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September 5, 2018 | Market update

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.

“Get some popcorn,” says long-time Toronto house slinger Alex Prikhodko, “and watch the bloodbath this winter. It’s gonna be ugly – WAY worse than what you are expecting.”

Well, that got my attention. Even though the now-spanked Toronto real estate cartel has yet to release August stats, the tale from the rest of the country is ugly. And, if the sold listings displayed below are any indication, the might GTA market is also circling the bowl.

First, check out the carnage in BC, where just two years ago real estate was making everyone horny, indebted and feeling rich. Now just the debt part remains.

In Vancouver monthly sales didn’t even crack the 2,000 mark – tumbling 36.6% below a dismal August in 2017, and sitting 25% below the ten-year average. But that’s just the start. The number of properties listed is swelling as sales are contracting – up 34% from last summer. And, ugh, the sales-to-listings ratio for detached houses – once the object of everyone’s unbridled desire – is a lowly 9.2%. That means 91% didn’t sell, and won’t for a long time.

“With fewer buyers active in the market, benchmark prices across all three housing categories have declined for two consecutive months across the region,” says the head realtor. Detached prices are down 3% – the start of something much larger – while condo sales have crashed but prices are up 10%. The greater fool theory is on display. Poor kids.

And Victoria? Pffft. Nine consecutive months of sales declines now. Listings have plateaued, prices have flatlined and buyers have taken the ferry home. Stick a fork in it. As YVR wobbles, this place will be in for a serious correction.

And what about the hinterland? Yikes. Sales are back down to 1980s levels in the Fraser Valley, according to realtor Bill Coughlin, who estimates there’s been a 58% drop in activity in the last three years – a direct challenge to the official industry story.

 

Calgary? A disaster. Sales crashed 35% last month while active listings jumped 21%. The average price is now 10% lower than a year ago, which already sucked compared to five years before that. It no longer matters what happens to oil, pipelines or the crazy swings of provincial politics, Cowtown’s best-before date has come and gone in terms of residential real estate. Good luck trying to get out of a Cowboy McMansion without eating a lot of your equity.

But there’s more. The GTA market is not immune. Broker Prikhodko says it’s all about to hit the fan, with industry rumours at least one major bank is bracing for a real estate recession while a major high-profile builder teeters on the edge of bankruptcy. Scores of buyers are apparently walking away from their signed contracts.

“I would like to point out that up to this moment, the ‘correction’ has been purely psychological. Starting about now, the real economic factors (*cough* underwater debt) are starting to kick in,” he says. “Meat grinder has started, so far lips and ass are getting minced, with t-bone steak coming soon. People are in DIRE situations, with builder closings coming up and unable to sell even at massive discounts (and let’s not forget the mortgage renewals). I’m guessing this is what happens when you live in a city that approximates a casino at a mental clinic with a bank financing the Russian Roulette.”

Well, enough hyperbole. We want proof.

“I wish I could get credit for finding these,” he says of the three listings below, “but it was one of my realtors, who used to be one of the ‘Toronto is the next New York’ people and now is expecting a MAJOR correction.”

So, here are three urban sales, giving you a taste of what’s actually happening in the marketplace. It’s ugly, tough and bitter for sellers. It’s becoming a romp for buyers brave enough to reach for a falling knife. Let’s see how the local real estate cartel spins the numbers when they report tomorrow.

 

Brand new, 2017-built ‘executive’ town house in Scarborough sold for 27% below list. Pity the sucker who bought that one from the builder’s plans.

 

Well, so much for that great idea of buying a vacant lot in a hot market and flipping it for big bucks.  After 85 tortuous days on the market, this east-end piece of dirt sank 44%.

 

Monster home being built in Mississauga turned into a monster mess for this family. After 72 days they walked away with $1 million less than they wanted.

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September 5th, 2018

Posted In: The Greater Fool

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