So it’s true. Vancouver crumbles. “People now think it’s a bubble,” we reported days ago, “so they are reluctant to buy.” You bet. Sales just crashed 18%.
“The main change now is that people actually think this is over and the only ones here buying are the few remaining Chinese and those who just can’t avoid a transaction (or whose fortunes do not depend on it),” our blog dog Van realtor wrote. This is what happens when markets change. People hesitate. Sales slide. Doubts rise. Listings swell. Deals rupture. Then prices erode.
The process is long, especially after years of mindless speculation and mass delusion. Greedy owners at first refuse to accept buyers are in control. Values stay sticky for months, but finally collapse. And it all starts with sales.
Last month house sales in the country’s most spectacular real estate market declined 17.8%, the worst month-over-month drubbing since the GFC. But the realtor cartel was brave.
President Rosario Setticasi said that the sales-to-active-listing ratio remains over 18 percent, which suggest “balanced conditions in our marketplace as we move into the traditionally busier spring speason”. You wish. By summer this will be a buyer’s market, as the barbarian hordes enter the city (even without the playoffs).
We all know the absurdity cannot last. The average SFH in 416 is now over $750,000. The average SFH on the west side of Van last month was $2.2 million. In Richmond, which makes Mississauga look like Paris, it was $1.03 million.
Already in Victoria, prices are falling. In February the price of the average detached house dropped by 4.7% on an annual basis. But this burg, too, is living on borrowed time. The average SFH still costs $579,985. That’s 8 times what the average household earns, and about double the rate at which the US real estate market began to disintegrate.
As stated many times, all markets are unique. And while in Vancouver sales are toppling and listings exploding just as fast, in the godless GTA a shortage of available houses and new supplies of testo have conditions quite erect. The cartel there’s expected to announce February numbers on Monday, and they’ll likely be robust. But how long this lasts in the epicentre of a province stripped of manufacturing and steeped in debt is an open guess.
And what of F’s anticipated mortgage reg reforms? They’re coming, and won’t help.
Somebody dissed me in the last comment section, saying I ‘hate houses.’ Hardly. Just show me a Toronto Life home decorating centrefold and I’ll ravage anything. What fails to stimulate, however, is the thought of so many people with so much of their net worth in one asset at its highest valuation ever. Every boom ends. And almost everybody forgets.
House lust has brought us to this point. Cue the fear.
Speaking of which, I’ve noticed the doomers are back in the last few days. Disappointed America didn’t default on its debt last year, that Europe is stabilizing, nobody cares about Greece any more, the Fed dumped QE plans and their precious gold took a dump, they’re obviously feeling ignored. It must be tough to have all that canned tuna, dried noodles and pallets of Charmin when the lights are staying on and stock markets humming. These days Ron Paul couldn’t get a job as color commentator on the suicide of Mitt Romney.
Since hitting bottom last autumn, markets are higher by about 30%. That was when I told you this was no 2008, and everything’s on sale.
Alas, few listened. Like Vancouver real estate, we have another fine example of human failure. In the last months about $400 billion has been removed by panicked investors from equity markets, even as the Dow hit a point exactly double the low of 2009.
And in Toronto, fleeing retail investors are thumping the financial industry. The daily average volume of shares traded on the TSX has crashed 21% so far this year – even as stock values have jumped 6% in two months. Huh?
Looks as if the little guys – those DIYers who buy high and sell low through their online accounts because they don’t trust anyone with their money – got creamed in the last market dip. Too many actually believed the doomer talk in the media and online, failing to understand central bankers and corporate profits were delivering a mama of a buying opportunity. They sold when they shoulda bought. C’est la vie.
BTW, there’s another buying opp coming.
Finally, before I leave for my Friday evening Amazonian oiling and suction treatment, I’d like you to know this blog will now have updates, starting next week.
Because the world is a volatile place, and highly entertaining, I’ll be firing off dollops of the latest news, interpretation and horniness via Twitter.
To be even more confused and aroused than in the past, I urge you to follow me. @garthturner.