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ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

September 8, 2016 | Busted

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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“Do you think the TREB is running scared?” wonders blog dogess Stephanie. “It seems like suspicious timing, to be stifling this information right when Vancouver prices are nosediving. Could this be a lame attempt at self preservation? Will they try to hide the sales dips likely to happen soon in Toronto?”

In case you missed it, the local Toronto real estate cartel just played the nuclear option against lowly agent Fraser Beach, who’s been doing a fine job of informing consumers not only of all the new local listings, but actually revealing what properties sell for. The site,torealestatesold.com, has been in trouble before, but this time it looks a tad more serious with Beach being delivered a ‘cease-&-desist’ letter that caused him to replace data with this message:

suspended

The sold-data blog was briefly disabled by a similar realtor threat last winter, but resumed operation soon thereafter. A few months later TREB lost its big legal fight with the feds’ competition tribunal, which ruled this kind of information is in the public interest, and the realtors are evil little weenies for trying to suppress it. The cartel is appealing that decision, meanwhile sending its lawyers to extinguish the lantern of transparency.

Of course, this is not the only disservice of the week. Days ago TREB released the sales/price data for the GTA market during August, showing a dirigible-sized 23% surge in sales. But there were two more selling days in the month this year. Stripping those out to provide an apples-to-apples comparison with 2015, the sales increase was just 13%. That’s good, but it ain’t 23%.

Here are more realtor tricks, kids. Last month, we’re told, sales numbers crushed anything in past history and average prices jumped wildly. For example, 863 detached houses sold in the Kingdom of 416 for an average trade of $1,206,637. The increase? A mind-blowing 18.3%.

Really?

Back in February almost an identical number of detached sales took place (855), and the average price was $1,211,459. So between last winter and this autumn prices fell a little, which makes you wonder why being 18% more than August of 2015 matters. As for sales, there were 1,075 monthly transactions of detacheds back in March, which translates into a fat 19% decline in market activity since then.

Hey, no wonder the dudes at the board hate guys like Fraser Beach. They manipulate, twist, contort and bend data until it looks like a drunk doing yoga, while the Toronto Sold site just tells you what something was listed for, then what the buyers got. By employing Assault Lawyers, realtors hope to maintain the ongoing fiction the market has momentum, depth, breadth and sustainability. Maybe it does. Maybe not. But let us decide on our own.

Meanwhile most people who know a hole in the ground when they see it aren’t buying the realtor meme. This week Bank of Canada boss Stephen Poloz made a point of saying he’s spooked. As he put it: “Vulnerabilities associated with household imbalances are elevated and continue to rise.” In other words, stupid houses prices could imperil the entire economy.

The Royal Bank’s latest ‘housing health’ report reached this conclusion: “Affordability-related risks continued to increase significantly in Vancouver and Toronto this year, as prices accelerated further, especially for single-detached homes…. Rapidly eroding affordability is a growing source of concern.”

In Hong Kong (of all places) the federal finance minister said what to do about housing was a “key issue” for the T2 government (between selfies and marijuana meetings), suggesting some kind of policy initiative is coming. “We are going to remain on top of the dynamics in order to consider whether we need to take actions,” he said, adding that he and the boss want to “make sure we’re managing those risks.”

Notice how those words keep cropping up? Vulnerability. Risk. Concern. Elevated. Hmmm.

I’m sure the realtors have. With so many eyes now watching Vancouver’s plop – thanks to a tax affecting just 9% of buyers – the last thing they want are doubts about the giant GTA gasbag. The longer the masses stay giddy thinking prices are rising 18% a year and sales soaring by 23%, the further the day of reckoning can be pushed off.

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September 8th, 2016

Posted In: The Greater Fool

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