The wars

FROZEN modified

Is it ethical to list a house for drastically less than it’s worth in order to pump desire and break hearts? Especially when available homes are few and many buyers desperate? Is it cruel to purposefully ignite a bidding war in which almost all will lose? Or is screwing out the last possible dollar the highest duty of a vendor’s agent?

The questions are floating around again in the country’s biggest market after the house below (middle peak) sold in Toronto’s Junction district – a place most people wouldn’t choose to live if houses weren’t normally in the modest $600,000 – $700,000 range.

PERTH 1

The row house at 325 Perth was renovated a decade ago, but shows well. The lot’s just 18 feet wide, the bedrooms small, there’s one parking spot and the geriatric basement has a little suite. But beautiful or spacious, it ain’t. Here’s the back and interior.

PERTH 2

PERTH 4

The owner, a real estate agent, listed it for $639,900. Immediately a well-read real estate-pumping blog called it ‘a good catch.’ Mike Gryspeerdt, the agent-owner knew it. Once his house became a media story, he admitted he knew it would sell for $100,000 more than the list price. So, this was not an example of a property mispricing. It was no mistake. It was never intended to be a bargain in a city where detached houses are scarce and rare. It was a strategy.

It worked. Four hundred people came to the open house last weekend. They shut down the street and queued on the sidewalk. Once inside, nobody could spend time digging into the mechanicals or the structure. Clearly this was a high-octane, competitive race to secure a house for less than it was ‘worth.’

On Tuesday night, when offers and certified cheques were accepted at 7 pm, 32 of them littered the kitchen table. Two hours later Gryspeerdt accepted $848,625. That was a third more than he has asked and a hundred thousand more than fair market value. The auction has worked perfectly.

After bucking allegations of conflict-of-interest in listing and selling his own home, and despite admitting he deliberately mispriced the property, he lamented this to a reporter: “I’m genuinely, 100% shocked by this. I did not expect this to happen — nor did I want this to happen. I’m not comfortable with this at all.” But he still cashed the deposit cheque.

In seeking balance for this post I asked a very experienced and respected Toronto agent, George Klump (no relation to the CREA economist), for comments on the morality of sparking bidding wars which inflate prices and repulse buyers.

“The listing agents’ ethical duty is to the seller, it is their job to obtain the best possible result for their client. The agent has to take many things into consideration; has the seller already bought; is this typically a time of year when buyers are as active as other times; will there likely be more inventory coming to market soon, etc. When selling in hot areas like the Junction, prices are continuously changing upward so it is hard to establish exactly what a house is worth but the biggest mistake a seller can make is overshooting that upward movement and pricing too high – people will think you aren’t in touch with reality and the house will sit on the market at a great inconvenience to the seller and will likely need to be discounted before it actually sells.

“Adapting a strategy of pricing below market and setting an offer date has a lot of benefits for the seller as it creates excitement amongst buyers which in turn can lead to the price being bid up beyond what current market conditions might indicate because buyers get emotional and it makes sure the property is sold quickly, which can be very comforting to those sellers that bought their next home before selling their current home. Adopting this strategy is not without risk for the seller, as sometimes the offer date comes and there is only 1 offer and you are stuck at a low price with no leverage to push it up. This can happen for a variety of reasons; perhaps a couple of similar properties came on the market at the same time and diluted the pool current buyers; the demand for the neighbourhood was over-estimated; there was extreme weather that kept buyers away; or even world events such as 911 after which there was virtually no activity in the Toronto housing market for a few weeks. If this happens and you reject the offer and raise your price, it is usually viewed poorly by potential buyers.

“The ethical question should lie more with the potential buyers’ agent.  Although it is up to the buyer to decide what they are willing to pay, their agent should caution them about not letting their emotions rule and base their offer on facts and their specific needs. Their agent should provide them with a price range of what similar properties have sold for and should also warn them of the pitfalls of paying too much.  Those pitfalls can have severe consequences. If the buyer needs a mortgage and they paid well over the asking price, the bank’s appraisal may come in much lower and the financing will be based on the lower price which will mean the buyer has to come up with a much bigger down payment than they may be able to afford. The length of time the seller plans to live in the home should also be addressed, if there is a chance they may have to resell in the next 1-5 years there is a real risk of not recouping your initial investment including fees, taxes etc. but if the plan is to be there for the next 20 years paying a little more than you should doesn’t matter as much.

“That being said it is very frustrating for buyers when looking in these “hot pockets”. If you can afford up to $700,000 and you are looking at houses priced at $639,000 and they sell north of $800,000 it is very disheartening. Work with an agent that knows the market and can show you properties that likely will sell in your price range. Also, while this happens in certain prime areas in the city, most homes in Toronto still sell at or below the asking price.”

Are there lessons here?

Of course. If you want to sell your home, at least in a demand area, this is the moment. And if you seek top dollar (and no friends) now you know how. If you decide to create a frenzied, emotion-laden auction, then don’t talk to reporters afterwards. If you see a property with an unbelievable price, assume it’s a fake. If you’re moronic enough to enter a bidding war, never do it alone.

And if you lose, relax. You won.

182 comments ↓

#1 NuisanceBear on 01.23.14 at 7:53 pm

FIRST with a vengeance!

#2 Prufrock on 01.23.14 at 7:56 pm

Sounds like the madness is accelerating in Toronto even as it flattens in Vancouver. Not many would pay that much for a half duplex (what we call that) out here.

#3 Derek R on 01.23.14 at 7:57 pm

Why on earth would you want to buy a house which some one else has expressed an interest in unless it’s really unique? And that one isn’t.

#4 takla on 01.23.14 at 7:57 pm

I cant believe people are still lineing up to buy realestate at the absolute top of the market,stretching thier credit to the max and believing theres yeild to be had down the road.My local RE weekly rag show’s REDUCED on top banner of most listing in the fraser valley B.C….no bidding wars here

#5 Tri-Guy on 01.23.14 at 8:00 pm

if its an unbelievable price then there will be a bidding war

#6 JustTryingToProtectEquity on 01.23.14 at 8:01 pm

Strange times. It’s odd to think of the person who bid the most as being the winner. If you were mugged in an alley, would you be better off with more or less money in your pockets? Odder still, is thinking that you’re winning with a so called “bully deal”. The only thing being bullied is your bank account.

#7 Victoria Real Estate Update on 01.23.14 at 8:02 pm

. . . . . . . . . . Percentage Price Decline From Peak . . . . . . . . . .
. . . . . . . . .Greater Victoria – Single Family Homes. . . . . . . . .
. . . . . . . . . . . . . (MLS Home Price Index). . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .0%. . . . . . . . . . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . .
– 0.5%. . . . . . . . . . . . . . . . . . (10). . . . . . . . . . . . . . . . . . . .
– 1.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 1.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 2.0%. . . . . . . . . . . . . . . . . . . . . . . .(11). . . . . . . . . . . . . .
– 2.5%. . . . . .(08). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 3.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 3.5%. . . . . . . . . . . . . . .(09). . . . . . . . . . . . . . . . . . . . . . .
– 4.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 4.5%. . . . . . . . . . . . . . . . . . . . .(10). . . . . . . . . . . . . . . . .
– 5.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12). . . . . . . . .
– 6.0%. . . . . . . . . . . . . . . . . . . . . . . . . . (11). . . . . . . . . . . .
– 6.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 7.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 7.5%. . . .(07). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 8.0%. . . . . . . . . . . . (09). . . . . . . . . . . . . . . . .(12). . . . . .
– 8.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(13) . .
– 9.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 9.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.0%. . . . . . . . . (08). . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.5%. .(07). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(13) .
-11.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-12.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
————————————————————————————————
. . . . . . . . . 07. . . .08. . . .09. . . .10. . . .11. . . .12. . . .13. . . .

This is a 6-month price chart for Greater Victoria single family homes (houses) that was put together using MLS Home Price Index data. Price levels for June and December are plotted for each year. This chart also includes the peak price level (*) that was established in 2010.

Single family home prices are lower than at any time from 2007 to 2012 and will continue to fall. Many (minimum down payment) first-time buyers who bought from 2007 – 2012 have underwater mortgages and many more will find themselves in this position as prices continue to fall. Victoria’s foreclosure rate will increase.

As of December 2013, the total price decline for houses across Greater Victoria was – 11 %. This is based on MLS Home Price Index data. This data is gathered by participating real estate boards across Canada.

Recently, some Canadian real estate boards have manipulated the data that they release to the public to make it look stronger, so we can safely assume that – 11 % is the minimum total correction so far.

I will be posting more charts in the near future.

Girls and guys, much lower house prices are on the way in Victoria. If you buy now you will be forced to watch the value of your property drop significantly in the future. Wait for lower prices and then reconsider buying. If you buy at a significantly lower price you will be able to look forward to price appreciation.

Buying a property at bubble prices is always a mistake. Millions of American families bought at or near the peak of the 2006 US housing bubble. Many of those families continue to experience financial difficulty and distress as a result of their actions as house prices in the US are still well below the peak level of 2006 (8 years later). It could take another 8-10 years or more for house prices in the US to recover completely.

All housing bubbles burst and the inevitable deep price correction always causes economic and financial problems. House prices in Victoria are still deep within bubble territory. Now is not a good time to buy.

Until next time – Cheers!

#8 lucyj on 01.23.14 at 8:10 pm

Looks like the property buyers have been watching to many Storage Wars shows.

#9 Daisee on 01.23.14 at 8:11 pm

Laneway homes going for close to a million in TO. Gack, people are nuts.

#10 Bill on 01.23.14 at 8:11 pm

Glad to talk about bidding wars again. All good right? This blog has taken on a seriously depressing tone the last few weeks.

#11 Freedom First on 01.23.14 at 8:14 pm

Garth, you were right about the spring virgin sacrifice/slaughter!

Insanity. The last of the “Greater Fools” are lined up and ready to enter the Sheep Heaven.

#12 Bogdan on 01.23.14 at 8:19 pm

First: so bidding wars should be the way of the future. Fast sale and best price (if it sells).

#13 ajostu on 01.23.14 at 8:29 pm

In Australia, underpricing like this is illegal. Of course it’s very hard to prosecute anyone because the agent can claim that they’re simply shocked!!! at the level of buyer interest.

But it’s a well known, well worn trick worldwide.

Dummy bidding at auctions is also against the law. Again, good luck with catching anyine.

#14 Spiltbongwater on 01.23.14 at 8:32 pm

Why with only 1 offer do you lose leverage to push up? Could the listing agent not call the buyer agent and say we received more offers then anticipated and request removal of subjects and a higher offer to be submitted? The listing agent does not have to say that the anticipated amount of offers was higher then zero, does s/he?

I don’t think there is any conflict of interest in an owner being the listing agent, so long as it is disclosed on the listing sheet. I have seen many listing sheets that state what relationship the agent has with the vendor.

#15 visorman30 on 01.23.14 at 8:39 pm

400 people waiting outside in this weather to pay so much is nuts.

#16 cheep cheep on 01.23.14 at 8:39 pm

It amazes me that anyone would pay more than $200,000 over asking and $100,000 above comparables in the neighbourhood. Aren’t these the same folks who get excited about saving a dollar on a pack of toilet paper? Have they any idea how long it would take and how many rolls of toilet paper they would need to buy on sale to recoup their loss?

#17 Peter on 01.23.14 at 8:45 pm

The Junction Triangle is great, GO TRAIN is rebuilding a new station , close to TTC, the Union Loft Church Conversion will cost more than that house when completed this year, plus the Bike-Path, several parks, rinks , and restaurants all with in walking distance, and new Brownstones filling in the old factory spaces , its turned into a really vibrant neighborhood

#18 White Rock Mom on 01.23.14 at 8:45 pm

Patiently Waiting

Could you make me another list of South Surrey listings?
I just love watching prices drop in the neighbourhood.

I seriously don’t know where realtors get their prices. The last house to sell in our neighbourhood sold for $930,000. Recent listing are $2,200,000 and $1,800,000. It is like a crazy game.

#19 sasquatch on 01.23.14 at 8:46 pm

Ran into a landlord trying to rent out a basement suite with the same tactic.

He only showed it for one night and arranged multiple parties interested in the suite to show up at the same time to make it look very popular. While it was in decent shape and size, he was asking several hundred dollars more than a comparable suite.

Don’t now if it worked. Walked out as soon as his method became clear.

#20 kitchener on 01.23.14 at 8:46 pm

Found another ridiculous one…look closely at the picture; it is really two houses and the buyer got No. 55 for $604k. Yes, it’s a semi!

http://themashcanada.blogspot.ca/2014/01/sold-55-berkshire-avenue-leslieville.html

Someone is going to be the laughingstock of all his friends. Surely not even the mother-in-law would approve of this purchase.

#21 [email protected] on 01.23.14 at 8:48 pm

i guess those houses with the peaks are torontos take on the following http://img.slate.com/media/1/123125/2079215/2133224/2150667/061017_ardh_sfRowEX.jpg

#22 DM in C on 01.23.14 at 8:49 pm

Right now is still hot in YYC. In our little community of 10k there are only 4 houses available under 500k. I saw a 2br. basement suite in Bridgeland being advertised at $1,650/month — more than what we paid for an entire house. Not even a full bath.

#23 Chimingin on 01.23.14 at 8:52 pm

I wonder when the buyer’s remorse kicks in…after the moving van has gone, after the first night, the first week, after the first mortgage payment?

I hope you’re doing as well as can be expected, Garth.

#24 yeah Baby Yeah! on 01.23.14 at 8:55 pm

Furst!!!!!!!!!!!

#25 TheCatFoodLady on 01.23.14 at 9:01 pm

Mixed feelings. As a seller, I’d obviously want the highest price possible. Clearly, my agent would as well – higher commission.

As a buyer, I want to pay as little as I can get with for ‘the’ property or type of property I’m after. It is or can be, emotional. Bidding wars with specified dates for putting in offers – forget it. Buying without my own inspection; likewise. Paying more than what *I* think a place is worth, taking on more mortgage than is reasonable for my circumstances.

It’s a place to LIVE, not walls within which I want to be trapped because I lost my brains to the lure of glittery granite.

#26 Smoking Man on 01.23.14 at 9:01 pm

There is nothing unethical about selling, from an artificial low list price.

A market is a market. We have supply and demand.

The marketfinds the price .

#27 Michele on 01.23.14 at 9:05 pm

I *have* to ask …where did the peaks go in the view from the back?

#28 Oh no! on 01.23.14 at 9:06 pm

Justin Bieber’s story matches that of the average Canadian: from kind and humble if somewhat naive five years ago to self-indulgent self-entitled now, all that the result of gains in material value obtained without having put special talents or skills to work.

#29 Vangrrl on 01.23.14 at 9:06 pm

Ugh… Hope they have quiet neighbours…

#30 thedoubter on 01.23.14 at 9:11 pm

Let’s say you are the only bidder and the offer is higher than the asking price with no subject. Can the seller not sell to you?

#31 timmy on 01.23.14 at 9:12 pm

What a shithole! I wouldn’t pay $300, 000 for this dump. Boy some people are stupid

#32 Dwell on 01.23.14 at 9:14 pm

I love the end!

#33 Big Roboto on 01.23.14 at 9:16 pm

I’ve seen some really crazy TO realestate deals but this one is pure madness. Oh well, things will change pretty soon … people who bought the house will soon realize this wasn’t a smart move after all. Can you really blame real estate agent(s)? Oh how sweet it is to burn your family’s future in just one night ….

#34 Drill Baby Drill on 01.23.14 at 9:25 pm

A foul and his or her money (the bank’s mostly) are soon parted.

#35 Cici on 01.23.14 at 9:25 pm

I bet the moronic “buyer” is actually a real-estate agent (and good friend of the seller). And I bet the new buyer agent will hold on to the property until the next sign of rising rates or whatever other trend shows economic upswings for RE.

By doing this, these agents are making a killing off the sale of their personal property, while at the same time driving up values in the area, and with them, their commissions.

When, oh when, will people learn. Rent zombies, rent…let the RE agents sell each other overvaluated properties.

#36 Tripp on 01.23.14 at 9:26 pm

“The row house at 325 Perth was renovated a decade ago, but shows well.”

One phrase that brilliantly summarizes what is being built and sold in in North America for hundreds of thousands of dollars.

#37 Fed-up on 01.23.14 at 9:31 pm

@#31 timmy on 01.23.14 at 9:12 pm
What a shithole! I wouldn’t pay $300, 000 for this dump. Boy some people are stupid

—————————————————————————–

Remove 1 zero from your price and that might spark my interest.

This is the end, my only friend the end…

#38 sasquatch on 01.23.14 at 9:32 pm

#22 DM in C

Rental properties YYC (Cowtown) are extremely temperamental by area and time of year. About a month after the flood I found several houses for rent for $1400-$1500 a month. Winter is probably the best time for prices.

Research, patience, and not being overly picky on a neighborhood can find some good rental spots.

#39 Daisy Mae on 01.23.14 at 9:33 pm

“And if you lose, relax. You won.”

*******************

You are amazing….

#40 gladiator on 01.23.14 at 9:38 pm

Garth, as the saying goes, “a fool and his money are soon parted”. This was one of the very classical examples of it. If there are gullible fools ready to dump so much money into this semi-shed, then why not take the most advantage of them? After all, it’s a market, if there are buyers for what you offer and at your price, moreover, if they agree to fight in an auction and pay even more than that – why not enjoy the extra profits?
I would call something unethical when buyers are given misleading information or when they are lied to. In this case though, everything was done openly: although the offers were not disclosed to the bidders, they saw how much competition they had and bid accordingly. I do not see any fraud here – just a realtor Smoking Man raking in the dough. The buyers made a choice as rational as their intellects’s potential. We know they made a mistake, but imagine you were there and tried to talk them out of this bidding war. You would have been looked at like you were an alien. The world is full of stupid idiots, but if it weren’t like that, we would not have as many opportunities. Wink. Wink.
This sale and the number of bidders tells me the market still has plenty of juices. I will still keep renting and investing though – and enjoy the show, of course.

#41 Mark on 01.23.14 at 9:39 pm

Hot in Calgary? I’m not seeing it. The Realtors obviously have a lot more time on their hands to play the pump and dump game since prices have been going down (in the real world), and things just aren’t moving how they used to be.

#42 carpicker on 01.23.14 at 9:46 pm

http://www.liveleak.com/view?i=078_1390498493 in case you missed it. “The town is burning the bi.ch comb her hair”

#43 Roxy on 01.23.14 at 9:48 pm

Anyone paying over $200K for a semi-detatched or a row house like this is a complete moron. I’m traumatized from having lived in a semi for ten years with the neighbours from hell. Unless it is super soundproof, you have the potential to hear them yell, stomp, blast loud music, kids banging non stop, idiot chain smokers…you must be really stupid to pay that much for that kind of a house. Back in the old days semis and row homes were for the poor people who just couldn’t afford more. These people paying that much for THIS obviously don’t know any better…

#44 eddy on 01.23.14 at 9:51 pm

It’s not an auction. Auctions are very fair, in this situation the winner has no way of knowing how much he overpaid. These events promote irresponsible behavior, like firm cash offers, which is fine if you have all cash and don’t need a fire insurance policy , but this likely does not apply to the 32 buyers here. If you go in firm and the bank appraises it for less, they may want you to add more cash to your down payment. Every lender needs proof of insurance before they advance funds, so what if your insurance company inspects it and gives you a binder to close insisting that you do upgrades within a month after closing?- you pay.

#45 Uh Oh Canada on 01.23.14 at 10:05 pm

For $848,625 I can buy TWO large renovated houses with lots of land in our area. If I drive just twenty minutes west, I can buy THREE large houses. Of course, wages here are not as high as in T.O., but they’re not much lower either. Most of my neighbours are professional workers. Sadly, I know many in this area that are Bombardier employees, so not sure if they will have a job soon or not.

#46 Polsky on 01.23.14 at 10:10 pm

#31 timmy , you are 100% right
This is not very scientific but look what you can buy
in Poland , close to a big city for about $CDN365,000
(and when you walk close to your china cabinets they don’t rattle like here in Canada ).

http://liszki.sadurscy.pl/dom/sprzeda%C5%BC/Liszki/oferta-BS3-DS-102699/

#47 zeepluszee on 01.23.14 at 10:12 pm

Garth and other folks over 50 in the GTA (being facetious; couldn’t help it):

Do you guys recall another time in GTA history where you had gentrification or a “hipster bubble” like this? How did it turn out? I’d love to know if history repeats on this one.

BTW this is more Blansdowne (Bloor / Lansdowne / “Junction Triangle”) than “The Junction” (other side of the tracks).

The area has great new restaurants, galleries, friendly crack heads, cafes, bike shops, diversity, farmer’s markets, shops that sell just craft paper, brunch spots, pizza with shawarma on top… what more do you want out of life?

Besides half the mortgage.

#48 Bob Rice on 01.23.14 at 10:13 pm

People buying these houses are just F-ing dumb…

Idiots… to live in “urban” toronto… an over-rated, mediocre, traffic-filled city with no soul..I should know – I was born and raided here…

Idiots abound

#49 Smoking Man on 01.23.14 at 10:19 pm

#39 Daisy Mae on 01.23.14 at 9:33 pm

The Losers Lounge now has meaning.

#50 Babblemaster on 01.23.14 at 10:21 pm

“If you want to sell your home, at least in a demand area, this is the moment.” – Garth

——————————————————–

That’s been the message for several years now. It suggests that RE prices have reached a peak and there will never be another opportunity to sell at these inflated prices. However, prices have just continued to climb and they may just continue to climb.

#51 renting for too long on 01.23.14 at 10:27 pm

I was at this house but I didn’t submit a bid.
it was crazy. the atmosphere was insane.
so many people loved this place. I think they loved the advertised price more than the home.
people are desperate for home ownership which is modern day slavery to the banks.
garth maybe you should be handing out flyers to the participants. that would be interesting.
I cant figure it out. purchasing a home for 850k without a home inspection or anything makes no sense. when I buy a car I look it over and kick the wheels and inspect it. in this house it was a race.
the greedy seller is the winner.
it is an old area of Toronto that was a dump. now that the area has a liquor license more bars and cool restaurants have appeared.

#52 LJ on 01.23.14 at 10:29 pm

Garth: “It was never intended to be a bargain in a city where detached houses are scarce and rare.”

Comment: Detached houses are a dime a dozen, the only difference currently are that the people living in them think that they are living in a gold mine.

Corollary: Detached houses in Toronto are only detached from reality.

And, now, a story from Calgary…

I drive by a particular, modest house in an inner city neighbourhood, daily. Two years ago, it sold after being on the market for several long months. Soon after selling, and continuing for well over a year, there was a complete gut and reno which probably cost something north of $200,000. The house went back on the market early last fall and sold before Christmas in the $800,000 range.

Today: completely torn down, including the foundations.

If this isn’t pure unadulterated insanity, I don’t know what is. And, you see this happening on a regular basis.

#53 SoSayTheAcademics on 01.23.14 at 10:33 pm

Anecdotes about “bidding wars” in trendy markets are common in real estate business discourse. But the practice of low pricing is not supported by systematic data and evidence: “Our findings based on market data … should give serious pause to any seller who is tempted to under-price a property in the hopes of generating a ‘bidding war’ per the advice of their realtor.”

http://www.sciencedirect.com/science/article/pii/S016726811300019X

#54 TurnerNation on 01.23.14 at 10:34 pm

Hopefully that hedgie is buying XFN kaputs. It’s all a blank tableau etc etc.

#55 Fed-up on 01.23.14 at 10:34 pm

@#48 Bob Rice on 01.23.14 at 10:13 pm
People buying these houses are just F-ing dumb…

Idiots… to live in “urban” toronto… an over-rated, mediocre, traffic-filled city with no soul..I should know – I was born and raised here…

Idiots abound

——————————————————————————–

But Bob didn’t you hear? Toronto is still cheap compared to Rome, London, Hong Kong and Tokyo. And the weather and economin Canada is just awesome if you plan on having to import everything because nothing grows or is made here…except for debt cardboard houses of course.

#56 TRON on 01.23.14 at 10:35 pm

If 400 people went through this house and one of them bid the highest price then the home got sold to the right person.

It’s too bad homes are so expensive, taxes so high, jobs getting scarce, governments with huge debt and deficits, little individual savings and a poor economic outlook.

It’s what happens when people stop thinking for themselves and rely on other for their opinion.

#57 Andrew Woburn on 01.23.14 at 10:40 pm

Is it ethical to list a house for drastically less than it’s worth in order to pump desire and break hearts?
===============================

Friedrich Nietzsche and Immanuel Kant don’t have much to say on this ethical challenge. More to the point was the work of the great American philosopher, W.C. Fields, who said, “Never give a sucker an even break!”

#58 Mr. Frugal on 01.23.14 at 10:40 pm

I can’t believe what these Torontonian dim-wits will pay for a house. News alert – there are much cheaper places to live within easy commuting distance. Just another case of people acting like lemmings. There was a time when $850K would have got you thinking about retirement. I don’t think the idiot that bought that hole will be retiring any time soon!

#59 eviee1973 on 01.23.14 at 10:41 pm

How about relators listing a house for a certain price in the open house listings of a paper, then increasing it by $100,000 when you show up. Remember seeing this once on a home in Dartmouth, a stale six month old listing I had drove by every day.

#60 World According To Garth on 01.23.14 at 10:52 pm

DELETED

#61 still waiting on 01.23.14 at 10:57 pm

hey garth when do you think property will drop in toronto im going broke renting cause i believed you

#62 World According To Garth on 01.23.14 at 10:58 pm

http://armstrongeconomics.com/2014/01/23/ukraine-the-revolution-in-full-motion/

Mexico
Thailand
Ukraine
Spain

Can’t happen here though. Canada, dictator Harper and his giant workforce of $91,000 workers with their $1,000,000,000.00 retirement pensions at 55 yrs old have it all sorted.

#63 Smoking Man on 01.23.14 at 11:01 pm

Hey Garth, you buddies, hedge fund, shorting Canada Real Estate. I sure hope they haven’t made any bets yet.

Less of course they are just collecting fees and make loot regardless of the out come.

But if they got skin in the game, they will get wiped out this spring.

Send em my email, I’ll tell em when to go all in.

It ain’t this year.

UCC never fails….

#64 sheane wallace on 01.23.14 at 11:08 pm

#46 Polsky
————————————-

For the same money I will buy decent apartment (no condo fees) in the heart of Frankfurt or Vienna. Or some top place in Berlin.

Much better than a house 15 km from Krakow.

Not to mention Spain, Greece, you will get a great villa for these prices with much better weather.

#65 Ronaldo on 01.23.14 at 11:09 pm

#51 Renting for too long –

”I cant figure it out. purchasing a home for 850k without a home inspection or anything makes no sense. when I buy a car I look it over and kick the wheels and inspect it. in this house it was a race.”

What makes even less sense is banks lending money out to these fools and CMHC insuring theses mortgages knowing full well that these places are not worth the price that was bid. How much longer can this insanity go on. We need some sort of shock to put and end to this madness. The tax payers will be the ones picking up the tab.

#66 45north on 01.23.14 at 11:15 pm

325 Perth

I worked three summers at Gliddens Paint Factory on Wallace Avenue. Very likely 325 Perth was home to a man that worked at Gliddens. Very likely he was slavic like Polish or Latvian. The filling foreman was Pat Kelly. There was another man Wolf who was on his way to becoming a veterinarian.

$848,625 well good for the seller.

#67 Market has spoken on 01.23.14 at 11:15 pm

The buyer is not stupid or a moron – the “winning” buyer (out of 400 potential buyers) thought it was worthwhile.

That’s how such markets operate, folks.

Alwyn

#68 Bernie on 01.23.14 at 11:26 pm

I find the value retention in places like Vancouver in particular Vancouver will erode, no matter what economists, real estate agents and media say. The prices are simply way too high. Way beyond normal housing metrics, and way beyond sustainable incomes. Simply put all real estate in Vancouver is poised for a major collapse in value as Canada goes through a deflationary period of absentee wealth syndrome. Whereby people believe that assets like homes will continue to climb in value from 1 million to 2 or 3 or 4 million within the next 48-72 months. And witness the exact opposite as deflationary curves begin to wreak havoc on overstressed markets. No one on God’s green earth can afford 2 million dollar homes on lower than average median incomes anywhere in Scamcouver. Vancouver real estate will fall. Guaranteed.

#69 Just Jack on 01.23.14 at 11:33 pm

The lender will likely want this property insured. So they’ll run it through the CMHC EMILY program and see if it sticks.

Because having a Human Being appraise the property is problematic. The appraiser could be good at her job. If the appraiser comes in too low then the listing agent, selling agent, broker, banker, buyer and seller will all be ripping her apart over the phone.

If it goes to an appraisal management company, they’ll find someone to appraise it in a few hours for $75 and the deal will go through.

This sale price will now set a new benchmark for the CMHC program so the next overpriced property in the hood to sell or get financed goes through without a hitch.

And this is how house prices get so high.

#70 Eatin' Bonbons on 01.23.14 at 11:35 pm

I swear, I just don’t get it. I know I don’t live in a hot or trendy neighbourhood, but the Go train gets me to work in 25 min. I can walk to the grocery store, post office, library, Timmy’s, parks, schools etc. When 600k gets you a nice 4 bedroom house on one of the best streets in this area – is getting in the car for 20 minutes to go to the Trendy spots really that bad. I just don’t know anymore, it’s all out of control.
This FSBO has been on the market for a while, I would have thought it would have gone but maybe the FSBO thing is putting people off. http://propertyguys.com/property/index/id/76685

#71 jan on 01.23.14 at 11:36 pm

Just in from Vancouver global tv;

Commercial real estate boom is back with 11 new rower under construction with a swiss company building one of the most environmentally sound towers in the world.

I guess it will never and in this country.

#72 Happy Renting on 01.23.14 at 11:40 pm

I hope at some point, somewhere during this bidding war someone stopped and thought, “this is crazy.” Because it is. If I had $850k, that house isn’t what I’d spend it on.

That realtor-seller should have kept his damn mouth shut with the press. At best, he sounds disingenuous. At worst, he sounds like a total tool, and decreases any goodwill the profession has even further.

#73 Smoking Man on 01.23.14 at 11:44 pm

Ronaldo on 01.23.14 at 11:09 pm

It’s like this, the machine, has restricted wage gains, trying to get advantage on rival trading partners, it has pushed productivity gains to shareholder and owners, but the wage slaves have been left behind.

They pushed it a little to far, they realized the wage slaves are the market.

The game now is to put a bit, not a lot into the rivet buckets wallet. Inflate some debt away.

Hence push up asset values, Stess out the Minions, get there wages up, to a point so the game of slavery, sorry associates will put the sword down, hopefully insuring the heads of the smoking men off spring stay firmly attached.

#74 blase on 01.23.14 at 11:46 pm

You can get what appears to be as good or better a house for $2,450 a month rent: http://www.homefinder.ca/listings/1584573-1154-dovercourt-rd-toronto-ontario-w2806684

There are going to be a lot of divorces in the coming years when this insanity stops. Lots of spouses looking for do-over marriages after this fantasy and debt pops.

#75 Cristian on 01.23.14 at 11:51 pm

The seller cannot be blamed, since history sellers of anything under the sun tried to get the best price they could for whatever they were selling. Ethics have nothing to do with it. It’s the duty of the buyer to do the due diligence and check what he’s buying, and if he doesn’t do it or pays too much it’s his fault, not the seller’s.

#76 Brian McFleelent on 01.24.14 at 12:25 am

What do these real estate practices mean for REITs? Do they add to the supporting portfolios with the higher housing prices or do they make it less desirable to own since private home ownership remains strong and virile?

#77 Millmech on 01.24.14 at 12:47 am

Cars for condos,it’s Cam Goods latest system,trade your car in for the down payment on a Gastown condo.He was on the Bill Good show on CKNW.Almost drove off the highway in my condo down payment when I heard this.

#78 Tedfiftyfour on 01.24.14 at 12:48 am

So when you Mother, Father Brother Sister etc all make out like bandits it’s ok but if a Realtor uses his skill ethically! it’s not.
What a bunch of mean spirited morons on this blog.

#79 Cici on 01.24.14 at 12:48 am

Garth, weren’t you supposed to tell us something about TD today?

#80 Not so long ago on 01.24.14 at 12:50 am

yep people, you could have bought two or three of these less than 5 years ago for that money. But who wants to invest in real estate…right?

anyone?

#81 DR on 01.24.14 at 12:54 am

26 Smoking Man on 01.23.14 at 9:01 pm There is nothing unethical about selling, from an artificial low list price.

A market is a market. We have supply and demand.

The marketfinds the price .

Well said…it is not a difficult concept to comprehend, I don’t think?!

#82 Republic_of_Western_Canada on 01.24.14 at 12:55 am

#52 LJ
Today: completely torn down, including the foundations.

If this isn’t pure unadulterated insanity, I don’t know what is. And, you see this happening on a regular basis.

Actually, that demolition is the only thing that is sane.

Renovating sad crap which was only originally supposed to be barely affordable minimums for a working stiff in the 1950’s (or 1920’s) is nuts.

Sure, once in a while you’ll get a few older neighborhoods with big massive old beam construction which could take an odd earthquake or two, and has parkable lots. I’m OK with replacing the tube-and-peg, plumbing, windows, A/C, roof covering, etc on those; maybe even the dank root cellars or coal/steam boiler basements too.

But once prices on some cheap congested shacks get to levels at which you could live indefinitely on the dividends of the purchase capital, it’s time to bring in the bulldozers and put up some serious architecture.

Good-looking solid rowhouses built out of steel, prestressed concrete sandwich and glass, in some sort of modern or frank-lloyd-wright arrangement, will serve far better and keep functional value for far longer than old junkers whether of brick or slat/waddle construction. And don’t get me started on all the tiny, peaky, pointy ‘herman munster’ crap, especially in new ‘burbs. (What is it with that stuff anyway? It’s like tailfins on all the cars back when they did atmospheric nuclear testing.)

Whether it’s quality multi-storey dwellings that particularly wealthy people live in, say on East 73rd or in Dubai, or it’s a bit more spread out like Drummond at the UBC campus, at some price point it’s time to upscale the infrastructure instead of just installing pot-lights and new hardwood onto 70-year old rot.

#83 DR on 01.24.14 at 12:59 am

Roxy on 01.23.14 at 9:48 pm Anyone paying over $200K for a semi-detatched or a row house like this is a complete moron. I’m traumatized from having lived in a semi for ten years with the neighbours from hell. Unless it is super soundproof, you have the potential to hear them yell, stomp, blast loud music, kids banging non stop, idiot chain smokers…you must be really stupid to pay that much for that kind of a house. Back in the old days semis and row homes were for the poor people who just couldn’t afford more. These people paying that much for THIS obviously don’t know any better…

you stayed there for ten years and (without knowing) think these neighbours are bad?

is that how you look at it? Really?

#84 Oceanside on 01.24.14 at 1:16 am

Nearly all the homes around Parksville and Qualicum Beach, both re-listed from last fall and new listings are all selling. Most for full price or close to….Seems there are a lot of people out there that were tired of waiting.

#85 Fed-up on 01.24.14 at 1:23 am

#66 Market has spoken on 01.23.14 at 11:15 pm
The buyer is not stupid or a moron – the “winning” buyer

——————————————————————————-

LMAO…you’d better look at the pictures again.

#86 Piccaso on 01.24.14 at 1:44 am

That’s an absolute POS

A Home Depot garden shed for $1,489.00 looks better then that and it’s not a semi.

WTF has this house horny country come to, I mean this is beyond stupid

#87 World According To Garth on 01.24.14 at 1:50 am

You know why Kanaduhhhhhh is the last at everything in modern western society? Because Kanadians are too dumb to look outside the box just like crooked everyone in govt looks only at their salaries and pensions. WHAT caused HAM?

THIS is whats going to bring down Vanncouver and the GTA……the biggest margin call in history.

http://theeconomiccollapseblog.com/archives/the-23-trillion-credit-bubble-in-china-is-starting-to-collapse-global-financial-crisis-next

Maybe after the dust settles duhhhhhhNadians will set things up right and be first instead of last. I’m so embarrassed when my German friends vist……

#88 Marco Polo on 01.24.14 at 1:52 am

No,

The top bidder was a moron. Whenever you’re in a bidding war, you’ve already lost.

This was a sealed bid tender, for this used house. You’d never buy a used car like that. In this case, the buyer could have been 100k over the next lowest bid. He did not pay what it was worth, or what the market would bear fairly.

Back in Kitchener, in 2005, I remember property auctions, usually an older home from an older couple that was way out of date and needed to be liquidated. The house was for sale by open auction, and all buyers knew competing bids. Expect these to return.

#89 Frustrated Kiwi on 01.24.14 at 2:20 am

Here downunder we have real auctions for houses with an auctioneer and people putting their hand up. Not great but sounds better than the blind submission process described above.

#90 Sign of the Times on 01.24.14 at 2:36 am

On the seabus in The Best Place on Earth today and overheard two stories that shine some light on the pulse of the city. The first was a young professional father explaining to the person next to them how they just realized that in five years of paying their mortgage they’ve only paid down the principle by $20k; they are considering selling and renting since the space is too small for what sounds like a growing family. The second was a young worker in the trades explaining how work in the city has dried up and complaining about how they need to work outside ‘even with their seniority’. This was followed by a complaint about working in the rain and their joy at the sunny weather we’ve had – but I thought people liked living here because of the weather? Or is it our robust economy that draws people to Vancouver :)

#91 Tony on 01.24.14 at 3:20 am

Re: #66 Market has spoken on 01.23.14 at 11:15 pm

Of course the buyer is an idiot, but we the taxpayers of Canada will be picking up the tab when the bank forecloses in the near future. There should be special rules where the persons’ decedents pay off the mortgage when the buyer is declared certified insane like the person who bought this hellhole.

#92 Jon on 01.24.14 at 3:57 am

When i see this price action in toronto i would say the cost of housing is higher than vancouver. The lot is 18 ft what was the land size this unit sold for prime west end price based on the land size

#93 unbalanced on 01.24.14 at 4:11 am

I know someone who is a liar,greedy and a bully and now is a real estate agent. True story.

#94 Dan on 01.24.14 at 4:14 am

Taking yesterdays posting into consideration Garth,if this purchaser acquired their mortgage through T.D.,and with
your estimate for a 15% correction,(I believe thats your figure),could you crunch some potential numbers come
re-mortgage time giving where you believe rates might be.

#95 Dan on 01.24.14 at 4:44 am

$850,000, so sad, but those numbers represent prices from a number of years ago here in North Vancouver.The potential for a economic catastrophe looms here! As I mentioned before, we sold quite a while ago and wait,but the anticipation is nerve wracking…I don’t wish hardship on anyone, but it well past that point in this neck of the woods.In my mothers neighborhood,where I
grew up,older houses have sold in the 1.5 to 1.9 range are regularly knocked down and rebuilt for the 3+ M.Sales ground to a halt for the better part of a year,(suprise suprise),but in the last couple of months,they sell in little spurts.Not only that,there are half a dozen within a stones throw,having sold remain empty months later…frustrating and confusing as hell!

#96 Bob Loblaw on 01.24.14 at 5:08 am

Proving, yet again ……. “there’s an asshole for every seat”

#97 Buy? Curious? on 01.24.14 at 6:24 am

Hey Garth! Did you just write this?

“Is it ethical to list a house for drastically less than it’s worth in order to pump desire and break hearts? Especially when available homes are few and many buyers desperate? Is it cruel to purposefully ignite a bidding war in which almost all will lose? Or is screwing out the last possible dollar the highest duty of a vendor’s agent?”

Gawddamit! Of course it’s cool! Do you know the feeling when you make that deal, regardless of where you are on the winning side, it’s the best feeling in the world! You can’t describe it but a close guess is that it lasts longer than sex and cheaper than drugs.

I know Perth Ave well. I know that house. Used to take my kids trick or treating there. I had to sell my house due to a lifestyle change and made a 71% profit over a few years. If didn’t listen to you and bought right away instead of renting for a few years, justifying it from this blog, fearing a drop in house prices (slow melt, soft landing, whatever!) I would have made more money! So instead, I lost 4 yrs of real estate value rising while re-educating myself diversified investing.

Thanks Garth. Thanks alot. I should have listened to my wife. The house we bought 2 years ago has appreciated just over 10%. Sell now? Pfft. By the time I hit retirement, the house may be over a million!

You’re not right all the time, ya know.

http://www.youtube.com/watch?v=ctCGA0VVaak

#98 Steven on 01.24.14 at 7:32 am

The real question is , is it ethical to charge so much for so little for a home to people that make ten to fifteen dollars an hour with variable hours? The houses in question being priced at 15 to 30 years pay instead of equal to or less than 3 years pay. Those homes would be expensive even with a zero knocked off the price and even at that if you paid cash you still don’t own the home any way because you have to pay rent in the form of property tax. Therefore it doesn’t make sense to buy real estate at all. Never pay for anything you can not afford and don’t really own.

#99 economictsunami on 01.24.14 at 8:19 am

Many are looking at the weakness of the Loonie in isolation and fail to see the risk of currency market recalibration taking place worldwide.

Contagion Spreads in Emerging Markets as Crises Grow:

http://www.bloomberg.com/news/2014-01-24/contagion-spreads-in-emerging-markets-as-crises-grow.html

Emerging market sell-off raises specter of contagion:

http://www.reuters.com/article/2014/01/24/us-markets-global-idUSBRE96S00E20140124

Reality? Taper-tantrum?

Most likely a little of both…

#100 Detalumis on 01.24.14 at 8:50 am

Scarcity c’est tout. The last 30 years have seen a zero increase in what a whole lot of people really, really want – walkability, good transit, services at the end of the street, culture, shopping all in one place, where kids and seniors aren’t prisoners in their homes because they don’t drive. Rich old people still choose Manhattan over any itty bitty retirement town. Rich young people do the same thing.

In Canada we have 80% suburban tracts and prisoner-small towns where seniors go to die. They ain’t building any more of the Junction model so no matter how much you mock this house 400 people would choose it over your house in a faux-town with no economy but tourism and looking after the elderly in the back of beyond.

#101 Bottoms_Up on 01.24.14 at 9:01 am

#100 Detalumis on 01.24.14 at 8:50 am
——————————————-
Then why was that house worth 300k a mere 10 years ago? The same factors were still present then….

#102 LJ on 01.24.14 at 9:04 am

#82 Republic_of_Western_Canada:

I don’t disagree with your statements. My only problem was with the middle step of dumping hundreds of thousands of dollars into an old house only to have it torn down at a much higher price point.

Waste of money, time and effort. Never mind that the next building will have to be well north of $1.2 million to make any profit. Even here in Calgary that is a lot of debt for someone to take on.

#103 recharts on 01.24.14 at 9:08 am

#75 Cristian on 01.23.14 at 11:51 pm
The seller cannot be blamed, since history sellers of anything under the sun tried to get the best price they could for whatever they were selling. Ethics have nothing to do with it. It’s the duty of the buyer to do the due diligence and check what he’s buying, and if he doesn’t do it or pays too much it’s his fault, not the seller’s.

This is RE agent logic
The ethic is involved mostly on the buyer’s agent side and on the TREB side (see the Competition bureau vs TREB case)
If the idiots had sufficient data about the area and in general about the sales in Toronto they would not bid like lemmings on that crappy house.

#104 bill marks on 01.24.14 at 9:26 am

Happy Renting,
Doesn’t make much diff if the realtor talks or not, I’ve seen bidding wars all over Toronto with or without publicity. Mostly it’s the client Realtor who fuel the fire.

#105 Limping Larry meets GT on 01.24.14 at 9:27 am

>>>>>>> # 17
The Junction Triangle is great, GO TRAIN is rebu…..

…And you are somebody who knows history of area?

LOL LOL LOL

Only 40tish or so years ago in that area Jane & Dundas where now GM dealership is was Steam locomotive washing station. All houses in radius of up to 5km where dark like charcoal from coal and ash dust.
no matter how why where washed dust was there in seams and visible
owners could not sell houses for then $5000 dollars where other houses where $25k..

everybody who owns house in that area that is same vintage can dig that ash and dust behind drywall…
because of the winds in summer time most of the houses affected are north – north east and north west.

Plant demolished houses rebuild life went on for while-
then enter drunken guys death on rails and Liberals imposed moratorium on LCBO in area in 1980. Area turned to below average slum.

LCBO back to local bars on dundas in late 1999.
massive credint incentives – from mosltly REALTORS benefited and area statet to pick up.

Reality: if you like to buy house and never leave property go there. so many condos on major intersections -you will never be able to get anywhere.
Enjoy your backyard and collect coupons for sales!
oh yes in summer time when windows are open

enjoy COUNTING TRAIN Cars !

At night they have up to 145 cars and 3 locomotives !!!!

#106 fixie guy on 01.24.14 at 9:35 am

#13 ajostu “…it’s a well known, well worn trick worldwide…”

Apparently not well known to bubbleheads. Simpletons screwing themselves is fine as long as I’m not on the hook in any way, shape or form for the consequences of their blind greed.

#107 Herb on 01.24.14 at 9:39 am

#26 Smoking Man,

of course the Great God Marketplace finds its best manipulated price!

#108 Dishonest article from someone who plays the honesty card on 01.24.14 at 9:44 am

http://www.torontorealtyblog.com/archives/what-everybodys-talking-about-325-perth-avenue/10502

This guy is a media stunt champion. He rides every turn of the market with his comments but to me he looks so out of the picture.

read this….

In the end, I think that 325 Perth Avenue is just the first of many homes that will sell for 133% of list price in 2014, although I will admit that 32 offers probably won’t be topped.

So hate me if you want, but I don’t think this is any indication that real estate prices are going down this year.

Bears – you’d better come out of hibernation soon. Unless you’re of the “the higher it goes, the worse it will fall” variety, but I think 325 Perth Avenue shows us all what’s in store for 2014 in the housing market…

and trust him because he is honest. And ignore your paycheck …you idiot lemming ..go out there and buy because it is going to be worse this year. It doesn’t matter that you can hardly pay for it, it doesn’t matter that Canada’s economy is so screwed that BoC has no ways to take any significative actions to improve the situation..all it matters is the numbers we RE agents see.
And he pretends he knows what he is doing…read the article.
This house of cards called Canada’s economy can go down any moment…it is a shaking building that needs just a bump on the road … and the road is not looking good.
Yes .. apparently the spring market doesn’t look good for the buyer, for the regular lemming but an educated buyer can see mounting pressure not only in the RE market but everywhere else.
There is no way they can save the Condo market. They are simply to many.
There is no way the canadian consumer can afford more than he already did
There is nothing that BoC and F’s peckerettes can do to cool off the market. Any move will simply destabilize everything.

This guy will have his commissions this year but he doesn’t think about the future. and he is young. At least 20 years of career ahead of him and nowhere to go. He is naive if he believes that his trade is not going to change.

I can’t get out my head what an economist said: every dollar owned to a mortgage is a dollar less spent in the economy in other sectors. One must be a truly and a genuine idiot to believe that Canada can survive selling resources and real estate. If relying on RE is a way to grow an economy why is not working? We had 5 f-beep-ing years to prove it!

#109 WTF on 01.24.14 at 9:48 am

#73 Smoking Man on 01.23.14 at 11:44 pm
Ronaldo on 01.23.14 at 11:09 pm
It’s like this, the machine, has restricted wage gains, trying to get advantage on rival trading partners, it has pushed productivity gains to shareholder and owners, but the wage slaves have been left behind.
They pushed it a little to far, they realized the wage slaves are the market.
The game now is to put a bit, not a lot into the rivet buckets wallet. Inflate some debt away.
Hence push up asset values, Stess out the Minions, get there wages up, to a point so the game of slavery, sorry associates will put the sword down, hopefully insuring the heads of the smoking men off spring stay firmly attached.

WTF is this guy trying to say?
Wow is he on magic mushrooms or crack?
Holy shit Ive seen fragmented sentences before but there is absolutely no coherency in this statement from Smoking Man at all! Good luck buddy, take an ESL course!

#110 NoName on 01.24.14 at 10:12 am

I am hoping that new owner are not driving KIA Cadenza, what would be kias imitation of luxury full size car, leinght of the car is around 16 ft. It would be biach to parallel park in front of the house…

#111 Condo Nightmare Ottawa on 01.24.14 at 10:15 am

More of this will be coming to Toronto next…

http://www.ottawacitizen.com/business/Hugh+Adami+repair+estimate+leaves+owners+Ottawa+high+rise+condo+shock/9391434/story.html

http://briankbriggs.tumblr.com/post/74088112865/condo-buyers-number-one-question-to-ask-when

#112 -=jwk=- on 01.24.14 at 10:18 am

@28 Let’s say you are the only bidder and the offer is higher than the asking price with no subject. Can the seller not sell to you?

In Ontario seller can decide no, so there is no risk at all to underpricing and going for the bidding war. If this house only had offers for 649, they could have not sold it. In other, more sane, jurisdictions, like California, seller is legally obligated to sell and can be sued if they don’t. This ensures properties are priced fairly to being with.

#113 economictsunami on 01.24.14 at 11:03 am

Meanwhile, south of the border, in the land of the faux housing recovery; where millions of homes await to be liquidated and sit rotting away…

Gundlach Counting Rotting Homes Makes Subprime Bear:

http://www.bloomberg.com/news/2014-01-24/gundlach-counting-rotting-homes-makes-subprime-bear-mortgages.html

As US banks have slowed/ halted the foreclosure process (it makes sense to have former owners stay in their homes) but without realizing market price losses (and rejigging mortgages to reflect this reality) the length of time needed to clear the backlog meanders further away…

Testosterone Pit: Housing Bubble 2.0 Hits Messy Resistance In California:

http://www.testosteronepit.com/home/2014/1/22/housing-bubble-20-hits-messy-resistance-in-california.html

#114 Robert on 01.24.14 at 11:06 am

My wife and I bought an old but solid bungalow in an in-demand area in central Toronto about 2 years ago, for 14.5% over asking. Our agents told us we competed with a builder for the property, but I don’t know if that’s true. Is there a way to verify that?

It’s really hard not to beat yourself up every day for a decision which I feel was unwise, but it’s also easier said than done to sell the place and move. But I really do regret ‘winning’ the bidding war for our home.

#115 DR on 01.24.14 at 11:08 am

http://themashcanada.blogspot.ca/2014/01/68-prust-avenue-greenwood-coxwell.html

I don’t think that Perth house is newsworthy as much as this….it has no parking and sold for 50000 more money. Whatever sells newspapers I guess.

be sure to check the stripper pole in the living room

#116 jess on 01.24.14 at 11:09 am

35 Cici on 01.23.14 at 9:25 pm
The three, record, fraud epidemics that drove the crisis :Appraisal Fraud, liar’s loans , Fraudulent “reps and warranties” are essential to sell fraudulent mortgages Continue reading @
Let’s End Politico and Deal Book’s “Competition in Sycophancy”
By William K. Black

——————————-
Netflix is threatening to mobilize their 44 million customer if internet providers slow down Netflix streams. Reed Hastings, Netflix’ CEO, said, “In principle, a domestic ISP now can legally impede the video streams that members request from Netflix, degrading the experience we jointly provide.” He added, “Were this draconian scenario to unfold with some ISP, we would vigorously protest and encourage our members to demand the open Internet they are paying their ISP to deliver.” When the D.C. Circuit Court of Appeals struck down net neutrality, they opened the door to a pay-for-play internet. Because of that ruling, internet providers could charge companies like Netflix more for their content, or charge users more to access it…..

#117 Ralph Cramdown on 01.24.14 at 11:14 am

Hilarious. The real estate agents are all back-slapping and high-five-ing that prices are set to continue their increase… And yet. With over 30,000 agents, a good chunk of them active and needing the income, and “no inventory” as they say, a lot of them must not be making sales because they’re unable to match buyer with seller.

Now as to the subject property, there’s no getting around the facts. It was built as cheap housing between three railroad tracks which serviced a variety of light and heavy industry, much of it of the polluting kind. Traffic in the area is a nightmare. At a 1km walk to the subway, you won’t think you live close enough in this weather. Being a row house, several other owners need to be bought out to redevelop. For this price, you can get beautiful, well located upscale properties in many places around North America and the world that I would rather live. No comparison. One poster pointed out that you can get a nice detached on a large lot in Scarborough for less, another that you could live forever, if a tad frugally, on the income from the capital this dump represents.

So it’s a bubble. Not high, or overextended, but an outright bubble. The only rational reason to spend $850k on this crackerbox rowhouse in a brownfield neighbourhood is if you honestly believe some sucker is going to be willing to pay a million for it a few years hence.

Why would people believe that? Here’s a theory:
http://www.pieria.co.uk/articles/weird_is_normal

Rich people of the world are using real estate as a store of wealth because they’re scared about stocks and bonds and currencies, much like loonier ones are stocking up on gold and bitcoins. Poorer people, seeing what’s happening to prices for rich peoples’ houses figure a rising tide will lift all boats. Well, it will, for a while. But there’s a difference between a cash owner with other assets besides in Rosedale who’d rather risk losing 25% of his house cost than risk a bigger decline in financial markets which he fears is more likely, and a 10% down owner in a cheaply built rowhouse in an “up and coming” neighbourhood. We’ll see.

#118 Robert on 01.24.14 at 11:21 am

In other insane Toronto RE news:

http://themashcanada.blogspot.ca/2014/01/sold-55-berkshire-avenue-leslieville.html

#119 Herb on 01.24.14 at 11:29 am

#111 Condo Nightmare PERIOD

you can ask about special assessments, but you can’t expect to be homefree if there isn’t one currently on the books. The Reserve Fund Study and the balance of the reserve fund itself will be be good indicators, but they’ll be provided to you (for review and final approval within a week or so) only after you have submitted your bid.

However, nothing protects a condo owner in case of an unanticipated or unidentified problem. All repairs to a large building’s infrastructure involve large bills, and you are at the mercy of the expertise of your lay condo board and its hired advisers from the construction and RE industry.

#120 Yo on 01.24.14 at 11:39 am

When I first saw this in the Toronto Star, I kinda laughed. Was the offer clean? No conditions? This deal won’t close. Anyone that is that dumb to pay like this is relying on bank financing, so I am pretty sure the deal is dependent on financing being approved. No bank in their right mind would approve financing in this situation. Not only it is about 15% above even (I think) already optimistic prices, this story has received too much attention, and no bank would want to be holding the bag. If the bank approved this deal, they would right away take a haircut of around 10-15% on the loan amount in a slowing market. This house will be back for sale. And if this was a clean offer (the buyer paid 100% in cash), then they must sell drugs, since usually someone with that kind of cash is smart with it.

#121 Yo on 01.24.14 at 11:45 am

Frankly, I wouldn’t be surprised right now the buyer has some serious buyer’s remorse and is always praying the bank declines financing so they can get out of the deal, and get their deposit back. You can tell from the article, the seller also has some regrets. I am sure he got lower offers that were clean, but got greedy, and went with the highest – but the hitch I bet it is dependent on financing. It happened to a house near me. Got a crazy offer, took it. But the deal fell apart later due to financing.

#122 DM in C on 01.24.14 at 11:51 am

Teddyfifty four spouted, “So when you Mother, Father Brother Sister etc all make out like bandits it’s ok but if a Realtor uses his skill ethically! it’s not.
What a bunch of mean spirited morons on this blog.”

****

Point out who was bragging about how their immediate family made out ‘like bandits’. Also;

#1 – who said realtors have ethics? you’re on the wrong blog if you think people here said that.

#2 – why are people mean-spirited if they call out shady behavior?

#3 – moron = ad hominem attack. If they didn’t teach you that in realtor school, look it up.

#123 angela on 01.24.14 at 12:07 pm

china dumps all us bonds …..bummer
http://webcache.googleusercontent.com/search?q=cache%3Apoliticalticker.blogs.cnn.com%2F2014%2F01%2F23%2Fbreaking-china-dumps-all-bonds-declares-south-china-sea-closed-zone%2F

#124 Dupcheck on 01.24.14 at 12:31 pm

Are you guys watching the stock market today? DOW and TSX are down 2%. Yesterday they went down 1%. Market crash approaching?!!!

A nice lesson on why DIY investors always fail. Emotionalism causes them to think in extremes. When the market loses 40% (not 2%) you can use the ‘crash’ word. — Garth

#125 happity on 01.24.14 at 12:33 pm

Wow, precious metals shares up 20% this year and the snp500 down, yup the USA economic renaissance that never was is faltering, and all that happened was a tiny Tim taper…

An equity market correction was never in doubt, and is overdue. It’s a healthy development. — Garth

#126 Perfect Competition on 01.24.14 at 12:41 pm

So, you get a Surprise when conditions for a real estate transaction happen in a (more) perfectly competitive economic model – where, among other things, communication between buyers and sellers is assumed to be “perfect” – after all, how many sellers can get 400 potential buyers to show up?

Non-economic-speak translation: Great marketing effort.

Now, you know why the seller received such a high offer.

Alwyn

#127 Ralph Cramdown on 01.24.14 at 12:42 pm

#121 Yo — “Frankly, I wouldn’t be surprised right now the buyer has some serious buyer’s remorse and is always praying the bank declines financing so they can get out of the deal”

If the realtor/seller walked out of a gong show like that with a conditional offer, he’s the biggest fool of all. You take the highest unconditional offer (with a fat, certified deposit) and run. No offer conditional on financing, inspection or appraisal should even be considered.

Of course, all the buyers’ agents were telling them they’d have to put in clean offers to even be considered.

#128 Realtor #1 on 01.24.14 at 12:48 pm

Everyone is missing the real story here.

32 offers!! Wow – that tells me demand is going to be much greater than supply this spring.

Canadian Bond Yields are falling!
Variable rate will stay the same till 2016, thus finding mortgage rates under 3% will not be an issue.
Carrying cost will stay the same.

I’m sorry no correction this year.

#129 overskooled1 on 01.24.14 at 12:49 pm

And the lunacy continues … check this one out!!

http://themashcanada.blogspot.ca/2014/01/sold-55-berkshire-avenue-leslieville.html

Try not to hurt yourselves laughing too hard!!

#130 Ralph Cramdown on 01.24.14 at 1:06 pm

#128 Realtor — “Everyone is missing the real story here. 32 offers!! Wow – that tells me demand is going to be much greater than supply this spring.”

It looks that way. On the other hand, there could be more than a few cranky old men reading the Star at the breakfast table who say “Good lord, Mildred. Some idiot just paid EIGHT HUNDRED AND FIFTY THOUSAND for a one-holer in the Junction ghetto. Our stocks did well last year, but the Canadian dollar is down and it sure looks like the bottom is in for the US housing market. What say we sell our place to a young couple and move down to Florida or Arizona? We’ve got enough, and might never have the opportunity again.”

And of course, you know there’s a few junior assistants in Ottawa whose job is to bring news like the Perth Avenue gong show to the attention of their masters at the BoC and at Finance.

#131 Big Brother on 01.24.14 at 1:08 pm

#109 WTF on 01.24.14 at 9:48 am

#73 Smoking Man on 01.23.14 at 11:44 pm
Ronaldo on 01.23.14 at 11:09 pm
It’s like this, the machine, has restricted wage gains, trying to get advantage on rival trading partners, it has pushed productivity gains to shareholder and owners, but the wage slaves have been left behind.
They pushed it a little to far, they realized the wage slaves are the market.
The game now is to put a bit, not a lot into the rivet buckets wallet. Inflate some debt away.
Hence push up asset values, Stess out the Minions, get there wages up, to a point so the game of slavery, sorry associates will put the sword down, hopefully insuring the heads of the smoking men off spring stay firmly attached.
……………………………………………………………………

WTF is this guy trying to say?
Wow is he on magic mushrooms or crack?
Holy shit Ive seen fragmented sentences before but there is absolutely no coherency in this statement from Smoking Man at all! Good luck buddy, take an ESL course!

____________________________________________

Dear WTF,

Big Brother and MKULTRA are sorry for our abomination and creation. He is our Frankenstein. He has good intentions such as “I Love Me, Who do you Love.” The world sucks, but “I am great.” “You are all slaves.” So on and so on. If you don’t like his drug infused ramblings then please skip his rants. We understand, we created him and we sort of control him. If you need to see him in action he hangs out at the bar in Seneca Casino, he’ll be the one in the leisure suit with girls hanging all over him. Drunk of course!

#132 bdy sktrn on 01.24.14 at 1:35 pm

What say we sell our place to a young couple and move down to Florida or Arizona?

——————————————
Like a growing virus colony in a fertile host, or a [email protected] anthill left untouched, human population numbers only go one way (esp in big cities)and every single day there are more warm bodies looking for a shelter/land to call their own.

In toronto, van,cgy and (mtl?) the supply of shelter is covered, but LAND SUPPLY DROPS constantly and continuously, without fail. always.

SFH being redeveloped to higher density/ commercial/park/etc will continue , just as it has, until pop growth stops. Fewer backyards to bid on by an ever increasing group of buyers, explaining prices today.

Burbs and further are a growing supply with a slower pop growth negating the urban price pressures.

Bigger wage gap has seen solid pay increases among the already high paid , two prof incomes can easily top 350k in the big smoke. Not everyone can be a lawyer/doc/exec/etc but enough exist to keep driving the shrinking supply of land upward in core liveable areas.

#133 Knickerbocker Knosty on 01.24.14 at 1:48 pm

#123 angela on 01.24.14 at 12:07 pm — “china dumps all us bonds …..bummer”

Possibly this, in combination with China’s impending default on Jan. 31 has something to do with this rigmarol.

Yo SMan! Keep on posting and causing mass confusion amongst sheeple of Garth’s blog!

#134 Subversive on 01.24.14 at 1:50 pm

I see no ethical issue with doing this at all. The listing agent’s job is to secure the best possible price for their client. If this strategy works, so be it. No one is putting a gun to the buyers’ heads and forcing them to bid.

#135 gladiator on 01.24.14 at 2:19 pm

123 angela and 132 Nosty (Nostramadus?)

CNN’s site was hacked. This news is BS. If this was to happen, it would be in all news feeds.

#136 Rational Optimist on 01.24.14 at 2:32 pm

325 Perth? (3^2)-5=4! No thanks!

#82 Republic_of_Western_Canada on 01.24.14 at 12:55 am

You obviously have great taste in architecture. Are you in an artistic field?

It’s hard to argue with you, but I think you’re wrong that it’s better to tear something down from the 20s in general. Some older construction is bad, but other is excellent, and I think that the latter outweighs the former. I also suspect based on experience that older construction was easier to maintain and was better-maintained than now. It’s not sensible to tear down a double-brick home to replace it with something made of wood frame. And the fact is, the lot observed by your compatriot has probably now been filled with a three story wood frame with all kinds of “gables” and such, and a very 2013 grey brick veneer stuck to the front of it with paste.

100 Detalumis on 01.24.14 at 8:50 am

You’re right that people want walkability and vibrant urban fabric, and also that developers and bad zoning are not giving it to them. “The Junction,” however, can absolutely be replicated. You could build a hundred of them. Wherever is the next Milton could be made to look and feel like the Junction, but cleaner and newer and better. The only thing that can’t be replicated about a property is its location, but you can come pretty close. And downtown Toronto will not be the only, or even the best, place to find employment in the future.

#137 Wrongly focused on 01.24.14 at 2:35 pm

The lack of ethic lies in the bidding system where the idiots who bid can not see what the others are bidding.
I wonder what else on this earth sells this way…

#138 TurnerNation on 01.24.14 at 2:35 pm

“Mildred, call our adviser.”

#139 Shawn on 01.24.14 at 2:35 pm

High Prices Explained

bdy sktrn at 132, good job as you have obliterated the tired old argument that average house has to be affordable by the average family. Never was the case in big cities…

I am not sure if house prices are too high, but they sure are not going down to where average family can afford house in Toronto.

#140 SofaKing on 01.24.14 at 2:52 pm

@#26 – smokingman

This is far fom being a normal market with demand and supply
as the driving forces. This is about taxing to death a younger genetation(s) for the benefit of the wrinklies with their huge sense of entitlement.

But then again, if generation y can’t figure that one out, well c’est la vie.

#141 bentoverpayingtaxes on 01.24.14 at 2:52 pm

So….here it is….the question about whether the BOC gov-Poloz is an incompetent…a liar….or just a run of the mill meat puppet with absolutely no clue about what the BOC actually does….or at least is supposed to do. Is BOC gov Poloz just a dupe who assumes we are just stupid…because he’s a big time civil servant getting all the royal perks…..and we aren’t?

http://www.reuters.com/article/2014/01/24/markets-canada-dollar-bonds-idUSL2N0KY0U520140124

His inflation numbers reported were very wrong…he missed the fact that inflation is much higher than he spoke of…or he was directed to bash the currency by the politicians who appointed him. What is it? Why are citizens…particularity the price sensitive poor being subjected to inflation…particularly food price inflation that Poloz has said doesn’t exist?

Stepho….or excuse me….. Mr Flaherty…..how does inflation not exist one day…..and show up the next….? Aren’t you supposed to be the guys with your eyes on the ball? Bashing the dollar doesn’t solve the issue of too much borrowed money…..only fiscal responsibility will do that.

#142 Old Man on 01.24.14 at 3:01 pm

The moral of this last posting is clear, as all is out of control with logical thinking about buying an asset called Real Estate. Auction sales are emotional; rigged; and feed upon the greater fool without giving any thought about the future financial consequences. Newtons 3rd Law comes to mind that with every action there is an equal and opposite reaction. Greed figures into this equation to buy at any cost; to beat out the competition; and it feels so good to win. But its all a trap in the end is it not? Its time for all to face reality, that the bubble will explode, and guess who is holding the bag of debt? Yes, the greater fools are not buying an asset, but a contingent liability in years to come; so sad that logic is set aside to take a fall into bankruptcy, a loss of savings, and a potential divorce.

#143 Just Some Guy on 01.24.14 at 3:03 pm

There is quote attributed to Oscar Wilde: “When the gods wish to punish us they answer our prayers.”

The people who bought this property may have put themselves into a situation which could end badly: divorce, bankruptcy, poverty, and perhaps a shorter life span. And I certainly do not wish this upon them.

How do I know this? The correct answer: I don’t. Why do I believe this is the most likely outcome? Because, if they were truly wealthy enough to be able to drop that kind of money without consequence or ill effect, they would never buy this kind of property. As our gracious blog host has said, the rich generally have a much smaller percentage of their net worth in real estate.

I think that what is really at work is that because the new owners are borrowing the money, and focussing only on what the monthly cost is, they have made a huge mistake. If they understood compound interest, and what this purchase will truly cost, they would have thought twice about it.

#144 BillyBob on 01.24.14 at 3:09 pm

#123 angela on 01.24.14 at 12:07 pm

china dumps all us bonds …..bummer

——————————————————————

Uhhh..actually, a fictitious story briefly posted on a hacked CNN website. But you knew that, right?

#145 Entrepreneur on 01.24.14 at 3:13 pm

Position of Power should not be abused; self-interest only leads to greed as Garth’s example. It should be illegal in Canada and anywhere else that real estate agent play mind games on potential buyers.

Cheers to Australia for standing up for the individual citizen. All and each citizen should be be protected from the abuse of real estate agents with position of power.

Each citizen is important to the economy and the above example just shows the lack of respect to the buyer. Shame, on the real estate agents…shame, shame, shame.

#146 Ralph Cramdown on 01.24.14 at 3:14 pm

#132 bdy sktrn — “Like a growing virus colony in a fertile host, or a [email protected] anthill left untouched, human population numbers only go one way (esp in big cities)and every single day there are more warm bodies looking for a shelter/land to call their own. In toronto, van,cgy and (mtl?) the supply of shelter is covered, but LAND SUPPLY DROPS constantly and continuously, without fail. always.”

Ditto for Detroit and Cleveland. Don’t forget them.

Nobody moves to Toronto for the climate, which can best be described as a bit better than Buffalo. People move here for the economic opportunities. Right now the jobs are in building a truly massive amount of housing and associated infrastructure, and in financing our and the rest of the country’s building boom in housing and energy. 25% of Toronto jobs are in finance. Fewer Canadians contribute to TFSAs and RRSPs? Fewer Toronto jobs. National real estate boom slows? Fewer jobs in Toronto.

#147 Realtor # 1 on 01.24.14 at 3:21 pm

Ralph Cramdown

Maybe, but it wasn’t a factor last year or the year before.
Also, We have had several changes to mortgage rules and it has done nothing to the market

With interest rates remaining low and stable for the next year or two it is now become a supply and demand game.

You will need something to cut demand – scared lenders or job loss/uncertainty.

#148 Bottoms_Up on 01.24.14 at 3:28 pm

bentoverpayingtaxes on 01.24.14 at 2:52 pm
————————————————
Didn’t he say “disinflation”, and as Garth points out, that means persistently low inflation, which is exactly what this report indicates? That we have low inflation? I don’t see that there is a conflict between the two? Our inflation for several months has been around 1% (annualized) or less, much lower than the 2% target range set by the BoC.

#149 Tony on 01.24.14 at 3:35 pm

Re: #124 Dupcheck on 01.24.14 at 12:31 pm

The market can’t crash until the price of oil implodes. It’s still missing from the equation unless oil melts down in the next hour and a half. If you see the bottom fall out of oil then yes you could see a crash. There still is the circuit breakers and the “plunge protection team”.

This is amusing. The markets decline for two days after a 30% gain in 2013, and the talk turns to ‘crash.’ As I said, it’s little wonder the self-invested cattle are routinely milked. — Garth

#150 Bigrider on 01.24.14 at 3:46 pm

People of Toronto will cOntinue to buy houses over financial assets. This way they can avoid having to worry about all the green and especially red arrows they see on BNN everyday.

After all houses only go up in price right?

#151 Josh in Calgary on 01.24.14 at 3:56 pm

Auctions frequently generate the highest bid. Buyers carefully evaluate the asset, establish their best price and when the bidding begins they forget it all and try to “win” at all costs. Sure not everyone, but all you need is 2 or 3 in the crowd and the race is on.

We have an auction for our playoff hockey pool. Every year it’s the same thing, the best players go for a stupid amount of money and that person never wins the pool. The guys who wins pick the good players who go for a bargain. It’s the same phenomenon but in the hockey pool it’s more obvious who the winner was.

I also believe that the “moral” component doesn’t sit with the seller. He/she should try and get the most money possible. It’s up to the buyer to determine what’s too much. However, it’s all been distorted by cheap money from the banks back stopped by cheap insurance from CMHC. Remove the CMHC (or at least make it harder to qualify for) and now the banks have to play with their own money and will be less likely to make ridiculous loans to back stop these bidding wars.

#152 Smoking Man on 01.24.14 at 4:00 pm

#140 SofaKing on 01.24.14 at 2:52 pmas the driving forces. This is about taxing to death a younger genetation(s) for the benefit of the wrinklies with their huge sense of entitlement.

But then again, if generation y can’t figure that one out, well c’est la vie.
……………

I’m at the tax farm for 11 hours a day, saving the asses of my traders, running two business from this phone that is typing this, trading FX. Going home, doing more business, with two other large clients, doing a book, and coming to GF to entertain you monkeys.

All my loot from tax farm and then some goes to CRA.

Yes very entitled I am.

#153 Old Man on 01.24.14 at 4:02 pm

There are those that are young who need to learn by their mistakes in life, as it is all part of the human condition that I and others have gone through. In older age we grow with wisdom for the most part, so we look for ways to overcome growing older. I can no longer shop the big grocery stores walking around like a fool to hoop the bargains for $100, so use technology to do my bidding for free.

I hit the web looking for an entrepreneur; nice van; a good website; works day and night; an Italian guy about 33 years old; and will shop groceries for me with his delivery service – his gig alone might earn him about $1,000 a week, as paid him in cash; might even be a part-time job. I gave him my order via email to shop at Metro for me, and he celled me all done, and he came with a cart of plastic boxes with all the bags inside placed on my kitchen counter.

Now he charged me $18.00, but bought me the half priced deals, so made a profit on my bill for $89.95 + $18.00, so it cost me nothing; not to mention picking me up the no name products – what a deal. He hit his van, and sent me via email a receipt saying paid in full on my screen minutes later. Yes, he will be my shopper for the a big shop, as the small ones can do myself, so am no fool.

#154 Ralph Cramdown on 01.24.14 at 4:11 pm

As I said, it’s little wonder the self-invested cattle are routinely milked. — Garth

That’s a theory that doesn’t stand up to scrutiny, Garth. If the self-invested are losing alpha to somebody, it isn’t passive investors, who are only getting the average market return by definition. It sure isn’t hedge funds that have been picking up the alpha, as their performance in the last few years has been stinking the joint out.

The milk that fattens the investment industry is mainly from fees, not market timing or superior stock selection.

The lactose I referred to is from those self-invested who buy rising assets and shed declining ones. Emotion always defeats them, with the winners being on the other side of the trade. — Garth

#155 Knickerbocker Knosty on 01.24.14 at 4:35 pm

#135 gladiator on 01.24.14 at 2:19 pm and #144 BillyBob on 01.24.14 at 3:09 pm — “CNN’s site was hacked. This news is BS. If this was to happen, it would be in all news feeds.”

Hi gladiator and BillyBob. I realize the story is false, but the point is that someone had a reason to hack into CNN’s site and plant the story, so it boils down to a few questions:

1) Who was the person or persons, whom did they work for and

2) What was their motive, intent or reason(s)?

If TPTB see a chance of making some big bux out of a war, they will use all opportunities to create and manifest a war, manipulating oil and gold / silver prices among them.

There is far more going on than the m$m and blogs can ever report. What other info. has Ed Snowden distributed which will go public soon enough?

#156 :):( Ying Yang on 01.24.14 at 4:37 pm

Smoking Man I think we should invest in Casinos. Money goes in, profit goes up. Money goes in, profit goes up………………………………………………………….
After watching old people (over 30ish) putting money into machines I am now a believer that we are ruled by the machine. It is much more evil in the method in which they rule us. They get your hopes up for the big one, give you a little dangle and then bam before you know it you’ve blown a grand in a heartless money maker.
It is amazing I watched a woman probably around 50ish plunking 100’s into a machine a few weekends ago at Seneca. She was oblivious to everything around her and chatted constantly with others while she was high on machine drugs. Then when the machine drugs wore off she changed her demeanor completely, it was as if she morphed into a demon. I can definitely afford to loose some fun $$ but these little old ladies and retires must either be loaded or borrowing against the home. I say Casino is a good investment!

#157 Ian - Ottawa on 01.24.14 at 4:42 pm

Thought this was interesting. Gastown. No Downpayment, No Problem. Bring us your car!! Ingastown is the name of the project. So Garth, I guess I buy a home in T.O. and get a BMW and then take my BMW to Vancouver as a down for the condo? Yeeesh….. P.S. Heard you took a fall, get well !

#158 To the idiots who believe that there is no more land in GTA on 01.24.14 at 4:44 pm

http://www.thestar.com/news/gta/2013/12/01/more_density_downtown_will_cut_down_on_gridlock_hume.html

Even more interesting, we were told, “80% of GTA residents would give up a large house and yard to live in a ‘location-efficient’ neighbourhood that is transit-friendly, walkable and offers shorter commute times.”
That report, released in 2012, has now been followed by a second that looks at why GTA housing prices are so high. The first myth it dispels is one promulgated by the development industry, namely that land is in short supply. Connected to that is the secondary belief that the cause of the land shortage is the provincial Greenbelt and Places to Grow legislation.
“Our study shows there’s plenty of land left,” says Pembina’s Cherise Burda. “In fact, there’s enough land left in settlement areas to accommodate growth and employment well beyond 2031.”
But as Burda also notes, “It’s not the land developers want, but there’s land.”
That’s an important distinction; the development industry has grown enormously rich on sprawl and above all wants to keep doing exactly that. That’s why it so desperately opposes change. Sadly for the industry, however, the province and even some municipalities are demanding an end to sprawl. They want growth to be more economically and environmentally sustainable.
That means developers can’t continue throwing up subdivisions, as they have done for decades, with their brains on hold. Quite simply, the effects have been ruinous and are only getting worse.

We are actually being screwed by developers and RE agents like some of those who posted here today repeating the mantra “there is no more land”

FY! (That means “for you!” …or course!)

#159 say it ain't so on 01.24.14 at 4:46 pm

An equity market correction was never in doubt, and is overdue. It’s a healthy development. — Garth
_____________________________________________

this is not a correction, but the beginning of the next bear market…

since your year end “predictions” you’ve been nothing but wrong.

stocks have been smashed.. earnings poor, economic growth collapsing, jobs disappearing..

interest rates have been falling, not rising…. gold and gold stocks have been the best performers by far in the market..

there is no economic growth, just money printing .. that’s not economic policy.

Let me express sympathy at your gold position. I feel your pain. — Garth

#160 Ralph Cramdown on 01.24.14 at 4:47 pm

#151 Josh in Calgary — “I also believe that the “moral” component doesn’t sit with the seller. He/she should try and get the most money possible. It’s up to the buyer to determine what’s too much.”

Short of informing buyers of latent defects and avoiding misrepresentation, I agree that the seller has few obligations.

But what obligations do agents have as “professionals”? One of the biggest skills they claim is “knowing the market.” So if the seller’s agent just lists $200k too low to create a cattle call and the buyer’s agent, upon seeing said cattle call says that the winning offer will be high and with no conditions, is either side adding value? Just call them auctioneer and roper.

#161 LTL_FTC on 01.24.14 at 4:48 pm

Seems like some group-think going on here today with so many claiming the bidders are idiots and buyer-beware sentiments.

If a flood is coming and the local boat vendor jacks his prices up 1000%, it would be considered a predatory strategy. Not quite the same thing, but worth considering another side of the coin.

It’s true that the market sets the price and that in an efficient market a fair price reflects all relevant information. However, real estate is not an efficient market in this sense, and buyers are often sorely lacking the required knowledge – making them idiots of a sort. The boat buyers were idiots too for not already owning a boat, but some jurisdictions would prosecute the boat vendor. Maybe it ain’t so black and white.

#162 Victor V on 01.24.14 at 4:51 pm

http://business.financialpost.com/2014/01/23/plans-to-work-to-retirement-age-up-in-smoke-after-layoff/

In a small town in Ontario, a woman we’ll call Jeanette, 59, was recently downsized out of her job as an administrative assistant with a large transportation company. It came as a complete shock. “At first, I felt anger, then worry, then fear. I would be on my own and out of a job and my plans to work more years went up in smoke.”

She received a package of termination benefits which included a year’s salary, $47,244. That’s hers independent of any other job she may get. In one sense, that seems a lot, especially for a woman who is alone and no one but herself for financial support.

“I was told it could happen, but at my level, I did not think it would,” she says. “I was stunned.”

If she does not plan her forced retirement, several years before she had planned to start, she could wind up in dire straits. She is frugal to a fault, but she realizes that, with her job gone and unlikely to be replaced, her financial life has to be reappraised. Travel, especially to Europe, hangs in the balance. She fears spending too much too soon.

#163 Westcdn on 01.24.14 at 4:56 pm

An article on why most German rent rather than own their homes. Long term and consistent government housing policy appears to deserve a lot of credit. It appears the government also managed to minimize incentives to buy over renting. http://qz.com/167887/germany-has-one-of-the-worlds-lowest-homeownership-rates/

#164 jess on 01.24.14 at 5:02 pm

Inside the Offshore Fraud: The Villains and Victims of Australia’s Biggest Pension Scam
By Bernard LaganJanuary 17, 2014
http://www.theglobalmail.org/feature/inside-the-offshore-fraud-the-villains-and-victims-of-australias-biggest-pension-scam/789/

http://www.theglobalmail.org/

The ICIJ files also shed light on the BVI’s previously unreported role in a burgeoning scandal involving Wen Jiabao’s daughter, Wen Ruchun, also known as Lily Chang. The New York Times has reported that JPMorgan Chase & Co. paid a firm that she ran, Fullmark Consultants, USD1.8 million in consulting fees. US securities regulators are investigating the relationship as part of a probe into the bank’s alleged use of princelings to increase its influence in China.

#165 say it ain't so on 01.24.14 at 5:02 pm

Let me express sympathy at your gold position. I feel your pain. — Garth
__________________________________

thanks. it’s done a whole lot better than your stocks, reits, and prefs combined.

Atta boy. Comedy will help. — Garth

#166 Jim Angus on 01.24.14 at 5:12 pm

#142 Old Man wrote:

“Newtons 3rd Law comes to mind that with every action there is an equal and opposite reaction”

Another Newton law to ponder:
Bodies in motion tend to stay in motion

Then there’s the Soprano version of that law:
Bodies in the ocean tend to float!

#167 jess on 01.24.14 at 5:39 pm

How I Lost My Offshore Oil Empire
By Michael Hudson, Alexa OlesenJanuary 23, 2014
He had a multi-billion-dollar oil pipeline in China and dozens of companies in the Caribbean. Then his cosy and convenient secret system backfired on him.
http://www.theglobalmail.org/feature/how-i-lost-my-offshore-oil-empire/808/

=
Tobechi Onwuhara led a multi-million-dollar home equity line of credit fraud scheme
real estate agents part of the fraud
http://www.fbi.gov/news/stories/2014/january/fugitive-identity-thief-led-global-criminal-enterprise

#168 Retired Boomer - WI on 01.24.14 at 5:39 pm

US Markets closed down…. GREAT!!

I was nibbling on a couple of what I presume to be “bargains” late today BMY and KEY not huge stakes but smaller nibbles today, they might even be further reductions tomorrow. KCS needs to go further to excite this ol RR guy, but it might come to pass.

Love an “on sale” day like this one!

Gold? Naaa no dividend there…

#169 World According to Garth on 01.24.14 at 5:49 pm

Gold $875 is coming soon !!

#170 Old Man on 01.24.14 at 5:50 pm

I am looking around to the world markets, and there might be a currency reset with BIS, and that hyper deflation needs to take years to adjust the debt problem worldwide, and May is a target date for all common stock to fall year after year. I pity those that bought Real Estate at the top, as they will be busted in Toronto and elsewhere.

#171 Ralph Cramdown on 01.24.14 at 6:04 pm

#161 LTL_FTC — “If a flood is coming and the local boat vendor jacks his prices up 1000%, it would be considered a predatory strategy. […] It’s true that the market sets the price and that in an efficient market a fair price reflects all relevant information. However, real estate is not an efficient market in this sense, and buyers are often sorely lacking the required knowledge – making them idiots of a sort.”

I’ve never really had a problem with vendors jacking up the price of bottled water, generators, gasoline, plywood and such before an approaching storm. I figure that’s a way to efficiently allocate it to people who want it most, in some ways better than the all-you-can-carry first-come-first-served behaviour that is typical.

Some of the behaviour I see in real estate is more akin to falsely spreading news that a storm is coming, with the whole Asian thing, the world-class city thing, no more land, etc. While sellers and their agents might well be guilty of no more than puffery, exaggeration or storytelling, it seems the buyers’ agents are just as guilty, even though they should be working in the buyer’s interest. Every buyer at this Perth place had an agent who, rightfully, should have been saying “unless you’re a contractor or a developer buying the place for land value, buying without an inspection is insane and could ruin your marriage or your life. Even inspections are largely useless in these renovated old row houses, because the important stuff is behind the walls and under the floors where the inspector can’t see.” I’ve seen all kinds of stuff, like six inch Romex pigtails at every receptacle spliced to knob and tube in the walls, basement showers whose drains just go into the dirt, and a hundred other things. Every weekday, I walk past an older two storey detached whose chimney is badly in need of repointing and is starting to list, has a melted snow patch on the roof revealing an insulation problem, and without a high efficiency furnace. It sold for $1.8 last spring, and I await the day that the chimney comes down on the new residents’ Golf or their neighbours’ house. But of course they had cabinetmakers working at the place last fall, so I don’t think they’re renters.

Whatever idiot made the winning unconditional bid for the Perth place now becomes a comparable, the voice of the market. Agents will duly point it out to other buyers and sellers in the neighbourhood, whatever they may think privately. And if one or two places go for similar prices, they’ll wisely not that perhaps he wasn’t such an idiot after all. Left untold are all the $20,000, $50,000 or $200,000 repairs discovered necessary at these “move in condition” places within a few years, unless you watch that Holmes guy on TV.

I think it was more honest in the old days, when the “buyer’s” agent was a sub-agent of the seller’s, and duty bound to serve the seller. Many jurisdictions have changed the law to make the buyer’s agent an actual agent of the buyer (but still paid by the seller, strangely). Switching the labels doesn’t seem to have had much of an effect. It isn’t even legal for an agent to accept an incentive to work in the buyer’s interest (e.g. 20% of every dollar under $800,000 that I buy that place for).

Funny comment from another blog on the Perth place: “Maybe they’re planning on living there for the next 40 years, so it doesn’t matter if they pay an extra $100,0000.” How not to become a millionaire.

#172 Stoopid Idiot on 01.24.14 at 6:06 pm

Trust your doing better Garth…. Man these posters are starting to make me look …… a forget it. AKA Dr. Wayne R.C. got’s to be a shut in and rereads his own posts….

#173 Min in Mission on 01.24.14 at 6:18 pm

18′ wide!! WT**^^##F???

#174 TEMPLE on 01.24.14 at 6:35 pm

#154 Ralph Cramdown on 01.24.14 at 4:11 pm

The lactose I referred to is from those self-invested who buy rising assets and shed declining ones. Emotion always defeats them, with the winners being on the other side of the trade. — Garth

You are missing Ralph’s point, Garth. You are inaccurately attributing poor investing records to do-it-yourself investing. Ralph correctly pointed out that you are making a blanket statement that is not correct.

I know you like to create a DIY investing straw man when comes to people who buy their own stocks, but you are wrong in that regard. It’s true that some DIY investors do badly, but the same is also true of the professionals.

TEMPLE

Meaningless. Ninety per cent of DIYers lose money consistently. No pro with that record stays employed. — Garth

#175 tkid on 01.24.14 at 7:04 pm

What other info. has Ed Snowden distributed which will go public soon enough?

Edward Snowden is a pile of horse manure. All of the information he has released was known long ago.

For example, his the-NSA-records-everything revelation was known back in 1999. Go to slashdot.org, search the old articles for ‘Project Echelon’.

#176 Cici on 01.24.14 at 9:58 pm

#124

Time to rebalance :-)

#177 Cici on 01.24.14 at 10:07 pm

#123 Realtor #1

Oh, whoa boy, wait a minute there…we don’t know what the other 31 offers looked like…perhaps they were at, near or even undershooting the ask price.

Also, we’ll see what’s in store for the job market. Yes, the Canadian dollar is down, but so are a lot of other international currencies.

#178 west coast on 01.24.14 at 11:16 pm

What we have in Vancouver (West Side etc.) are many mothers from Beijing who have decided for the sake of their children to relocate to Vancouver. The mums and their children are landed immigrants (soon to be citizens) whose husbands (once the family have bought a house) usually return to China as there is no work for them in BC.
The men who try to get a job in BC are often unable to find the kind of work which will allow them to pay for their family’s living expenses (we don’t have such high net salaries here). So, the husbands return to their businesses in China and the wives stay with the kids. Some mums improve their English and try to get a job, and others stay year after year in their houses raising their kids. Often, these women’s only contact with their husbands is a twice yearly visit or perhaps a summer visit back to Beijing with the kids.
I am sure that many families manage to maintain their lifestyle and many husbands continue to support their families. There are however, many families whose main bread winner decides not to do so. Often the mother is left to support one or two children. Many of these women have very limited language skills and poor job prospects.
If this is HAM, it’s an uglier picture (from a societal point of view) than some people might imagine.

#179 The Man From Nantucket on 01.25.14 at 11:38 am

Still being amazed by the likes of the Junction row house.

The one thing no one can buy is time. Therefore it is tough to put a price restriction on living close to where you work and play.

I get that folks are willing to pay a hefty premium to live centrally if that is where they need to be.

What I don’t get is, given net worth numbers, and income numbers, where is the cash/financing coming from to create demand for sales at these prices ?

#180 w-hat on 01.25.14 at 8:48 pm

#179 -it’s not difficult to come up with 750k when household income is 200k or so. Loads of people read this blog and think that is big money, but it is what two well educated, slightly lucky and ambitious people can earn, even when they are relatively young. I am not condoning putting a noose like that around your neck by the way, since it is still really stupid, but that is where it is coming from, since you asked. You can’t throw a stone downtown Toronto on Monday at noon without hitting someone in the head that makes 100k.

#181 Al on 01.26.14 at 12:28 pm

Look at it this way; the extraordinary generosity of the Buyers will allow the Seller/Real Estate agent to retire comfortably on income from the $800,000 tax free gain invested in preferreds and REITS !

#182 sideline sitter on 01.26.14 at 1:04 pm

that will not appraise close to that sale price… and even if you can afford the payment, why would you pay that much for so little house?

For that kind of money, you can get WAY more very close by (and in better areas too).

that deal wont close as is… the runner-up should expect a call soon! this happens with some regularity.