Phil Soper, CEO Royal LePage. ‘We’ll see continuous improvement’
One year ago the US housing market was in distress, young couples in Mississauga and Surrey were moving into houses with no downpayment, Vancouver condos were the price of whole blocks in Truro, 40-year mortgages were the loans of choice, homes on 30-foot lots in Leaside were fetching $1.2 million and it took almost seven times the average family income to buy a house in Toronto.
It was, of course, unsustainable. I said so, as did others. But not Phil Soper.
Twelve months ago the guy in charge of the real estate mega-marketer Royal LePage issued a 2008 forecast which said:
â€œAfter experiencing an exceptional year characterized by strong average house price appreciation and record breaking unit sales, the momentum from 2007 is anticipated to carry over and position Canadaâ€™s real estate market for steady, yet moderate growth in 2008, according to the Royal LePage 2008 Market Survey Forecast released today.
â€œCanadaâ€™s housing market in 2008 should continue to thrive on a balanced diet of strong economic fundamentals, including high levels of employment, resilient consumer confidence, modest levels of inflation and the relatively low cost of borrowing money,â€ said Phil Soper, president and chief executive of Royal LePage Real Estate Services. â€œCanada is currently enjoying one of the longest housing market expansions in history; however, as we move into 2008 it is anticipated that slowly eroding affordability will cause demand to ease, allowing the market to move toward balanced conditions, with lower levels of price appreciation, and fewer homes trading hands.â€
Thriving marketâ€¦steady, yet moderate growthâ€¦strong fundamentalsâ€¦price appreciation. Letâ€™s hope no young couples looking for â€œexpertâ€ opinion read that report then went and bought. If they did â€“ especially with zero-down and 40-year ams (which Mr. Soper was silent on) â€“ the odds are, one year later, they’d have negative equity – owning nothing but owing a pile. Imagine how bitter and disillusioned you’d be, if you followed the advice and experience of Phil Soper, only to find you were the greater fool â€“ the last sucker into a market which should have been condemned.
Of course in the intervening months, real estate sales have collapsed by up to 70% in some cities, and prices have fallen precipitously in the countryâ€™s largest markets. Listings have ballooned, multiple offers are a memory, houses are sitting without offers month after month and the economy has deteriorated in a way that has the prime minister musing about a possible depression. Our major trading partner and the worldâ€™s biggest economy is in tatters even after trillions have been spent, interest rates are on the way to zero and Chinese leaders are freaked out about layoffs and deflation.
So, what does Phil Soper say now? That heâ€™s sorry? That he regrets pumping the market when he was supposed to be a leader?
Nope. Hereâ€™s this yearâ€™s esteemed Royal LePage market forecast:
“Emotional reaction to recent economic and political instability did much to dampen consumer confidence during the latter part of 2008, causing a marked slowdown in house sales activity,” said the survey. “However, as a more rational understanding of the issues gains ground, together with a wide range of announced corrective measures, consumer confidence is anticipated to recover, prompting real estate activity to pick up once again in the latter half of 2009. ”
Added Soper: â€œWeâ€™re well through the process (of a cyclical correction). Our expectation is that as credit spreads narrow and mortgage rates fall, and as the economy bounces back from a very poor fourth quarter 2008 and first quarter 2009, weâ€™ll see continuous improvement.â€
So, there you go kids. Two bum quarters, and then itâ€™s back to eternally rising housing prices by the beginning of April. No matter that unemployment could be at the highest level since World War Two or that the US has a budget deficit of $1 trillion or the auto sector is on its knees while Canada sinks inexorably into new debt. Get a mortgage, get a house and get with the program.
Iâ€™m having a hard time deciding which to be more ashamed of: Soper as an industry leader, or the reporters who once again made him matter.
If he were a bungalow, heâ€™d be foreclosed.