Lets look at the facts:
1) Sales are down. Most Agents I speak to are NOT happy. less sales = smaller commission cheques.
2) Listings are down too. There was no expected big boost in the listings in August.
3) MOI is up, but prices are still holding up.
(Note the above is for Vancouver mostly. I still expect places like the OK where listings are very high and MOI is stratospheric to show weakening.)
So what do we make of this..what explanations are there.. and remember these are all supposition..no-one knows for sure:
1) Sales demand was truly drawn forward by HST and CMHC changes, and is this is the lull afterwards. Meanwhile there just aren't that many owners that need to sell.
2) Mortgage rates are heading down and so the buyers left in the market can afford higher prices and are caving in and paying up the sellers' asking prices, who are discounting very little.
3) We are at the start of the market shift and this is always a choppy time. My views lean to this let me give you my opinion on how we got here..
People are Pavlovian, they learn from previous experiences. The most recent drop in RE that we had led to an almost instant and violent bounce back thanks to the Government's efforts. So that sends the message that any drop in demand is temporary and will quickly return.
This keeps sellers fairly firm in the prices and keeps those-who-dont-really-need-to-sell out of the market. Hence we get firm prices and lower listings. But then why are folks still buying?
I spoke to a realtor who specializes in the North Shore. Sales are down, but there are still people buying. Mostly local move-ups and buyers coming from out east..Toronto mostly. They have been transferred or moved for other reasons..have themslves sold into a bubbly market and so have brought a good chunk of equity and want to buy before the kids start school.
If that is the case, we should see sales weakening even more once school starts, and then those that didn't sell and need to, may start leading the market down.
Frustrating for the bears, for sure. the correction to sane levels seem to have been delayed yet again. However we can console ourselves in the thought that this is a national event. All major Canadian cities are bubbly and have become the talk of the Wall Street Journal and numerous US economic blogs.
I guess we will have to wait another month to see if my theory is correct or not.