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August 4, 2016 | Misery 4

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.



I’m sure it wasn’t Ray’s idea. The Norfolk Country, small-town backroads realtor is a gentle dude with an air of 18th Century aw-shucks formality about him while embodying something in short supply these days. Ethics.

Disclosure: I bought a lakefront property through his little brokerage a decade ago. He sold it for me a few years later. In a bidding war, no less.

Well, Ray Ferris is president of the realtors’ cartel for all of Ontario these days, and I imagine his bald pate may have furrowed a little as he sent out a media release this week showing that our youth have been terminally afflicted with FOMO. The reason, says Ray, is obvious. The kids believe this is “a good long-term investment.”

And here we thought they were just waiting for Justin to give them weed. ‘Long term investing’. Who knew?

Well, let’s end Misery Week on a particularly miserable note. The most over-educated, sheltered, uber-parented generation ever to walk this earth has inherited the worst characteristics of their parents. House lust. Financial illiteracy. Nesting. Good-bye backpacking through Europe to find yourself or chasing a career four provinces away. Hello mortgage and property tax. Lawn and minivan. Eavestrough repair. We are so screwed.

According to the realtors’ survey of Gen Yers, 51% plan on buying a property within the next two years – a big jump from the past. Just over half of these little hornies say they want a detached house. And almost eight in ten (77%) say it’s because real estate is a no-brainer, always-goes-up asset, which is 7% more than last year. Wow.

Of course, houses have never cost more than they do now. Incomes are stagnant. Unemployment’s increasing and the economy fizzling. Despite that, the key reason cited by the kids for walking into epic debt and less mobility was simple: “the desire to own a home.” Ah yes, we’ve taught them well. And the higher prices go, the greater that desire. It’s classic buy-now-or-buy-never behaviour.

So, let’s share the misery sloshing around this pathetic blog, and try to save the minnows from themselves.

Here’s a start:

VAN SALES 1 modified

That’s right. Behind those boffo, dizzying price stats announced every thirty days in Vancouver there’s a darker story – seriously declining sales numbers for detached homes. Kinda makes you wonder. Are we hitting a wall? With prices wobbling higher on thinning volume while BC purposefully plays whack-a-mole with foreign buyers and average families face houses they can never afford, how can this have a good outcome?

Burnaby -49.6%
Coquitlam -46.9%
Delta-South -22%
Maple Ridge-Pitt Meadows -20.7%
New Westminster -5%
North Vancouver -14.6%
Port Coquitlam -34.3%
Richmond -43.5%
Vancouver East -21.4%
Vancouver West -30.3%
Whistler -6%

Meanwhile in Toronto, the market shows equally worrisome signs, even as the media (and Gen Y) sees only rising prices. The number of active listings has cratered by more than 30% with homeowners too greedy (houses only go up) or scared (can’t afford to move) to go to market, even though harvesting a big, windfall, tax-free gain is logical.

Besides, look at sales in the Kingdom of 416. Detached deals were down 6.5% in July from last year. Sales of semis fell 11.5% and townhouse transactions were lower by 6%. As prices shoot higher, what consumers can afford dips – so only condo sales showed a gain.

Given this (plus the issues already chronicled this week) why do people think real estate is golden? Because we’re manipulated, month after month by realtor stats comparing the present to a year ago, masking important market trends and burying key data. Housing analyst Ross Kay looked at this week’s statistics from Vancouver and concluded: “Peak Pricing was reached in Vancouver in February 2016 when that single month’s Average reached $1,109,409 which has now fallen each consecutive month until this July when that single months price dropped below the average of the previous 11 months all together.”

So, sorry Ray. Stop with the surveys and fomenting the FOMO. A decent guy in a position of influence is rare. Use it for good. Leave the misery to us.

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August 4th, 2016

Posted In: The Greater Fool

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