The oozing

A hundred days ago virtually every house hitting MLS in the country’s biggest market was gobbled up. In a day or two. And while this is still largely true in the Big Smoke, things have definitely chilled in Armpit, Bunnypatch and the indentured cul-de-sacs between urbanity and the bears.

Re/Max knows this. It was inevitable. We told you as much. The end of the pandemic, the reopening of workplaces, the 80%+ vax rate, the resumption of travel, the lifting of restrictions on retail and Ricky Martin’s concert downtown last night – all pointed to the inevitable. The urban flight and wild price inflation of the boonies during Covid had to eventually crash. And here we are. On exactly that path.

So, yeah. All the street realtors in 905, 705 and 519 get it. But the humping and pumping from head office continues. On the Friday of the long weekend, it reached a crescendo of desperation in the pursuit of house-lusty victims. If you every needed evidence corporate real estate marketers need to be spanked, regulated and occasionally assaulted with a wad of moist multiple offers, well, here she be.

The Re/Max Fall 2021 Housing Market Outlook Report (aka The FOMO Times) is breathtaking in its forecasts. “Young families are expected to continue driving demand in the Toronto housing market, with first-time and trade-up buyers active in the region,” it says.

“The average price in the Toronto housing market is expected to increase by 7% by the end of 2021.”

Whoa. Hold on here. It’s October and there are but 80-odd days left in 2021. So Re/Max is telling us there’ll be a further 7% price escalation in the remaining 23% of the year, for an annualized gain of almost 50%. Seriously? Moreover, that would add almost $80,000 to the price of an average GTA property, and come atop the 18% jump already experienced. This, despite declining sales, increasing fixed-term mortgage rates and an easing the pandemic which helped create the mess?

But wait. It gets worse.

Looking at the bigger picture, Ontario real estate has seen some of the highest single-detached price gains in the country, with 13 out of 16 Ontario housing markets examined in the report seeing growth between 20% and 35.5% year-over-year. The estimated price outlook for the remainder of the year ranges from a 2% price decrease in North Bay, to increases across the other regions ranging between 2% and 15%.

Yikes. Price hikes of up to 15% more in the next 2.5 months alone? In the sticks? How can this possibly be a responsible public document when the market in many places is cooling fast? Does Re/Max not have an ethical filter for its media releases? Or even a smell test? This is just as credible as that infamous claim days ago by Royal LePage that 91% of the time owning is cheaper than renting, supported by the flawed McReport of a guy largely employed by the mortgage community. The sleazy oozing never stops.

By the way, Re/Max also says prices of houses across the nation will be 5% higher than today by the end of December. That’s a 20% annualized boost. Above current historic levels. And this statement from company VP is rich: “We must continue to educate Canadians from a practical, real world, point of view. What is affecting the Canadian housing market right now? Low Interest rates, economic stimulus, higher home-buying budgets, a higher savings rate, homeowners too scared to sell, and not enough new construction. These factors have created current market conditions.”

Actually real estate inflates because of demand. And while low rates, for example, have augmented that, it is emotion driving the bus. Folks do irrational things like jumping into a blind auction, using 20x leverage or over-bidding on an asset that’s never cost more, because they’re emotional. Covetous of owning a home. Greedy to get something which is going up. Fearful of missing out. Terrified of having to pay more later. Scared of not being able to afford it. Worried what their mom will think.

This is why the Re/Max and LePage messages are crafted as they are. They fuel greed. They stoke fear. Nowhere are they concerned with people having balanced lives, buying things they can truly afford or keeping debt contained. And now, sadly, their political allies in Ottawa are about to raise the debt ceiling on insured loans and hand them a new house-buying tax shelter.

If real estate execs were regulated financial dudes, they’d be finished. Nowhere is a realtor required to assess a client’s suitability to make a purchase, or sustain a borrowing. Nor are their marketing arms held to any standard of accountability or truthiness. This helps make the world a more insecure place. Pity.

About the picture: “First the MSU: Charter member of the GF Fan Club having read (?) every blog since it started oh-so-many-years-ago.  I have benefited from the free info/wisdom/guidance over the years (with mostly prudent avoidance of the rabble in the comment section),” writes Lloyd. “Now the dog:  Ziggy is our much-loved mini Australian Labradoodle.  It’s almost impossible to go for a short walk with her as we are stopped constantly by people (“what kind of dog is that?”  “How old is she?” “How big will she get?” “What’s her name?”).  Here on Vancouver Island she is forest bathing at a park near our home. Thanks for your work over the years.”