In yesterday’s gonzo blog posting, the omnipotent Ryan told you why Real estate in Toronto (plus most of southern Ontario, and formerly Vancouver & Calgary) is in a bubble. Which cannot last.
Lack of supply, cheap money, speculation, Chinese dudes, the Bank of Mom – combined, they form a heady mix of desire. It’s all true. But the picture’s incomplete. The way real estate deals are now consummated has changed fundamentally, shifting the power from buyer to seller – almost regardless of market conditions. So long as regulators allow this to continue, property values will continue to squirt higher than a lovesick grapefruit.
First, there’s the purposefully-low price. It works like a charm. Every. Time.
A creative realtor will list a property for 10%, 20% or even a third less than the current market value of surrounding houses in the hood. The listing price, however, has nothing to do with what the sellers want nor where the agent expects the deal will end. It’s just bait. The desired result is (a) an open house that looks like an Adele concert, (b) massive buzz on the street, (c) multiple offers and a vicious bidding war, (d) a final price that likely surpasses anything a reasonable listing price would have brought, and (e) a local media story about how real estate is going nuts because of the ‘premium’ paid, complete with a nice quote and photo from Mr. Realtor. It’s cheaper than advertising.
Then there’s the blind auction. This really blows.
In a real auction, like when you buy a ’71 Plymouth Hemi Cuda at the car barn, or a Lawren Harris painting at Heffel’s, the final price is unknown, but buyers always have a fair and equal chance to compete. When you’re in a bidding war for a slanty semi worth $1.2 million, no such luck. It’s a crap shoot, and completely under the control of the listing agent.
On offer night the bids are reviewed in private by the agent and the seller. Potential buyers know only the asking price and (maybe) the number of competing offers. They’re all encouraged by their own agents (or mothers and spouses) to ‘make the offer your best one’ – which means no conditions, whatever closing date the seller wants, and an absurd pile of money. Sometimes a begging note is included.
The agent may then appear at the door, summon two or three of the top bidders, and tell them they need to cough up more. How much more? Lots more. All of it. And in the end, one buyer emerges – the greater fool winner.
Throughout this process everything’s opaque. In a blind auction nobody knows what anyone else is offering, which means all buyers are powerless to act correctly. Bid too little and be punted. Bid too much, and seriously overpay. And who was there in the kitchen with the listing agent, ensuring the process was ethical? Nobody.
And then there’s the certified cheque.
As you can see from the listing copied above, this is common practice in a hot market. Bidders are expected to come up with cash – and many agents will not even accept an offer that does not have certified funds stapled to it. Big money, too. Normally 5% of the purchase price, which is $75,000 on the average Toronto detached. Many agents will tell their buyers that a round $100,000 “looks better” attached to the offer. “It shows you’re a little more serious.”
No kidding.
The certified cheque is not a legal requirement. An agent has absolutely no foundation for not accepting an offer allowing a deposit to be paid within 24 hours of acceptance – yet it happens daily. When a bidder has to come up a hundred grand just to enter the game it ratchets up the stakes, puts more psychological pressure on the players, and likely results in higher prices. Shame.
Yes, then we have the pre-emptive offer. Sometimes known as a “bully offer”. Most listings now inform other agents whether the seller is willing to consider an offer at any time, or will force everyone to wait for the blind auction. This is especially frustrating in a market with scant inventory where bidders go to an open house, round up their giant pile of certified cash, craft an offer for the Big Night, then find out that afternoon the property’s been sold. In a hot market, this just makes things hotter – changing bad rules to make them worse.
How much better would the Australian method be – when everyone stands around the front porch and calls out their bids for the house. Or, as blog dog Bruce suggests: “Instead of allowing the Realtors to Rush-Rush-Rush get the deal, if there was a 7 – 12 day cooling off period it could slow down the market overnight. Note, there would still be just as many houses sold but people would have time to think about what they are doing.”
Silly Bruce. Cooling off? Actual ‘thinking’?
The system is rigged in favour of sellers and their agents. It is amoral, inefficient and sleazy. There is no other commodity which changes hands in a more obtuse, unfair and non-transparent fashion. And, ironically, real estate is the most expensive thing any of us will ever purchase. To do it under these conditions, intimidated and manipulated, is a crime.
Correct this. The market will follow.
176 comments ↓
High housing prices are good for the banks, banks can then lend more with those proceeds and pay higher dividends to stockholders, those stockholders have more income to spend in the economy, these are the silver linings right?
The Real Estate Market in Sleepy Drayton, ON is red hot with multiple bids/no conditions etc. Hard to believe.
Anyone proposing a cooling-off period for share trades?
Garth, do you want government to save people from themselves?
This was definitely not the case when I bought a rental in Hamilton in early 2013. Tons of expired listings. Expect to pay around 297k for something listed at 330 with 40 days on market. I had 3 or 4 conditions on my offer at least.
The other advantage of an auctions process is data. You get articles like this one:
http://www.interest.co.nz/property/86290/buyers-were-picky-weeks-auckland-apartment-auctions
which discuss auction clearance rates – provides an indication of whether it’s a seller market or not.
C,mon man, do it for the dog…
M42BC
https://m.youtube.com/watch?v=OxWF9–Dr9o
Actually the listing office is required to disclose the number of competing offers. Not that it matters whether there are two or 20 game on.
Like playing the Pinks without Level II
Whoever wrote this blog – should at their earliest convenience – review economics 101 and 102, real property valuation principles and theory, marketing (preferably in real estate) and enroll in a real estate law curriculum. (You need it).
PS – a realtor must follow and employ all the silly and LEGAL demands of a Seller.
Hence stupid games.
Real estate has always been a game of greed and optimum value. If this is news to you, get a paper route.
Big mess waiting out there. I used to feel sorry for these greater fools, but no more. The showing-off is beyond stupid. As in “We paid the highest price EVER on that street!” Complete with smug smiles.
#162 DON on 03.05.17 at 5:17 pm
#157 Penny Henny on 03.05.17 at 3:08 pm
To Euro Observer,
you come across as being so angry.
I think you should have listened to your MIL when she told you not to sell your GTA home.
It’s sad that you are wishing for a crash so badly so you can tell your MIL “see I was right”.
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Doesn’t seem angry to me. Just level headed and factual. Too bad some can’t comprehend what he is saying. Attack the argument not the person.
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You mean like this?
#119 Euro Observer on 03.05.17 at 5:33 am
#68 Linda on 03.04.17 at 6:56 pm
So let me see if I have this right. When the USA housing bubble went ‘pop’ house prices declined 30% & have since recovered. When Japan’s housing bubble went ‘pop’ Ryan’s post indicates it dropped between 40% to 50% & Japanese housing prices are roughly the same today as they ended when the bubble popped.
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Linda, engage all 2 neurons in your brain and digest this:
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Don you need better role models.
Nailed it. That would be an interesting topic on CityPanic 24’s hot property segment. Bunch of hacks..
The largest purchase most people will ever make in their lifetime, and with what for a depth of due diligence?
With Greater Thanks, To Mr Turner for making Canadians aware of exactly the enslavement people might be getting into.
On a similarly dangerous worldly/political economic note….we have Agenda2030.
The United Nations 2030 Agenda decoded: It’s a blueprint for the global enslavement of humanity under the boot of corporate masters – …
http://www.naturalnews.com › 051058_2030_…
Correct this?
Not a chance.
Mobs with pitchfoks on Parliament Hill, might, get things changed
But Realtors?
Realtors dont want to shoot, pluck, cook and eat the Golden Goose……
They want to shoot, pluck, cook and eat the BUYER of the Goose.
And when they are done……next!
Preach It!
No. What is amoral is CMHC. Privatized gains and socialized losses. You are barking up the wrong tree.
Who cares… the only reason the market is behaving like this is because the govt meddled in it. CHMC should not exist and we’ll see how the market reacts. Interest rates should be linked to risk. Tax payers shouldn’t backstop loans that encourage stupid behaviour. Toronto sucks, I’ve lived here my entire life but fortunately for me I’ve been able to travel. It’s boring, work until you die look at me bullshit culture that makes most look desperate for attention to validate their stupidity. I think I’ve had enough of Canada, higher capital gains taxes might be the final push that makes me leave.
#10 not moi on 03.05.17 at 6:34 pm
Big mess waiting out there. I used to feel sorry for these greater fools, but no more. The showing-off is beyond stupid. As in “We paid the highest price EVER on that street!” Complete with smug smiles.
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I felt the same about the stupidity . Shoe on other foot sold at the highest $$ on the street , not one soul happy for me .
This will not end well!!! haha!
The listing price, however, has nothing to do with what the sellers want nor where the agent expects the deal will end. It’s just bait. The desired result is -Garth
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Garth you may have skipped over one of the most important reasons of all.
I know you are no longer young and house horny but for those that are it is a very emotional thing. The thought that the house you just fell in love with because it’s under priced and once you have actually made an offer on this house, well in your mind you have already pictured buying it. So when the offers get sent back you don’t want to lose your dream so you bid more.
Maybe you are lucky (some would say unlucky) and win the bid. GREAT. Dream accomplished. But if you lost you are going harder next time.
All good for me cause I’m selling in 8 weeks.
I already anticipated your snarky remrk.
Garth- It’s all about you then.
“The system is rigged in favour of sellers and their agents. “
Not really. It’s simple supply and demand.
Be nice to point the finger at some sinister force but really it’s just that irration exuberance thing again excessive demand amid limited supply.
Everybody wants to be a rock star.
Nobody forces anyone to enter a blind action, do they? Don’t like it? Don’t participate!
You wanna overpay? It’s a free country, go nuts!
Meanwhile the people who should “correct this” look deeply into their navel with a blank expression on their faces.
Nothing is allowed to be set free of manipulation anymore. The market will never regain its freedom because those that do the manipulating are the profiteers. It’s not gonna change – not in this new world of extreme greed and control. The old ways of thinking and operating are gone so you better get use to it.
RATM
Hi Garth. Great post as usual. I would assume now with higher valuations of homes,the property taxes would reflect new highs. Maybe all single family homes would have $18,000 to 30,000 annual property taxes to pay for all the infastructure and shortful in tax revenues in other areas. Great for mpac and local governments. Raise the mill rate.
For the sellers ?
Good grief . It’s the idiot buyers that choose to sign on the dotted line . And if they choose to pay $1.5 million to buy piece of crap ? Their choice . Nothing rigged .
Reeks of Trump paranoia
The certified cheque is not a legal requirement. An agent has absolutely no foundation for not accepting an offer allowing a deposit to be paid within 24 hours of acceptance – yet it happens daily.-Garth
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You are 100% correct.
But, ever heard of buyer’s remorse?
“Life is tough, it’s tougher when your stupid!”
John Wayne.
Mister Turner, will that eventually lead to a decline in value to the CAD-USD exchange rate?
Poloz keeps on telling me that he plays with himself thinking of a 50 cent level Loonie. He says that it’s to boost exports in a globalized economy.
With the US Rate hike coming next week, while Poloz insist that the BoC should cut interest rates in April, does that mean that Poloz was right on this threats to devalue the Canadian dollar?
A 50-cent Loonie will in theory, boost exports for Poloz, but it will increase Import costs for American food, materials and services which account for 80% of Canadian imports.
Oil prices are double than what it was in early 2016 when oil was at $26/bbl, but even then the lowest Canadian dollar was at 68 cents. It was never below 60 cents.
Poloz is out of his pro-feminist mind to expect that Fiscally cautious Saver Canadians should take it easy with a Loonie in the 50s range, while oil is over $50/bbl.
If I were to save $13,300 Canadian now, that is valued at $10,000 US dollars today, but under Poloz’s wet dream for a 50-cent Loonie, my savings would be valued only $6,650 US dollars & I will earn no Savings Interest!
Looking at real estate when younger there was no bidding wars. I think #10 Triplenet that the real estate board should put morals into this bidding war.
All I have to say is to walk away from bidding wars unless everyone in the group bids low at all the bidding shows, backfire. The youth have facebook, come on youth, get your act together and fight back. Maybe a facebook protest or retaliation of sorts.
Walk away from group emotions, the sweat will disappear.
Walk away from group emotions, bidding wars, and the sweat will disappear.
#15 crowdedelevatorfartz on 03.05.17 at 6:39 pm
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Forget it, you’d never understand.
Why is a sold auction price unknown? Barrett / Jackson hammer fake?
Then there’s the blind auction.
so how is it going to end? It’s going to end when a significant number of sales fail. Nobody knows what that number is or when it will happen. I’m thinking when half the sales fail some will be re-listed immediately at a lower price.
How much better would the Australian method be – when everyone stands around the front porch and calls out their bids for the house. -Garth
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FYI- That is standard practice in only parts of Australia, mate.
Canada! The only jobs left in this country are for Realtors! That’s our biggest draw and commodity for sale. We don’t make anything or extract anything anymore.
We just prostitute our housing and realestate to foreigners who will buy…Or to ourselves and go deep in the hawk.
Yay! Canada…We suck!
“Instead of allowing the Realtors to Rush-Rush-Rush get the deal, if there was a 7 – 12 day cooling off period it could slow down the market overnight. Note, there would still be just as many houses sold but people would have time to think about what they are doing.”-Garth
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Garth I know this is not your idea but it has to be the silliest thing I’ve ever read on here.
well said, Garth.
#10 triplenet – you are exactly the kind of twit that’s involved in real estate. big money for nothin. what the heck do u know?
“The Geographic Targeting Orders (GTOs), require U.S. title insurance companies to identify the natural persons, or beneficial owners, behind shell companies used to pay “all cash” for luxury real estate in the Los Angeles, Miami, New York, San Antonio, San Diego, and San Francisco metropolitan areas for a six-month period. In announcing the renewed GTOs, FinCEN noted that “about 30 percent of the transactions covered by the GTOs involve a beneficial owner or purchaser representative that is also the subject of a previous suspicious activity report. This corroborates FinCEN’s concerns about the use of shell companies to buy luxury real estate in ‘all-cash’ transactions.”
Clark Gascoigne, the deputy director of the FACT Coalition, issued the following statement welcoming the announcement:
“Nearly one third of all high-end purchases through shell companies in our nation’s biggest cities are raising red flags for law enforcement. The secrecy has turned luxury real estate into safety deposit boxes for the world’s criminals and corrupt — all while artificially inflating property values and pricing future generations of American’s out of the housing market.
“The findings so far continue to underscore the importance of ending the ability to anonymously own shell companies, a practice which drives terrorism, criminal money laundering, and corruption at home and abroad.”
https://thefactcoalition.org/fincens-continued-effort-to-purge-dirty-money-from-real-estate-welcomed-by-experts/
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foundations?
Vladimir Putin Critic Takes Big Risk Exposing Graft
anon. international hacked Medvedev’s iphone through his online purchases
subtitled in english – establishes pepople connections /”gifted” real estate
Where did all this money come from to fund all this:
The 5W’s -foundation for socially important projects – dar foundation – orion /centrum cyprus offshore
https://www.youtube.com/watch?v=qrwlk7_GF9g
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cbc.ca isle of mann for the “gifted”?
http://www.cbc.ca/news/business/kpmg-offshore-sham-1.4006469
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All of this happened on our old 905 street, except with one added feature: Of the 6 houses sold on two streets in 2016, 3 were sold to out of country buyers, who may or not have moved in…. BUT, the 3 empties have service providers dropping around, keeping things looking neat and tidy. Seasonally decorated. But empty. Wanna know what that does to local schools as the kids disappear? Fewer street chats, and more landscaping service
providers and snow removal providing the fake out….
aggressive tax planning
March 03, 2017
Cat raid raises key question: Will Team Trump be tough on tax shelters?
http://www.chicagobusiness.com/article/20170303/NEWS04/170309937/caterpillar-office-raid-raises-questions-about-trump-tax-strategy
REALTURDS®
Real Estate is like black jack …. win or loose …
Yes, some and most of the realtors are really rude, sleezy and greedy … so, please buyers BEWARE and prudent …. we know..
We are entering a very scary period, from which we may not emerge. Get ready. Check your supplies. Fuel up all vehicles.
Trump is flailing around domestically, now accusing Obama of treason while his own FBI begs to differ. His ‘great’ speech Tuesday is now completely forgotten in the Jeff Sessions craziness. Trump was having a total sh!tf!t in the Oval Office this weekend.
Very soon, things will change. Big time.
What do autocrats do when they cannot manage domestic politics?
Like Hitler before him, Trump will seek foreign targets as distractions, trying to unify the populace around him with a common enemy.
**One hour ago, North Korea fired a missile in response to US/Japan war games nearby.
Are we weeks or days away from global chaos and war?
Or perhaps hours…….?
I dont understand how people can compare housing bubble in USA ,Japan ext to Canada . In US every city were in bubble more less .In Canada its a tail of 2 cities . look at Montreal and Ottawa with zero home appreciation for the lust 2 years . I dont see any reason why government has to be involved because some Toronto residents cant afford detached home .
Great post.
Hard to imagine a scenario where they would actually correct this problem.
I have a feeling this market correction will take a long time to happen. And when it finally does house prices will still be ridiculous.
“The agent may then appear at the door, summon two or three of the top bidders, and tell them they need to cough up more. How much more? Lots more. All of it. And in the end, one buyer emerges – the greater fool winner.”
What’s sad about this practice is that the so-called “winner” probably didn’t have to raise his offer a penny to still win. This is a deceptive practice designed to see if they can squeeze an extra bunch of money out of the person who had already one the bid.
I know this because years ago I had made an offer on a house that wasn’t accepted (although I thought it was fair) and then just decided to cool my heals since the house wasn’t moving real fast. Suddenly I got a call from my agent, “there is another offer coming in tonight, so if you want it we have to put in your best offer tonight!” Fool that I was I allowed my agent to come to the bar where I was enjoying wing night with my wife and we penciled in an offer for basically list price. Higher than I wanted but the whole situation was so hyped up and I was a foolish virgin. Guess what? The place went over list, after months on the market. The agents were just using me to push up the offer. It was sick. And no, I don’t think my agent got paid anything for the work. The other agent just now owed him a similar favor. That’s how they work and they don’t even see it as immoral. They are all just trying to close deals, which they see as a good thing because they believe (rightly) that people want houses. They aren’t trying to act like scammers, or at least not all of them. I really believe my agent thought he was doing me a favor giving me one last chance to bid because he knew we liked the house.
I think it’s possible to consider the viewpoint of the realtors who hold blind bids in the same context. If you are the seller’s agent, isn’t it your duty to get the best price possible for the seller? And if people are dumb enough to participate in blind bids with no conditions, shouldn’t you do your duty to the seller, who is your employer?
I think the larger moral consideration is on the buyer’s agent. But he’s in a spot. He knows his client is desperate to buy and really wants a house. And also he’s not going to get paid unless his client buys. So he is not only doing himself a favor when he can get a close (commission), but his client too (they get the house). It’s different for selling agents because they get a commission no matter who buys the house.
The fact of the matter is for most people (and me at the time) the real estate market works best when you only have so much money to spend, and just shop for the house you like best in that price range. When you have access to free money, you start doing stupid things.
So here is a question I have. Why don’t we have agents for buyers in the auto market? You know, people who act as agents for buyers, have something like MLS (it already exists for cars too), and the agent collects a hefty fee for getting you the best deal. After all, we all already know the salesman at the dealer is working for the best interest of the dealer, not you. He wants to get the deal done at the top dollar he can squeeze out of you. And your only defense is you don’t have quite that much money. There must be a market for “buyer brokers” who get 30% of what they save you by knowing where to find the car you want for less. But it doesn’t happen. I guess probably because regulations in that industry would prevent it.
It is an unfortunate fact that there are stupid people in the world, and its really just a question who gets their money. The TO thing will end, prices recede, and government will be called on to do something. Which they will, and make things worse, repeat. The stupid people will still be stupid, and someone else in some other game will get there money. It’s always been this way, and it always will.
Yes, the very low inventories in Toronto are greatly contributing to this, but I think Toronto is also seeing a surge from foreign purchases lately, as a result of the 15% foreign resident tax in Vancouver. It’s no surprise that Vancouver home prices are down significantly following this new tax (according to the CREA, average Vancouver home prices are down 19% Y/Y to $878,242), and that Toronto is surging to new levels over the last 12 months.
Bidders are all for foreign – as evidenced in Australian TV.
Garth, you, of course, are still in denial about the above statement from your cohort. Correct?
When there is evidence, I pay attention. To date there is nothing to suggest the GTA market is being moved by foreign money. But, believe what you want. — Garth
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I went through this experience in January. Felt like I am dealing with gangsters (no first-hand experience dealing with gangsters, just saying). Obviously, I lost the bid. Selling agent did not let my agent even let in stating my bid was too low (it was). It was listed for $500K, Sold for $550 and now listed for leasing https://www.realtor.ca/Residential/Single-Family/17860066/102-BONIS-Avenue-Toronto-Ontario-M1T2V2-Tam-OShanter-Sullivan
I made Canada home immigrating from a 3rd world country. In my 3rd world country, the buyer(s), the seller and agents all call a meeting, sit together agree and negotiate on the price and payment schedule. It goes very well, official papers and agreements are signed in this meeting. While in the developed country like Canada, we have a home buying procedure that has no place in the civil society.
Anyway, seriously thinking now of moving out of GTA or Ontario is required because this practice will not stop. I love my money too much to hand it over to gangsters just to own a house.
This is so simple….control your emotions and take some responsibility….
Don’t want to over pay for a house, car? Walk away.
Bitch about over priced sports seats to see a crappy team? Don’t go.
As long as you play THEIR game…you lose.
Same as it always was.
Grow a pair people.
Toronto has 8k less empty homes than Paris, meanwhile in the rest of the world: “Vacant Homes Are A Global Epidemic, And Paris Is Fighting It With A 60% Tax”
https://betterdwelling.com/vacant-homes-global-epidemic-paris-fighting-60-tax/
The underquoting got so bad in Australia they introduced laws against it in one state.
The first agency charged got hit with 330k fine plus 80k costs.
But. Always enlist the services of a Realtor®.
Right Garth? Suck and Blow much?
Without buyer representation in this market, you’re prey. But go ahead. Find out. — Garth
NORTH KOREA HAS NOW FIRED 4 BALLISTIC MISSILES INTO JAPANESE OCEAN TERRITORY!!!!!!!!!!
Trump is going nuts at the Whitehouse as we speak.
Hug your kids.
That should be effective. — Garth
Garth, I have a question. Reading yesterday’s article Ryan said that the market wouldn’t correct like in Japan by 50% neither like in US by 30%, but more in the range of 10-20%. Considering that the housing market in Toronto grew like crazy each year, a correction of 20% would bring it back to the 2014-2015 level? So the people who bought a house then have nothing to fear?
Wait and find out. Or sell now and retire. — Garth
Maybe all essentials should be sold this way. Imagine the fomo when you only offer $300.00 for a loaf of bread and end up starving your family because you lost the bid again.Garth is correct that some kind of crime is going on.
Don’t blame realtors. I would take money from people if it were legal.
Blame the corrupt puppet regime we call a government for not only allowing this war on the young, but actually promote it with insanely low interest rates.
I hope this ends with guillotines on capital hill.
Cmhc, rates, reduce federal and provincial funding of big cities. Move queens park to Sudbury or something.
Forum Host, why did my last post get deleted?
We all know that Poloz only aims for a very devalued Loonie to “boost exports” while providing no savings interest to offset the inflationary policies caused by importing American goods on a 70-cent Loonie.
Poloz wishes to lower the value of the loonie to about 45 or 50 cents to the American dollar, yet he will refuse to hike interest rates to protect savers from the effects of Inflation.
Go into any major bank in Toronto, and these are the likely rates for “High Interest Savings Account”.
TD Bank- 0.55% interest min.required, else 0.15%.
RBC Royal Bank- 0.50% interest.
Bank of Nova Scotia- 1% interest min.required, else 0.10% interest.
^ These are “High Interest Savings Accounts” which the interest is taxable under the Income Tax Act. These banks also charge fees about $180-$300 per year.
Poloz wants to cut rates. Or are you now Poloz which can answer why my previous post was deleted?
Polo wants to see a very low Loonie. He even thinks the current 74 cent Loonie to be overvalued deserving of a devaluation in currency.
Garth, which government agency is overseeing realty boards, realtors, etc. And how they conduct biz?
Sounds like a massive overhaul of the realty selling system is long overdue.
Provincial oversight. In Ontario the regulator is RECO. — Garth
Attn: #19 [email protected] on 03.05.17 at 6:47 pm
Of course nobody (on your street?) is happy for you, green eyed monsters that they are!
I AM happy for people like you, who sold for the best price in history in your ghetto.
Question is, are you now renting, or were you as big a fool as they were, as in:
” Honey, we doubled our money on this first house. Here’s our opportunity to SPEEDILY buy back into our DREAM house this time!”
I’ve heard some of the arguments why real estate costs so much in Toronto. They say we are a Canada’s financial Centre. True but Canada doesn’t have a large enough economy compared to other world cities. They say we are a world class city. But what world class city has really only 3 subway lines. And not to mention our great premier who won’t rest until she taxes us to death. Who would ever want to spend 1+ million dollars to live in a city like this. We don’t have a housing crisis we have a stupidity crisis.
I live a very boring life, so for entertainment, the spouse and I go to the local open houses. First thing the Realtor says: we have an accepted offer. Four months later the house is still listed. Yea the offer fell through. And there is life on Mars.
back just a few years ago, many properties went for ask or under. then some realtors got the idea of holding back offers (maybe from experience in other areas/countries or from tv, or from back in the day?). anyways, what was once localized to a few trendy areas of toronto became endemic, especially after the 2015 double poloz cuts. this caused prices to increase at a rapid pace. bringing us to today – people who want to move can’t (too pricey/don’t want to get into bidding wars) and low listings. so there are about 40k+ realtors in the gta and how many listings? i can tell you about one realtor’s office that i know – 40+ full and part time agents and they only had 10 to 15 listings in all of last year. hope they won on some of those multiple offer bids. i think there are a number of buyers who can’t help having a sense of schadenfreude at the idea that the realtors themselves have become victims of the monster that they helped to create. the same thing goes with the foreign buyer (and fb tax). the prices get pushed up and out of control, listings go down, a few agents specialized in those markets profit and the rest have nothing. and yet most agents are against the fb tax and so is the orea. so is the orea really looking out for all their members? or was the pie distributed more evenly a few years ago before all this bs? we are all going to learn that when the pendulum swings too far, more and more will be left out including the ones that were pushing on it at the start.
Garth – there will never be any evidence of foreign influence as long as the current structures are in place which inadequately track these things. there is no will, no leadership. the name on the deed does not matter when you need money to be somewhere safe. you’re talking places where there’s a long history of circumventing any and every type of regulation. our banks are more than happy to enable this. people know this. they aren’t guessing. they know it. but no, no evidence forthcoming.
Sounds like RECO needs some fixing then, from a higher government level. Cause they sure aren’t stopping this anytime soon by the looks of it…
#53
Bang on.
Was looking at a retirement house in Okanagan, mls#164956 , kind of backfired since no takers and still on the market.
Now that the Ontario Liberals have completely blown their morally bankrupt brains out, virtually guaranteeing another equally morally bankrupt
Conservative government in the near future (you know, the party that supposedly champions uninhibited, free-markets based upon supply/demand principles, then hypocritically entrenches the complete opposite to please their corporate donors), I wouldn’t count on a redirection of the Ontario real estate industry toward market forces anytime soon.
After all, the current CEO of the Ontario Real Estate Association is none other than failed former Ontario Conservative Party leader Tim Hudak.
Posting without reading any other comments first and with about a six pack in me…. Ya, you f….in think?
No where on this planet would that kind of stupidity be allowed….but no, it’s Canadian real estate on the line. My lord, imagine someone shoving a cell plan down your throat like that or someone selling a mutual fund, ETF or T-bond…. regulation, fines, jail time, crucified in the paid for corporate media and so on..
but no, again, it’s real estate, so screw you! Buy now at any price or be ostracize out right out of the county. No regulations, no government intervention (actually ja, they will support real estate at all cost), tiny and embarrassing fines for down right fraud and illegal marketing tactics…lie, cheat ,steal, it’s all good…it’s real estate…..
ANY other industry, let’s say a mom and pop coffee house gets hit with 20 regulations, fines, overview, compliance bla bla bla but when it comes to buying a POS 1.4 mil place that realistically no actual Canadian can afford, it’s all good.
WAKE UP CANADA….It is funny watching this outside of Canada. It is so stupid that is really is embarrassing.
OH, “but it is what it is”- ja, dumb.
YOU REALLY DO NOT SEE A BUBBLE WHEN YOU ARE LIVING IN ONE!
Take a year off and travel. It’s almost painful talking to young Canadians who have never been outside Canada.
Maybe this is mad social experiment gone wrong? No idea but I pray that it stops soon….actually, forget it, I’ m gonna drink another $.65 cent CAD here (converted to CAD$) (world class beer that cost about $2.75 in the liquor store in Canada) and chill- I need a new hobby- seriously.
Amoral. Lacking ethics or unethical. Reminds of this..
http://news.nationalpost.com/news/canada/financial-consultant-who-defrauded-ontario-widow-ordered-to-pay-300k
Housing markets almost Canada wide are nothing short of a casino. Most participants are in for greed, they lose, tough, unfortunately a few ordinary people are in due to financial illiteracy.
The real damage is done to the cities involved.
And the regulators just watch, and just watch.
Shim. Sham. Ponzi. Scam. Always was.
I am blessed with an abundance of empathy.
Pity those who are not.
#52 Loser on 03.05.17 at 7:35 pm
i agree with your sentiments, and i was born here.
#31 Entrepreneur
YES, get your act together you young 20-30 and even 40 year olds and stop participating. Make a movement. The 1% percent wall street movement didn’t do much but it was heard.
Actually, that’s too crazy and anti Canadian (just take it and like it). Keep paying 380K for a 1 bedroom apartment with a 300$ strata and more and more until you are enslaved for life by CIBC, BMO, RBC, etc.
It’s only debt. Bank said you can afford it at 2.99%. Free money… nothing to see here.
Wait and find out. Or sell now and retire. — Garth
… actually I don’t have anything to sell, however I could buy something then. Now I’m thinking did I make a good decision by waiting or not, since at that time I was expecting the house prices to drop by 10-30%, and if they drop now by the same amount, there wasn’t any point waiting…
#62 Got me thinking…
What would a “Low Interest Savings Account” offer?
#20 Penny Henny
In 8 weeks the bubble may be seriously deflated – list NOW to get your greater fool!
I still wonder why, as USA crashed and burned in 08, Canada didn’t hold higher rates. A $1.10 loonie would keep inflation at bay in our imports, and would the world really not pay more exchange buying our natural resources at peak population?
With higher interest rates, there certainly would not have been such a debt race to emulate USA’s credit crunch. CMHC obligation is going to be the bomb to end all bombs.
Whereas, A $1.10 loonie could not possibly have been such a bad thing this many years later as a no interest policy has unravelled into.
#59 broader mind on 03.05.17 at 8:15 pm
don’t give the elites anymore ideas.
I still wonder why, as USA crashed and burned in 08, Canada didn’t hold higher rates. A $1.10 loonie would keep inflation at bay in our imports, and would the world really not pay more exchange buying our natural resources at peak population?
With higher interest rates, there certainly would not have been such a debt race to emulate USA’s credit crunch. CMHC obligation is going to be the bomb to end all bombs.
Whereas, A $1.10 loonie could not possibly have been such a bad thing this many years later as a no interest policy has unravelled into.
#66 Ronh
Call bs. No agent has an open house to tell people we have an accepted offer.
From the writings of Daniel Kahneman:
1. A bat and a ball together cost $1.10. The bat costs a dollar more than the ball. How much do the bat and the ball each cost?
2. If a test to detect a disease whose prevalence is one in a thousand has a false positive rate of 5 percent, what is the chance that a person found to have a positive result actually has the disease, assuming you know nothing about the person’s symptoms or signs?
[Only 18% of the physicians, residents, and fourth-year medical students who were asked this question in a study at a prominent medical school got it right. Yikes! Something to think about, next time you visit your doctor.]
Have fun. No cheating. On your honour. Answers tomorrow.
The delema…
Do I wait for son #3 to get his real estate license in May to unload.
Wait till peak in 2018
Or list with a pro now for a sure thing..
It’s a delema.
I have got to disagree with the cooling off period thingy. I mean, you should think before signing legal documents to purchase what is probably the largest expense in your life. To get out of a purchase agreement you should have to go to a lawyer…as opposed to see a better house a week later.
I would lean towards having any and all offers to buy registered, for all to see. Then at least you know what you are up against.
And perhaps all listings should not be able to accept registered offers until a minimum of 2 days after being placed online.
As i’ve been suggesting for months – Realtor Commissions only on list price.
Also TREB and other Realty boards have not shown the ability to appropriately self regulate. Their fines and penalties are a pittance – worth the risk. Therefore the Public needs to regulate them.
Just don’t tell Kathleen. She still thinks we are living in a Lobbyocracy.
#83 Smoking Man on 03.05.17 at 9:39 pm
The delema…
Do I wait for son #3 to get his real estate license in May to unload.
Wait till peak in 2018
Or list with a pro now for a sure thing..
It’s a delema.
..
When ya moving to Ecuador Smoking Stooge?
In yesterday’s gonzo blog posting, the omnipotent Ryan told you why Real estate in Toronto (plus most of southern Ontario, and formerly Vancouver & Calgary) is in a bubble. Which cannot last..
……
What? Serously? you disrespect the world gonzo….
Gonzo writing is usally followed by an imbalanced stagger then fall. Face plant..
Ryan a gonzo writer..please… goody two shoes is what I’m thinking. Hey garth check out my IP address, you know we’re I’m at.. legs shaken.
last month they moved the dooms day clock ahead a couple of seconds, so does it really matter any more
I still never understand why people agree to this? If buyers didn’t agree to be treated like dirt sellers wouldn’t pull these stunts.
You can always rent.
I’ve been in the global Pulp and Paper business for decades, and in that market a 5% swing in demand will send prices sharply up, until sufficient capacity is added to bring prices back down. Not withstanding the death of paper I have lived through 5 cycles. For some reason I am expected to believe that a 5% change in housing demand (from offshore money) won’t impact house prices? Since it adding housing is problematic in Vancouver, and Toronto due to road blocks set up by local governments, and NIMBYs; the result is what we see now, and was entirely predictable. Also, this is not just a Canadian problem, it is a world wide problem. Specific cities where the confluence of limited developable land and lax oversight have been specifically targeted. Some buying are humble immigrants, but some are profiteers who saw and opportunity, and executed a plan. They Pirate class are largely gone from Vancouver now, except for commercial real estate, and they will be gone from Toronto soon enough. But, despite the obvious there are many, including the humble Pied Pieper on this blog that think otherwise.
#82 Slow Thinking
#1 Ball $0.05, Bat $1.05
#2 The prevalence of the disease is irrelevant. If the false positive rate is 5% then the true positive rate is 95%. Your chances of having the disease are 95%
https://www.thestar.com/business/wealth/2017/03/04/housing-market-will-burst-like-all-bubbles-do-pape.html
what a 40% drop between 89 and 96? total scaremongering
“The agent may then appear at the door, summon two or three of the top bidders, and tell them they need to cough up more.”
This seems to be exactly what happened when a friend sold his Toronto place for 13% over asking last week. But it is not as bad as a Sydney auction, when the successful bider will often be expected to bid, first against the seller (“auctioneer’s bid”), and then if he wins, against himself.
Any blog that makes passing mention of a 71 Plymouth Hemicuda is worth making a meaningless post in reply to…
Like this one…
So when do 70 GS stage 1 Buicks start gettin’ some respect, huh?
1. x+x+1=1.1
2x=0.1
x=0.05, so $1.05 and $0.05
2.
1/20 – test error
1/1000 – disease
approximately, to have good numbers
go to test – bet 1 to 20 or 50 to 1000 that it’s positive because test mistake
and bet 1 to 1000 that he tested positive because of disease
So if you have to bet that the result will be positive for whatever reason, you can bet 51 to 1000 or better.
But if the person came out positive, 50/51 times it will be due to test mistake, so about 98% that it’s a mistake. Or 2% that it’s the actual disease.
#82 – Slow Thinking
Spoiler Alert – Potentially correct answers below
“1. A bat and a ball together cost $1.10. The bat costs a dollar more than the ball. How much do the bat and the ball each cost?”
Ball = $.05
Bat = $1.05
Ball and Bat= $1.10
“2. If a test to detect a disease whose prevalence is one in a thousand has a false positive rate of 5 percent, what is the chance that a person found to have a positive result actually has the disease, assuming you know nothing about the person’s symptoms or signs?”
Answer: 2%
Garth is right this is BS. Time for me to write another letter. Time for all of us to write a letter. We can all sit here and complain but that will solve nothing. Write to your MP and let them know. Blind bidding is criminal and the cooling off period was something I didn’t even think about. That’s a good one. Garth for PM. Serious Canada needs a guy like you. You are kinda like Trump where you care for the people of your country. Come on G man, time to come out of political retirement and hit Canada’s g spot ….Make Canada Great Again!
Provincial oversight. In Ontario the regulator is RECO. — Garth
OK going to copy and paste and changes things around to now include RECO. You know I feel a little better complaining to all those [email protected]
wild animals they do
never wonder why
just do what they goddamn do
There seems to be a growing undertone of anger towards realtors, buyers, sellers and even with each other over opinions of what should be done.
Division seems to be the theme in all western countries anymore.
There’s an elephant in the room that’s being ignored. Makes me wonder how bad things will get.
http://www.dailymail.co.uk/news/article-4284086/Canada-border-control-union-suggests-increased-patrols.html
Crest, son # 1 manifesto.
Top sellsmen in a global company… He got his training with pops going door to door.
Love and hug you mark……so bad ass it’s good..
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#101 Smoking Man on 03.05.17 at 11:21 pm
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..
The smoking stooge face plants yet again…. you should be a writer with such communication skills
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These fools have their minds made up that they must find a home in Toronto or VanCity or one of their burbs and will pay ten times what the place is actually worth so that not even a lottery win will pay off the mortgage … their own damn faults.
Meanwhile, in Nova Scotia, plenty of cheap houses, plenty of cheap land at a fraction of what you’d pay in BC or Ontariario. The air is clean, people friendly, the economy sucks. But if you’re a skilled tradesman (general contractor, electrician, plumber, carpenter, drywaller) then there is so much work available at good wages. There is a huge aging housing inventory right across Nova Scotia that is in desperate need of renovations, but it’s hard to find decent, affordable tradespeople.
Or if you work for the school system, medical, dental, elder care, tourism or retail, there is plenty of work in NS.
So all you disheartened city dwellers unable to win the lottery and are therefore unable to buy a house, come on out to NS and enjoy the good life.
Really gonzofiction writers. I suggest this one for the ear buds.
Works for me…
https://www.youtube.com/shared?ci=k0N4KpSbntY
To my wife
https://www.youtube.com/shared?ci=aXwyppJYz6E
#83 I have the same dilemma.
# 85 no body pays 2.5% to listing agent this days . even 6 years ago when I sold my house I paid only 1 %.
One can sell now with ZERO for selling agent check Red Pin brokerage or even better ComFree brokerage you pay only $500 for sell and they split commotions with you if you buy with them . still have to pay 2.5 % to other party .
Immoral, inefficient and sleazy….you’ve just described the Ontario Liberal Party. If we are who we vote for….it doesn’t say much for the population of Ontario….or the ROC……what type of hillbilly dribble voted Trudeau? Ya’ll get the system you vote for.
Everyone involved in this ridiculous game is just shooting themselves in the foot ten times over. Anyone who gets excited and thinks it’s cool should get a TBS Seagul Sunday round of reality slaps. Human greed…..enjoy the slavery.
I taught, I would last longer, but I guess i’m week…
Anyways. .. if you are man and working stif as I am, or lumber jack from starbuks this is below should be very big concern.
—-
Fertility has declined and out-of-wedlock births have risen all over America during the past three decades, not just in areas where jobs have been displaced by trade. But the authors show that these trends have been much more pronounced in areas that have lost a significant number of manufacturing jobs, where, as a result, men’s prospects have declined disproportionately. This worsening of the fates of men has been long predicted, including in The Atlantic in the summer of 2010, when Hanna Rosin highlighted how women’s bettering prospects would lead to “The End of Men.”
https://www.theatlantic.com/business/archive/2017/03/manufacturing-marriage-family/518280/?utm_content=buffer73ece&utm_medium=social&utm_source=linkedin.com&utm_campaign=buffer&single_page=true
The certified cheque is not a legal requirement.
…
The system is rigged in favour of sellers and their agents. It is amoral, inefficient and sleazy. There is no other commodity which changes hands in a more obtuse, unfair and non-transparent fashion. And, ironically, real estate is the most expensive thing any of us will ever purchase. To do it under these conditions, intimidated and manipulated, is a crime.
——————————-
What is legal? This is Canada, renting substandard basements for people to live in apparently also legal.
Moral and ethics? In Canadian Real estate?
Don’t make me laugh.
#12 Penny Henny on 03.05.17 at 6:35 pm
You are taking arrogance (my fault in this post, my apologies to Linda, could not resist the temptation) for anger, which is a mistake.
I have seen no response to any of my arguments, so I am assuming you have no objections to them.
Thank you.
The RE Scam will never be corrected unless the courts do it.
Our Governments at all levels are all in on it. Clearly they are or change would have happened years ago.
Hello fellow blog readers,
http://www.reco.on.ca/complaints-enforcement/filing-complaint/file-a-complaint-form/
File a complaint using this form if you feel you have been cheated by your Ontario Real Estate agent/broker. The more complaints the better, obviously.
I have purchased many properties over the years in Toronto and really never had any problems dealing with the selling agent or my agent at the time. I even bought a house using the listing agent.
That is usually the first step in any complaint process. Always issue complaints in writing. Always ask for someone senior in the escalation process after a few weeks. Keep escalating the complaint, be persistent. If you don’t follow any complaint process, then you are really just whining, aren’t you?
I will just say it point blank and wait for the hateful comments to come pouring in.
It is clear that financial asset investing is not a match for the wealth creating machine that investing in Toronto and Vancouver real estate has been and will continue to be.
Knock yourselves out everyone
Over decades that is untrue. But it’s irrelevant. Wise people have both. — Garth
#94 stage1dave on 03.05.17 at 10:36 pm
Any blog that makes passing mention of a 71 Plymouth Hemicuda is worth making a meaningless post in reply to…
Like this one…
So when do 70 GS stage 1 Buicks start gettin’ some respect, huh?
—————————————-
70 Gs 13.38/105.5 MT mag 1/70
70 hemi cuda 13.10/107.2 CC mag 11/69
Wrong year cuda, yeah, but close in a race ain’t the same as in horseshoes.
Buick needs a diet…
There is no fixing stupid.
Hoping the government will do something and not expecting more stupid as a result is …. stupid.
#52 Loser
“Anyway, seriously thinking now of moving out of GTA or Ontario is required because this practice will not stop. I love my money too much to hand it over to gangsters just to own a house.”
My friend, you do not have to go too far, (like another country), to escape the insane practices of the G.T.A.
You only have to move to other Good cities in Ontario a couple hrs away, that actually have better communities, family incomes, and living standards!!!
The great myth is that Toronto is the be-all-end-all.
There actually is no requirement that a real estate agent hold back on receiving offers, or consider offers all at the same time, or really do anything at all other than present offers, as they come in, to the seller.
When a house is listed, from that point on, it is “for sale” and if a buyer wants to make an offer on it, they are free to do so. Unless the agent has specifically had the seller sign a direction that the agent NOT show the seller offers as they come in, the agent is required to present the “bully” offer to the seller.
As the house is for sale, the seller is free to accept the “bully offer” or hold it over to “offer night” and consider it with all the other offers.
All we are dealing with, is someone selling an asset that they own personally. This is the same as if they were selling a car, or a piece of furniture. The house is a personally owned private good, being sold by the owner.
What you are suggesting is a form of securities market for private residences.
This would never work. Reason being, as a seller, you don’t have to sell your house into a regulated market, or into any market at all. You own the house. If you want, you can get a black marker, a piece of cardboard, and make a “for sale sign” and put it on your lawn, and sell the house to the first person who drives past and sees your sign. That is your right.
People who call on government to correct problems by intervening, when the problems were caused by government intervention in the first place are confused or naive imho.
But they will get what they want, and a whole new round of people finding ways around the new regulations will begin.
Too bad they don’t teach a class called ‘unintended consequences’ in elementary school.
So I’m on layover in Frankfurt today, walking around in the cold rain by Frankfurt Main station. I believe I am looking at the future of Canada: more begging, homeless, desperate people on the street than I have ever seen in the last decade and a half of coming to Germany. Lederhosen and schnitzel, it ain’t. But the shawarma is cheap and plentiful.
This is rarely reported in the press, anywhere. I guess it doesn’t fit with the happy, sunny narrative of Mounties lifting kids over snowbanks.
Like Dan.t I am so glad to be employed outside the borders these days. Of course, the North Koreans did fire a few missiles right near the area we flew through to get here today. Nothing’s perfect, I guess. Just wish there was some, ANY, good news coming out of Canada these days politically or economically.
#110 NoName
Interesting article and absolutely true! In many cases the family unit disintegrates when the man loses his job.
what struck me was the young 29 year old single mother working at Red Lobster who said
“it pays good, i’m now driving a BMW and own a house!!!”
Well!, that pretty much says everything!!!!
What if the TPTB really want a bloated housing spectacle because every UP-Tic in MPAC assessment is more tax review. How many politicians own investment properties, flipping at will and earn money in REITS? Why change much? Since real estate is a key economic driver, these same politicians earn donations from all levels of the development, real estate and etc circuit which benefit from higher prices per square foot. Not to mention the fees earned by the financiers of this racket. The peasants are just debt slaves in this entire ruse. If so, don’t expect much change. Who knows, at some point the kids will just get willed the family castle and live in it as in olden times. Investment products will be taxed away by all if the current T2 types and future copycats. And all nest eggs will be de-nested and confiscated. Why play this racket may be the voice of the millenials going forward. And then where will that leave this mess?
You both got the first question right.
It didn’t help matters that I misworded the question. It should have read, as follows: “A bat and a ball cost $1.10 in total. The bat costs $1.00 more than the ball. How much does the ball cost?”
Many people respond by saying 10 cents without doing the math. The question was deliberately formulated to activate one’s “fast, intuitive (and lazy)” thinking style (what Kahneman calls “System 1”).
https://www.scientificamerican.com/article/kahneman-excerpt-thinking-fast-and-slow/
“#95 leebow” got the second question right, both the answer and the method. (Good job!) You can also answer the question by applying formal mathematics (Bayes’ theorem). See Example 1 in the link below for the math (same parameters, different scenario).
https://en.wikipedia.org/wiki/Base_rate_fallacy
Re: Housing Bubbles:
“It’s very clear that in situations of extreme ambiguity, people take their cues from what other people are doing,” Kahneman explains. “If a lot of people start moving in one direction all at once, then that creates a positive-feedback loop and people are going to move in that direction.” Source: Princeton Alumni Weekly
https://paw.princeton.edu/article/mining-meltdown
#48 Nonplused
Same happened with us. We bought in Toronto in 2003. We had been outbid on a few houses and this one had been sitting for a while over our budget.
They relisted it at a lower price and we visited with our realtor. We made a offer below asking. The night of our offer our realtor got a call that there was another offer and could we up our bid. To our realtor’s credit, he advised us to remain firm. We did and got the house. What other offer?
On a side note, we see now that we did get into that buyer frenzy of getting outbid time after time and felt desperate at that point. We were blinded at the time but I can see how it happens.
@#21 Devils Accountant
“Everybody wants to be a rock star…..”
++++++++++++++++++++++++++++++++++++
I’m just curious do you tell that to one of your clients thats just paid an obscene amount for a house as you “high five” them while shoving 10’s of thousands in commisions in your back pocket.
All that “sales” commission for hammering a “For Sale” sign on a lawn, yammering on to potential rubes about “How this place REALLY suits your needs” and then unlocking doors ……so difficult, so unecessary.
The… house…. sells…. its …..self.
Mob enforcers could learn a thing or two about ursury payments from realtors.
Well done.
Enjoy it while it lasts cause that light at the end of the tunnel is a train wreck headed your way
Wow.. so many comments missing Garth’s point. Yes, buying an overvalued piece of crap (with leverage) is indeed the fault of the idiot buyer. However (the point!), at least with Nortel, the idiot buyer can see the bids, the offers, the price history, etc… Big difference! The system IS rigged in that the cartel of no-talent realtors, in collusion with the blood-sucking layers of government, actually collude to withhold that very information from buyers.
Scotland also has a blind bidding process, except your first offer is usually your last chance as they are sealed bids and usually the winning party is selected from there. In the UK, you can win a bidding war, pay your deposit, arrange your mortgage (usually a £1k fee), complete your surveys and legal work only to find out that the sellers have changed their minds. Why? Because, in the UK, the deal is not final until contracts are exchanged (usually a week or 2 before closing). Are either of these systems more “fair”? Who knows. The point is that nothing about the buying/selling process in Canada has changed since before bidding wars errupted all over the country. What has changed is demand. Why should the real estate market be more fair and why would you expect the real estate industry to want this? Are banks screaming for more regulation? Is anyone forcing people to overpay for houses? If it’s unfair now then it’s always been unfair and the last time I checked buying a house was not a national right. Despite this I actually like today’s post because we can see what kind of lunatics (in the comments section) think they’ve actually been vicitimized.
#104 Former BC Guy Now NS Guy on 03.05.17 at 11:49 pm
______________________________________
What you describe in NS is the same as just about anywhere in small town Canada. Great life to be had for sure – **if** you can keep your job. I am just a hair outside the “commutable” range into the GTA, cheap houses, great fishing, hunting, ATV trails and more. Love it, but it’s a limited time offer it would seem.
Steady loss of decent paying local jobs, steady population loss, and steady significant tax increases mean small town Ontario is burning the candle at both ends. Young couples just starting in small towns now face much worse prospects than the wife and I did 25 years ago.
I am racing to retirement right now. Trying to get there before the industry I work in takes the final couple blows from the Ontario Liberals that will finally do it in for good. Hopefully I’ll make it in time to still be able to unload my digs. City has new public infrastructure plans out the wazoo, but there are no new natural revenues to pay for it – it’s going to be higher taxes no matter what they’re saying in the present. The town where I work is going to really start showing a contrast between privately and public buildings. All these new city institutions – gleaming modern glass towers – back dropped by the rest of the city most of which is starting to look like a slum…
If I can retire early and also unload my digs – I’ll be exiting Southern Ontario like a bat outta hell.
Imagine, if I woke up on a Saturday morning tweeting in a demented fashion that Obama has wire tapped my home and office, I would be taken off stage and given a full mental examination. The benefits of OHIP I guess. At what point does this example of a slow moving train wreck get taken off the world stage?
Totally true. People are not understanding what they are going into. Totally blame is on the ****ing real estate agents. Everywhere i go to see a house E.g. in KITCHENER /WATERLOO (because i can’t afford a single room here in toronto, this sucks,, and govt sitting on the pile of cash doing nothing n nothing), listed for 569 sold out for 742 with 23 offers. Amazing…. A time, real estate gave me 4 calls after placing an offer to raise it every time.. by some $$. F***ing r u kididng me. It is just like oh open your **** we want to ******* badly… means… this is purely auction. If you have to auction something do it in proper manner, don’t blackmail the buyer. Its totally blackmailing. let’s come up and find a real buyer who needs a real house not some chinese guy bringing millions to your doorstep for keeping it either empty or with 1-2 people having a MERC/BMW in front of the house.
TO all real estate agent, u r a BLACK SPOT on the society, looting your own people, sucking them with $$$$ of DEBT. Its your good time, so enjoy it. I want this ****** bubble to happen so that u remain unemployed for 10’s of years and noone gave u a job bcoz you are nothing just a mouth full of shit… hope this happens and god listens. If this soon continues it will be CHIANADA (not Canada), as there are no canadian’s left in this country (except real estate agents).
Beaware, you will have the bad luck of all the candians that can’t buy anything bcoz u sold everything as a DIAMOND whether it is worth gold or a block of COAL.
Imagine buying stock, and only having a rough estimate of what the stock might be worth, then it is up to you to guess what it is worth. If you guess wrong, then you will never get to buy that stock again, so you bid a premium. Maybe, a very large premium.
Now, let’s limit the supply side. Let’s say there are only 5 stocks to choose from today, and you have a limited time to invest the money. The premium you pay will go up.
Now, let’s make it the biggest purchase you will ever make.
Clearly, prices will go through the roof!
What will stop it? Real estate regulations.
Nothing else will, not mortgage regulations, not higher rates. People just seem to skirt regulations, or find ways to pay the mortgage (like Alberta).
Home ownership is too ingrained into the Canadian consumer.
i have a friend of mine that could n’t sell her house.. its been on an off the market for weeks. finally found a “Top” agent. this house is at Main and Danforth in toronto, and it’s listed for 599,000 i can’t wait to see how much it will oversell by. I’ve lost one daughter to Bradford and it looks like my youngest will be somewhere in Lake Simcoe .. this is splitting up families.. no one seems to care… Shameful on the government for not stepping sooner.
An easy way to avoid a bidding war or bully offer is buy a house that has been listed for 60 days or more or listed multiple times. Your agent should be able to tell you this. If you really have time, track a neighborhood. Once a house is listed for a third time, the vendor is easy prey. That occurred in my area. Someone listed for $1.4 M, then $1.3, then $1.2. By the fourth time it was $999,999. I don’t know what it sold for but there was not a flurry of activity at the last open house.
CIBC is warning against a possible capital gains tax rate hike in the next federal budget.
http://www.bnn.ca/raising-capital-gains-tax-would-be-inappropriate-cibc-1.688698?dsdf
De Verteuil believes a hike would prove another shot at individual investors from the current government.
“The good news is that a material amount of equity investments for Canadians is held in tax-deferred accounts such as RRSPs and pension plans,” de Verteuil wrote. “The bad news is that if done, this would be the third move by the current government that is adverse to most individual investors in Canada – the first was the bump in tax rates for high income earners, and the second was the reduction in TFSA limits in 2016.”
#31 Entrepreneur on 03.05.17 at 6:55 pm
Looking at real estate when younger there was no bidding wars. I think #10 Triplenet that the real estate board should put morals into this bidding war.
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It’s what the market is doing to bidders that is the root cause. Do you think in your younger years a realtor could have coerced you into partaking in a bidding war? Fat chance.
The mania, emotion, status, and greed surrounding the GTA market is what the realtors are preying on. They probably laugh all the way home every night.
No one is putting a gun to these bidders heads, they are willingly assisting in their financial destruction.
It doesn’t seem to be working in Australia…
#125 Julia
”On a side note, we see now that we did get into that buyer frenzy of getting outbid time after time and felt desperate at that point. We were blinded at the time but I can see how it happens.”
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And the thing is, you don’t know for certain whether there were any other bids or not. I believe that many times there are no other bids. Auctioneers play the same game with the telephone bids. Most of the time there is nobody on the other end of the line. So much deception out there for the naive to be sucked in with.
Garth, it seems TREB and OREA are getting away with murder. How is the media not all over this issue ? Politicians too???
This one is for all the girls on the blog…
M42BC
https://howmuch.net
#149 Euro Observer on 03.05.17 at 1:09 pm
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Euro-2. It is not a question of probability. The crash is an absolute certainty (see Michael Burry in the Big Short)
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So you saw a movie and now you think that it is a certainty that this has to happen in Toronto soon.
Weird.
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Euro-3. The fact that the mortgages are not recourse here will have even greater impact on spending as you cannot just walk away from a house and keep spending like people did in US, on the contrary, you will be ruined and literally hungry on the street.
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non recourse mortgage are a foreshadowing of a crash??
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Euro-4. Japan demographics? You must be kidding, the country has 90 times higher density of population than Canada.
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Japan demographics is a reference to a declining population whereas Toronto net immigration continues to grow. Density of Toronto’s population continues to grow also. Increase in demand is not a sign of a crash coming.
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Euro-5. See my example with Ireland, I am very familiar with it as I spoke with many Irishmen in 2008-2009 and I was actually there for some time in 2010. Trust me
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It happened in Ireland so it has to happen in Toronto too.
Hey that might be your best reason yet Euro. Not.
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Euro-6. Credit also froze up in Canada and Canadian banks received bailout
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So? What does this have to do with a crash in Toronto real estate.
So Euro Guy. In conclusion there are many things that might lead to a crash in Toronto real estate but you have not named one.
A Series 7-registered broker attempting to sell stocks using the same practices as the Canadian real estate industry would very quickly wind up unemployed or perhaps in prison…
An auction is just about the fairest way to price an item that is not a commodity. Most sellers have no idea what the market can bear, so how could they set a price?
The buyer on the other hand knows exactly what they can afford to pay. The system is not rigged at all. Even if bids were made public, presumably to eliminate that one offer that is way above, in a real auction there is a minimum increment. One would think that for a 1.5 mil house, that increment would be about 50-100k , so it wouldn’t do much to lower the price.
Cooling off period? You must be joking! 5% penalty for being silly and changing your mind is a small price to learn a lesson. How about a cooling off for the seller, how would you like that?
Real case in my neighbourhood, a few years ago: clueless seller accepts 950k on a nice house/nice central area, 1 week later worse house sells for 1.2 mil (‘stubborn’ seller who did not want auction, but priced right at market value and held on). What if the first seller could cancel the deal? + Fine example how an auction backfired while the traditional way, applied by informed seller yielded better result.
And it’s not like I did not write here (and elsewhere) at the time that there are relative bargains to be had – especially from old people who are being LIED TO by agents as to their property’s worth and IF the auction fails to attract bids because of poor preparation, they get scared and sell under market price. I sympathise with them, but I cannot do anything – THERE ARE relative bargains out there, but if you want half price, no, nobody is really that stupid – just come here everyday and complain.
#134 Lee I don’t think that’s a good way. I se house priced above market value that stay on the market for months – they usually sell 5% under asking when the market almost catches up to them. The best way is to get in with a clever bid on a failed auction. DON’T be greedy. Offer them a bit less, otherwise they’ll just decline and re-list 6 month later. It work in slower periods – just when most people around these forums start to get excited about a crash. You can get in for a 10% discount – if you are waiting for 30-50%, good luck, it happens once every other generation.
#131
Wow. See my post about feeling victimized.
#133
Splitting up families – are you serious? And regarding the “shameful” government, do you expect them to put limits on the price sellers can ask? I suppose you need them to tell you whether to take the blue or red pill too. Get a grip.
Who cares what the “fairest” way is. Honestly? If some idiot wants to way overpay for a crap house let them. If you don’t like it don’t buy. Nobody forces you buy a house.
AI, Robotics, Tech advances…….
Can you say MINCOME Kanada?
Tax the AI, Robots and Tech co’s to pay for your welfare.
Replace Corporate welfare with Public welfare.
Welcome to the new reality.
Bank for International Settlements says Canada is showing early warning signs of financial crisis
http://business.financialpost.com/news/economy/bank-for-international-settlements-says-canada-is-showing-early-warning-signs-of-financial-crisis
#141 Penny Henny
I can’t help you sir.
Not a medical mental health professional, sorry.
“Lack of supply, cheap money, speculation, Chinese dudes, the Bank of Mom – combined, they form a heady mix of desire.”
“It’s all true. But the picture’s incomplete. The way real estate deals are now consummated has changed fundamentally, shifting the power from buyer to seller – almost regardless of market conditions. So long as regulators allow this to continue, property values will continue to squirt higher”
“The system is rigged in favour of sellers and their agents.”
“Correct this. The market will follow.”
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The “system” will not, “Correct this” as things are going as planned. (bit hot maybe) Any changes made will be to appease the disenfranchised, yet not effect significant change (Christy baby)
I accepted this three years ago and bought RE again, but won’t bore you with appreciation details.
Fed rates are going nowhere fast, regardless of the claimed 4.8% US unemployment. Western economies are soft with low GDP and simply to weak to support a traditional post recessionary Fed rate of say, 4% that’s been the ballpark average for the past 40 years.
I don’t see an economic miracle on the horizon that will drive wage pressure for employers, forcing rates significantly higher. Robots, remember the robots….
$ lent for free = crazy asset prices.
Long story short, don’t fight the system!
Let’s compare a 1.2M mortgage to a 300K mortgage.
Putting aside the rule which states a mortgage payment should not exceed 1/3 of your total household income, which in this case means you’d need to gross 270K/yr to qualify to buy that mildew slathered 1.2 Mil spore containment GTA sinkhole of misery and lamentations.
That’s a lot of money, more than a Cop, more than a Teacher, more than both put together. Actually, it’s a couple Cops plus a Teacher combined. There are just a few thousand folks in all of Canada that make that kind of coin.
The difference between those two payments is a cremaster contracting $4000.00 per month. Every month, until you are officially old by anyone’s standards.
So, what can the 300K house buyer get for a spare 4000.00 per month that he has saved?
2017 Yamaha Grizzly 700 SE – $200.00/mo.
Another 2017 Grizzly 700 SE – $200.00/mo
A very nice 2017 half ton quad cab 4×4 – $1200.00
A very nice Stratos bass boat 200+ HP – 1200.00/mo
A very nice vacation to a sunny place – $1000.0/mo
We there yet? Almost – we’ll spend the rest on hookers and blow. Every 5 years you’ll have to dream up more things to buy – like maybe a garage expansion. Also new trips to take every year.
In light of the above, I don’t know why folks buy 1+M GTA boxes, somewhere there’s a perfectly good explanation, someday I hope it will be clear to all.
#130 Grey Dog
If you think you are equivalent to the POTUS, you probably should be carted off and checked out.
Meanwhile, the lefty press including the NYT were reporting that Trump was under surveillance for alleged ties to Russia both before and after the election.
So unless the lefty press were just completely lying about the IC surveillance in order to try to smear Trump, then it looks like there is lots of reason to be suspicious.
Now the denials are coming out with highly suspicious wording, implying that the wiretaps were indeed in place, but that there is no proof yet that Obama ordered them.
Since you cannot trust anything these days, I’ll wait for some evidence before I start calling Obama a fascist.
But I am also still waiting for any real evidence that Russia hacked anything, including the (completely irrelevant to the election results) DNC emails.
Trump will carry on for the next 4 years, and probably 8 if he decides to run again, so you should probably take a pill and get used to it.
Tudval #143
I don’t know where to begin picking apart your inane post so I will start with this:
5% penalty ? That is just the tip of the iceberg. More than losing a deposit the vendor can sue for specific performance of the contract.
That is before mentioning that false off the record information is supplied to bidders abound.
Bank for International Settlements says Canada is showing early warning signs of financial crisis
http://business.financialpost.com/news/economy/bank-for-international-settlements-says-canada-is-showing-early-warning-signs-of-financial-crisis
bribes and guns – —-> starving people
4 countries in africa face are facing famine !
Press release / March 3, 2017
Glencore redirected over $75 million in mining payments to scandal-hit friend of Congolese President, Global Witness reveals
Between 2013 and 2016 mining giant Glencore paid over $75m to Dan Gertler, a controversial businessman accused of bribing senior officials in Democratic Republic of Congo to advance his mining interests, Global Witness revealed today. These payments were due to be paid to Congo’s state mining company Gécamines under the terms of the original contract it had with Glencore. …
A Global Witness investigation found that from 2013 to 2016 Toronto-listed Katanga Mining, majority-owned by Glencore, made “signature bonus” and other payments totalling over $75 million to Dan Gertler’s Africa Horizons company, registered in the Cayman Islands. Under the original contract these payments would have gone to Gécamines, but Global Witness wrote to Glencore after reviewing company documents and filings that raised questions over the true recipient of the payments. Glencore admitted that they were made to Gertler’s company.
“It’s outrageous that Glencore has been making payments to a friend of the Congolese President who has been accused of bribery and corruption, and then not telling its shareholders or the public that it’s done so,” said Pete Jones from the Congo team at Global Witness. “Glencore has been in business in Congo with Gertler for a decade and has known about the allegations that have been made against him for years.”
https://www.globalwitness.org/en/press-releases/glencore-redirected-over-75-million-mining-payments-scandal-hit-friend-president-global-witness-reveals/
global witness:
“In 2011, Shell and Eni paid $1.1 billion to Malabu Oil and Gas, a front company secretly owned by a former Nigerian oil minister, Dan Etete. Prosecutors have alleged that over US$500m went to “fronts for [former] President Goodluck Jonathan of Nigeria”. This corrupt deal deprived Nigeria’s people of a sum worth 80% of its 2015 healthcare budget. Shell and Eni have always denied that they knew the money would go to Malabu, but documents seen by Global Witness show that the companies constructed the deal knowing that the money would flow ultimately to Etete’s company. Former President Jonathan has denied the allegations, saying in a statement that he has never used fronts to “seek favour or collect any gratification on his behalf.”
#152 traderJim on 03.06.17 at 2:36 pm
#130 Grey Dog
…………………………………………
If you think you are equivalent to the POTUS, you probably should be carted off and checked out.
Meanwhile, the lefty press including the NYT were reporting that Trump was under surveillance for alleged ties to Russia both before and after the election.
So unless the lefty press were just completely lying about the IC surveillance in order to try to smear Trump, then it looks like there is lots of reason to be suspicious.
Now the denials are coming out with highly suspicious wording, implying that the wiretaps were indeed in place, but that there is no proof yet that Obama ordered them.
Since you cannot trust anything these days, I’ll wait for some evidence before I start calling Obama a fascist.
But I am also still waiting for any real evidence that Russia hacked anything, including the (completely irrelevant to the election results) DNC emails.
Trump will carry on for the next 4 years, and probably 8 if he decides to run again, so you should probably take a pill and get used to it.
____________________________________________
Grey dog is correct! You sir are delusional. Trump is in a world of hurt re Russia, Russian hacks, Russian influence, Russian investments and his constant lies. I’m a conservative, I’m sorry I just cannot accept his bitter pills. His has a puritanical attitude towards his lies as he really believes his miss-truths. The heat is on his right now so what does he do? He deflects the shit storm towards Ex-President Obama and continues the twitter tirade all morning and day. I just sat in a meeting with a colleague overseas from England for business Friday. We discussed Trump and he laughed so hard and said the people of Great Briton cannot take him seriously any more. Donald Trump is the laughing stock of the entire free world. In fact they said it was questionable at the least before he was President to believe him. So believe what you may sir but Trump is deranged and dangerous.
BTW a five year old is the equivalent of POTUS.
Another way to deal with real estate madness is to just stop buying. When the prices are far exceeded the top wage earner there are less debt buyers. The average millennial will just stop buying, stop family life, stop having kids. And this is what our government wanted!?l
#128 Londoner…so this is where bidding wars came from, Scotland/UK. Cannot you not see how an agent can twist it around to get a buyer?
Time to step up to the plate real estate board and government leaders (the good ones) and put the correct regulation in place.
We have laws that are controlled by morals, and don’t comply, consequences.
#133
Are you serious? “Lost a daughter to Branford” Boo Hoo
Ask a Mother who lives in the Maritimes if ANY of her kids lives in the same time zone
If you are concerned about your children(and why wouldn’t you be?) perhaps have Mssr Trudeau and Madame Wynne stop mortgaging their future…..
“There is no other commodity which changes hands in a more obtuse, unfair and non-transparent fashion.”
The physical silver market is leveraged 100-1 by derivatives.
But why would anyone want silver? — Garth
drip drip drip decay
go back to the 80’s –
Greenmailers stealthily buy up stock in sleepy companies, then threaten to make trouble unless they are bought out at a premium read
http://www.slate.com/articles/arts/books/2017/02/brian_alexander_s_glass_house_about_lancaster_ohio_reviewed.html
RE 160 Frank: Silver is not what you want to buy. But people have to seriously start looking at lithium and Bolivia. Little South American country that could become the next Saudi Arabia
#37 Cto on 03.05.17 at 7:03 pm
Canada! The only jobs left in this country are for Realtors! That’s our biggest draw and commodity for sale. We don’t make anything or extract anything anymore.
We just prostitute our housing and realestate to foreigners who will buy…Or to ourselves and go deep in the hawk.
Yay! Canada…We suck!”
Don’t be so hard on Canada…there is also a huge demand to for Canadians to fill out minor league hockey rosters in the IHL, American League etc, not to mention hockey refs, statisticians, and professional Tim Horton’s donuts chefs…..
#116 Wrk.dover on 03.06.17 at 7:10 am
#94 stage1dave on 03.05.17 at 10:36 pm
Any blog that makes passing mention of a 71 Plymouth Hemicuda is worth making a meaningless post in reply to…
Like this one…
So when do 70 GS stage 1 Buicks start gettin’ some respect, huh?
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70 Gs 13.38/105.5 MT mag 1/70
70 hemi cuda 13.10/107.2 CC mag 11/69
Wrong year cuda, yeah, but close in a race ain’t the same as in horseshoes.
Buick needs a diet…
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Just messing with you Dave. The Stage one was the 9th fastest muscle car of the era.
#121 BillyBob on 03.06.17 at 7:52 am
So I’m on layover in Frankfurt today, walking around in the cold rain by Frankfurt Main station. I believe I am looking at the future of Canada: more begging, homeless, desperate people on the street than I have ever seen in the last decade and a half of coming to Germany. Lederhosen and schnitzel, it ain’t. But the shawarma is cheap and plentiful.”
Don’t forget to mention the huge and dangerous red light district surrounding the station…..
Trader Jim, sure wiretaps may be on Trumps advisory staff as they were FBI officially following the Russian trails…time will tell, time for the paranoid guy to exit stage left.
Believe me, KGB alive and well in Russia, my tour guide got the boot plus screamed at while a group of “plus 1s” were touring a downtown Moscow Church. The only reason I know what the guy was screaming about was one of was was raised in Poland and had a good command of Russian due to occupation. This was just about 8 years ago.
#122 Cto on 03.06.17 at 7:55 am
#110 NoName
Interesting article and absolutely true! In many cases the family unit disintegrates when the man loses his job.
what struck me was the young 29 year old single mother working at Red Lobster who said “it pays good, i’m now driving a BMW and own a house!!!”
Well!, that pretty much says everything!!!!
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It is true, there is few of “them” on my street, every so often i will put my tool pouch and go shirtless to do some work around house, and befor i now there are a few walking a dog down to street and stopping buy to check me out and to aks me can i stop by their and evaluate of wood working tools that they keep in a basement.
That neighbourly interaction is knoting knew, but what kicker hare is, that i am morbidly obist with XL man boobs… what in a world is going on, i ask my self every day.
link some explicit language
https://www.youtube.com/watch?v=bsUWK-fixiA
1. A bat and a ball together cost $1.10. The bat costs a dollar more than the ball. How much do the bat and the ball each cost?
$1.05 and $0.05
Easy
I hope Kevin O’Leary wins the PC leadership, I will gladly vote for a Trump style madman to burn our economy to the ground. If our government doesn’t care a lick about the well being of families suffering ever increasing hardship, at least we can return the favor.
I appreciate that this blog hosts a lot of opinions, but all I hear are people arguing about the housing situation. Bubble or not… if you are not the greater fool, then we have to think about the fact that when the housing prices drop, we will have a large population of people in over their heads. And no plans for cushioning the blow. Inevitable or not – how do we save those fools?
#72 Dan.t
2.75 doesn’t buy a world class beer in liquors stores here. Maybe $4-7 for a good can.
I told you the system was rigged!!!
Interest rates down south have no impact on our interest rates in Canada…not anymore. The two countries have diverged more than ever as our Government moves in the exact opposite direction…as will our interest rates.
Canada will feel the “Trump Shock” in the future. “Trump Shock” will be the reason why Poloz will keep interest rates the same in the next little while. Interest rates will go down again next year followed by a recession.
CBC news
Chinese enquiries in Toronto, Montreal, Calgary real estate spiked with Vancouver tax
http://www.cbc.ca/news/business/juwai-sotheby-china-canada-searches-1.4013285
sorry Garth but I have to respectfully disagree with you.
We need a Canada wide “heavy” foreign buyers tax.
The last 30 years we let all our decent paying manufacturing jobs skip overseas to make many of them rich. Now they come here and remove our houses from us.
to me, at this point, it pretty clear where all those foreign buyers went, when they left Vancouver.
A second survey just published this week showing FB influence in Toronto is marginal. We are responsible for high prices, not foreigners. — Garth