The Globe and Mail reports Vancouver home sales drop sharply.
The Real Estate Board of Greater Vancouver reported yesterday that home sales fell 30.2 per cent in June from the inflated levels of a year earlier, and 5.8 per cent from May. New property listings rose 1.2 per cent from May and 32 per cent from a year earlier.
The Calgary Real Estate Board, meanwhile, reported sales of single family homes fell 16 per cent in June from May and 42 per cent from June of 2009, while condo sales fell 14 per cent from a month earlier and 40 per cent from a year earlier. Notable is that sales of high-end properties worth $1-million or more are rising, the group said.
“We are seeing continued moderation in Calgary’s home sales in the face of higher mortgage rates, increased inventory levels and a decreasing number of first-time home buyers entering the market,” said board president Diane Scott.
This pattern is quite similar to how things cascaded in the US once the top was in.
Housing Collapse Cascade Pattern
- Volume drops precipitously
- Prices soften a bit
- Inventory levels rise slowly
- High-end home prices remain relatively steady for a brief while longer
- The real estate industry tries to convince everyone it’s “business as usual” and homes are affordable because rates are low
- Bubble denial kicks in with media articles everywhere touting the “fundamentals”
- Stubborn sellers hold out for last year’s prices as volume continues to shrink
- Inventory levels reach new highs
- Builders start offering huge incentives to clear inventory
- Some sellers finally realise (too late) what is happening
- Price declines hit the high-end
- Increasingly desperate sellers get creative with incentives, offering new cars, below market interest rates, trips, etc
- Gimmicks do not work
- Price declines escalate sharply at all price levels
- The Central Bank issues statements that housing is fundamentally sound
- Prices collapse, inventory skyrockets, and builders holding inventory go bankrupt
Some of those may happen simultaneously or in a different order, but the whole mess starts with a huge plunge in volume.
I am now confident the peak in Canadian housing insanity is finally in.