Volume then Price: Housing Collapse Cascade Pattern Hits Vancouver/Calgary

Mike “Mish” Shedlock’s blog was #6 of the 10 Best Blogs in a The Daily Reckoning article.

Vancouver Home Sales Drop 30 Percent , Calgary 42 Percent – First Comes Volume, Then Comes Price; Canada Housing Peak is Finally In

This pattern is quite similar to how things cascaded in the US once the top was in.

Housing Collapse Cascade Pattern

Volume drops precipitously
Prices soften a bit
Inventory levels rise slowly
High-end home prices remain relatively steady for a brief while longer
The real estate industry tries to convince everyone it’s “business as usual” and homes are affordable because rates are low
Bubble denial kicks in with media articles everywhere touting the “fundamentals”
Stubborn sellers hold out for last year’s prices as volume continues to shrink
Inventory levels reach new highs
Builders start offering huge incentives to clear inventory
Some sellers finally realize (too late) what is happening
Price declines hit the high-end
Increasingly desperate sellers get creative with incentives, offering new cars, below market interest rates, trips, etc
Gimmicks do not work
Price declines escalate sharply at all price levels
The Central Bank issues statements that housing is fundamentally sound
Prices collapse, inventory skyrockets, and builders holding inventory go bankrupt

Some of those may happen simultaneously or in a different order, but the whole mess starts with a huge plunge in volume.

I am now confident the peak in Canadian housing insanity is finally in.