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Nobody’s Happy – We Just Want It To Be Gone

A report from Star Metro Vancouver in Canada. “After years of dramatic increases, Vancouver’s most expensive homes are plummeting in value — but experts say affordability is still out of reach. Single-detached family homes will plunge by five to 10 per cent this year in areas such as the North Shore, South Surrey, White Rock, South Delta and Richmond, according to BC Assessment Authority numbers.”

“On the west side of Vancouver, areas such as the University Endowment Lands and Point Grey expect to see drops of 12 per cent. For instance, the province’s most expensive home — a mansion in Point Grey owned by Lululemon founder Chip Wilson — has lost more than $5 million in value from last year.”

From the Canadian Press. “Home sales in metro Vancouver plummeted to their lowest level in nearly two decades last year and the average home price moved lower in the once red-hot real estate market. ‘As the total supply of homes for sale began to accumulate in the spring, we began to see downward pressure on prices across all home types throughout the latter half of the year,’ said REBGV president Phil Moore.”

From 980 CMJE. “‘We just want it to be gone.’ That’s how Kaitlin Stocks feels about her condo in Harbour Landing. It’s clean, in listing condition and it’s only a few years old; but she’s finding it incredibly difficult to sell. ‘Endlessly’ frustrating is how she described the process.”

“Stocks bought the condo for herself and lived there a few years, then she moved in with her partner, so she began to rent the condo out. But then the rental market started to relax and she had a bad experience with a tenant. The condo sat empty for a few months, then she decided in November 2017 to put it on the market.”

“The ensuing year was a bit of a bust. Stocks said there have been open houses where no one showed up; she’s had to reduce the price four times, now by about $20,000 less than the original price. And she said she’s only had one offer. ‘It was a lowball offer. Part of me wishes we would have taken it, but I guess you never know in the real estate world.'”

“Stocks’ story isn’t that unusual in Regina lately. A report out from the Association of Regina Realtors said the total number of residential sales for 2018 in the Regina area was the lowest since 2005. In December in Regina, the MLS Home Price Index listed the benchmark residential price as down 5.2 per cent from the same time in 2017. It was also 11 per cent below the composite price from December of 2013.”

“The number of properties on the market is something Stocks has noticed. ‘My condo is in Harbour Landing, so every time I drive down there, there seems to be a new development being built, and why would you want to buy used when you can buy new?’ Stocks said she’s going to give it another week or two, then she’s going to get more aggressive in trying to sell.”

From CBC News. “Calgary’s housing market continues to contend with more supply than demand and in 2018 saw the lowest sales numbers in over 20 years, according to a local real estate agent. Figures provided by Jim Sparrow with Royal LePage Solutions show the last time home sales dipped below the 16,144 units sold last year was in 1996 when the population was significantly lower and there were fewer dwellings.”

“According to the Calgary Real Estate Board (CREB), December sales in Calgary dropped 21 per cent from the same month in 2017 with only 794 units resold. More than 4,900 units were listed for sale, 30 per cent higher than typical levels for the month, CREB said.”

“Realtor Emma May said those holding out for a so-called spring market likely won’t see the results they’re hoping for. ‘I actually foresee that we’re going to get a lot more inventory coming onto the market here in the spring. But I’m not sure that we’ve got the buyers to pick that up. I don’t think we’re gonna see significant improvement in the long term, I think this is really just the new normal,’ she said.”

“She said realtors will need to make sure sellers are informed that they need to be aggressive in pricing, and have some difficult conversations with clients who may be losing money to make sure they have realistic expectations for what to expect.”

“‘It’s really an emotional task to walk people through. This is the reality,’ she said. ‘Nobody’s happy. And that takes a toll on people.'”

This Post Has 49 Comments
  1. From the last link:

    ‘CREB chief economist Ann-Marie Lurie said the job market and lending rates have both had an impact. “We just didn’t see the economic growth that was expected in the second half of 2018,” she said. “Demand hasn’t improved enough to absorb additional supply.”

    ‘She said there’s not going to be a “quick transformation,” and it’ll take time for conditions to get more stable.’

    Ann-Marie has sure changed her tune. For years, “Oh the sun will come out tomorrow!”

    Bubbles don’t have soft landings.

  2. “It was a lowball offer. Part of me wishes we would have taken it, but I guess you never know in the real estate world.”

    lol not a lowball offer… you priced your pony too high! Now you get to ride the market down!

    1. Q. What is the primary condition that makes for creating a financial genius?

      A. A rising market.

        1. Have you considered dumping all of your risk asset HODLings and hiding the proceeds under the proverbial financial mattress of money market funds?

          The Financial Times
          Capital markets
          Investors pile into money market funds amid market turmoil
          Nine straight weeks of inflows is longest such streak since depths of financial crisis
          Joe Rennison in New York 33 minutes ago

          Investors fled into money market funds in an attempt to shelter from the market turmoil that has sent prices on bonds, loans and equities plummeting in recent weeks.

          US money market funds — which are almost equivalent to holding cash because they invest only in super-safe short-term debt — took in $8.5bn for the week ending January 2, according to data from the Investment Company Institute.

          That takes the total to $175bn over nine straight weeks of inflows — the longest such streak since October 2008 at the peak of the financial crisis, when the US Treasury had introduced emergency measures to insure money market fund investors against losses.

  3. ‘Nobody’s happy. And that takes a toll on people.’

    Really? I thought buyers would be getting happier by the month!

    1. In a market driven by fundamentals buyers converge in force as prices drop but in a speculative market a price drop causes buyers to vanish.

      1. When Macy’s has a sale, when prices are lowered, then shoppers show up in mass and fight each other over merchandise. That’s because the perception of price and value are seperate from each other.

        But the opposite happens in the real estate market. In the real estate market bidding wars often break out and work buyers into buying frenzies because in the real estate market price and value become one and the same, meaning as the price rises value also rises.

        This is considered wonderful if the house you live in is a comp because the price rise caused by the buying frenzy for your neighbor magically translates to a rise in equity wealth for yourself.

        1. If the house that is sold has, say, a hundred comps then each dollar of price rise for the house that is sold creates (as in presto) a total of a hundred dollars for the comps.

          I find this amazing, amazing not that it happens but amazing that most people do not quite see it this way. What most people see is their own personal financial genius at work.

          1. The creation or destruction of home equity for the comps is directly related to the buying decisions of strangers who have, or do not have, access to money. It is really that simple.

          2. Here’s that chart again.

            https://goo.gl/images/Z2ouxu

            If real estate prices roll over and fall far enough then the orange equity line will end up under the pretty blue mortgage debt line and our current real estate financial geniuses will be be immediately transformed into underwater victims.

            Stay guned.

          3. Stay guned = Stay tuned.

            (On second thought, perhaps “Stay guned” is the appropriate advice. Whatever.)

    2. Au contraire, Emma. When I see speculators and the FBs who make housing so unaffordable getting burned, I feel deep joy.

  4. Wow, the Australian and Canadian press outlets are certainly reporting straight talk. Something our press outlets are not doing, at least not yet.

    However, if you do a Google search for “housing market” then select “news” it is amazing how many of the articles and negative or cautionary in comparison to optimistic. I would say now about 5 or 6 to 1. Interesting to see the shift over the past month or 2. Try this for yourself, you may find surprising.

    However, there is still a lot of word art and stats massaging going on but you can read between the lines. Will be very interesting to see how this shifts over the next 30 to 60 days. What we have been predicting on the blog is beginning.

    Regards.

    1. how this shifts over the next 30 to 60 days

      You might be missing the speculative bubble that has been 40 years in the making. 60 days isn’t going to put much of a mark on it.

        1. I looked at that and tried many others. They’re still way behind compared to 10+ years ago. Most people are still asleep at the wheel.

          1. It won’t tick up meaningfully until once the NBER has said “we are in a recession.” But the uptick at the end of 2018 is a significant departure from the baseline. It started about the time some treasury denominations started to invert.

  5. “…Single-detached family homes will plunge by five to 10 per cent this year in areas such as the North Shore, South Surrey, White Rock, South Delta and Richmond, according to BC Assessment Authority numbers…”

    Haha, wishful thinking. It’s going to be much, much worse. And, 5% is not a “plunge.”

    1. Those areas are already way down. Some are off 20%-25% or more. Remember when some independent UHS came out a few months ago with their own numbers and said the associations were putting out rubbish?

      1. I remember years back when you posted a press release about the NAR where they falsely inflated sales numbers.

        1. Yep, don’t know why they do that. Will not prevent or change trends. Wait, actually I do, this is what their membership wants.

          Ding!

        2. And what’s different now? Think the reports we see are 100% accurate or perhaps just a little less manipulated…

  6. “We just want it to be gone.” That’s how Kaitlin Stocks feels”

    Kaitlin, meet Kaitlyn:

    “You gotta roll with it” — Kaitlyn, Millennial, Portland, OR, 2016

      1. “The reason the Vestals started to consider buying a home is “sort of hilarious,” Caitlin Vestal said”

        And you “sort of” lost tens of thousands of dollars borrowing money you didn’t have to “buy” an underwater shack you couldn’t afford.

        That’s not sort of hilarious, it IS hilarious.

  7. ‘the last time home sales dipped below the 16,144 units sold last year was in 1996 when the population was significantly lower and there were fewer dwellings’

    I did an interview with a Calgary magazine in 2008 or so, when I was asked if commodities would save Alberta from the bubble. I replied that based on what we experienced in Texas in the 1980’s, it would make the bust worse. Because in Texas, we had a real estate bubble first and foremost with the oil boom compounding the problems.

    So Alberta got their commodity boom courtesy of China. And here they are all these years later the worse for it.

  8. “‘We just want it to be gone.’ That’s how Kaitlin Stocks feels about her condo in Harbour Landing.

    I love watching greedheads finally have their moment of truth: our listing isn’t special, and we have to price it aggressively if we want it gone.

  9. What was Uncle Warren’s comment again about the naked swimmers?

    Jan 3, 2019,4:16 pm
    Warren Buffett, Down $4.3B In A Day, Was Right To Downplay Berkshire’s Apple Gains
    Antoine Gara, Forbes Staff
    Hedge Funds & Private Equity

    It’s easier to lose billions on paper when you don’t brag about making billions beforehand. That’s the moral of the story when it comes to Warren Buffett’s $36 billion-plus investment in Apple, which soared to nearly $60 billion in value this October before then plunging 38% in 90 days, wiping out all of Berkshire Hathaway’s investment gains.

  10. Two waterfront houses down here just reduced from799k to 749k after sitting idle for months. However a roughly competing property has been sitting idle for months at 685k.

    This is how the price reduction game begins. Finally someone really needs to sell and then you see actual marketable price and know how far things have truly reduced. Asking prices and minor reductions in them are not reliable indicators. This same area currently has 19 months supply and is a premium island location. No mention in local press. Only quotes from the latest NAR news about existing home sales rising for 2 consecutive months

    1. “Asking prices and minor reductions in them are not reliable indicators.”

      I beg to differ. In mathematical terms, these are upper bounds on the market value of a property, although not like likely the least upper bound (supremum) if the place won’t sell at that price.

  11. Wall Street’s Big Landlords Are So Hungry for Houses They’re Building Them
    Wall Street Journal
    Ryan Dezember

    “Millennials aren’t the only ones having a hard time finding houses to buy. So is Wall Street.”

    “A shortage of houses in the entry-level price range where first-time buyers and big rental-home companies both shop is prompting some institutional landlords to start building new ones themselves.”

    “Bruce McNeilage, whose Nashville, Tenn.-based Kinloch Partners LLC flips packages of occupied rental homes in the Southeast to larger investors, has augmented his own construction projects with homes he acquires from builders on the cheap. By paying cash, he said, he is able to close deals in a day or so, as opposed to the months it might take someone who has to secure a mortgage. That approach has enabled him to squeeze discounts of up to 15% from builders in recent weeks, he added.”

    He said he pays full price so public records don’t show a decline in neighborhood sales prices and reaps the discount after closing through rebates from the builder. He also agrees not to use yards signs to advertise rentals, to avoid raising hackles among the neighbors.”

    1. What a turd this guy is and just contributing to dragging bubble 2.0 out even longer.

      “He said he pays full price so public records don’t show a decline in neighborhood sales prices and reaps the discount after closing through rebates from the builder.”

      These “rebates” he gets are discounts on his future build or just a check to deposit in his bank account? I don’t like this guy at all

      1. This is why everyone should revolt when RE agents ask you to keep your price high but pay closing – so they can keep the fakery up and collect commission on it? No way. Lower the price as it helps the buyer and seller out as they pay lower commission and lower taxes. Most young buyers do not think this through.

    1. this is an incredible fact. CA has 1/3 of the US gain of housing value.

      I dont like it – but i see Silicon Valley. …. But LA???

  12. how about some advise from a realtor…

    http://www.forbes.com/sites/forbesrealestatecouncil/2019/01/04/should-you-wait-to-invest-in-real-estate-until-the-housing-market-crashes/amp/

    “I’ve been seeing a lot of posts on Facebook about another housing crash coming. Many people assume there will be a crash just as bad or worse than the last crash we had about 10 years ago“

    “When I bought houses at their low I was assuming they would jump back up in price“

    “I never thought prices would have risen as high as they have, but I also would have thought the builders would have built many more homes than they have.”

    “I am certainly not sitting on the sidelines hoping for a crash that may or may not happen, and neither should you.”

    1. Does Miami have a ‘zombie’ property market?
      Financial Times-4 hours ago
      Latin American investment buying has been concentrated in the condo market. As space in South Beach — the smart southerly strip where many of Miami’s …

  13. About time these folks got the reality check. As a local in Vancouver I guarantee incomes can’t hold a candle to the valuations. These people tied themselves to the hype train and now the relentless ride to reality is going to smash that new era, world class sentiment out of their gullable souls.

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