The Shepherd

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lamb1

It was hardly a fair match. There was Brad Lamb, le Roi des Condos, all seven magnificent, macho feet of him. Almost a high-rise development on his own, dressed in designer black. Two floors below us in the private club’s garage was his hand-built $250,000 automobile. A few miles to the south, on a dozen downtown corners and sprinkled throughout the trendiest of 416 hoods, were Brad Lamb buildings.

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He strode in, saw me. “I see Mr. Turner is here,” he said to his phantom entourage. But I was also hard to miss, smelling vaguely of poutine and complimentary beer nuts after 36 hours of Porter Airlines, Trudeau International and the bar babe at the Aloft. Besides, I wore my best squirrel hat.

As I may have mentioned, it was time for the annual real estate slugfest, sponsored by a hopelessly trendy, self-absorbed and condescending chain of urban mags covering the wealthiest enclaves of Toronto. Merely owning digs in a postal code where one of these publications deigns to circulate is a game point at the hair salon where I have my tail done.

CBU_md  Besides the King and I, panelists included some rock star real estate brokers, three major developer dudes and a woman who sells $4 million houses to Iranians. (She waved a copy of the current Canadian Business magazine, festooned with the headline “How low will house prices go?”, and said she was disgusted. She then looked at me.) Sadly, newly-departed BMO chief economist Sherry Cooper, who used previous roundtable chats to tell me, “you write drivel” and “clocks are right more often than you,” could not attend due to an emergency. I fantasized about that a little.

After a photo shoot involving a temperamental photog, four assistants, props, blank spaces for Cooper to be digitally inserted, and enough lights to fool Pentecostals, we began. For the next two hours every possible argument proving I’m not only wrong, but dangerous, spewed forth. The spring market has already started strongly. Interest rates can never rise because the government needs inflation to reduce its debt. Toronto is different because all the Chinese want to move here. If prices fall, people just won’t list their homes, “because why would they?” Stock markets are scary and volatile while the people love and know real estate. And my fav (from Brad): “Everything would be absolutely fine with housing if it had not been for the government involved in that blatant market manipulation.”

(Of course it was cool for F and the peckerettes to blatantly manipulate prices higher with 0/40 mortgages, unlimited CMHC coverage, first-timer tax breaks and lax lending standards – not to mention ‘emergency’ interests for five years.)

Lost on everyone, save for one pathetic, aromatic blogger, was the fact this convo was happening in a city where sales have suffered year/year drops for eight months, the average SFH has fallen 12% in price, new home construction just crumbled 53%, a condo tsunami is about to hit and the real estate board routinely manipulates its stats. But my bleatings about household debt levels, unaffordable prices and lagging incomes, plus falling market momentum, sidelined first-time buyers and price-to-rent ratios went unheard. Or maybe not.

“Okay,” the King said after the medics had finished my treatment. “I agree the market has been unsustainable. There is no way we are going to sell 25,000 condos this year. In fact, we’ll probably never sell that many ever again in a year – twelve thousand is more like it. The market was on steroids. This was not reality.”

Through my bloodied gauze I could see he was staring at me, awaiting reaction. The room fell silent. Editors laughed nervously. The still and video photographers circling the table looked at the sound technicians in wonder. Could this be an admission that sales and prices would not, in fact, rise without end? Did the emperor just duff his Calvins?

Hardly.

It was marketing. The thing you must excel at to sell $7 billion worth of properties and build $1.3 billion worth of concrete boxes in the GTA, Calgary, Ottawa and Montreal. Not for a moment did I forget this is the guy claiming investors buying his units can earn 280%, or that his free lecture at Toronto’s Sheraton Centre on February 23rd will tell you, “How to become a Multi-Millionaire through Brad J. Lamb’s POWER Investing.” If he were peddling stocks or bonds, he’d be ripped. But in real estate, he’s not just legal, he’s royalty.

Everyone at the table knows the market has slowed dramatically. Some see it as a lull. Others block it out. But Lamb smells an opportunity. Tell people what they fear, then show them how to play it. In the end, in his world, greed always wins.

Not sure, but the Hummer may have nicked a Rolls on the way out. Rich people have no idea how to build parking garages.

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avatarGarth Turner - The Greater Fool posted Wednesday, January 30th, 2013.

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