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June 5, 2017 | The Big Blow

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.


Five weeks after the Ontario anti-bubble crusade commenced, here is the state of the once-frothy, frenzied, house-lusty GTA real estate market.

WARNING: What follows is based upon Toronto Real Estate statistics. Be advised it may contain misleading Frankenumbers, unhealthy assumptions, coarse calculations and adult situations. Reader discretion is advised.

Average price drop during May: – 6.2%
Total sales drop in GTA during May: – 12%
Drop in sales year/year: – 20.3%
Average price: $863,910
Average detached house one-month price drop: –$64,221
Decline year/year in detached sales: –26%
Average price reduction (all properties) over one month: –$56,881
One-month increase in new listings: 19.4%
Increase in active listings year/year: 43%

What do all these numbers mean? Well, the oxygen just left the room. Whether it’s a temporary gasp, or fatal, remains to be seen. But there’s no slapping lipstick on this gasbag. It’s got a serious leak.

Ron’s been a realtor since people knew who the BeeGees were. “I have never in all this time,” he told me, “seen a 6% price drop in a single month. Even back in the collapse after 1989 I cannot recall this kind of a number.”

So how serious is this, Ron?

“If you went into a house deal last month with a 5% down payment, then you are now under water. That serious.”

By the way, don’t look for most of the statistics above in the official realtor news release. Even Ron – who has access to detailed TREB numbers – says he had to call the director of research to find out what the actual drop was in average prices over a single 31-day period. “It was buried in the bottom corner of page 27,” he says.

Meanwhile , this was what the organization chose to trumpet – and which the repeaters in the MSM parroted (Global News: ” Toronto home prices rise to $863,910, an increase of 14.9%…“):

“Selling prices continued to increase strongly in May compared to the same month in 2016.  The MLS® HPI Composite Benchmark price was up by 29 per cent year-over-year.  The average selling price for all home types combined for the TREB Market Area as a whole was up by 14.9 per cent to $863,910.  Year-over-year price increases were greater for condominium apartments compared to low-rise home types.  This likely reflects the fact that the low-rise market segments benefitted most from the increase in listings.”

Are prices still ahead compared to last May? You bet. The period between then and March of this year obviously constituted peak house – culminated by that 33% year/year romp in March which had experts everywhere warning of a market top and an imminent plop. Given the economic fundamentals – mediocre job growth, static incomes and record household debt (not to mention the fact half of all borrowers say they couldn’t withstand any rate hike) – it’s impossible for prices to keep advancing. Only speculation and house horniness have been keeping this Hindenburg aloft.

But now, down she comes. At least in May, an historic fissure opened. Despite all the misleading statements and hidden stats – dance and weave as they might – the Audi crowd cannot change history. We created a state in which crap houses cost $1.5 million, kids get eternally indebted, mortgage loans top $1.4 trillion, personal finances grow worse by the month and the tuliped masses flock to a single, leveraged asset at its most inflated moment in time.

This does not end well. But now you know that.

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June 5th, 2017

Posted In: The Greater Fool

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