Bob Truman, First Place Realty

Seems inventory is slowing.

Whether or not folks re-list will depend on their situation. Do they have to sell? Does owning the (second?) home put them in financial distress? Is the bank forcing them? OR are they just "testing the waters".

One thing is for sure - current inventory levels are insane. By looking at the discrepancy between median and mean I can only guess that the majority of sales are more expensive homes, that are more like move-up purchases. If that's the case, and the starter market has really left the market for now, then I would think we're in for a treat.

Even if 20% of the listings would just naturally disappear over the course of the next few months, only a price reduction or significant improvements in economic factors will bring the starter market back. I'm no real estate expert, but that rationale only seems to make sense.

Sometimes people use the argument that "their friend is only listing to test the waters" and "that if they can't get their asking price, they just won't move" thereby having the possibility of reducing inventory numbers.

That's all fine and dandy, but it can do a few things:

1) That person is no longer selling, thus no longer buying. Listings may go down, but sales go down proportionally, putting price pressure on the market.

2) There are a lot of folks out there who made a good coin on their home. A sale is emotional as much as a purchase is. I think for a lot of people who are looking to sell their primary residence and have the room to move down in price - they will end up doing so. Once you set your mind on that new neighborhood, bigger house, or whatever is making you move out of your primary residence, you want it to happen.

3) Really the only group who will pull their home will be investors, who have good tenants in their property, and can still afford to carry multiple mortgages. Keep in mind that the rules have changed, and when their mortgage comes up, they will still need to have 20% equity in the property to be able to keep it.

In looking at the stats over the past month or so I am absolutely mind boggled to see absorption rate climb, while average prices just shoot through the roof. Not sustainable I would think.

Will said : Keep in mind that the rules have changed, and when their mortgage comes up, they will still need to have 20% equity in the property to be able to keep it.

Can someone confirm that this is true?  I guess I had been assuming that the rules would only apply to a new investment property.  It seems rather draconian to suddenly change the rules on existing investment properties?

There is definitely a gap now between listings, sales and inventory. Inventory is finding a plateau despite listings doubling sales so there must be some houses pulled off the market by unmotivated sellers.

I think we'll find out how many of these "testing the waters" types there are when their listings expire. Listings shot up in April and March so maybe those ones will turn over soon.

What is the usual expiry time on a listing Bob?

Isn't this an absolutely normal real estate market ie flat prices low sales volume not much motivation to buy or sell unless you have to?

I have to admit i am surprised.  I really didn't think they would drop their price either but i also thought it would just sell as I thought somebody out there would buy it before they took it off the market.   I think this goes to show how tough it is to get into the rental market.  You really have to pay a premium for a place that has a suite (especially with tenants) already built.  It seems if the seller doesn't get his price he'll just continue to rent it out and try again another time.  with this added premium it makes it very expensive for new people taking this on and much harder to cash flow.

Wait, so my prediction of 'won't sell' isn't the winner ?

Purely anecdotal, but here's a blurb from what one Calgary realtor is seeing (from another site)...

"Inventory is very high. Alot of fellow realtors I talk to have listings that have gone stale.

Not any viewings in weeks.

I have had many listings appointments with families that bought in 2007 and 2008 and are desperate to sell. However, they have negative equity in their homes now that prices have dropped off since the boom.

Many don't have a clue as to what their home is worth and feel their property is 'different' and can sell for what they purchased it at in 2007.

It is quite frustrating and saddening at the same time.

I am glad I didnt get licensed till well after 2007, or else I would have some unhappy clients! "

My overall feeling of late is that real estate is no longer the hot topic around the water cooler. Lots of the new comers are settled in and no one is doing much of anything and are just paying their mortgages now!

Also I've notice that Calgary is no longer growing and seems to be taking a wait and see. I no longer think we are having the influx of people coming here , which should explain sales slowdown. I know think that its time for some sellers to be realistic in their pricing. Old rules apply Location, condition of home ! The fast built and poorly properties will not fetch the prices they expect

liverless: I have a hard time figuring it out too, but so far the consensus seems that when your mortgage is up for renewal, you will have to re-qualify under the new rules. After all, you are technically asking for a new loan.

I would think that if you stick with the same bank you should be fine, but shopping around might cause problems. Best to contact your mortgage broker to be sure.

Since it didn't sell maybe we should be buying Bob a dinner at Rouge!

Bless your kind heart! -Bob

Oh, so I have to buy my own dinner now ... life is not fair.

"I am glad I didnt get licensed till well after 2007, or else I would have some unhappy clients! "

House prices for May 2010 are comparable with May 2007/2008, give or take a few dollars. For some reason the guy doesn't realize that down the road he's going to have as many unhappy clients as those licensed prior to 2007.

I keep hearing about those desperate sellers, yet can't find one. With so many of them, prices should have gone down long ago. Desperate=you sell for what you can get -> prices dive ... and fast, because we have the lowest sales this millennium and there are so many desperate out there not just a few.

Or is it that, the "desperate" are desperate to sell only if they get what they want for their property? Otherwise they pull it off the market? Now I'm confused as the meaning of a "desperate seller"?

I'm also desperate to win the lottery, does that mean I'm broke?

@Zoro: I agree, I don't think we've seen 'desperate' here in Canada up to this point.  

http://www.irvinehousingblog.com/blog/comments/bubble-market-psychology-part-2/

^^ Enthusiasm -> Greed -> Denial -> Fear -> Capitulation -> Despair

I think we're just coming to the end of the denial stage.  We need fear and capitulation before we start throwing around the word desperate.

Hello Bob,this is the very first time I've won something from a draw!!! Thank you very much. How can I claim the prize?

Hi Dag, and congratulations. I'll be in touch with you within a couple days and let you know where to pick it up. -Bob

Hi Bob, just wanted to remind you about the prize since I haven't heard from you. Cheers!

Send me a personal email to bobtruman@shaw.ca. Make sure you include your real name and phone number so I can verify it.

LOL, nice try, dude. I don't think I'll be hearing from you, because I personally handed over the prize to the real winner many days ago. - Bob