They listed their fashionable, almost-new condo in one of Toronto’s hottest hoods ten days ago. Priced forty thousand less than the last sale in the building, and it’s on a higher floor with an extra parking spot. It should have sold in a weekend. But, crickets.
“Three showings,” says Sharon. “No action.” She slumped in her chair. How could this be happening?
Easy. There are current more than 6,000 condos on MLS in the godless GTA today. A thousand or so more on Craigslist and Kijiji, and the men’s room wall in the Bloor station. Plus twenty thousand unsold, vacant, unlived-in new units. Oh yeah, and thousands more in pre-sales. So, close to 30,000 condos to buy, and yet only 1,260 buyers last month. And it’s Spring, with 2.74% mortgages. Yikes.
This is a disaster in the making. For Sharon, though, it’s already here. She and Pete have to sell and move to chase a great job in Boston. They’ve one month to find a greater fool, and yet there’s thirty months’ worth of competition.
Yesterday brought all of the confirmation you should need of where this is headed. Real estate sales plunged in Canada’s biggest market, pacing tumbles in Vancouver, Victoria and even the beginning of the end in Cowtown. Equally distressing for the few bulls still left standing, the realtors had to lie about things.
The Toronto Real Estate board announced 7,765 transactions in March, “down 17 per cent compared to 9,385 transactions in March 2012.” But last March there were actually 9,690 sales, according to the same guys one year ago. That’s a drubbing of 19.9%, showing how much fun realtors can have with numbers. (Apparently an astonishing 305 deals, worth more than $19 million, never closed last March. That seems like a story on its own.)
Meanwhile sales in Vancouver crashed another 18%. They were down 15% in Victoria. In the suburban Lower Mainland, off by 20%. Even in Calgary, single-family home sales fell 6%, with realtors citing a lack of listings which is one step up from blaming rutting season. Even the Vancouver board’s famous Frankenumber, which is always supposed to go up, fell by 4%. In Toronto, condo sales sank 18% and single-family home deals were reduced almost 22%.
Let’s recap. It’s Spring. Five-year fixed-rate mortgages are available at 2.74%. You can still buy a house with 5% down. Banks will still shower you with money. Your mom still really wants you to do this. Sharon will crater her asking price for you and throw in her see-through Lululemon pants. So, what gives?
This tired bull is finished. Of course, all real estate is local and Mississauga’s not Burnaby, but the writing is on the wall everywhere. It says, “risk.”
The price crumble now hitting the Mouldy City and the rest of the wet coast, also impacting the Maritimes and most of Quebec, will be a reality everywhere as 2013 plays out. Remember, this is the peak season, the strutting, hormone-fueled moment of supreme prowess for the housing market. With cheap money and warming rays, it doesn’t get any better than this. And still, buyers have faded and the headlines turned nasty. Debt, real estate ennui and granite saturation have taken their toll. If your property was your retirement nestegg, I sure hope you bailed last year, or that your horny kid didn’t buy a condo in 2011 with 5% down.
Finally, why have prices in T.O. not started to rot, as in Van? The average is now up a little over 3% year/year.
Statistically, with an 18% collapse in sales of lower-priced condos, and continued action in the sub-million SFH category, the average and median price can still rise on reduced volume. In fact, that’s pretty much a hallmark of the final stages of a croaking bull – a phenom well-documented before the last epic tumble in the early Nineties. (By the way, it took 14 years for prices to recover. Gulp.)
Beyond that, sellers afraid prices are tanking have simply let their listings run out. The number of detached houses for sale has withered, which has perversely sparked bidding wars among the lusty buyers who remain, especially in traditional 416 demand areas. It’s not uncommon for a semi in Leaside with a mutual drive and an addition made of cornflakes and duct tape, tastefully covered in creamy stucco, to sell for $100,000 over its $900,000 ask. It doesn’t take many of those fin-de-siècle sales to skew the numbers.
Besides, the realtors lie anyway.