Last May, at $19 million, it was pure real estate porn. But now the mansion on Lands End Road is merely $9.9. What’s next? EBay? The stunning price reduction of more than nine million bucks says something simple to Scott and his wife, who monitor this stuff. “It is clear that realtors are manipulating the figures and are about to muddy the waters even more. It is also clear that the upper end of the Victoria market is in serious trouble.”
It’s not just Victoria, of course. But this crusty, self-obsessed city does show what happens when house horny meets the economy. Porn never wins.
There’s a place on Ardmore that was listed for $13.5 million. It’s now $7.9. Plus 7152 Skyline Close, now down more than a million, to just $2.1. In fact, the four local properties Scott and his babe track have been reduced a total of $20 million, or 42.8%, and they’re all still on the market.
Hell, the place down the road from the Bunker has been shriveled by $500,000 in the last few months (on the market now for two years), or 36%. And the new build around the bend which languished unsold for nine months (first at $1.2 million, then $929,000) is now a rental. Both of these are in the GTA commutershed – a market of six million people.
This miserable blog has given you the stats on the formerly-hot Vancouver burbette of Richmond, where sales have now plunged close to 2009 crash levels. In the Okanagan, once the moist dream of countless Mississauga Boomers, the average house now costs 25% less than it did in 2008.
“These are not the statistics that the realtors give you,” says Scott. “But they do give a true picture of what it happening.”
In fact, nothing could seem more remote from the news release which blanketed Canadian media yesterday, as uninquisitive editors and anchors in maquillage did exactly what CREA wanted - accept a new House Price Index masking the evolution of a national housing decline. Gone will be average prices, replaced by a benchmark number – expressed relative to 2005 pricing, and taking into account property differences and the social aspects of a piece of real estate. Granite good. Formica bad.
“One of the key goals is to take a little bit of volatility out of housing statistics,” said the Toronto Real Estate Board spokesguy. “It’s going to provide a good tool for consumers to understand where their home fits into the market.”
Fitting in, good. Volatility, bad.
And it’s an even better tool for local real estate boards to mask evolving market realities, hide the early signs of a correction and remove raw data from the hands of consumers. It’s bad enough that the public MLS already omits vital information, such as the number of days a house has been on the market, price changes during a listing or previous sales history. But now being given a broad, homogenized index-based McNumber for a wide area is nothing but soma for the masses.
Here’s how the Toronto Star, for example, reported it: “As of January, the benchmark price of a single-family home in Toronto hit $606,600 — $100,000 more than the $499,800 benchmark price for a similar home in the rest of Canada. That Toronto home cost 50.3 per cent more than it would have in January, 2005.”
Property virgins and people silly enough to still listen to their mother-in-law might interpret that just as the realtors intended – (a) detached houses in Toronto are selling for six hundred grand and (b) the housing market is stable and awesome. Time to jump in! In reality, the average SFH in 416 is changing hands for an absurd $754,000; sales and prices swung substantially in 2011; and house values hit their high point months ago.
Also devoid from any discussion in a still-hot market like 416 (sales have already collapsed in great tracts of the hinterland, such as Brampton) is where real estate’s headed. Seems to me this is a big deal, since 70% of families are exposed, and have run up a huge, steaming pile of debt to get there. What’s happening in other markets is relevant. Consumers should know. Harbingers matter.
As I wrote here yesterday, the simple fact major international publications like The Wall Street Journal and web sites with millions of readers are making book on when Canadian real estate will blow up, is also germane. If I were about to spend $1.2 million for a skinny old garageless brick house on a 30-foot Leaside lot, that sold for $500,000 four years ago, I’d be hungry for more than a House Price Index made of KD and duct tape.
But that’s just me. Weird, no?
By this time next year the HPI will be delivering feel-good stats to the majority of Canadians, as thirteen real estate boards pile on. By cleansing that damn volatility and shushing those neighbourhood price drops, it will reassure. Calm the herd.
Our own Judas goat.