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August 3, 2018 | Massaged

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.

There are more than 50,000 realtors in the GTA. It looks 80% of them made nothing last month. Of course, you’d never know it from the swill the real estate cartel dished out on the Friday before a summer long weekend.

Toronto Real Estate Board President Garry Bhaura announced strong growth in the number of home sales and the average selling price reported by Greater Toronto Area REALTORS® in July 2018.
Residential sales reported through TREB’s MLS® System for July 2018 amounted to 6,961 – up 18.6 per cent compared to July 2017.  Over the same period, the average selling price was up by 4.8 per cent to $782,129, including a moderate increase for detached home types.  New listings in July 2018 were down by 1.8 per cent year-over-year.
The MLS® Home Price Index (HPI) Composite Benchmark for July 2018 was down slightly compared to July 2017.  However, the annual growth rate looks to be trending toward positive territory in the near future.
“We have certainly experienced an increase in demand for ownership housing so far this summer.  It appears that some people who initially moved to the sidelines due to the psychological impact of the Fair Housing Plan and changes to mortgage lending guidelines have re-entered the market.  Home buyers in the GTA recognize that ownership housing is a quality long-term investment,” said Jason Mercer, TREB’s Director of Market Analysis.

Well, that sounds encouraging. Until you look under the kilt.

Like YVR, this is not a healthy market. That ‘strong growth’ in sales is actually a plunge from the previous month, when almost 8,100 units changed hands. The 14% drop in a few weeks is significant: July sales were the weakest since back in February. So much for “an increase in demand.”

By the way, for 2018 to date, sales in the massive GTA market have declined more than 22% from the first six months in 2017 – which included the big drop following Ontario’s bombshell Fair Housing Plan announcement. In other words, demand has weakened substantially from last year to this one, and from June to July. Pig. Lipstick.

But what of prices, you cry?

Don’t actually believe what the monthly reports spit out. Look at the stats. So far in 2018 the average detached house in the 6ix has lost 10% of its value, while in 905 it is 12% less. Sales of single homes are lower by 27%. Condo sales have dropped in the GTA by more than 19%, but the stress test has pushed condo prices higher – 7.5%. It’s the same story as on the Left Coast as buyers retreat, detached properties lose altitude, yet fist-time buyers inflate the cost of hi-rise boxes after being shut out of purchasing a traditional home.

Always remember that real estate boards are run by realtors and dominated by the big marketing outfits – Royal LePage, Re/Max and Century21, for example. The statistics they publish are not regulated nor independently verified. The Toronto board has gone through the entire judicial system trying to prevent transparency, fighting the federal government’s competition watchdog which alleges consumers are being blinded to vital market information. Unlike the stock market, where regulation is intense and trading data pristine, the real estate market operates in a shadowy world riddled with undisclosed conflicts of interest.

Meanwhile the numbers are staggering. In the GTA alone last year 92,400 properties changed hands. The average selling price was $822,681. Thus citizens did $76 billion in trades. In most of those cases buyers were unable to know the sales history of the property they were purchasing nor the market activity surrounding it. Nobody would buy a stock that way, let alone one worth $822,681.

Let’s hope realtors are not massaging the numbers the way they’re twisting the message. That would be even more terrifying.

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August 3rd, 2018

Posted In: The Greater Fool

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