The Strong Start
“Verry interesting about the Canadian housing market on your blog,” Göran Högberg writes me. “But what about Sweden?”
Sweden? Göran, dude, we still haven’t figured out Calgary. Or why real estate boards manipulate their numbers. Why Sherry Cooper hates me. Or why anyone would move to Saskatoon, which is a lot like Sweden without Abba and Ikea. Or blondes.
In fact, the beaverish real estate market here is a mystery to most people who lack the stomach to come to this blog, and rely instead on the slowly-bankrupting mainstream media. For example, six million people woke up with a start one morning this week to read the headline, “GTA realtors report strong start to 2013!”
And the story went:
“Toronto-area realtors are seeing a surprisingly strong start to 2013 after a slump that began last spring. Home sales were down just slightly — about 1.3 per cent — in January over a year earlier after months of largely double-digit decreases while prices were up 4.3 per cent across the GTA, according to new figures released Tuesday by the Toronto Real Estate Board. The average sales price of a GTA home last month was $482,648, up from $462,655 in January, 2012. Assuming the turnaround holds, “expect annual price growth in the three to five per cent range this year,” says TREB’s senior market analyst, Jason Mercer.”
Some of this is actually true, at least for now. There were 4,375 sales in this massive market in January compared with 4,432 last year. Of course, in January of 2012 there was one less market day than this year, which means sales slipped more than reported. But who’s counting?
And price? Well, the price of a detached home in 416 was $831,214 in April and today it’s $765,049, which sure looks like an 8% decline. Back in the spring of last year the average condo was changing hands for $362,000. Now it’s worth $340,295, a dip of 6%. So how is the average price $20,000 more than a year ago?
Because last January we were heading into the market apex, a frothy time of urban excess exceeding even the aphrodisiac high of eating Swedish meatballs in the nude while listing to an 8-track of The Dancing Queen. Multiple bids were everywhere. Horny, vexed buyers idled at the curb while their agents battled it out inside. Bully bids, hold-back offers and certified deposits of $50,000 filled the air. F had yet to hammer down the virgins, banks gave away downpayments and asking prices were nothing more than lame suggestions.
In short, the price comparison is irrelevant. It tells us nothing, save what dinglenuts we all were a year ago. Far more relevant is knowing about market momentum, which means the trends of the last few months are more salient to prospective buyers and sellers.
Like this: Sales may be flat, but the number of new listings has swelled by 11% from this time a year ago. In a perfect world, that should mean it takes longer to sell a house, which is exactly what happened. The days on market in 416 increased from 31 to 39 which is, wow, a 25% increase. In fact, in central Toronto listings are multiplying faster than Volvos, up by more than 40 per cent (2,057 last year and 3,080 now).
This is news you can use, since it suggests supply is starting to overwhelm demand in certain areas, hinting prices could be headed lower instead of higher. Meanwhile we all know condos are more vulnerable than an Ikea monkey in drag. Sales of new units have tumbled by more than half, and 53,000 more are in the pipeline even as over twenty thousand new boxes sit vacant, unsold and unloved.
So how, exactly, is this a “surprisingly strong start” to the new year? Only one reason. The realtors, despite all their protestations to the contrary, their Frankenumbers, misleading media release, stats revisions and faux economists, also believe the market is going down. After the mortgage and bank rule changes, the debt, the real estate saturation and the economic torpor, how could it be otherwise? We are in not for a crash, but a long, sustained correction, which is worse.
This is Canada, not Sweden, after all. We don’t hurl our naked, steaming, sauna-sautéed bodies into some icy fjord while grasping half-sucked bottles of Absolut. Get a grip, Göran. Keep your Nordic depravities where they belong. And solve your own real estate bloat.