Rebel Rebel

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Rebel realtors. Are they trying to tell us something?

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I mean, other than just being naughty boys, of course. Without a doubt the nation needs more of these characters, to counter the incessant spin of real estate boards. Coddled by the advertorial media, the industry’s had a free ride for years, telling consumers in a seller’s market they need to buy immediately and in a buyer’s market they’re nuts not to… buy immediately. These are the same guys who won’t allow consumers access to basic information, like the number of days a home’s been on the market, or its sales history. (There’s only one place in the country where this may be an exception – here.)

So, contrarians matter – those few rogue agents who understand the best possible marketing is honesty. Besides, being a rebel means you can wear your leathers and shades to work, nip office girls in the wrong places, spill Starbucks into the fax machine, park in the broker’s private spot and seriously swagger.

In past posts I referenced two rebs in the Vancouver area, Sam Wyatt and Keith Roy. Both of them admit to having sold their own homes, and renting. “I sold because in 6 months my home will be worth less than it is today,” Roy told his clients in a blog posting. Since they dumped their properties, sales have collapsed making real estate almost illiquid in many hoods, and prices are on the way down. Way down.

Across the ditch in Victoria, more distress and another rebel. Anyone tracking homes in the swishy Oak Bay or Uplands areas knows what is happening. Properties are coming to market which have been closely held within families for generations. For the price of a crappy new house on a 30-foot lot in North Toronto, or a handyman’s special in East Van, you can now buy a genuine mansion with baronial overtones, hand-tooled wooden interior and gigantic lot with mountain views. And still, sales suck. The real estate board claims all is well. Reb Ron Neal says otherwise.

Last month sales in the city were down about 12% from year-earlier levels and the average price declined 5%. “Prices remain steady,” the board says, ignoring the obvious. More telling is this little speech given the media by board president Carol Crabb:

  “Buyers are waiting for prices to go down, but there are no economic indicators to show that will happen. Sellers are pricing their properties reasonably for the current market, which is reflected by the fact that single family homes are selling for an average 96% of list price and the average days on market remains 64.

“The median price of a single family home is only 1.5% lower than last year and that number has held steady for the last five months. Interest rates are also holding, but should they increase by as little as 1%, that would negate a 10% drop in purchase price. People shouldn’t wait for prices to drop, because we never know when interest rates will be increased to stimulate the economy.”

It’s hard to know where to start, given such economic stupidity. Buyers who wait for lower prices will, of course, eventually get them since without enough demand sellers have no choice but to adjust downwards. Meanwhile the toxic combo of record household debt plus mortgage and banking changes which have squeezed credit and boosted carrying costs are the real estate equivalent of chemical warfare. It doesn’t get a lot worse than this. And does Carol know that interest rates are never raised to ‘stimulate’ the economy, but rather the opposite – to cool off inflation or excessive borrowing? How did this woman ever get elected?

Reb realtor Ron says it’s all ‘sugar-coating’:

“The market is anything but steady with sales numbers down significantly and prices too, driven down buy distressed sellers competing for the few predatory buyers who are seizing the opportunity. Statistics are misleading and the 64 average days on market does not include the prior listings of the same properties or those that have not sold. By my estimate the average days on market is closer to 180 days including just the successful sales. Furthermore, the average sale price reported as 96% of list is based on the final listing price, not reflecting the original price or prior listing attempts. My quick review of the numbers shows more like 85% of list price on average based on the original asking price.”

He’s right, of course. Victoria listings have popped as sales tank, and price reductions are a daily occurrence. The city is still one of the least affordable in Canada, with a household income 36% less than in Calgary and 20% behind that of Toronto. The average house is selling for 7.7 times income, and Victoria is only one of two cities in the West with population growth lagging the national average (Winnipeg’s the other).

In short, Victoria real estate is probably hooped.

Mr. Neal thinks people should know that. So they can… buy immediately.

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“It is an excellent time to buy, especially to trade up! For a personal consultation of your options in this market please call today!”

I give up.

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avatarGarth Turner - The Greater Fool posted Wednesday, October 10th, 2012.

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