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Fourth Part AKA “The Market is Holding”:
2008 is going to be remembered as a medium-paced and steady season. In an uncertain economic future – at least the media wants you to think this way – and with supplies tightly controlled by builders, that is, slow release of new developments, observe two behaviours on behalf of downtown builders:
(1) Builders discounts: as discussed in Part 3, builders prefer to keep prices at current levels – price reduction are not required at this point in Canada and by default will be disastrous to their reputation and current value.
Instead, we see builders offering specials, discounts, or free upgrades, with many projects. However, this applies only to buildings which are well over 70% sold, most cases buildings with several units remaining and builders simply clearing out stock.
(2) The move to contain inventory supply by selling-out of existing projects: minimizing inventory is a smart step in controlling a market, especially if it is at 90% sold-out: that’s crucial to a builder that wants the sales centre closed, costs reduced and focusing on completion of the project while moving the sales and marketing team to the next project, yet by offering less buildings at a time, supply and demand keep a balance and market naturally stabilizes as we see it performing now.
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