Time for a few updates, and a little clarity. No goats today. Promise.
Days ago I gave you the skinny on what’s happening in a number of spots across the country, from the Maritimes to Ottawa, Montreal and across the flat bits. Without a doubt, housing markets in most places outside of Calgary, urban Vancouver and hipster Toronto are anything but booming – despite those sexy mortgage rates and come-hither bankers.
So, let’s talk about the GTA. This week the local realtor cartel announced a boffo July complete with a 10% jump in sales over last year, and a 7% annual increase in the average price to $550,700. Overall, listings dipped 5%, and all this adrenalin led the Toronto Real Estate Board’s economics guy, Jason Mercer, to blurt: “Strong demand for ownership housing will underpin robust average price increases for the remainder of 2014. In fact, the pace of price growth that we have experienced over the past year will continue…”
Isn’t it a good thing Jason works in a fundamentally unregulated cowboy industry where ‘professionals’ can tell investors anything they want? Because if he was in the securities business, he’d be on his way to jail. Or at least out the door. He just guaranteed anyone buying a house now will make a profit by the end of the year. What if he’d said that about, oh, Royal Bank stock, or a mutual fund? Next stop would be a body cavity search.
Well, things are not exactly as the realtors would have you believe. Sales activity is in fact up – but not by 10% over last July. It’s 7.5%, because the board once again went back and secretly altered last year’s statistics.
But that’s not the issue. Instead it is a withering at the top end of the market, as many properties above $1.5 million go unloved and unsold, as is now the case in almost all major markets. Of course, the kids are still borrowing their little brains out and the hot zone remains $700K to a million (where CMHC insurance ends), which explains the overall average.
But TREB’s assertion that 416 detached houses are in hot demand is a bunch of hot air. Back in the Spring when average prices neared the $1 million mark this market finally found its ceiling, and bounced off. If this were a stock, we’d be looking at a classic head-and-shoulders formation. The truth is that single homes in urban Toronto have dropped in price by more than $85,000, or 9%, in just the last four months.
As you can see, it can’t be explained away as mere seasonality, since prices have been declining steadily since April – after a long winter and a wet spring which pushed the peak out from March. Truth is, a melt has begun. From the top. If you’ve been waiting, you win.
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But it could be worse. It could be Saskatoon.
Sigh. Was it only a year ago the prairie people were telling us they were different? How everyone in a province where football fans wear actual melons on their heads was getting rich? That Saskabush was booming?
You might want to rethink that. There are now more people bailing out of their houses than at any time since back in 2008. Listings have surged by 19% from this time a year ago, and at the same time sales have dropped by 9%. Supply up. Demand down. Guess what comes next?
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Now, the cheapest real estate in Canada – by weight.
For that we go to the picturesque, sea-side Nova Scotia town of Pictou, which is having a lousy summer. Seems the dingdongs who run the local kraft paper mill there broke the bit that scrubs pollutants out of the smokestack, and the town has been blanketed in stinky dust as a result. In the real world, the mill would be forced closed until they fixed the problem. But in a province where jobs are precious, people would rather inhale crap.
Well, this has just made a bad real estate market worse. But what a place to do some vultching, especially if you love history, gigantic slabs of granite or need the ultimate bunker for the coming zombie apocalypse.
More than two years ago I told you about the old Pictou post office hitting the market – 7,500 square feet of pre-Confederation majesty, boasting the only chimney in Canada with a window in it, a lower level recently renovated into a high-end eatery, a hand-painted safe (no, the kind you put money in) and a commanding presence in the middle of the downtown. I actually toured this place with Dorothy and the agent, Giovanna Ferrera, one day between gigs. I felt baronial for two days.
Anyway, a dude in Florida bought it, loved it, poured hundreds of thousands into renovations he never finished, and has been trying to sell it for a l-o-n-g time. When it was listed for about $300,000 it was deathly cheap. But today it’s yours for $115,000, and the owner will take back financing.
By the way, the soaring stone post office in historic Annapolis Royal is also on the market. It started at $295,000 and is now a hundred grand less. Also the centre of town. When I asked the listing agent what was wrong with it, he said the only small issue is some water in the cavernous, grotto-like basement.
“But,” Alyn added, “it’s only really bad at high tide.”