Stressed

The good news is that know-it-alls working for BeeMo say real estate will get more affordable. Yahoo!

The bad news? This will happen in two to five years – if interest rates fall and incomes rise. Unless the orange guy wins, of course, and unleashes new inflation causing rates to rip both there and here. Or if PP wins, slashes spending and causes a cleansing recession in Canada. Or the populists eat Europe, causing bond yields to spike (already happening in France) and prompting a liquidity crisis, just as Putin ramps up the Ukraine war as Trump disengages from NATO.

So, yeah. Who knows? In short, there are many good reasons not to buy real estate at the moment, at least not in a stupid (like 5% down) fashion. Interest rates may have started coming off in Canada, with one or two more nips to come, but we live in a world of uncertainty.

The latest stats dropped Monday, showing house prices year/year across the nation fell 2.4%. Sales are lower. Inventory is higher. The national average price (houses, condos, raw land, parking spots, cottages, porta potties) sits at $714,300. Five years ago, when nobody believed a global pandemic was possible, the number was $454,000. You could get a mortgage for 2.4%. And Millennials bitched about affordability.

So a lot can change quickly. It pays to stay nimble. And informed.

Here’s how CREA is describing the market: “May was another sleepy month for housing activity in Canada, although it may prove to be the last of those now that interest rates have moved lower. The psychological effect for many who have been sitting on the sidelines was no doubt huge. The question now turns to further rate cuts – specifically, how fast, and how far?”

Clearly the realtor cartel is pumping houses, building rate lust and feeding FOMO. Given political risks, the cost of money may fall in a meaningful way. It may dribble down a little. It may do nothing. So let’s review what agents are seeing on the street at the moment, and grab some advice for buyers and sellers.

GTA broker Nasma Ali is clearly in a stressed-out funk. Here, she wrote on social media (so it must be true), are elements of “a new normal for our market”:

– Price reductions
– No offer dates/bidding wars
– No one trying to be a realtor
– Asking for showing feedback
– No staging
– Not selling in a day/week
– Being the 3rd agent to try to sell it
– Buyers having power
– Sellers at mercy of buyers
– No more 100 showings a week
– Properties not selling

If this is true, why shop for a house? Just wait. Let the sellers sweat and vex. Prices will only continue to decline amid negative economic and buyer sentiment and as the number of listings swells – now happening in every major market. And if our central bank decides to follow the US Fed and shelve any more rate cuts in 2024, you can be sure the price descent will spiral.

But others see a different reality. “Right now, there are definitely less showings than usual. Shockingly, I’m seeing this on smaller more affordable condos,” says veteran realtor Carly Weisz. “Buyers have more power than they usually have, but they aren’t holding all the cards. Houses that are nicely staged and renovated are selling quickly, often with multiple bids.”

True enough. While listings plump, quality properties in good hoods – even at $2 million or $3 million+ – are finding buyers in days or weeks. These are usually ‘equity’ purchasers moving funds built up in a previous property, who don’t care much about the price of a mortgage. And they want Kits or Leaside – places where the value of a house is determined by continuous and insatiable demand for a limited product, not by geopolitics and monetary policy.

“Now I will say that some sellers are not listening to their agents and not pricing right,” adds Weisz. “Some houses are $100k over and some condos are $30 k over where they should be.  Are Buyers in control? I would say they have more power to take their time – and buyers are much pickier now. They’ll want to see a house a few times before pulling the trigger.”

What about sellers?

Simple. The greedy ones are paying for it.

“Price reductions are happening if you don’t listen to your agent’s suggestion first. My advice: stage it, market it, and listen to your agent about price unless you want to hold it for months.  Forget what you think it’s worth, if you trust your agent, listen (hopefully you don’t have a crappy agent).”

Buyers are stressed. Sellers are stressed. Realtors are stressed.

Tells you something.

About the picture: “Hi Garth – UK reader here.  Polly is a 3/4 Staffordshire Bull Terrier / 1/4 English Bull Terrier, rescued in appalling condition three and a half years ago.  Wouldn’t say boo to a goose,” writes Mark. “This picture was taken quite recently after I returned to the living room to find she’d decided to evict me from my seat.  The expression says something along the lines of:  “Yes, so I’m in your seat.  The question is, what d’you think you’re going to do about it?  Huh?”   Lovely dog, she is now. Gentle, and a good friend. Been reading your blog for some years now and as the world descends into chaos and madness – with our mediocre, pygmy politicians competing for attention and power with one bribe after the next – it’s useful to have your informed commentary on North America.  UK media are entirely partial and can’t be trusted – particularly the BBC which has taken to selective reporting and non-reporting.  They seem to get their information about the US in particular from those same sources that have over half of Americans believing in record jobless figures and recession.  Your views and commentary help me no end in nurturing my pension portfolio – thank you.”

To be in touch or send a picture of your beast (and thank you for the outpouring yesterday) email to ‘[email protected]’.