What do you do when your house won’t sell?
Drop the price, of course. But when even that doesn’t squeeze an offer out of anyone in a declining market, there’s always one desperado action left. The auction. Needless to say, you’ll be seeing more of these in the months to come.
In fact Saturday morning a 2-bed, 2-bath, 1950-build, two-storey went under the hammer in Saskatoon, where delusional locals think everybody wants to live (with a foot of snow). Of course, GreaterFool correspondents were there:
“The auction got started by the auctioneer at 200,000, and he did his best to talk it up. No bites happened. Price moved to 175,000, not a flinch from the crowd. Price moved to 150,000, and I heard crickets calling out their bids. Then suddenly there was a loud burst from the living room that called out “60,000”. I thought, right on — now we have an auction!”
We’ll take you back into the kitchen of 2105 20th Street West in a few moments. First a few words on the fiscal cliff. For those of you just joining society, these words were coined by US Fed boss Ben Bernanke and refer to the simultaneous triggering of tax increases in the States and spending cuts to the federal budget. The combined $607-billion sucker punch would likely lead to recession and boost unemployment back above 9%.
But don’t worry. It won’t happen.
President Obama thinks he has enough testo from the recent election to bully through higher taxes for the rich, while shielding middle class families. The Republicans want spending cuts, higher taxes for nobody, but will agree to limit deductions for millionaires. Doomers think this is a pivotal event leading to the decline of the American empire, so their gold will be worth something again. Stock markets are losing interest. Most Americans are fed up, and want them all to piss off.
Some weeks ago I said the fiscal cliff would be a non-event, averted (of course) by a political compromise. This could pave the way for a 2013 in which the US continues to recover, with unemployment inching down and housing in full renaissance. Five years after hitting the wall, America will be on a path of inescapable recovery – the first phase of a long process of rebirth from debt excess and the insanity of two unwinnable wars.
These are exactly the times you would want to be liquid, diversified and carefully exposed to growth assets – especially as Canadian real estate wobbles and slumps.
By the way, a ‘cliff’ story moved by Bloomberg news yesterday carried this expert opinion: “The threat from the fiscal cliff is greatly, hugely and fantastically exaggerated. It’s almost reached comical levels. Of course, if we really were to go over the cliff, that would be bad news – and that’s precisely why it won’t happen.”
You bet. And it never was going to happen. But it’s a great little fear-monger if you need to unload some bullion. If equity markets do waver and dip, then I hope you find the courage to ETF your way into them.
Speaking of courage, let’s revisit the drama gripping 20th Street, in the city where the only decent building is a hotel:
“I was inching to get in on the action when another bidder cried out, “a hundred and twenty-five thousand!”. Dang I thought, what a jump. He really values this falling knife. Shorty after a third bidder quietly tells the actioneer’s helper $132,500. At this point I’m noticing the auctioneer’s helper hand frantically waving and shaking in everyone’s face to stimulate bidding I suppose.
“I started to just stare at the kitchen floor, and starting making notes on my cellphones saying to myself that I just gonna let someone else catch the falling knife. Well the hand waving and shaking worked for the auctioneer, cause with me standing right next to the baby boomers. the second bidder that called out $125,000 now quietly said $134,500. The auctioneers did their best with the hand waving and shaking in people faces, as well as to talk up the revenue potential of the property to get a higher bid. But it stuck at $134,500.
“Wasn’t the end of the auction yet. No call of going once… going twice…. sold! We’ll take a short break, the auctioneer called out. Huh??????. The crowd seemed to divide. Some that were in the kitchen moved to the living room to congregate, and all that was left in the kitchen was me and the two boomers. A few moments past, I think the auctioneer went to consult with the seller; and the auction started up again. With me staring at down my cellphone texting my wife the results, the auctioneer’s helper came back with his hand shaking in your face thing with the two millionaires. Coming around to me with his shaking hand seemed like he was trying of get me into the fray but I didn’t. I kept thinking to myself “Give it to the man, Geez”
“Finally with no more price movement the sale was called. Was no monumental cry of SOLD! Instead it was a “There we have it folks, the property has changed hands today”. And I said to myself, there I have it! House had support at $60,000 and met resistance at &134,500. Wow, approximately $70,000 below asking.”
There you go. We don’t need no US crisis. We have our own. The foolscal cliff.
Update: Poor Victoria – single-family home sales in November crashed 31% over year-ago levels. “For buyers, there is a good supply of homes on the market,” say the realtors, “so while they have time to conduct due diligence they shouldn’t expect large reductions on all properties.” You wish. Details here.