I Just Want To Get Out, I’ve Been Holding Too Long
A report from the Vancouver Sun in Canada. “A number of Vancouver realtors believe a significant decline is happening in Metro Vancouver house prices, through official statistics are so far providing more muted signals. Realtor Ian Watt uses the independent figures from SnapStarts Publishing Company, which reports median prices. For July, it shows that prices for detached homes on Vancouver’s west side have fallen 26 per cent in a year, dropping by just under $1 million, from $3.8 million to $2.8 million. In West Vancouver, detached home prices have fallen over 30 per cent or $1.1 million, from $3.6 million in December 2017 to $2.5 million in July.”
“By comparison, the real estate board’s index shows a year-over-year decrease in July of 8.4 per cent for the west side and 8.3 per cent for West Vancouver.”
“Realtor Stuart Bonner watches detached homes on Vancouver’s west side and says the drop in sales and prices that he is seeing feel like a ‘canary in the coal mine’ — a warning of what is to come in other parts of the Metro market because the west side is where the ‘chain reaction’ starts. The downward trend would come off some intense price gains in the last few years. Watt says, in January 2015, the median sale price for downtown condos was for $493,000, according to SnapStarts. In January 2018, it was $950,000 for an increase of 93 per cent.”
“‘My thoughts are if they went up that fast, they can certainly go down that fast. That was a one-time Chinese money infusion and a spectacular frenzy, which are both over. Vancouver will never be affordable, but it will drop 25 per cent or more,’ says Watt.”
“Prices tend to be cut as properties sit unsold on the market. So another way to look at things is to count how many months it would take for the current inventory of homes on the market to sell, given the current pace of home sales, a measure called months of supply. Bonner says as this statistic increased in July, the average detached home price dropped 11.6 per cent to $3.323 million from $3.757 million last year. The median detached home price dropped more slightly from $3.009 million to $2.984 million. There has been a drop of 25 per cent in average home price and 22 per cent drop in median home price since the highs of 2017, according to Bonner.”
“‘Detached, attached and apartments on the west side are now all experiencing price reductions and while this is creating good buying opportunities, buyers are holding off in anticipation of further declines,’ Bonner wrote to clients in a note. ‘This will exacerbate the decline and soften prices further.’”
“Realtor Steve Saretsky says when prices were rising, it was the ‘irrational buyer who would set a new level by bidding $200,000 over the asking price.’ Now, the prices are being set by owners who are willing to take a lower amount because they have to sell for personal reasons, such as a divorce or an illness that forces downsizing. ‘We are in a period of price discovery,’ says Saretsky, with some sellers adjusting their expectations and some finding it harder to do so.”
“One would-be seller of a one-bedroom condo in Yaletown, for example, who thought in the fall of 2017, his place might go for $750,000. He got an offer for $735,000, but didn’t take it then, says Saretsky. ‘He asked me what it would be worth now, based on recent sales and I said, ‘asking anything higher than $700,000 would be on the high side. Maybe $685,000. And he said, ‘oh no, he couldn’t sell it for that since he had that previous offer for $735,000. So it’s tough to adjust if people have been anchoring those prices.’”
The Australian Financial Review. “All eyes have been on Sydney where the softness has been most apparent as investors are forced from the market by curbs on lending. Sydney prices have dropped 5.4 per cent for the year. SQM Research’s Louis Christopher said auction volumes are beginning to pick from the winter lows and clearance rates so far haven’t deteriorated further, in Sydney and at a national level.”
“‘The pick-up for the spring selling season is now upon us. The market is going to be very much tested,’ he said. ‘We’ll know from this whether we’re going to experience a deep crash or whether it’s going to be an orderly downturn that will last a period of time but won’t be anything at panic levels.’”
“Anecdotally, sellers are showing more signs of capitulating and a willingness to meet where the market is now at, according to Mr Christopher. ‘I’ve been hearing this more and more from sellers: ‘I just want to get out. I’ve been holding too long, I want out.’”