A Victorian row house, just 15 feet wide, hit the Toronto market recently. Reno’d and flipped, it was listed for just under $1.4 million on a street in the riding that Bill Morneau represents in Ottawa. Offers were held back, creating another blind auction that realtors love and buyers despise. “Vendor requires a certified cheque with offer,” said the MLS instructions. The standard cheque these days? A hundred thousand, stapled to the bid.
How do you buy a house in that kind of environment? Aggressively. Cavalierly. Recklessly.
“I’ll come and collect the cheque and get you to sign the offer,” the agent for one of the bidders told them. “We’ll see how many offers are registered, so we’ll just leave the price blank. I’ll call you ten or 15 minutes before offers are presented to tell you how much competition there’ll be, so we can write in the number then.”
And what happens after the offers are submitted?
“They’ll probably pick a few and tell you to go back and do better,” the agent (with decades of experience) said. “So wait outside in the car and we can adjust the price up then.”
Of course, making an offer with a condition in it would be pure LOL. No seller these days will grant a buyer three or five days to come and do a home inspection, check for termites or arrange financing. Just as they won’t wait for a cheque to clear. It’s an utterly one-sided process.
By the way, offers for this ancient sliver of a dwelling in an area blocks away from public housing and Needle Park, are being accepted on Tuesday. But one day in advance of that, Mr. Morneau may have something consequential to say about the housing market (and another assault on foreign buyers), that changes everything:
Toronto—Finance Minister Bill Morneau will make an announcement on Monday, October 3, at 11:15 a.m. local time.
Media should present themselves no later than 11:00 a.m. at the Ministers’ Regional Office, located at 150 King Street West, Suite 2404, in Toronto.
A media availability will follow.
The Department of Finance Canada will provide a background telephone briefing at 12:30 p.m. local time and will answer questions on a deep background, not-for-attribution basis only (no quotes or references to government officials). Audio recording of the briefing for the purpose of broadcast is strictly prohibited.
As you know, for months now a federal-provincial Task Force on Housing has been in effect, made up of officials from Vancouver and Toronto, as well as reps from the BC and Ontario governments, along with Morneau and his federal flunkies. The biggest event since its inception has been the 15% Chinese Dudes tax slapped on the Van market at the end of July. In August sales tanked and prices wilted, and on Monday the stats for September are due for release. They’ll show an unhealthy market developing – sales collapsing almost 50% year/year while listings balloon 18%. The average price of just over $1.5 million for a detached house is $300,000 below the peak, and local realtor Larry Yatkowsky calls it a ‘Mexican standoff’ between buyers convinced things will fall and sellers unwilling to dicker.
Meanwhile both Toronto mayor John Toronto and premier Kathleen Wynne have made it abundantly clear they’re watching the Chinese Dude tax results closely – mostly because it’s politically expedient. Now that the debt-to-income ratio has exploded through the 170% mark (higher than the US before its epic crash), 56% of people could not stand a $200-per-month increase in their expenses (last week’s poll), and with US rates set to plump next on December 14th, what’s a poor federal finance minister to do? Especially when his own riding’s being flooded with Greater Fools?
Well, let’s see this morning. The latest restriction on foreign buyers may end up being something. It may be nothing. But the status quo is doomed.
UPDATE (Oct 3, 8 am EDT: Morneau’s department confirms the announcement today will be “regarding housing.” Here’s the link. — Garth)
Stop sucking up. You’re still DELETED.