One theme of yesterday’s insufferable post was that real estate’s not all it appears to be. That, as you know, is exactly as the industry wishes. Obfuscate. Mislead. Manipulate. Once again the poor, moist virgins are being led into a vortex of hormonal desire based on the false premise housing is going straight to the heavens.
Let’s look at steamy Toronto, since the cartel there just released its latest barrage of numbers, dutifully aped by the mainstream media.
This is what a breathless city of six million souls awoke to:
“The average price of a detached home in the City of Toronto hit close to $1 million in April as the GTA continues to be plagued by a shortage of new listings. That shortage of homes for sale helped pushed prices up an average of more than 10 per cent from April of 2013. The average sale price of a home across the GTA hit $577,898 last month, according to figures released Tuesday by the Toronto Real Estate Board. Sales were up just 1.8 per cent, year over year.”
First, the sales number. There is no reason whatsoever to believe it’s any more accurate than the one the Toronto Real Estate Board published last April. Then TREB counted 9,811 sales during the month, a number it now claims is really 9,535. Either than means 3% of all sales fell through, or the realtors screwed up. But the effect’s the same: ‘statistics’ are constantly and secretly revised, and always in a way that makes current sales appear to be more robust.
So, according to the board’s own unrevised data, sales in April of 2014 were 1% lower (not 1.8% higher) than last April. And sales this year are 3.1% lower than they were in 2012. Not so hot, actually.
Now, let’s yak about that ‘shortage of listings’ which is being blamed (along with a six-year-old land tax) for a ridiculous spike in prices. Last month there were 19,118 properties for sale in the GTA. Granted, that is 8.4% fewer than the 20,886 on the market a year ago. But this is not the real story, because listings have just exploded higher.
In January buyers had a choice of 14,231 houses. In February, just 14,019. In March that popped to 16,543, and last month it bloated by 15.6% to the current count of more than nineteen thousand. Obviously a jump of fifteen per cent in 30 days is more than significant, and entirely consistent with what is happening in other markets across the country.
The average price in Toronto, “close to $1 million”? Yup, the realtors say the average SFH in 416 was trading hands in April for $965,670, which is 13% more than twelve months earlier. But it’s also down from the $1,012,172 average price for the same house in the first two weeks of the month. So, was that an aberration in the numbers, or more creative reporting since the minions in Ottawa started freaking when two Canadian markets passed the million mark?
That prices have shot higher in Toronto and much of its dead-eyed suburban hinterland is not in question. They have. Like Vancouver, there’s no value any longer for new buyers since the cost of entry is so high and the prospect of future gains so nebulous.
Anybody contemplating a purchase who cares about risk has to look deeper than the vacuity offered by the daily media. Sales are lower than they were in years past, despite rock-bottom mortgage rates. The supply of homes just catapulted higher. And certain segments of the market (like the massive $1.5 million+ clutch of listings) are growing stone cold, and now offering deals. Besides, how can we actually trust any of these sales numbers when they are routinely, and privately, revised by the very people whose livelihood depends on more deals?
Like Pete & Joyce yesterday, if you own a SFH and have held it for years, you won the lottery. But to win, you must cash in the ticket.
If you’re Pete & Joyce’s kid, chill. It’s a trap.