“Garth,you are still making this correction happen in your little stupid head….we need to see prices down first you moron, then who gives a shit about volume?” – Comment yesterday.
It’s hard not to love this pathetic blog. Where else can you find such a robust collection of people with the infinite patience of fruit flies? Screw technical analysis, they cry, show us blood! Keep all those idiot economic indicators to yourself, they hiss, until house prices fall, Turner, you fail!
Fair enough. Forget the big stuff for a moment. You know, Japan, nukes, Libya, the Dow and your helplessly indebted and addicted neighbours. The impact of many things now unfolding will be felt later, and they’ll not be kind of real estate. But flies live for today. They’re desperate to find windshields. Here are a few.
In a beautiful seaside town in BC’s Lower Mainland, local realtors and house-pumpers from Vancouver have been telling the locals and the media for weeks that Hot Asian Money is flooding in. They wish. But how can claims that 50% of all sales are to house-horny, cash-sodden Chinese, when this is reported to me?:
Garth we have accepted an offer on my mom’s condo.
Here’s the details:
· March 2008 – bought new condo in retirement complex. Total $315 taxes in.
· Currently 5 comparable units for sale in the same complex and 1 has been sitting 12 months.
· Jan 2011 – listed 229K – 30 days 1 showing, no offer. Price reduced to 209K – 30 days no showing, no offer. Price reduced to 199K – 1 showing, 1 offer, sold for 180K (minus move, commission, legal = 170K)
· Paid $315, Sold $170, Loss $145K
Next door in Alberta, where you’d think $100 oil would have ignited the real estate frenzy that died three years ago, and have petro cowboys buying $65,000 trucks and snapping McMansions, that ain’t the story. Not in Lethbridge. Or Edmonton. Red Deer or Grande Prairie. In fact, Phil tells us about the closure of a GP 62,000-square-foot, $16-million store, now an empty box:
Garth: Been following for 2 years, 1st time writer.
In Grande Prairie, a Rona store closed its doors last month. This in itself is interesting, except this one was the largest independently owned Rona in Canada. What makes it even more interesting is that the owner also owned the largest home builder in the area.
Yesterday, his home building company went into receivership. Elaborate Homes has 46 homes under various stages of construction. This cannot End well.
In Toronto, where six million people live and together account for more real estate activity than the rest of the country nailed together, the numbers are disturbing. After sustaining lower year-over-year sales for a withering eight months – amid realtors blaming the HST, too hot weather, too cold weather, mortgage changes and (wait for it) Japan – the numbers are down yet again.
In the first two weeks of March, despite the property virgin rush to beat the 35-year mortgage ban, sales lagged 2010 numbers by 5%. But at the same time, prices were higher by 4.6%. As I’ve pointed out elsewhere in recent hours, this – rising prices on declining volumes – is a classic sign of a market in transition. Be it stocks or houses, it ain’t good news. Worse, listings in the GTA have sunk by a dramatic 15% from last year.
Fewer buyers. Fewer sellers. And in a period of generationally low mortgage rates with a looming rule change that could sideline an estimated 20% of first-time purchasers. Worse, the average SFH in 416 now cost $758,409. That is 8.54 times the average household income of $96,040. The American market disintegrated at 4.6.
Said the local cartel boss, Bill Johnston: “A positive economic outlook for the Greater Toronto Area, including steady growth in jobs and incomes, has kept households confident in their ability to purchase and pay for a home over the long term.” Let’s hope so. Because in the short-term, today’s buyers are entering a futures contract no sane investor would touch.
Here (finally) is my point: There’s no longer any sense waiting for a real estate correction. It’s here. Some markets populated with serious boatloads of greater fools may take a little longer to show it, but the outcome is inevitable. After being an out-performing asset for decades, creating more personal debt than people a generation ago could imagine, housing is entering a decline. It’s not even a cyclical one. It’s just done.
If I didn’t worry so much about being repetitive, I’d suggest selling now, buying later and staying a virgin.
Don’t forget yer bug spray.