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ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

July 6, 2016 | The Big Meme

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

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“Can you be on the show?… the CBC babe cooed. “The question would be along the lines of, ‘Have you given up on the idea of home ownership?’ The hope is to hear from people who have come to accept the idea of being a lifelong renter, as well as from those for whom home ownership is still a goal in spite of the challenge of getting into the market.…

Of course, I said, in the full knowledge that the leftists, vegetarians, Bernie Sanders supporters, social housing advocates, bleeding hearts and moist social media coordinators who listen to CBC Radio would be waiting to pounce. After all, I’m a fossil, believing a house is not a right. Shelter, maybe. Granite & stainless? Not a chance. In fact far too many people in this country already own houses, with way too much of their net worth concentrated there. No diversification. No Plan B. A one-asset strategy which now chances ending in tears.

Of course, it’s an opinion few share, especially the celery-munchers who love public radio and think society should treat everyone with respect, with government financing. But the reality is, cheap money, too many hormones, financial illiteracy and a tulip-mania obsession with real estate is creating dramatic levels of risk and debt. When things start to wobble and fall, even the CBC’s hero — weed-spreading, tat-wearing, overspending, Vogue-posing T2 — won’t be able to put it together again. So, the kids should know. They could be pooched.

That brings us to the Kingdom of 416, where the local realtor-dieties have just delivered their monthly stats. The contrast with Delusia, the west-coast metropolis featured on this pathetic blog yesterday, is quite marked. For starters, listings in YVR have started to inch higher while overall sales take a battering. Meanwhile average and median prices have been bloating, even as the volume of deals thins. Not good. Especially when you look at trades of detached homes (declining fast) compared with condos and semis (robust). It tells you a simple story — experienced players are throttling back.

As unaffordable as it’s becoming (RBC says over 70% of gross income is needed to carry a GTA house) the Toronto market is considerably more stable than that of the Lower Mainland. June sales were down marginally from the month before, but new listings fell 4% while total active listings have plunged from almost 18,000 a year ago to just over 12,000 now — a plop of more than 31%. That means if current sales levels hold, there’s but a 28-day supply of available properties.

This helps explain prices. The average selling mark for all homes increased year/year by just under 17% to $746,546. In the city itself (416) a detached house now averages $1.259 million, a number which is 19.6% higher than last June. But what’s interesting is how price creep is hitting the burbs. Year/year gains were 16% in Halton and Mississauga, 20% in York and Durham and even 19% in Orangeville where everyone drives a dually F150 and says ‘dang’ a lot.

So why have listings plunged? Mostly it’s about perception. While in YVR there’s a surreal aspect to real estate which is starting to repel buyers, in the GTA people are afraid to list because tight supplies and steady demand mean they’d have to join a bidding war. And who the hell wants that? After all, this is a region of six million people, with a relatively tiny number of properties on the market. Even the real estate cartel’s new boss admits buyers are facing headwinds and existing homeowners are scared witless at the thought of trying to find a replacement home.

And let’s not forget the media’s role. Below was the headline in theToronto Star Wednesday, clearly telegraphing that local real estate jumped in price last month by 16.8%. It didn’t. The real monthly increase was… hey, wait a minute… the benchmark price in June actually declined from May. By $5,362. And guess where it says that? (Nowhere.)

Conclusion: Van’s getting closer to implosion. Toronto, not so much. And you shouldn’t buy in either.

TORONTO REPORT

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July 6th, 2016

Posted In: The Greater Fool

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