Why house prices aren’t getting cheaper even though sales are way down

Why house prices aren’t getting cheaper even though sales are way down

Since sales activity in Toronto’s housing market began sliding last summer, many real estate pundits have pooh-poohed the possibility of an accompanying collapse in prices. So far, they’ve been right, and here’s one of the reasons why: sellers are simply refusing to lower the price tags on their homes, opting instead to de-list and wait for a more auspicious moment to sell. Analysts like CIBC’s Benjamin Tal argue that absent a trigger forcing people to sell immediately—like an overnight spike in interest rates or widespread layoffs— the market will simply stagnate. The notable exception is condo developers with half-finished projects, since they need to sell reasonably quickly to avoid being saddled with multiple unsold units—potentially good news for first-time buyers hoping to make the leap into the condo market. Read the entire story [Financial Post] »