not, we are talking anybody who might find themselves in a severe negative equity position.”

The people that will find themselves in the most severe negative equity position will be first time buyers who bought over the past 5 years. That is well over 30% of home purchases. Not everybody who owns a home needs to walk away to make foreclosures sky rocket like in the US. In the US it wasn’t the home owners who owned houses pre bubble that walked away for the most part. Although, I do agree there will be many on the westside who will walk away once values plumet.

@Reality Check

It’s true that on the basis of mortgage debt alone, Canada is still behind the US when comparing outstanding debt to GDP. When we factor in other consumer debt, we find we are not just slightly below where the US peaked and well above where they are currently.

There’s a chart in this post:
http://theeconomicanalyst.com/content/comments-cibcs-no-us-style-crash-canadian-housing-report-part-2

One interesting phenomenon is that HELOC debt is FAR higher in Canada….3-4x higher than in the US when compared to GDP. This is “technically” housing-related debt. If mortgage debt and HELOC debt were aggregated, we’d find Canada is well above US currently, but still behind Australia.

That chart doesn’t give me a whole lot of comfort.

“LOL ‘retirement savings’. We are talking first time home buyers who couldn’t even save a down payment or put all their savings into a down payment. ”

No we’re not, we are talking anybody who might find themselves in a severe negative equity position. Do you really think that all the people who’ve spent $1m+ on West Side homes are first time buyers? Or that the only people who suffered in the US were FTBs?

The best part of that article:

But what if you wait too long? Everyone knows what happened in Vancouver real estate. One day, the money turned off like a tap. What if teams interested in Luongo make alternate plans, unwilling to meet those Canucks’ demands?

@109: Anonymous Yes and the have nots that own houses and have to sell set the price of housing. Anyone that has to sell would set the market price. In this market, the haves who own their homes will have more dramatic effects. Imagine your primary asset being worth over a million dollars but depreciating 5-10k per month. Those are tax free gains for many, making those losses hurt twice as much. If you have no retirement savings and your only hope is to sell the home and take the proceeds and rent a smaller place (kids gone etc.) then you have some serious motivation to sell and take less than the comparables in your area since the longer you wait, the more you stand to lose. Village whisperer has been calling this the boomer trigger but my family has… Read more »

“A walkaway probably won’t have started tapping their retirement savings, for example.”

LOL ‘retirement savings’. We are talking first time home buyers who couldn’t even save a down payment or put all their savings into a down payment. They have no savings to tap into. The group that walks away is living off credit. Remember our household debt levels are higher than the US was at peak.

“Crashes don’t just happen in a vacuum, you need a trigger”

I recall US stocks being quite overvalued in 1998. The Asian crisis hit in 1998 and the Fed eased. People jumped in and were saying exactly this in 1999 and 2000. Valuation was ignored, stupidity reigned, and the the whole thing boiled over. The S&P 500 returned to its 1998 level in 2009.

An email from Onni for the (presale) Westwood project in Coquitlam Centre: “Thanks for your interest in Westwood. Here is some more information regarding our project, please see all the details as below: Type Plan Size Starting Price Price after Prom. One Bed Plan A 595 S.F. – 600 S.F. $ 252,900 $ 242,900 One Bed Plus Den Plan G/J 695 S.F. $ 305,900 $ 295,900 Two Bed Plan B,D,D1&H 845 S.F. – 880 S.F. $ 349,900 $ 334,900 Two Bed Plus Den Plan C, E, F & I 975 S.F. – 1180 S.F. $ 402,900 $ 387,900 Westwood is offering very attractive incentives for holidays right now: $10,000 discount for one bed and one bed plus den; $15,000 discount for two bed and two bed plus den. Besides great location, unobstructed view, Club W amentities, and conveninent transit, for… Read more »

It actually does make a difference, because borrowers are likely to have exhausted much of their wealth before the bank finally forecloses. A walkaway probably won’t have started tapping their retirement savings, for example.