Quote:
Originally Posted by whatnext
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It's because selling prices lag inventory. If inventories build eventually sellers who are stuck with something they don't want anymore will have to lower prices to attract any buyers. When those sellers have brought enough negative momentum on the market, then people who were holding out on lowering prices will have to also lower their prices in a race to the bottom of the market, in order to be competitive.
We're already at the point where supply has exceeded demand, as evidenced by the build up in inventory. Now as soon as the sellers begin to get desperate, prices will start to tumble. It may take a few months though for people to lose confidence and get desperate.
If the shit really hits the fans here, like in the states; forclosures of people who didn't want to sell, but no longer can afford/qualify for their mortgage will add a feedback effect into the market adding to the oversupply of available housing.
I can't wait for this bubble to pop though. My neighbourhood has become utterly ridiculous. Someone is trying to flip a tarted up Van Special in the downtown eastside for $1.549M. Come on!
See said ugly house.
The house is wedged in on a 25' lot between 5 row houses and an ugly old apartment building, and has absolutely no mortgage helpers which most other $1M properties in the area have. I have no idea what RE are thinking trying to push things like this nowadays.