February 21, 2021 | Brain Bug

Pandemic puppies. Since Covid changed everything, 12.1 million dogs have been adopted in the US. Historic. Off the charts. In Canada the CKC says inquiries about breeders are up 40% year/year. Dogs selling for $1,500 a year ago are now fetching four grand. Backyard Kijiji breeding has exploded. Sadly.

The scammers have emerged. Like “James Brooke” ([email protected]), who places online ads in local publications nationally – Montreal to Edmonton, Red Deer, Vancouver and the GTA selling pups, from Poms to Beagles to Huskies. But there are no dogs. Just pictures, and an upfront demand for a fat deposit to cover transportation costs.

MJ says she was roped in by this crew after being told to send money to a dog-shipper. “It was a service located in Manitoba that is scamming service advising they will ship your dog for a flat fee and then add additional charges along the way till you realize it’s a scam.”

So if you see something like this, ignore it.

Well, here’s the point today: the shelters are empty. The animal rescue groups have no dogs. Breeders are taking names for litters in 2022. Prices have quadrupled. TikTok and Insta teem with puppy messages asking, ‘how could you get through this year without one of these?” Puppy inventory has collapsed. Canine costs have exploded. Sellers (legit or otherwise) can ask for whatever they want. Buyers continue to line up. FOMO and YOLO, brought on by an endless pandemic, have created a seller’s market in which valuations are rising by the month.

Sound familiar?

You bet. Now let’s flip over to a comment made recently by Cathy & Tanya Rocca, sis realtors in the steamy GTA burb of Burlington.

The results for January can only be described as stupefying. The average price paid for a freehold property during the month of January was $1,315,069 as compared to $1,006,343 in January 2020 The logical expectation with that kind of increase is that sales would be down significantly but they were not. In fact, during the month of January, we saw 3% more sales then we did in January 2020.

It’s everywhere, of course. A questionable bung in Hamilton listed for $599,000 sold for $801,000. Same experience in Kelowna, where the typical property is nearing $900,000, up a third. Listings in Toronto will pass the seven-figure mark, on average, in a month or two. Halifax and Victoria are nuts.

The sisterly advice to buyers:

Don’t despair – adjust. The new reality is that you will almost certainly not be the only buyer vying for a property. There will be competition. Be prepared, know your limitations and use the most recent sales as your guide. No point in looking at what happened 30 days ago – that’s old news. As to waiting this out – the likelihood is that 6 months from now, prices will be up another 6-15% (depending on who you listen to) and you will be kicking yourself for not being more aggressive.

Covid has infected brains everywhere. Puppies and houses epitomize it. Nesting, fear of the outside world, WFH, immense social change, isolation and a destruction of routines have over the course of 12 months bent personal priorities in ways we’ll marvel at in future. We started off hoarding toilet paper. We ended up desperately buying real estate over FaceTime for hundreds of thousands more than buyers asked. Because of a pandemic we all knew would be temporary, we agreed to decades of debt.

Well, puppies grow. Wildly. They eat mountains of chow and rack up the vet bills. Some shelters have started to report five-pound bundles of joy that turned into 65-pound obligations are showing up at their doors. There will be more. The American Kennel Club figures a million canines could be looking for rehoming as the vaccines defeat the virus and, yes, people go back to work.

How will inoculation and reopening the workplaces affect housing? Is the Rocca Sisters advice – to be aggressive and not delay – wise, or suicidal?

Panic buying can end in remorse. Or tears. The outcome rarely meets the expectation. Real estate is a huge commitment involving big leverage so grabbing some in a bidding war without conditions, a home inspection or even (increasingly) a walk-through, is a leap of faith. Yet scores of people are doing just this. The stats are incredible – prices and sales in the middle of winter, in the midst of a recession and pandemic, now at historic highs.

There will be buyer’s regret. Some will be punished for not having done due diligence on the properties they selected. Others will be surprised when their 1.5% mortgage rates eventually double while their incomes do not. Many who moved to the sticks will be forced to choose between commuting or selling when the boss calls them back to work.

Inventories of houses, like dogs, will only rise from here, not fall further. The bidding wars will end. Days-on-market will increase. In time, a seller’s market will turn into one favouring buyers since high prices have drastically reduced the universe of potential purchasers. Already, in most cities, average families cannot qualify to buy average houses, even at historically-low loan rates. So where are all the future sales flow from?

If you don’t need to buy, well, don’t. If you’ve been thinking about selling, this is your moment. If you got a pandemic puppy, stare into her eyes. It’s a life. Remorse is not an option.

Garth Turner February 21st, 2021

Posted In: The Greater Fool

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