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May 13, 2018 | The truth

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.

It’s taking longer to flog a house these days. There may be no truer indication of the state of a market, nor its intensity and direction, than DOM. The days-on-market number’s a crucial stat for any buyer. In it lies a clue as to whether or not the property is priced appropriately for the market, plus how motivated (or not) the seller may be.

According to the country’s largest real estate board, the DOM number has exploded – from a lowly 9 last year to 22 this spring. That’s a leap (it says) of 122%, certainly reflecting a market where sales have crashed more than a third and prices have fallen an average of 14% and by 30% in some suburban hoods.

But the reality – the truth – is far different. Far worse.

For example, the average DOM last month in Toronto was (say the realtors) 16 days. In the once-hot distant suburbs of Richmond Hill and Vaughan the number was slightly higher, at 24 and 25 days respectively. No coincidence that particleboard McMansions in these areas are depreciating by the month.

Unfortunately it’s all a lie. The DOM is a Frankenumber, like the manufactured and trend-concealing HPI (home price index). It’s a fabrication that the average homeowner in Vaughan, for example, can expect to offload a property in little more than three weeks, nor that prospective buyers need to act fast to snare it. That’s because the real estate board has purposely concealed from consumers any relistings, repricing, terminations or listing suspensions that occur. Thus, it’s a common tactic to relist a property after a few weeks, resetting the DOM clock to zero. Ditto for a price change. Or the termination of a listing for a day or two, replaced by an identical one.

Local broker John Pasalis knows better, because he sees it. In a recent Tweet he shared some of the tricks. The average DOM in Toronto is not 16, but 150% higher, at 40. In Richmond Hill, houses take 46 days to move, not 24. And in Vaughan the stat is 65, or 160% than the 25 reported in April.

For the past seven years GTA realtors have spent huge sums on lawyers fighting the federal Competition Commissioner for the right to conceal, manipulate, hide, protect and exclusively own sales and listings data. The board, TREB, has lost twice. But it fights on. Truth, is seems, might show the emperor has few clothes. That the market is inflated, dangerous and held together with gossamer strands of deceit. Maintaining the fiction of eternal demand and ever-rising prices is central to not only the board’s bloated membership but to the fact average families can no longer afford average homes.

Well, there is another way.

As mentioned Friday, I’m spending some time in NS these days, whacking away on my latest project. In this province real estate data is free, unfiltered, transparent and immediate – one reason among many why average houses cost a fraction of what they do elsewhere. The local realtors make all market statistics available and a couple of companies, like Viewpoint.ca, pipeline them directly to buyers and sellers. How refreshing. Sunshine.

Here’s a small example from Halifax, a city of 500,000 and the principal centre east of Quebec City. Somebody bought 5960 Campbell Drive in the scenic and desirable south end for $552,000 in August of 2016. That was $17,000 less than the list price for an unrenovated property that had been on the market for 120 days. Here’s how it looked when sold:

The house was gutted to the studs and renovated to a high standard with the obligatory granite, stainless, potlights and marble. New appliances, slipper tub, redone exterior, landscaping, wiring, plumbing and HVAC. Total job.

  

By the next September the place was done, and the property listed (in a hot market) for $1.115 million. Ooops. Wrong price. It sat there for 101 days, until the listing was terminated a week before Christmas. Shortly after the new year 5960 Campbell went back on, this time for $949,990. Oops. Still the wrong price. Three weeks ago the ask was reduced to $899,000, and now awaits an offer. The time since the initial listing in January is 128 days. And, you bet, this is a motivated seller. Maybe ripe for vultching what is essentially a brand new home in a demand hood.

How do I know all this? Simple. It’s published. Just like the sales and listing history of every other property in the province.

You might have absolutely no interest in moving to Halifax (most people never stray outside their comfort zone) but you have to envy the gift every buyer and seller there are given. It’s called the truth.

Not too much to ask for everywhere.

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May 13th, 2018

Posted In: The Greater Fool

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