Were we spoiled by the early spring flurry? Probably.
Does the inventory have to decline at the same rate as the number of units sold to maintain market integrity? Probably not.
The market appears to be levelling. Prices are adjusting slightly downward but not in all areas depending on inventory. Once again proving that one of our principle rules of real estate analysis is “supply and demand” and that rule is absolute. Inventory is declining and prices may be stabilizing but perhaps not at the same rate. Buyers and sellers are having trouble reading the market signs.
With the stock markets and the economies of USA, Europe and others regions all are emitting mixed signals, it is hard to pick a cause or effect that has any long term significance. This brings to mind our second rule of analysis, that of “cause and effect”. Good things cause good things to happen and bad things cause bad things to happen. One day consumer confidence is good then the next day builders confidence is down then business leaders are optimistic then Ben Bernanke says he won’t intervene, and then he will. The stock market goes down and then recovers. The bank of Canada says interest rates will rise then when they do the banks ignore and keep offering low mortgage rates. Nobody knows what is to do and nobody can predict how the various markets will react and that I guess is why they call it a market.
Today, according to the Conference Board of Canada, consumer confidence in BC is down. Experts say this is the result of the implementation of HST. We would guess it is a combination of many factors and externalities. Although we must admit we have seen a lot of confusion as to the HST and Real Estate. No doubt our industry could of done a better job of educating the public. But so could have the government and the fifth estate (who spent a lot of time creating a kafuffle to sell papers rather than explaining the tax).
Throw in our last rule of real estate analysis, that ”history repeats itself” and it gets even more confusing. As we have noted previously, and our friend Bruno recently calculated, that after the last big real estate correction in Vancouver, it took 7 years (from 1996-2003) for prices of West Side detached houses to recover to the previous high .The following 6 years (from 2003 – 2009) saw a compounded average growth of 13% for Westside detached houses. Then in the last three quarters of 2008 and first quarter of 2009 we experienced a 20% plus downward correction but then were fully recovered by the fall of 2009. Anybody heard of the “dead cat bounce”?
Prices seem to have corrected downward over the past few months by 5%-10% although we may be seeing a levelling. It should be noted that it is not uncommon for prices to adjust up and down during a cycle, upward or downward cycles.
Blog post provided by Murphy Costello Personal Real Estate Corporation, a REALTOR® with Macdonald Realty in Vancouver.