The leap

Photo by Andy Seliverstoff

People with wasted lives who follow social media and (ugh) blogs were scandalized a few days ago when a Toronto rowhouse which deserves to be burned hit the market for $750,000. Yes, it’s in an area favoured by trendoids and hipsters, guys with beards and buns and women wearing tats but, sheesh, three-quarters of a mill for a place with a kitchen like this?

If the house sells, according to the Tweets and posts, it will ‘prove’ the local market has resiliency and duration, that a piffle like rising mortgage rates or a stress test cannot stop it. This place is an utter, complete, unqualified, horrific, likely diseased, dump. Makes you wonder if the people on either side of space a local real estate site called a “howling shithole”, know what’s but a few inches away.

Anyway, let’s all celebrate the grandly-named Allister John Sinclair, the listing agent from Re/Max, who put pen to paper and came up with a glowing description. I think a Pulitzer is in order, or certainly a Governor-General’s award for fiction:

Builders Delight Perched In The Highly Desired Neighbourhood Of Trinity Bellwoods! Attention Renovators & Builders! 9 Foot Ceilings. This 2 Storey Home Just Needs Tlc, Renovations And Remodeling To Become Your Dream Home! Just Steps To Queen Street, Trinity Bellwoods Park, Ttc, Subway, Shops And So Much More. Prime Location! Don’t Miss This Opportunity! **** EXTRAS **** Property Being Sold As Is Where Is, Street Permit Parking Available, Roof Is In Good Condition. Upgraded Furnace – Recently Serviced With New Heat Exchanger And Motor. Hot WaterTank (Rental – 2016)

As of Friday afternoon it was still on the market – not yet picked off by some smarty moister with a B of Mom loan and an e-bike. Maybe there’s hope after all. BTW, here is the listing for 15 Rebecca. Please be responsible, and don goggles and other protective gear before you click on the link.

Well, there’ll be serious discussion over the next two weeks about the direction of the market as a whole. Despite sliding detached prices in Vancouver the natives seem convinced things are just ducky, unless Comrade Horgan, the new NDP premier, comes down with a vicious new anti-speculation law in his February budget. He’s rejected an outright ban on non-locals owning property, which is entirely correct and reasonable, but he’s only in power thanks to the Greens, whose leader is a flaming xenophobe. So, we’ll see. The combination of the existing anti-Chinese tax, the empty houses tax and a new spec tax – plus higher mortgage rates and B20 – should be enough to finish off YVR.

Toronto’s a more interesting case, since what happens here will impact about 8 million people in the GTA and its commutershed. The big news will come about February 5th, when the realtor-gathered sales numbers for January are released. If they suck, you can pretty much write off the next two or three months as market sentiment runs negative. Already homeowners believe conditions are worsening thanks to interest rates while buyers are stressed over the stress test. It’s a perfect storm as banks pull in their horns and credit is seriously restricted.

But if the January numbers are close to those of last year (5,188 transactions, of which 2,261 were detached) and if the HS at 15 Rebecca finds a buyer, the bubble will continue to inflate – certainly leading to a more catastrophic outcome down the road.

And where are we now?

As reported the other day on this blog by a veteran broker, a mere 77 detached houses found buyers in 416 in the first couple of weeks in January. Bad. Now Zoocasa has some new numbers. Also bad. So far condo sales are down 21% year/year and 20% lower for detacheds. This has created a buyer’s market, as the ratio of sales to listings plunges below the 40% mark – in stark contrast to early last year when it oscillated between 90% and 100%.

The ratio now is somewhat shocking: 24% for detached houses and 26% for condos. It means as new listings flood in for spring, buyers will probably have a large and growing pool to choose from.

But these aren’t ‘official’ numbers. The weather was appalling after Christmas. News about the mortgage changes are rate hikes was everywhere. And two weeks do not a market make – that’s too big a leap to take. But there’s no denying the cost of money has shot higher than anyone expected a year ago. The new borrowing rules are, by historic measure, extreme. Tens of thousands of potential buyers will not be approved. As many more will qualify to borrow less. If listings swell as they do every March and April, peak house will truly be over.

Meanwhile, some deluded kid will buy the horror on Rebecca. Pray for her.