Wednesday, October 04, 2006

Ottawa Housing Sales Drop And Listings Increase

But what about prices, OHMB? Well, in the US bubble markets that many of us have been watching closely, the same pattern played out. First, sales dropped. Then, inventory rose. Finally, after 6-12 months of ever-increasing listings, prices started to drop.

We've got two out of three right now in Ottawa. Will we get to the price drop stage? Time will tell. But if it does happen, it's not going to happen tomorrow. These things move ssslllooowwwllllyyyy.

This whole "sales dropping while prices still rising" thing happens because an increasing segment of potential buyers sits out - either because they are priced out, are scared of buying at the top, or whatever. The rest of the market continues on as it was, playing the ever-increasing prices game. This dynamic continues until there are fewer and fewer buyers who are willing to play anymore. Then the game of chicken is entered as sellers and buyers stare each other down to see who will chicken out first, and things either stagnate or collapse.


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