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Are Stubborn Sellers Killing the Real Estate Crash?

Are Stubborn Sellers Killing the Real Estate Crash?

News Release Provided By The Financial Post

ashley nielsen vancouver real estate blog - sellers are killing the crash

"Like many others, Toronto public relations manager Megan Vickell is sitting on the real estate sidelines dreaming of bargains to come.

What direction are home prices headed? Depends on who you ask… After a dropoff in sales, the debate over the future of Canada’s housing market has come down to an argument over how much prices will pull back.

The 28-year-old has never owned a property and is hoping to scoop up a discounted Toronto condo when prices fall off today’s frothy record highs. “I’m waiting for that bubble to pop that everybody is talking about so I’m not sitting there owning a condo in the city that later everybody else has for a much cheaper price,” said Ms. Vickell. “I mean look at everything that’s being built, who is going to live in all those? There’s lots of beautiful spots out there.The picture is not much different nationally. The average sale price across the country was $364,260 over the first 11 months of 2012, according to the Canadian Real Estate Association. Compare that to beginning of this boom when the average sale price across the country was $158,303 in 1999.

But what if the crash never comes?

The one thing missing from the market, for all those people looking for a crash, is a catalyst or an event that will force people to reduce their asking prices. Before this housing market burns up in flames, it needs some type of spark.

I’m waiting for that bubble to pop that everybody is talking about

And, if you talk to some people, that key event — two that come to mind are a spike in interest rates or job losses — is not happening any time soon. “Crashes don’t just happen in a vacuum, you need a trigger,” says Benjamin Tal, deputy chief economist with CIBC World Markets. “I can’t point to any crisis in the history of crashes that didn’t have a trigger.” In the United States, the trigger proved to be a sub-prime market and the expiry of teaser rates that jumped as much four percentage points on some mortgages. Overnight, people couldn’t afford their homes. “If you have a gradual increase in the rates this doesn’t happen,” says the economist, who predicts a decline in prices but only in the 5% to 10% range. The real estate industry is on the same page, continually calling for a soft landing.

What has people like Ms. Vickell excited and looking for a major decline in prices is the massive drop off in sales activity in some major markets.  So you’re sitting on the sidelines, not buying at what many consider ridiculously high prices — the product of a 14-year boom that has only seen one mild pullback during the recession in 2008. But what if sellers simply refuse to lower their price, something that has happened so far in the markets where sales are drying up very fast. What’s next? “I think stagnation is a good word for what will happen, it’s what we saw in the market from 1992 to 1997,” says Mr. Tal.

The CREA stats show the market nationally — albeit real estate can be a very regional story — did not move all that much in the 1990s before it took off in 1999. There were some corrections in the 5% range on a yearly basis but average prices from a bottoming out of $142,091 in 1990 had climbed to $154,768 by 1997 — an 8% increase that is paltry by today’s standards for such a long period.

“We are going to see a correction and the question is ‘what will emerge from that,’” said Mr. Tal. “The scenario is the market will not be strong, it will be stagnant.” In this scenario, instead of people of people selling in a panic, they pull their homes off the market, waiting for a better day, refusing to sell at distressed prices. New listings and active listings will start to shrink.

“In the U.S., you had to sell your house because you were delinquent. If you tell me tomorrow the unemployment rate [in Canada] will jump to 12%, we will have a crisis,” said Mr. Tal.

People are not forced to sell, they are staying with their price

Don Lawby, chief executive of the Century 21 Canada, and a charter member of the club that doesn’t see home prices dropping anytime soon, can’t see any desperation from sellers. “The economy continues to be okay, people have jobs, interest rates are low,” said Mr. Lawby. “Historically, anytime when prices dropped it was tied to high unemployment and interest rates. It’s not the case today, people are not forced to sell, they are staying with their price.” Still, Ms. Vickell’s patience may pay off. Even Mr. Lawby concedes that the condo sector may be hit. Developers who already have buildings under construction may be forced to scale down projects or lower prices on unsold units. “They are going to be throwing in packages to sell,” says Mr. Lawby. “But the average homeowner, without an economic event, they have no need to sell.”

Gregory Klump, chief economist with CREA, says history supports the notion that some sort of major event is needed to create a housing market collapse. “In the late 1980s, it was a case of a spike in interest rates, in late 2008 and early 2009 it was a massive layoff,” said Mr. Klump. “You need a massive and extended economic shock and none of that is in the forecast.” In the interim, people waiting for a decline a major decline in price will have to keep waiting, says Mr. Klump. Only time will tell if it ever materializes."






28岁的从未拥有物业,并希望舀起折现多伦多公寓在价格下跌时引爆了今天的泡沫屡创新高。 “我等待着那个泡沫弹出,每个人都在谈论所以我不会坐在那里,在城市拥有一套公寓,后来其他人有一个更便宜的价格说:”:女士Vickell。“他说:“我的意思是看的一切,正在修建中,在所有这些谁去住呢?有很多美丽的地方了那里。图片没有太大的不同,国内。在2012年首11个月的平均销售价格在全国各地364260美元,根据加拿大房地产协会。与此相比,这股热潮时的平均销售价格全国各地的158303美元,在1999年开始的。




而且,如果你跟一些人来说,这关键事件 - 浮现在脑海中的是一个尖峰利率或工作损失 - 不发生任何时间很快。 CIBC World Markets的副首席经济学家本杰明·塔尔,“崩溃不只是发生在真空中,你需要一个触发器,说:”。 “我不能指向任何危机的崩溃并没有触发。”在美国的历史,触发被证明是一个次贷市场和引逗利率跃升为四个百分点届满一些抵押贷款上的点。一夜之间,人们买不起自己的家园。 “如果你有,说:”这不会发生率逐渐增加,经济学家,预测市场价格下跌,但仅在5%至10%的范围内。房地产行业是在同一页上,不断呼吁“软着陆”。

女士Vickell等人兴奋和价格下降的主要是大量的下降,在一些主要市场的销售活动。所以,你坐在场边,不买什么,许多人认为价格高的离谱 - 一个14年的繁荣期,在2008年经济衰退期间,只看到一个温和回调的产物。但是,如果卖家拒绝降低他们的价格,已经发生的东西,至今在市场上销售干燥速度相当快。接下来是什么? “停滞是个好词,会发生什么事,我认为这是我们在市场上看到,1992年至1997年,”Tal先生说。

CREA统计显示全国的市场 - 尽管房地产可以是一个区域的故事 - 不动了所有的东西,在20世纪90年代之前,它在1999年。在5%的范围内有一些修正上一年度的基础,但平均价格从一个触底反弹的1990年的142091美元在已攀升至1997年的154768美元 - 增加了8%,按今天的标准,这么长的时间内是微不足道的。

“我们会看到一个修正的问题是'什么会出现,”Tal先生说。 “的情况下,市场不会是强大的,它会停滞。”在这种情况下,而不是在恐慌的人卖的人,他们把自己的家园离开市场,等待一个更美好的世界,拒绝出售心疼价格。新上市的和积极的上市将开始萎缩。

“在美国,你不得不卖掉你的房子,因为你是拖欠。 ,Tal先生说:“如果你告诉我明天的失业率[加拿大]将跳转到12%,我们将有一个危机。


唐Lawby,21世纪加拿大首席执行长,和该俱乐部的创始成员,并没有看到住房价格下降很快,从卖方看不到任何绝望。 “经济继续好起来的,人们有工作,利率是低的,先生说:”Lawby。 “从历史上看,任何时候当价格下跌是高失业率和利率挂钩。这不是今天的情况下,人们不会被强迫出售,他们住在他们的价格。“不过,女士Vickell的耐心可以还清。连先生Lawby承认,可能会碰到的公寓部门。已经有在建​​楼宇的开发人员可能会被迫缩减项目或更低的价格,未售出单位。 “他们将被扔在包出售说,”:先生Lawby。“ “但是,一般的房主,没有一个经济事件,他们没有必要去卖。”

CREA首席经济学家格雷戈里Klump说,历史支持的概念,即某种大事,需要建立一个住房市场崩溃。 Klump说:“先生,”在20世纪80年代末,它是利率飙升的情况下,在2008年底和2009年初,这是一个大规模的裁员。 Klump先生说,“你需要一个巨大的和长期的经济冲击和没有的预测是,”在此期间,等待价格的下降大幅下滑的人将不得不继续等待。只有时间会告诉我们,如果它得以落实。

News Release Provided By The Financial Post -Ashley Nielsen - Prudential Realty - Vancouver Real Estate -