So we’ve gotten to the point where it’s pretty unanimously agreed that real estate in Toronto and Vancouver is over-valued and due for a correction.
The question now is what sort of an end to this housing boom we will be looking at.
Will this be an explosive toppling of values, a market that runs head first into a wall, or will it be a simple slow leak for years and years?
..And which would be better?
You can add David Rosenberg to the list of people that say ‘whimper, not bang‘.
His latest comments fall into the ‘not a bubble, a balloon’ camp:
“Prices are starting to deflate by 0.8% YoY, though more like air coming out a balloon slowly than a giant pop,” wrote Rosenberg Tuesday in his morning note.
“It is gradually becoming a buyer’s market with the inventory of unsold homes rising to six month’s supply, which is at the edge of a balanced market.”
Of course most of that drop nationally is being driven by Vancouver where everything is falling fastest. What remains to be seen is whether the current drop will remain even or accelerate.
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.
Over at the CBC there’s an article about the ‘uncertain fate’ of Vancouver real estate.
Vancouver’s real estate market has taken another interesting turn, with listings up and sales down during what is usually a busy time of year.
In May, average prices for houses have dropped about $150,000 compared to one year ago. That 12-per-cent drop wiped out two years of price increases.
The reason appears to be that too many more sellers are trying to cash in at the same time. Listings are up by 23 per cent, but fewer are buying: sales are down 24 per cent.
“Probably, on average, about a 150 or 160 homes in Vancouver are reducing their price every day in the hope of catching, getting ahead of the train and maybe get out before they can’t,” said realtor Larry Yatkowsy.
Larry is an interesting fellow, he seems to change opinions frequently, but isn’t it in most realtors interest to get sellers to lower listing prices to make a sale?