Well, had an interesting day. Started it out in sunshine in Kelowna, jumped into the rented Hummer to head through the mountains, and drove straight into a blizzard. Blowing snow, whiteouts, a 17-degree Celsius drop in temps and fishtailing semis on the summit – followed two hours later by warm breezes and swaying green leaves in the burbs of Vantown.
Spoke to two big audiences in Surrey, spent time with investors in Vancouver desperate for answers, and bolted about six Grande Bolds. Oh yeah, and I sold a property. Interestingly enough, I listed it on Wednesday and it was gone on Friday. One showing.
So that made me dwell a moment or two longer on the latest CREA stats, when I read the big headline on my Berry. “Sales of existing homes on the rise.” Could we be going back into a real estate delirium, I wondered? How, with no news of surging employment, falling debt or boatloads of wealth-stricken Asians, could house deals suddenly take off after months of decline?
Well, actually, truth is that resales across the country in September were 20.1% lower than in the same month a year ago. It’s just that they improved a little (3%) from a disastrous August. And that’s worth a headline? September is traditionally the second-best month of the entire year for real estate transactions, so if would have been an unmitigated disaster had the number of home sales fallen. As it was, a 3% jump over the final summer month bordered on the pathetic.
However, it was enough to make the property-pumping MSM hot. Even the Globe is getting into Phil Soper’s boxers, I see, asking this question hours after the new numbers appeared: “Is it finally time to buy a home?” Worse was this: “With interest rates low, many Canadians are wondering whether they should get off the fence and buy a home. Real Estate Investment Network president Don Campbell joins the Globe next Tuesday at 1 p.m. to share his insights on real estate hot spots, where the market is heading and the difference between buying a home and an investment property.”
Holy crap. The mothership newspaper bedding down with the horned leader of the satanic cult called REIN. What next? An online session with the Hair Club for Men? A guest editorial by the SlapChop felon guy?
But back to the news. “Analysts say the Canadian housing market is stabilizing as it cools off after helping to drive the economy out of recession last year and early this year. This, together with recent developments in existing home sales activity, signal the likelihood that we are closer to a balanced market position than previously envisaged.” That insight comes from a staff economist at TD Bank, where they apparently lend mortgages.
And this hopelessly unbiased opinion leads to whines from the houseless, to wit: “I am a married 30 yr old father of one who has been taking a beating at work for not having bought a house within the last two years. I am one of the only renters on the job among 100+ fire fighters, and my wife is desperate to own a home. So I am.” That came from a burly wimp who attended my talk in Kelowna.
Which is fine. We all need somewhere to live. But despite the butchered info from the industry and the cheerleading from the media, the facts remain: Housing prices are at an all-time high. Canadians have never been so indebted. Unemployment’s stuck at 8%. Sales are dwindling, skewing prices. Interest rates will only rise over time. Taxes, gas, food, insurance are sucking family cash flow. Salaries are stagnant. The only way for real estate to recover momentum is (a) for prices to drop, increasing affordability, or (b) for people to take on more debt.
Now, humans being essentially joyless emotional wrecks, anything can happen. But if (b) prevails, then the odds of us repeating the US housing disaster take a giant leap higher. You know that. I know that. Mark Carney knows that. Hell, even F knows that. The housing renaissance that Don Campbell and the editors of the Globe so desperately pine for will be short, brutish and lead us over an economic cliff.
Which is why it will never happen.
No, the way forward will be as this well-despised blog has laid out. Correction, then melt. And until this becomes widely known, it’s a fine time to be a seller.
