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] »