Entries from March 2020 ↓


Eeeeeeeeow! What a wild ride.

The stock market careened lower from record highs in just a few weeks by a shocking 38%. But lately it’s zipped back up an impressive 22%. Mr. Market apparently doesn’t think the world is ending. So I guess he doesn’t read the comments on this pathetic blog.

(When I walked back from the office yesterday Dorothy was a wreck. ‘What happened?’ I asked, sweeping her into my manly embrace. Finally she admitted it. “I read the comments,” she whispered. It took three awful episodes of Father Brown to cleanse her mind.)

Back on Bay Street an experienced vet says this: “We’ve had the shock and awe. The institutions are buying again. Consumer sentiment may start to improve. The bounce is technical. The market is pricing in a “V’ shaped recovery. Everybody wants one.”

People with nicely balanced and diversified portfolios who leave them alone will probably do fine. But what about the real estate market? Could the virus attack of 2020 be the catalyst for housing’s Big Reset?

Things are going from uncomfortable to excruciating for the realtor species. In Toronto, for example, showings fell 59% last week from the previous seven days. Same story for sales. Year/year deals are down 40%. The number of cancelled listings has grown by a third and new listings have plunged 33% as owners decide there’s no way germy strangers are coming through to fondle their stuff.

RBC (the biggest mortgage lender) says property values will fall. “Surging unemployment and the market’s illiquidity will compel a growing number of tight-squeezed [home] sellers to make price concessions. We think the recovery will come in stages—taking buyers up to a year to regroup and rebuild confidence amid high unemployment. Based on these assumptions, we project home resales to dive by nearly 30% this year in Canada to a 20-year low.”

Way worse in Calgary and Edmonton, of course, as Canadian oil prices crash (more to come, it seems). Meanwhile cash-strapped homeowners continue to melt down the banks’ call centres. Over a quarter million families have now asked for relief, and the calls are coming in at the rate of 80,000-120,000 per day. Staggering. Add this to the maybe-1,000,000 tenants who have indicated they can’t (or won’t) pay their rent tomorrow.

Now, here’s another flea on the dog: failed closings.

Almost 66,000 properties across Canada sold in the first eight weeks of the year, and a ton of those deals have yet to be completed. For every transaction there’s a family selling and one buying, so in the middle of a pandemic with mass unemployment and growing credit risk, many folks have a lot to worry about.

For example, the appraised value of a house may have declined between offer day and closing, jeopardizing financing. The buyer might have suddenly, unexpectedly lost a job and be unable to proceed. The mortgage broker’s funding commitment might have gone poof. Maybe an investment portfolio that was intended to finance the deal faded. Or perhaps, like so many in the blog’s steerage section, purchasers turned into paralyzed puddles of gooey anxiety. Buyer’s remorse, fear and loathing. Perchance they even got the bug.

Lots of reasons now exist for buyers to consider walking from a deal that poses risk. It’s not that dissimilar from 2017, when prices charged lower and deals disintegrated into lawsuits. Expect more, since a mere global pandemic is no legal excuse for getting out of a real estate contract. Buyers who fail to close not only give up their deposits, but also stand liable to pay the difference between their offered price and the ultimate sale price of the property in a down market. Plus legals. Ouch.

So, if you bought a house you could barely afford with a job, and are now unemployed, too bad. Even having the bank pull your funding won’t allow a clean break from the deal. With almost 10% of the entire workforce having applied for EI benefits at this point, expect some chaos.

And speaking of legal stuff, agents now need this sworn statement before they’ll even show you a house:

  • I have not travelled anywhere outside of Canada, or been in contact with anyone who has travelled outside of Canada, in the last 14 days.
  • I have not experienced any of the following symptoms in the last 14 days: fever, dry cough, shortness of breath, or difficulty breathing.
  • I have not knowingly come into contact with anyone experiencing any of the following symptoms in the last 14 days: fever, dry cough, shortness of breath, or difficulty breathing.
  • I have not knowingly come into contact with anyone with a presumptive or confirmed COVID-19 diagnosis in the last 14 days.

If you lie, the brokerage can go after you. The homeowner might, too. The cops will arrest you for non-self-isolation. The Social Distance Warriors will shame you mercilessly on FB, Insta and maybe (if they can dance) on TikTok.

Remember back when all you had to worry about were bidding wars, rockstar realtors in Audis, greedy sellers, blind auctions, runaway prices and your mom’s failed expectations? Damn, miss those days.


Virus porn


“People are not very good at statistical analysis and probabilistic reasoning,” says blog dog Matthew. “I feel like this pandemic has now taken on a whole psychological life of its own, most citizens comply with the official story and are scared by the media, but in truth the reaction is way out of proportion to the evidence, and the ensuing damage to humanity will be staggeringly worse.”

Ya think? Just read the comment section of this pathetic blog. Apparently we’re all days away from a wheezy death. Politicians get a pass on gutting the economy and blowing a hole in finances that will take a generation to mend. Because we’re terrified.

This is not a virus blog. Let’s make that clear yet again. We have no idea where this little bugger is headed. How many of us will sicken, succumb, or the impact on our health care system – all unknown. But we can see 100% are being damaged in an engineered shutdown of epic proportions.

“To allay our fears it is so important to note that up to 1,500 Canadians die each year from seasonal flu (including kids),” Matt continues. “Covid is well and safely within that range.”

But few believe it. (Actually 12,200 Canadians were hospitalized with the flu last year while 3,500 died of it. Thus far we have had 67 Covid fatalities.)

Darker days could lie ahead. We have no idea. So let’s deal in some facts.

First, people are not prepared for this shock. Or any shock. The number applying for EI has shattered all records by a huge factor. Up to 800,000 tenants are believed unable (or unwilling) to pay their rent on Wednesday.

A survey released Monday shows 49% of us are a few hundred bucks from bankruptcy and the number worried about debt (46%) is inflating fast. A quarter couldn’t pay their monthly bills even before the lights went out two weeks ago. About 35% figured they’d soon be jobless. This is a snapshot of a nation in personal financial crisis. No savings. No reserves. No plan.

Second, if you really want something to worry about, here it is: oil.

Crude prices have slumped to twenty bucks, a 17-year low and we’re running out of places to put the stuff. This is Canada’s biggest export. It costs more to move our crude than the oil is worth. Global demand has fallen by a quarter in recent weeks thanks to Covid, and that’s a first. Despite that, Russia and the OPECers have been fighting and increasing supply. Canada, with its pipeline problems and expensive oilpatch operations, has seen its price collapse. Alberta may go with it.

Third, real estate accounts for more of the Canadian economy than all manufacturing. And guess what Virus Porn has done there? Yup, killed it dead.

For example, the following words form part of a release Royal LePage is requiring sellers to sign before an agent will show their home. Yikes.

I am requiring that my Listing REALTOR® market, provide access and show my property to third parties and potential buyers and I do so voluntarily and of my own free will without any coercion by any person or company and being fully aware that we are in the midst of a COVID?19 virus pandemic and the virus appears to be highly contagious;

I fully understand that by allowing access to third parties and buyers entering into or onto my premises that I may be exposing myself to the potential transmission of the COVID?19 virus to myself, my family or my friends and I knowingly, freely and voluntarily accept the inherent risks of this activity, including possible contamination, illness and death;

I will maintain at least a 6 foot (or 2 metre) social distance from all persons that my Listing REALTOR® or any Co?operating REALTOR® brings onto my premises during showings of my property or visits by my REALTOR® or other third parties for marketing preparation purposes;

I have been advised by my REALTOR® that upon completion of any showings of my property to any third parties that I air out the premises and disinfect and clean all surfaces in the Premises including but not limited to door handles, switches, windows, counter tops or any other surfaces. I further understand and agree that these efforts may be limited in their effectiveness of preventing viruses or diseases of any kind;

I have been fully advised by my Listing REALTOR® of the risks involved in marketing, selling and providing access to my home during the COVID?19 virus pandemic and I take full responsibility for any negative consequences resulting from continuing these efforts at this time;

No showings, no sales. No sales, no market.

Fourth, political spending is off the charts. The federal deficit was supposed to an awful $24 billion next year. It will be north of $130 billion. The legacy of tax could be breathtaking in an already high-tax nation. People are being given $2,000 a month. Businesses will be subsidized to maintain payrolls. You can be sure this is a big step towards a universal income – because people have no savings. No reserves. No plans. However, 70% own houses. Go figure.

By the way, Robert sent me this note Monday afternoon: “Just had a call from a friend whose mother in her 90s in a retirement home with supplemental private health and whose life is supported by rental income was told by her tenants, residential and commercial, that they are not paying rent April 1st. Commercial is definitely able to pay. Balanced portfolio sure would be good now.”

So, feel free to worry. But not about getting sick. We can fix that.