He built two houses, a year apart. Same street, same size, similar, side-by-side. The first sold in one day for $700,000, last year. The second just sold after four months of showings, for $640,000. The city: Victoria.


Meanwhile blog dog Carlyle chronicled what happened to his house this week. One day, nine showings, two offers, sold to house-horny 20-something newlyweds. Setting a new price record for a dreary suburban slap-build. The city: Milton.

In Vancouver, multiple offers in Richmond, while new listings surge everywhere and suddenly it’s a lot harder to rent your moldy basement suite. In Edmonton and Calgary the market’s so cold realtors have their hands in their own pockets. In Toronto, sales stutter while 35 new condo buildings with 17,000 units are soon to be unleashed.

What does all this mean? Beats me. But I’ll take a stab.

In all of the country there is one constant: sales of existing homes have declined now on an annual basis for seven months. During this time variable-rate mortgage costs have stayed low and stable, while five-year money has sunk into the 3% range. Also over the last half-year, Canadian household debt has risen and unemployment has remained about the same. So it’s fair to assume incomes have also flatlined.

Is this a healthy picture? Does it set the scene for a robust balanced market once the thaw sets in?

Hardly. Sales momentum is weak, despite ideal borrowing conditions. Families have less disposable income and the economy is barely moving. And a mess of new listings is likely to wash over the market in the next eight weeks. This is a formula for unhappy sellers.

Meanwhile, the peer-to-peer evidence contained in this pathetic blog’s perverted comment section is worth noting. Sales evaporate in the bucolic curvaceousness south of Kelowna. Chalets in ritzy ski country north of Toronto go begging for buyers. Cottages and retreats outside Vancouver drop in value by half. Powers of sale surge in suburban Brampton.

But how can we have so much droop while this blog is regaled with news of an offering orgy in Milton? As expected, blame F.

That announcement which killed off 35-year mortgages is having the anticipated effect. Egged on by lenders and mortgage brokers, it seems a new squad of  property virgins has rushed in to be sacrificed on the altar of stupidity. They’re madly pre-approving, shopping, offering and financing, trying to deep throat the greatest amount of debt possible before the March 18th deadline. Poor kids. Buying in haste at high prices with financing destined to cost more on assets sure to swoon. Doesn’t anyone tweet about this?

Of course there’s a precedent for this kinda thing – when government affects real estate buyer behaviour through an arbitrary deadline. When the Obama $8,000 homebuyer grant expired last summer, the housing market withered and died. It became apparent that all Washington had done was pull forward some dregs of future demand, instead of providing a much-needed spark of ignition. Besides costing billions and being unfair to existing homeowners, it actually hurt everybody. Even those who took the freebie money, and purchased, saw their equity start to decline within weeks.

Could F’s bomb have a similar effect? Could it trick enough comatose young couples into advancing their buying decisions so that April becomes the cruelest month? Combined with the spring listings gush, crappy sales momentum and debt overload, is this a game changer?

Maybe. But it’s a new game already.

Somebody should tell the kids.


avatarGarth Turner - The Greater Fool posted Saturday, January 22nd, 2011.

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