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Shattered Families Have Been Selling For Less Than They Paid

A report from the Vancouver Sun in Canada. “Expect to see developers offering incentives — like a Langley company’s promise to pay your first year’s mortgage — as the Lower Mainland’s housing market softens. Realtor and analyst Steve Saretsky said cities farther from Vancouver seem to be ‘cooling a little quicker’ due to the one-two punch of a sales drop and inventory spike. Langley was the region’s strongest condo market just one year ago, with year-over-year price growth peaking at 51 per cent in December 2017. But in the months since, inventory has jumped 387 per cent and sales have declined.”

“Saretsky said the trend is concerning, although he cautioned the glut is exaggerated because 2017 saw inventory hit record lows. ‘Some of last year’s demand was built on speculation,’ he explained.”

“The trend seems to be hitting Abbotsford and communities farther east as well. In October, home sales plummeted 50 per cent year-over-year in the Fraser Valley, while prices also dropped.”

From Castanet in Canada. “The Penticton real estate market is in the midst of a ‘correction’ following two record-breaking years, according to new statistics from the South Okanagan Real Estate Board. Penticton real estate has also been hamstrung by the cooling of the white-hot Vancouver market.”

“‘I’ve had people that have bought here and expected a really quick sale in Vancouver, and that hasn’t happened,’ said SOREB president Dori Lionello. ‘Vancouver homeowners are used to listing their homes and then setting a date to look at offers. Now they are listing their homes and a month has gone by and they are taking another look at their price.'”

“‘A little less of the speculation and trying to get over-market value. That’s really slowed down, people are being more realistic,’ she said. ‘The realtors are not necessarily trying for that extra four per cent. We are still busy, the numbers are just coming down to reality.'”

The Daily Telegraph in Australia. “Shattered families have been selling their homes for up to $134,000 less than they paid for them in the Sydney regions worst affected by the ongoing housing downturn. The losses were mostly from those selling upper market houses purchased within the last one-two years and in areas heavily supplied with new housing.”

“These homeowners struggled to find buyers who could afford to pay the excessive prices they once paid as banks put a stranglehold on lending. They also faced stiff competition from other sellers in their area due to the high supply of housing, forcing them to offer big discounts to get buyers interested.”

“Real estate analyst Andrew Wilson of My Housing Market said the homeowners most vulnerable to the falls were recent buyers who were forced to sell by divorce, recent unemployment or other financial hardships. ‘They will have to accept whatever price they can get,’ he said.”

“Homeowners in the construction hot spot of Canterbury were most likely to make losses on their sales, additional data showed. Nearly 9 per cent of sellers in the Canterbury council area resold their homes for less than they paid during the three months of winter, with the median loss $134,000.”

“Most of the unlucky sellers had purchased their homes about two and a half years ago. Recent sales included a unit at 314 Canterbury Rd which sold in August for $650,000 — $73,000 below the $723,000 paid in February 2017. In the nearby Auburn area, 8.6 per cent of sellers resold their homes at prices below what they paid, while in the Bankstown, Ashfield, Ryde and Hurstville council areas it was 6-7 per cent of sellers. The median losses ranged from about $30,000 to $55,000.”

“Transactions included the August sale of a three-bedroom house on Heber St in Hurstville for $74,000 below the price paid in December 2014. A nearby home on Beronga Ave sold in September for $10,000 less than its 2015 price. A three-bedroom house on North St in Ryde recently sold for $1.22 million, well below the $1.51 million paid in 2016.”

From Domain News in Australia. “There were tense scenes at auctions across Sydney on Saturday as buyers feared overpaying for properties while vendors were unwilling to budge on reserve prices.”

“Some agents found themselves in stand-offs, they said, with bidders and sellers determined to secure the best deal for themselves. One buyer likened the process of negotiating prices in a cooling market to ‘catching a falling knife.'”

“In Sydney’s south a termite-ridden property, a deceased estate, struggled to sell under the hammer. Eventually the sole registered bidder of the auction also had to bid against themselves to walk away with the keys. The three-bedroom house on 64 Harris Street in Sans Souci had a price guide and reserve of $1.8 million throughout the campaign.”

“But selling agent Lisa Sherry of McGrath Sans Souci said many interested buyers were ‘waiting for it to pass in so they could negotiate.’ A opening vendor bid of $1.6 million started the auction followed by $1,615,000 offered by the sole registered party. It eventually sold for $1,665,000 — $135,000 below reserve.”

“‘[The result is] disappointing and obviously I feel for the owners, the beneficiaries. What it was worth last year is not what it is worth today,’ said Ms Sherry. ‘It’s a sign of the times, this price may look good in six months’ time if the market keeps declining.'”

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This Post Has 26 Comments

  3. Speaking of shattered families, where is future housing demand going to come from if nobody is having any babies?

    1. Health
      ‘Remarkable’ decline in fertility rates
      By James Gallagher Health and science correspondent, BBC News
      9 November 2018

      There has been a remarkable global decline in the number of children women are having, say researchers.

      Their report found fertility rate falls meant nearly half of countries were now facing a “baby bust” – meaning there are insufficient children to maintain their population size.

      The researchers said the findings were a “huge surprise”.

      And there would be profound consequences for societies with “more grandparents than grandchildren”.

      How big has the fall been?
      …

          1. Good read and data backing it up. Sounds like the gobernment has been following a formula to allow low payments (payments the same as the baseline) for 30% higher pricing. With interest rates going up so does the decline in “free money”. I look forward to 7% + interest rates again and the collapse of that artificial “free money”

    2. Chinese investors, when they die off they can just generate an autonomous computer program to keep buying up RE and put it under a shell company.

    3. Professor,

      Here in the Bay Area elementary schools are closing because of a lack of kids.

      Million dollar deal shacks means no families can afford the Bay Area.

      2. We lived in Richmond whilst up there but sent our kids to grade school in El Cerrito to avoid social problems in Richmond public schools (primarily discipline and crime). Even though it was the least desirable area of the East Bay, living in Richmond was barely affordable, thanks in part to the Housing Bubble.

          1. In Boulder, CO in the late 90s it was already getting expensive in town, tech was booming, but you didn’t have to drive very far to buy a nice suburban house, new or used. I was part of an LDS congregation there and it was weird to watch everybody just move. The ward went from a fairly normal mix to nothing but retirees and college students in a short time. We were among those leaving. Came back 8 years later and it was totally different, wards had been forced to combine, etc..

  5. Wonder how high the number is when closing costs and carrying costs are factored in….

    ********

    “8.6 per cent of sellers resold their homes at prices below what they paid, “

  6. It still boggles my mind how many people have to sell after just 2 or 3 years…….and then complain about how much they lost.

  11. “…for $74,000 below the price paid in December 2014.”

    Good thing they weren’t throwing away their money on rent. /sarc

  13. “‘[The result is] disappointing and obviously I feel for the owners, the beneficiaries”

    She feels for people who are getting a free inheritance for no effort. She doesn’t feel a jot for buyers who have been overpaying for years, many of whom are now underwater.

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