There is news, and then thereâ€™s sort-of news. Real news might be that the government is about to fall, new home sales in Toronto last month plunged or that twenty million Americans have mortgages which exceed their home values. Oh yeah, and Mumbai. Real news these days tends to be real depressing.
That may be why there`s so much sort-of news, especially online, where anybody can turn out a spiffy blog with passable gfx and look credible. Thatâ€™s ok. Itâ€™s a free country. But if you were to start a blog and claim Stephen Harper is in control or that the west coast of India is lovely this time of year, few people would believe you, and the consequences would be thin.
However, when it comes to real estate news, itâ€™s a different story. Legions of potential homebuyers and misty-eyed young couples use the web to search out a home and to research current conditions. Often they turn to â€˜real estate professionalsâ€™ who position themselves as authorities, or the purveyors of credible market information. Big mistake, kids. Almost every realtor out there masquerading as an analyst seems unable to resist the temptation to pump and dump.
And Iâ€™m sad to say this. It drags down the entire professional. Maybe there should be something radical â€“ like regulation.
Anyway, hereâ€™s a taste of what I mean.
In Vancouver, condo flogger Ken Stef says â€œHousing prices will not stay low for long!â€ Hmmm. Based on what? Oh yeah, a story in the Homes Section of the Vancouver Sun by developer Peter Simpson. â€œSix months ago, people were dancing on the â€˜donâ€™t-worry-be-happyâ€™ bandwagon. A couple of those same guys now believe the world is nearing its end,â€ Stef says, â€œand have assumed the fetal position in some dark, clammy corner…Â The return to a balanced market offers many opportunities to buyers.â€
Vancouver. Average home price down $75,359 in six months. Annualized decline, 21.7%. Welcome to a balanced market. Next stop, the Taj Hotel for a quick drink.
(Speaking of Van madness, please see chart, and my note, below.)
In Toronto, condo pumpers Laurin and Natalie Jeffrey boldly headline, “Buyers not deterred by doom and gloom reports.â€ They point to a fluff piece in the Star which reports 2,100 new homes and condos were sold in the GTA (population 6,000,000) in October. If there is a lesson in all of this, itâ€™s not to get caught up in all the exaggerated doom and gloom,â€ the Jeffreys exude. â€œIf the circumstances have finally come together and you are in the right position to buy that new home or condo, donâ€™t let it slip away to someone else because youâ€™re psyched out by all the negative headlines or thinking you might get it for less down the road.â€
â€œUnlike the US or Western Canada where prices spiked dramatically, driven by subprime mortgage lending in the US and commodity wealth out west, GTA new home prices have risen gradually, and according to Canada Mortgage and Housing Corp., will rise a further 1.8% in 2009.â€
Sure they will. Say, is that the same CMHC which forecast a 6% increase for prices in the GTA in 2008? Amazing how those pointy-headed guys missed the $45,713 average price drop in the last six months, a 25.9% annual decline. And as for new home sales last month, they were down 44% in Toronto. Hey, condo babes, where do I sign? Pant, pant.
Now, I understand fully real estate practitioners are sales people. I also understand most are honest, decent and ethical. And I know this is a bitch of a time in which to make a living on commission. But real estate is a commodity which moves higher and lower in response to a myriad of factors and after more than eight years of up, it’s going to have at least three or four years of down. That doesnâ€™t mean the world stops or that people will cease buying and selling houses.
But it does mean purchasers will be more wary, value-conscious and discerning, while sellers must be realistic, pragmatic and pliant.
It also means realtors who hope to weather this storm must be seen as credible and trustworthy. If they set themselves up with blogs and snazzy web sites full of opinion, at least what they have to say should be believable. This is not a market anybody with a sales license can wish better. Shame on those who lure in buyers with false prophecies or prey on the uninformed with misinformation.
When the buyers return, you wonâ€™t.
Further to the post above, I was contacted by Vancouver realtor Paul Boenisch, who had this to say: “I wanted to offer some Vancouver numbers for your blog (which I read daily). $745,778 for Nov v. $825,206 for Oct. That’s -9.63% I guess we would round that up to a 10% monthly drop. Wow. The average sfh price in Vancouver is now down 19% since its peak at the end of Feb 08. From a high of 920k to 745k.” And (above) you can see from Paul’s web site a nice little summary of why Van prices have a long ways yet to fall, as supply overwhelms demand in a way unseen for many years.
Now, I don’t know Paul, but I did stroll around for a while on his site and was impressed. He’s taken the time to understand what consumers think about the market, and give them objective information. Nice change from realtors treating protential homebuyers as marks and idiots. Note to his competitors: This is the future of real estate, guys. — Garth