Stage one, denial

news.jpg US sales crash 11% in month. More here.

 

cartoonforeclosures.gif

This email came flying in this week. Its message is powerful in its simplicity and directness. Thought you might find it instructional, as Canadians awake to a disturbing and unstoppable economic, social and personal reality. — Garth

I had come across the five stages of grief (Kubler-Ross model) watching the Simpsons of all things one evening a few years back during my time I was researching why bubbles happened and the psychology behind them. I started thinking that the five stages could be easily applied to the current real estate situation in North America.

After I did a little more research into the stages I had learned they were written by Kubler-Ross with all personal in mind tragedy, but she later focused these principals to people diagnosed with terminal illnesses and disease for her book “On Death and Dying”.

I figure Canada is in the Denial phase at this point as the cracks are only beginning to show, our American friends are a little farther ahead and are in between “Bargaining” and “Depression” stages.

The five stages of grief are:

Denial“A bubble can’t and won’t happen here…”
Anger“Its the banks fault, the governments fault, I was lied to…”

Bargaining“Please let me sell this property, please don’t let the value go down!”

Depression“I’m financially strapped, I’m inside out on my mortgage, what am I going to do?”

Acceptance“Things are going to work out, over time.”

I just wanted to applaud you for going against the grain and being upfront and honest, unlike the mass media over the last few years whom have helped incite and prolong the hysteria for obvious rea$ons. A lot of people do not want to face the truth at this point, being a politician your taking a chance on alienating yourself from the majority as we know home ownership is something we all have in common and hold dearly.

Nobody wants to hear that all that money “they’ve thought they’ve earned” being real estate gurus, could potentially vanish into thin air but the underlying economic fundamentals aren’t lyin…

Shawn

5 comments ↓

#1 Sphinx on 03.25.08 at 5:14 pm

This is a more descriptive curve to different phases of a mania/bubble

http://bp2.blogger.com/_wFWqWIH-WFU/R0090DTr3sI/AAAAAAAAC5k/tZC5gkQvfGY/s1600-h/stages.6.jpg

Garth,
I believe we have not reached “Denial” yet, we’re probably somewhere between “Euphoria” (bidding wars still happening in GTA, Vancouver, Saskatchewan) and Anxiety (everybody knows this boom is not sustainable any more, and about to end).
Home prices might start to faltten or fall slightly in canadian hot markets (like GTA/Vancouver) by begining of this fall, that’s when Denial sets in and homeowners reject the fact that their house worth less than last year’s, and thinking it’s just a dip before the boom resume upwards. Denial stage consumed more than a year in US given the size of the US bubble, during that period sellers threw in HD TVs, vacation packages, and even boats/cars trying to sell their homes at the same price of the peak. Also, the National Association of Realtors (NAR) played a big role in prolonging the US denial stage by telling people “it’s always a great time to buy” and housing is expected to shift into a “soft landing”, and it’s having a very negative effect on pushing their correction farther into future, add the credit crunch caused by housing crash, the US might be headed into a Japan like scenario losing a decade of economic growth, or may be even worse; a ‘depression’. Eventually, canada will have it’s share too, and all promotors of that theory called “decoupling” between canada and US, will look like fools within a year.

#2 Leah on 03.25.08 at 7:20 pm

A house in Leaside just sold for 2.018 million. It sold for $700,000/$800,000 6 years ago and we all thought it was crazy.

I wonder where this money is coming from and why things are still selling at crazy prices.

How long can denial last?

#3 Dane Caldwell on 03.25.08 at 8:13 pm

Sphinx beat me to it!

I don’t think we are in denial yet; my guess is sometime next year.

Canada is still in ‘Euphoria’ definitely; with anxiety setting in…for the minority who are attuned to the issues and engage in a bit of introspection.

Dane

#4 Pecked to Death by Ducks on 03.25.08 at 8:22 pm

I notice a Canadian bank is offering 7% instant cash back as soon as you sign a 7 year mortgage, up to 50K max.

#5 nearmilton on 03.25.08 at 8:53 pm

2 for 1 pizza marketing concept (well almost!) now being used by real estate marketers http://housingpanic.blogspot.com/2008/03/its-now-buy-one-get-one-free-for-homes.html