Because it’s wicked hard to have a real estate blog and not make fun of Vancouver, I’ll continue. The entire Lower Mainland is hilarious. But first a word about godless Toronto.
The property pumpers at places like The Toronto Star may continue to blow sunshine up every public orifice they can find, but this market’s turning into a sick puppy. Unless properties are priced below expectations, they sit. Over 17,000 new condo units will flood in during 2011, burying demand. And once March 18th is in the rear view mirror, the stage is set for price declines – especially when higher interest rates kick in (the next announcement is at 9 am on Tuesday March 1st).
For the eighth consecutive month, year-over-year sales numbers are negative. This is meaningful. Since June of 2010 fewer deals have taken place than in the same month a year earlier. For the first half of February, it’s a decline of 13%.
But while sales continue to go down, prices continue to go up – another classic indication of a market in distress. The average GTA price has swollen 5% in a year to $451,257. That’s 4.7 times the average family income, which puts it just above the ratio at which the US housing market collapsed. But this is misleading. The average SFH in 416 now sells for $751,366, or almost 8 times average income, a number which has risen 9% in the past twelve months, or roughly four times the rate of inflation.
And the average income gain in the country’s largest city in the past year? Zero. Meanwhile debt has romped higher and now sits at $1.50 for every dollar a family earns. So it’s not too hard to see where this 9% hike in the value of a single-family home came from – money borrowed at historically low rates.
So, this is why we’re screwed. At least those of us with scant equity and fat mortgages, or dumb enough to keep the bulk of our net worth in a single assets – a house. Over the next 90 days we know (a) the 35-year mortgage will croak, (b) first-time buyers will give up and go back to coping with puberty, (c) the Bank of Canada will do its thing, hiking VRMs, (d) the bond market will goose 5-year mortgages and (e) rising food and gas prices will suck. So how can we be headed into anything other than a buyer’s market?
And it will be a long one. Correction first, then a melt. By this time next year the only things I’ll have to write about — squirrel brownies and yummy underwear.
Meanwhile in Burnaby, home of the faux condo lineup, idiot reporters and worse weather than Gander, we have more eyewitness reports on that scandalous marketing fiasco. As you know, somebody advertised on Craigslist for rent-a-buyers to queue up outside the sales centre for ‘The Sovereign’, a 40-something storey tower in the centre of this world-class, cosmo city.
If you build it, they will come. If you pay them, they’ll come sooner. And enough came that Global TV rushed a crack news team down to film the fakers, then rushed to air with a story about the return of condomania. It was pathos. But the funny kind.
Some additional things you might want to know if tomorrow morning you wake up with an uncontrollable urge to live beside a Sav-On store and payday loan shop, with a fabulous west coast a view of the Staples parking lot across the street:
You can buy a unit in The Sovereign for only $260,000, but it contains just 388 square feet. My Harley lives in more room.
So maybe a two-bedroom ‘estate home’ would suit you better. Here 1,000 square feet starts at $700,000, and lucky buyers can get “upgrades” such as laminate wood flooring (I think you can buy that at Staples) and a real electric fireplace. Can you imagine how any babe would put out after lounging before a heatless appliance on a quarter inch of plastic-over-concrete? Where do I, pant, sign?
By the way, balconies are included in the square footage totals. Extra parking spaces can be had for $20,000. Completion is in 2014, or maybe never. Buyers must put down 20%, a full three years before buying – the lost use of which will be used to subsidize the mortgage rate for the first 80 lucky victims.
Ah yes, and word has it the people who loaned their bodies for marketing, and laughed as they gave interviews to Global, were paid $1,000 for three days.
Did I mention we were screwed?