Blogoscopy

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Jimmy’s proof that being a doctor and an idiot are not mutually exclusive. He even admits it. “After reading your blog for several months and feeling like a complete idiot I’ve been compelled to email you my financial situation hoping you could steer me in a better direction.”

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You betcha, Dr. Jim. This pathetic blog is all about healing. It has amazing restorative powers. Merely reading these words to a horny spouse, all juiced up on HGTV, will turn her icy cold, completely hostile and absolutely cured of any fuzzies she had for you eight minutes earlier. (For most men that’s more than enough time, fortunately.)

Like many medical professionals (myself excluded, of course), doctors have way more money than they know what to do with, make appalling decisions – especially with love and real estate – and end up with a bald spot and their Canada Revenue Agency auditor on speed dial. Plus several ex-wives. Without a doubt, Dr. Jimmy’s on that path, and needs a big dose of blog therapy. Strip to skivvies, my learned colleague. This won’t hurt a bit. Almost.

While he does that, let’s review the latest news.

Days ago I brought you the headlines from Montreal, Toronto and Vancouver of falling sales volumes and crashing condos. The same can be said of most markets, including Edmonton (sales down 21%, ditto for value of homes sold), Regina (27% fewer deals), Hamilton (sales lower by 11%), Oakville (a 29% crumble) and Halifax (tanking 32%). Winnipeg is off by single-digits, while Calgary still thinks it’s different there.

Sales and prices have faded since the Spring, of course (as I detailed yesterday with 416), but year-over-year comparisons also underscore what so many realtors and sellers are living every day. Houses are far more illiquid than in the late autumn of 2011, with momentum and buyer sentiment draining out of the market. As you know, sales fall first, followed by prices. The fact we are in the eighth consecutive month of declining deals across Canada should tell you something, even if you have a medical degree and a Boxster.

Now a measure of home prices is flashing red. In fact, says the Teranet-National Bank Home Price Index, “For the first time since February 2009, when the recession was in full swing, prices were down from the month before in 10 of the 11 metropolitan markets surveyed.”

Just to remind you, that was a few weeks before stock markets spiraled to their lowest point in the midst of the GFC, the Canadian housing market ground to a virtual stop, and investors capitulated. In fact the greatest wave of selling ever for stocks and mutual funds came on the afternoon of March 9th, 2009 – the moment with the least risk possible, and the fewest people buying.

In that environment, real estate was cooked because sentiment and momentum were overwhelmingly negative. So, is that where we’re headed?

T-NB says prices have now dropped for four consecutive months in Victoria and Quebec City, for three straight months in Montreal and Ottawa and for the past two in Toronto and Halifax. They’ve fallen month-over-month in Vancouver, Edmonton, Hamilton and Winnipeg. Year-over-year, prices are still ahead in many places (which real estate boards trumpet), but that means little when those gains are being whittled away daily.

For example, it’s estimated that the price of a home in westside Vancouver is falling by $1,000 a day, and a swanky condo was recently listed at False Creek for 47% less than its provincially-appraised value. How is it not obvious where major markets are headed?

But back to Dr. Jim, now naked on the slab, his eyes darting from my left hand, cradling the suction cup, to my right, which holds the probe. Reaching for the fluid-barrier mask, I ask sweetly, “Are you ready to confess?”

“I completed medical school and residency in Winnipeg with a $200,000 student debt and have been working for the last 1.5 years FINALLY making a comfortable income,” he stammers. “ I bought a $500,000 house in Winnipeg last year (you don’t even want to know the reason why) on a fixed 2 year mortgage at 2.49%.  I bought a house even though I saw myself moving back to the GTA in 2-3 years.  After a year in the house, the plan is still to move back to the GTA in 2-3 years.  Currently I have about $100,000 in my medical corporation gaining a whopping 1.2%.”

I start the vacuum motor.

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“Now from reading your blog it sounds like several obvious events are going to happen in 2013.  Housing prices will drop, interest rates will go up, and liquidity over the next 5 years is key.  I was reading about your advice to blend and extend my mortgage rate. Any other advice you could offer me?”

“Is that it?” I ask, asking him to bend and extend, the vibrations of the engine now throbbing through the room, as my shapely assistant, Miss Anna Sthesia, arrives.

“Oh yeah…I also recently invested $200,000 into a restaurant.”

I drop the mask, flick off the suction pump, holster the cup, drop the probe on the splattered tile floor and stare at a man sweating in his pathetic nakedness before me, his upturned face a study in terror and regret. He has bared all. Understood his own capacity for deviant thoughts and potlights. The healing has begun.

“Go,” I mutter, ripping at my scrubs.

“But, why?” he whispers.

“Because doctor, you’re already reamed.”

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avatarGarth Turner - The Greater Fool posted Wednesday, December 19th, 2012.

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