April 12, 2018

The Real Estate Equivalent Of Car Crash Scenes

A report from Bloomberg on Canada. “Toronto’s housing market has seen a stunning slowdown in the past year. Now one brokerage has cataloged the damage for 988 homeowners who got caught in the eye of the hurricane. In the space of four months last year, the homeowners lost a collective $135 million as the median house price slid 18 per cent, a faster decline than any major market during the U.S. market crash, according to Realosophy Reality Inc.”

“The story goes like this: The median house price surged 30 per cent from January to peak at $765,000 in March, largely driven by investors who were pouring money into the market for quick returns, Realosophy said in a report. To tame the beast, the government instituted a series of regulations, including a foreign buyers tax, starting in April. Some 866 homeowners had clinched a sale but were not able to close, eventually selling to another buyer later in the year for $140,200 less on average.”

“Some buyers had to walk away as they weren’t able to sell their own homes or the banks appraised the house for less than what they agreed to. Another 122 sellers sold their houses for an average $107,325 lower than what they bought it for earlier. By the time the dust had settled in July, the median price had dropped to $626,000 from $765,000 in March.”

“‘The rapid rise in investor demand coupled with their rising negative cash flow suggests that a speculative mood hit Toronto, reflected in investors who appeared to believe they could make easy money by buying what they perceived to be a safe and secure asset, single family homes,’ Realosophy President John Pasalis said in the report. ‘When the market unwinded, the areas with the biggest decline had the highest percentage of investors.’”

From Macleans. “There are many culprits behind last year’s unsustainable rise in Toronto house prices, with experts blaming everything from foreign buyers to lack of supply. But a new report singles out another major factor: speculative investment. Toronto brokerage Realosophy Realty Inc. found 16.5 per cent of low-rise houses in the Greater Toronto Area were purchased by investors during the first quarter of 2017, the peak of the bubble.”

“In York Region, an area north of the city of Toronto, investors accounted for more than 20 per cent of sales. House prices in York surged the most during the run-up to the bubble, and have fallen the furthest in the aftermath. ‘This was largely a speculator driven bubble,’ says Realosophy president John Pasalis.”

“Pasalis noticed a shift in buyer behaviour in 2016, when nearly half of the visitors to his brokerage were interested in purchasing investment properties. With home prices rising fast, however, rental income typically wasn’t enough to cover mortgage payments and other expenses. Most interested buyers didn’t care about losing money each month, according to Pasalis, since they were betting that home prices would keep rising. ‘That’s just not normal,’ he says. ‘They’re just overly optimistic about how much money they’re going to make.’”

“During the period Realosophy analyzed, the average GTA investment property was short $1,650 each month. In Richmond Hill, a town north of the city, investors were out-of-pocket $2,488 monthly. A similar mentality is still at play in Toronto’s condo market. A recent report from CIBC and Urbanation found that 44 per cent of investors who took possession of newly constructed condos last year are losing money each month.”

“The Ontario government helped to burst the speculative mindset in the GTA in April 2017 when it implemented a 15 per cent foreign buyer tax. Median home prices fell 18 per cent over the next four months. Realosophy found 866 transactions failed to close during the first quarter of 2017. Those properties were eventually sold later in the year for $140,200 less on average than the price received earlier in the year. Another 122 properties were bought and sold in the same year for a loss. It’s unclear why these homes were re-listed so quickly. ‘The only thing I can think of is panic selling,’ Pasalis says.”

“A recent Superior Court of Ontario decision lays bare everything that can go wrong when buying at the top of the market. In March 2017, a couple listed their home in Stouffville, just north of Toronto, for $2 million. A bidding war ensued, and one pair of interested buyers boosted their initial offer by $200,000 to $2.25 million. The sellers accepted, but the deal quickly unravelled when the would-be buyers felt they had a mistake and overpaid. (The appraisal also came in short, and they couldn’t obtain the financing to close.)”

“The sellers re-listed the property, which sat on the market for months without receiving a single offer. The home eventually sold for $1.77-million in October. The sellers also filed a lawsuit against the pair who walked away from the deal earlier in the year. A judge ruled in favour of the sellers, and ordered the defendants to pay the difference between the closing price and their initial offer back in March. That amounts to $480,000, plus special damages. It’s a grim reminder that while the bubble may have burst, some households are still dealing with the consequences.”

From the Globe and Mail. “There is a more bearish way to examine the market, often with anecdotes shared on Toronto real estate Twitter accounts focused on examples of financially-crushing real estate losses. The twitter account ExtraGuac4Me, for example, run by investor and lawyer Joey Evans, is fond of tweeting the real estate equivalent of car crash scenes that show recent transactions that resulted in multi-hundred-thousand-dollar losses in a single year. ”

“He shared a recent example of a court case featuring a buyer who walked away from an April, 2017, agreement to purchase a house for $2.25-million. The home was resold for $1.78-million, and the original buyer was sued and ordered to pay the difference to the seller: $470,000. ‘I’m pointing out examples of what’s actually happening; these are real examples, these are real people, real families – huge amounts of money on the line,’ says Mr. Evans, who lived in the United States during the sub-prime mortgage crisis of the mid-2000s and finds eerie parallels between those days and now.”

“In his Realosophy blog, Mr. Pasalis recently shared some data that suggests those areas that saw the highest amount of investor-buying activity between 2012 and 2016 also saw the fastest price corrections in 2017-2018. In markets like Newmarket where more than 30 per cent of buyers were investors, house prices are now down 25 per cent from the same time last year, Richmond Hill’s declines were steeper at 27 per cent and Markham prices slid 22 per cent.”

“Mr. Pasalis’s take is that a declining market simply exposed some of the risk that was always there. ‘A lot of people were making bad decisions and they were able to get away with it for a long time.’”

From the Toronto Star. “The financial impact varied dramatically within the Toronto area, says Pasalis. Sellers who had to re-list took an average of 12 per cent less on the second sale of their homes. But in Newmarket, sellers took 21 per cent less — $238,866 less on average. Brampton prices depreciated by about 7 per cent or $54,502. In Toronto, the second sale was 13 per cent lower on average, about $162,000. Pasalis’s 988 total includes 122 homes that sold for less than the owner had paid within the previous year. Those cases averaged a $107,325 price drop.”

“Another 1,784 homes purchased in 2017 were re-listed and failed to sell again through the first quarter of 2018, says the study, A Sticky End: Lessons Learned from Toronto’s 2017 Real Estate Bubble. ‘We see all these people doing stupid things without really thinking. A lot of these are bad real estate decisions,’ he says. A market psychology gripped the region in 2016, says the report. ‘In a market where house prices are rising 20 per cent or more, investors believe that the $700,000 property they’re buying today is going to be worth at least $840,000 a year from now,’ writes Pasalis.”

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Comment by Ben Jones
2018-04-12 07:40:00

‘Toronto’s housing market has seen a stunning slowdown in the past year…as the median house price slid 18 per cent’

A couple of days ago I posted a price per square foot decline in NYC of 18%. The media says nothing about a bubble. And that was year over year, prices were down last year too. I found examples of near 50% price declines in NYC and Miami Beach almost 2 years ago. The media doesn’t ever mention a bubble, and they’ve already popped.

Comment by Sean
2018-04-12 08:17:39

Ben, how do you think GTAs bubble will impact Florida and/or Arizona RE? I ask because a few months ago I sat outside a bar on A1A in Lauderdale watching one snowbird Canuck after another drive up and down the strip. The waitress said she’s seen more Canadians every year buying up condos, which leads me to believe they’ve leveraged their Toronto property into a South Florida property. As bad as Florida condos are without the Canadians you’d think this would hit the accelerator in the snowbird area?

Comment by Ben Jones
2018-04-12 08:30:05

We’ve already seen Alberta’s specuvestors pull back in AZ. Yes, they were borrowing up there to buy down here. I posted one article a couple of years ago with a UHS bragging how they were getting into Phoenix shacks with nothing down.

It’s all ping-ponging through: China, London, Australia, Vancouver. Where ever the speculation is highest, the harder it will fall. Why buy a condo in Florida when you can stay in a hotel cheaper? Only if you expect to make money on the flip.

Comment by Sean
2018-04-12 08:51:20

Why buy a condo in Florida when you can stay in a hotel cheaper? Only if you expect to make money on the flip.

Because people like to brag and say “I own a place in Florida”. It’s about their ego, not their investment.

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Comment by In Colorado
2018-04-12 11:08:25

Yup. Having a vacation home signals that you’ve “made it”, never mind that you’re now up to your eyeballs in debt; of course, the people you’re trying to impress don’t know that. Having a second home is a major PITA. It means that you will be taking ALL your vacations there, and you will spend a big chunk of that vacation time performing deferred maintenance and cleaning, as opposed to relaxing and having fun.

Comment by Mortgage Watch
2018-04-12 11:31:33

The poor donks….. The poor poor donks.

Comment by BlackSwandive
2018-04-12 12:06:08

The people who advertise that they have a second house are usually the ones who can’t afford it. They’re insecure and trying to impress. They’re the same types who are big on name-dropping, pretend they’re on their cell phone when nobody’s on the other line, etc. A sad, sad group.

Comment by octal77
2018-04-12 12:33:36

“…A sad, sad group…”

People spending money they don’t have.

On things they don’t need.

To impress people they don’t know.

IMHO, a most definite form of mental illness. Very sad indeed.

Comment by tresho
2018-04-12 16:35:48

IMHO, a most definite form of mental illness. Very sad indeed.
There is an ancient Chinese Zen poem that even mentions this, the Xin Xin Ming or 信心銘. There are different ways to translate the title. One line in the poem goes (my version) “To set what you dislike against what you like - is mental illness”

Comment by Professor 🐻
2018-04-12 21:11:39

I’m so glad I don’t give a crap about impressing the (non-Ben) Jones’s.

Comment by Ethan in NoVA
2018-04-13 07:55:09

I have a friend who lives in Toronto, but snowbirds in Florida. He uses his Florida house a month or two out of the year, and then the rest of the months it gets rented out. I’m sure he breaks even on it.

Comment by BlackSwandive
2018-04-13 08:19:17

“I’m sure he breaks even on it.”

No way in hell. A single month’s vacancy will generally put a landlord in the red for that year. That’s a loss of 1/12 annual gross income. In his case, if he uses it 2 months a year he’s already lost 1/6 gross. Do you know how hard it is to rent out a house that you are using yourself for a few months every year?

Most renters don’t want a temporary rental where they have to move all the time, they’re looking for a multi-year property, which means he’s scraping the bottom of the barrel insofar as renters are concerned, and he’s got multiple months vacancy every year when you factor in his own use. He’s taking it in the shorts.

Comment by BlueSkye
2018-04-13 08:49:44

taking it in the shorts…

The point is that he can wear shorts! Come February the denizens of Ontario get a little crazy over the cold and snow. Many come south if they can for a break.

He might have bought it for $20K a few years ago and has never flinched about it.

Comment by Mafia Blocks
2018-04-12 09:58:32

“Why buy a condo in Florida when you can stay in a hotel cheaper?”

Precisely. Why buy any house or condo when you can rent it for half the monthly cost? Buy it later after prices crater for 75% less.

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Comment by octal77
2018-04-12 12:26:32

“…Why buy any house or condo when you can rent it for half the monthly cost?…”

In effect their own personal time-share from which its almost impossible to escape.

Nothing more than a massive Florida sink-hole for $100 bills.

Comment by Jessica
2018-04-12 17:48:23

Why are you all so sure the housing market will collapse? What will cause it this time?

Here in DC the average Fed worker makes 100K. Both spouses work here - so average household income is well over 100K. The economy here is taxpayer financed and nobody who works for the Fed (the majority of homeowners) is ever in real danger of losing their job - or their great pension.

As if that isn’t enough, there is a mass influx of illegal immigration which is crowding everyone into certain neighborhoods to get away from them.

Add to that, the huge influx of HB1 visa workers who have pretty much taken over Freddie Mac - a huge DC metro employer in VA.

And finally, the Chinese and other “investors” who are buying up homes for cash and renting them - which is reducing inventory.

How will this EVER improve for the average hardworking American?

Comment by BlackSwandive
2018-04-12 20:34:46

You’re right, Jessica. You should hurry up and buy a house. HURRY!!!

Comment by DirtyLawyer
2018-04-12 21:57:11

She’s not saying she is right, she is asking others for their opinions and reasons in support thereof.

Comment by BlueSkye
2018-04-13 04:15:27

…the housing market will collapse?

It’s the prices. The higher they go in this pyramid of credit the more fragile they are. We don’t all live in DC by a long shot, but we all have a Housing Bubble.

Speculators are just accelerators. They exaggerate the rise of a bubble and they dramatize the collapse when they flee.

It’s interesting how people think about a mania. It’s illogical by definition. When it collapses people will pin a coinciding event as the cause for its end, which will also be illogical. It will collapse because it is unsustainable, like a bubble floating in the wind. A single blade of grass may be the end of it.

Comment by Jessica
2018-04-13 04:36:39

Thanks. I just am so depressed that the last bubble was replaced so quickly with a new bubble.

And it really is different here in DC. And, I believe, in CA.
Where there is rampant corruption, and little effort or interest by honest folks to fight, it will continue.

Comment by Mafia Blocks
2018-04-13 04:45:17

Solution: Rent it for half the monthly cost. Buy later after prices crater for 75% less.

Comment by BlueSkye
2018-04-13 05:18:49

The last bubble never went away. That’s why we are still here studying it. Slight correction and then the resumed moonshot. It’s the same housing bubble, the same credit expansion.

Why be depressed? You seem to have avoided the anchor around your neck so far. You are very fortunate it seems.

Comment by oxide
2018-04-13 06:37:18

Jessica, that is an excellent description of what’s going on the DC area.*

To make things worse, Maryland is a commie state that welcomes all those illegal immigrants — as long as those immigrants live a mile away.

IMO Freddie Mac has no business hiring H1-Bs, and that’s flat.

*Except that I disagree about the “great pension.” That great pension was discontinued ~25 years ago, and the last of them are retiring now. That current $100K government worker will get a $25K pension. Yes it *is* a pension, but not what I would call gold plated. Moreover, employees in the last five years are paying 4% of their salary for that great pension

Comment by Mafia Blocks
2018-04-13 06:51:01

The last bubble never went away. That’s why we are still here studying it. Slight correction and then the resumed moonshot. It’s the same housing bubble, the same credit expansion.

Why be depressed? You seem to have avoided the anchor around your neck so far. You are very fortunate it seems.


As I recall a wise man one saying, If you have to borrow for 15 or 30 years, it’s not affordable nor can you afford it.

He’s right.

Comment by goudey
2018-04-13 09:12:17

If you have to borrow for 15 or 30 years, it’s not affordable nor can you afford it.

He’s right.

Not necessarily. Not enough info to know if the statement is correct or not. You can’t claim “if you have to pay back $500 a month it is too much” either.

Not nearly enough information. Not even close.

Comment by Mafia Blocks
2018-04-13 10:14:12

“You can’t claim”

Sure I can.

If you have to borrow for 15 or 30 years, it’s not affordable nor can you afford it.

Comment by BlueSkye
2018-04-13 10:54:55

30 years of your life in debt slavery. That is more than enough information.

Comment by Taxpayers
2018-04-12 09:17:01

they didn’t leverage $60 oil
now 66 but no bonanza

Comment by b
2018-04-12 13:01:03

A brief - on the ground report - i am spending the week with my folks in Oakville (a well-off western suburb of Toronto). This are some observations - not necessarily statistically based

Something that folks are not focusing on — is the loss of human capital. Let me try to characterize

1. People are very aware that they are cash flow negative on the investment (rental) properties. The elder son of a Friend of my mom’s, had to move out of their 2 br 1050 sq condo in downtown Toronto. The reason - they just had a baby and bought a townhouse (without selling the condo). The younger son just out of university was asked to move into the empty condo (with a roommate). Instead of saving - they are paying close to $3800 CDN for rent - so they are not saving themselves. How is that good for the country?

2. There are a lot of people (maybe like FL in 2005) that have good degrees and have moved into housing industry. So instead of working in productive businesses, they are selling or flipping houses). A relative with a chemical engineering degree from a good university - is now in real estate (as an agent not construction) for the past 18 months - because he would make 3x than his job. What happens when there is a real estate downturn - how does he get back to his vocation

3, To get a nice detached house, people are buying in north Oakville or Burlington. They are spending 90+ minutes on a commute each way.

4. In these suburbs, Tim Hortons (like Starbucks) and other places are jammed packed. In the old day it was young mothers and the seniors - good for them. I just went with my dad - i estimate 50%+ at 2PM were folks in their 30’s and 40’s - what the hell were they doing - living of their housing appreciation?

crazy valuation story. There are high end exec townhouses near my folks - 7 blocks from L.Ontario. 7 years ago they sold for $260K. The asking is now $1.1M. Somehow, people want to live in Oakville - and this is now a premium neighbourhood.

Comment by whirlyite
2018-04-12 13:06:55

I always ask why do people eat out so often? This article from 2016 opened my eyes to the whys and wherefores…learned behavior!


Comment by In Colorado
2018-04-12 15:29:31

I can make a filet mignon dinner at home for less than eating a burger at Red Robin.

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Comment by Karen
2018-04-12 18:55:45

I can make a filet mignon dinner at home for less than eating a burger at Red Robin.


Comment by Professor 🐻
2018-04-12 21:14:58

Eating out is great…no cooking, good food, no mess to clean up, and perfectly affordable to those who avoided making a death pledge.

Comment by BlueSkye
2018-04-13 04:19:25

Nice perspective PB. I am planning a vacation adventure in September. The total cost of this, including dining out will be much less than the typical monthly death pledge payment.

Comment by MacBeth
2018-04-13 04:49:56

Eating at home is great…no cell phones, no screaming kids, no lines, no traffic, I know what I am eating, and perfectly affordable to those who avoided making a death pledge.

I eat at home because I like to. I greatly dislike eating out.

Comment by Professor 🐻
2018-04-13 06:24:26

I greatly like eating out. Also fine with cooking at home. I guess I am blessed with food appreciation, sans obesity tendencies.

Comment by oxide
2018-04-13 06:44:38

People eat out because cooking is ugly painful work. All those cookbooks which brag about “weeknight meals in 30 minutes or less” or LYING. That doesn’t include shopping time, chopping time, or cleanup time. I know this very well.

You can cut down the time if you have a limited menu. You can plan your shopping and cook to freeze leftovers. But, to eat something new 2-3 nights a week? Forget it.

Comment by Professor 🐻
2018-04-13 07:23:28

Oxy, My divorced sister uses Blue Apron to cut down on the time costs you mentioned of home meal prep. Have you considered that option?

In our case, my wife and I are both working so much these days to keep up with the rapidly inflating cost of living here in Taxifornia that our cooking and dishwashing skills largely go to waste.

Comment by In Colorado
2018-04-13 08:50:59

I find most restaurant food underwhelming: too salty, too greasy, too many calories. Sure, you can get good food, but it’s VERY expensive. It’s OK for an occasional treat, but that’s it.

But yeah, people are eating out a lot now. And it shows in their waists.

Comment by oxide
2018-04-13 09:51:24

Prof, I thought about Blue Apron, but it doesn’t fit my lifestyle. It’s probably great for a Millenial couple who enjoy cooking together and want to try gourmet foodstuffs. But I’m a paleo with a limited menu (when I’m not cheating that is). Meal kits are probably not my thing.

FWIW, some grocery stores now sell meal kits. You just buy one when you need it and there’s no worry about delivery.

Comment by drumminj
2018-04-13 18:59:25

no screaming kids

That is absolutely the big one. So disappointed when we go out for a nice meal and someone has their screaming sprog and not the politeness to take the kid outside…

Comment by Sam (SW)
2018-04-12 13:30:33

Thanks for the update B.

Comment by Lurker
2018-04-12 13:58:42

Great update, very informative. The human cost and lost savings and lost time for so many will never show up fully in the stats, but it’s nice to know it doesn’t go unnoticed. Thanks :)

Comment by Mafia Blocks
2018-04-12 14:19:00

That pretty much aligns with all the reports of the cratering going on.

“Greater Toronto Area House Prices Falling Furthest Where Investors Once Dominated”


Comment by Ben Jones
2018-04-12 15:03:15

It’s not just where, but exactly what they were buying as well. In this case, detached shacks. And where prices fell the most (and fastest). Proving that speculation is terrible for the long term health of any housing market. Hear that California, with your Chinese buyers?

Lo and behold, the exact same phenomenon happened in Vancouver (detached again). In Sydney, ditto. In London the biggest declines have been in the priciest suburbs and airboxes favored by speculating foreigners.

Remember the stories about the mining towns in Australia that got walloped? “Investors poured in from all over to clean up on the boom!”

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Comment by Karen
2018-04-12 19:05:31

Hear that California, with your Chinese buyers?

Don’t forget Texas. They all come here after starting their crime sprees in CA. There are entire suburban neighborhoods in north Dallas where Asians (not Asian-Americans, but recent immigrants) are the majority. Entire strip malls filled with Chinese, Japanese, and Korean businesses. And it’s all new within the last 5-10 years.

There are places I go where I get stared at like I’m the foreigner, and it’s not in small urban enclaves like it used to be. I’m sure they’re all speculating on real estate.

Comment by oxide
2018-04-13 06:49:20

The biggest impression I have of Toronto shacks is watching Love It or List It. Never mind the financial aspect; those houses were all in TERRIBLE condition. Rotting foundations, 60-year-old systems, original windows, mold damage, dead landscaping, the works. Half the area should be torn down.

Comment by oxide
2018-04-12 07:57:33

The sellers also filed a lawsuit against the pair who walked away from the deal earlier in the year. A judge ruled in favour of the sellers,

This appears to be a dangerous precedent.

Comment by Taxpayers
2018-04-12 09:18:31

? I thought u were a law n order gal

Comment by BlackSwandive
2018-04-12 12:13:10

Nah, she’s “oxide,” not “polly.”

This is more her style:

“Double, double toil and trouble;
Fire burn and caldron bubble…”

Now, not sayin’ she’s a witch, just that her education is more along the lines of brewin’ up something mysterious in a beaker or caldron rather than a court of law.

Comment by Professor 🐻
2018-04-12 21:18:30

“Polly” was quite the school marm! And a federal attorney, if I recall.

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Comment by Carl Morris
2018-04-13 09:38:08

I thought Polly was fine and thought it was funny that she knew exactly the legal games Bill was playing. He was just annoyed because she knew his business and said it in public. But it was his own fault for giving so many clues. That’s my recollection anyway :-).

Comment by oxide
2018-04-12 09:30:55

It depends on the details of the case. But here, it looks like the courts are ordering a potential buyer to pay up for a drop in value. It also raises the question of when a real estate deal is actually binding. evidently the buyers were bound before they sat at the closing table? No opportunity to walk away at all?

Comment by BlackSwandive
2018-04-12 12:17:41

That’s why a good real estate attorney is well worth the money. Those people probably didn’t have a financing addendum attached, and once they couldn’t perform they were sued for lack of performance. A real estate agreement is a legal contract.

I’d venture to guess that most buyers and sellers don’t even understand their legal rights, and most will just go on their way if a deal falls through, not realizing they could be held liable for, or rewarded, damages.

Comment by scdave
2018-04-12 16:03:30

were sued for lack of performance ??

The correct legal language is called “Specific Preformance”

Specific performance is an equitable remedy in the law of contract, whereby a court issues an order requiring a party to perform a specific act, such to to complete performance of the contract.

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Comment by BlueSkye
2018-04-12 18:15:46

such to to…

You and your fancy lawyer speak!

Comment by BlueSkye
2018-04-12 12:27:23

They were bound when they signed the contract. Nothing new about that.

When I used to be a leveraged house buying goober, I always had loan approval as a condition. Maybe these folks got so excited they didn’t have any conditions.

The last time I bought a shack there wasn’t any loan, so I wrote in everything is subject to my lawyer’s approval.

Comment by In Colorado
2018-04-12 15:27:19

When my coworker sold her Arvada house, none of the offers had contingencies, not a single one.

She ended up selling it to an out of state equity locust. There was no loan involved and they closed in just over a week.

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Comment by Patrick
2018-04-12 17:38:07


Not a precedent. This has been going on for years. Toronto condos are currently red hot - up to $1200 a foot. Most developments are already fully sold. One developer told me today that “if they don’t close we’ll sue them”.

But single family housing is definitely on the skids. This fall should be serious bath time.

Comment by Bellinghouse
2018-04-13 11:38:15

I had a buyer walk away just prior to closing and after all contingencies were removed. Was told that I would have to prove damages even to keep the 3% earnest money that was on deposit with escrow, and that typically both sides agree to the cancellation of the contract and buyer cancelling escrow gets fully refunded.

So I went along as my agent instructed and put the house back on the market and the next offer was for a higher sales price ($300,000 higher — this was in San Francisco, after all). Hence, no financial loss to me — just time and hassle.

In the Toronto example, the seller’s subsequent offer was $400,000 less, so that I am assuming is why the judge made the previous buyer pay the difference.

Comment by Professor 🐻
2018-04-12 07:58:39

Any insights on when Team Trump plans to join other developed nations’ efforts to bring an end to the residential real estate mania?

Comment by 2banana
2018-04-13 02:04:29


Rising interest rates?
New tax laws drastically decreasing tax deductions for owning an expensive home?
QE unwind?

So exactly what have “other developed nations’ efforts” done “to bring an end to the residential real estate mania?”

Comment by oxide
2018-04-13 06:50:57

15% tax on foreign purchases ring a bell? It brought down Vancouver and is now bringing down Toronto. Slap a tax on US real estate and that might just drive the chain-migrating Asians out of Texas.

Comment by 2banana
2018-04-13 07:23:55

So the US housing bubble is the fault of foreigners?

QE1, QE2, QE3, QE4, Operation Twist, ZIRP, HARP, TARP, bank bailouts, not one banker in jail, adding more to the deficit than ALL other administrations combined and accounting for inflation, etc., etc., etc.

Just was some fluff…

Lemme guess. You really think a 15% tax is going to deflate the bubble too?

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Comment by Professor 🐻
2018-04-13 07:30:14

Yup. Easy-peazy way for the Trump administration to end the situation where foreign real estate investors are driving long-time U.S. citizens to live in the streets.

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Comment by Mortgage Watch
2018-04-12 08:12:51

San Francisco, CA Housing Prices Crater 16% YOY As Homeowners Borrow To Meet Mortgage Payments


*Select price from drop-down menu on first chart

Comment by Apartment 401
Comment by jeff
2018-04-12 10:35:08

They’re dropping in DUMBO

Comment by Apartment 401
2018-04-12 11:07:43

I hate that those New York acronymns / abbreviations have infected Denver i.e. River North = RiNo, Lower Highlands = LoHi, South Broadway = SoBo. There’s nothing organic about it, it’s forced, it’s marketing.

And there is no such thing as West Wash(ington) Park. It’s fake…

Comment by whirlyite
2018-04-12 13:09:49

Same nonsense is trying to catch on in Houston - sounds like MOCACA to me.

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Comment by In Colorado
2018-04-12 15:24:36

Those are the nabes where the house prices are insane. Not quite Bay Aryan, but given the dearth of six figure salaried jobs here, the endless layoffs, plus no stock option lottery, I can’t figure out just who can afford them.

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Comment by Salinasron
2018-04-12 09:14:44

Haven’t posted in a while but Ben’s blog summaries of late have been more depressing than ever. One knows the system is badly broken and the lending institutions are allowed to continue he game without accountability.

Comment by Sean
2018-04-12 10:54:11

Depressing? I’d say they are pretty exciting. Getting markets back to a rational level is exciting for me.

Comment by In Colorado
2018-04-12 15:21:36

Perhaps, but it won’t happen without a great deal of pain. Keep in mind that a lot of people who lost their jobs in the previous crash never recovered.

Comment by scdave
2018-04-12 15:49:01

Keep in mind that a lot of people who lost their jobs in the previous crash never recovered ??

Exactly Colorado. And the ones that remain with jobs are looking over their shoulder and are not sleeping well.

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Comment by rms
2018-04-12 11:15:23

“Haven’t posted in a while…”

Fingers crossed… is your wife doing better?

Comment by Salinasron
2018-04-12 14:26:26

First Chemo treatment stopped working. Switch to other 1st line treatment 4 treatments ago. Just had a 4th CT scan today. Thanks for asking.

Comment by BlueSkye
2018-04-12 14:59:42

Best of luck to you Ron.

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Comment by scdave
2018-04-12 15:50:46

Best of luck to Her Ron.

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Comment by rms
2018-04-13 00:18:14

My thoughts are with you.

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Comment by PDneXt
2018-04-13 19:41:10

Sending luck yr way, Ron. Hang in there.

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Comment by Taxpayers
2018-04-12 09:19:44

in my hood in N VA inventory is 1/2 of par
feed the squirrel letters are required

Comment by oxide
2018-04-12 09:32:22

wonder what an amazon effect will be?

Comment by Mafia Blocks
2018-04-12 12:22:22

Hey Donk

Comment by In Colorado
2018-04-12 15:19:25

Notice how the media isn’t talking about Amazon’s HQ2 anymore?

The whole thing struck me as a publicity stunt. I’m beginning to think it won’t happen or if it does it will be very scaled down.

Comment by Neuromance
2018-04-12 18:49:09

I’m guessing it may be kind of a done deal. The White Flint location is a center point between Bezos’ house in DC (the largest house in DC), the Baltimore shipping center and the Northern Virginia datacenters. Also proximity to DC for lobbying. Maryland just passed an 8.5 dollar assistance package for Amazon.

Could be everything thinks this area is a fait accompli.

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Comment by In Colorado
2018-04-12 23:14:42

It makes sense for it to happen there. What I don’t get was the whole dog and pony show, making mayors write love letters to Amazon, begging them to build HQ2 in their town.

Comment by BlueSkye
2018-04-13 04:26:36

proximity to DC…

Interesting business model for an unprofitable catalog sales house. What could go wrong?

Comment by Neuromance
2018-04-13 05:02:48

Interesting thing, Amazon makes the vast majority of their money from the Amazon Web Service (i.e. remote hosting/remote storage) business: https://www.google.com/search?q=amazon+profit+breakdown

Also: http://www.businessinsider.com/amazon-web-services-cloud-online-shopping-profits-chart-2017-5

Comment by In Colorado
2018-04-13 08:55:57

Amazon has turned AWS into a business that’s on track to generate well over $10 billion in revenue annually.

That’s revenue, not profit. I can think of some non-sexy “legacy” tech firms that make 10B or more in profit, and their PE’s are way lower than Amazon’s.

Comment by Ethan in NoVA
2018-04-13 09:04:34

CIA Cloud

Comment by Mortgage Watch
2018-04-12 09:41:29

North Palm Beach, FL Housing Prices Crater 12% YOY As Vacation Property Market Melts Down


Comment by azdude
2018-04-12 11:53:49

real estate investor seeks apprentice

Comment by azdude
2018-04-12 11:59:51

“Sharga said Carrington will manually underwrite each loan, assessing the individual risks. But it will allow its borrowers to have FICO credit scores as low as 500. The current average for agency-backed mortgages is in the mid-700s. Borrowers can take out loans of up to $1.5 million on single-family homes, townhomes and condominiums. They can also do cash-out refinances, where borrowers tap extra equity in their homes, up to $500,000. Recent credit events, like a foreclosure, bankruptcy or a history of late payments are acceptable.”


Comment by BlackSwandive
2018-04-12 12:20:41

Credit score doesn’t even matter anymore. Once the pigmen realized it was only a road block to their delicious profits (since they’re sheltered from repayment risk), they decided to only use it as a tool to extract more interest, not to deny loans.

Comment by Anonymous
2018-04-12 13:13:47

What you say must be true. Because no one assuming the risk would lend $1.5 million to someone with a 500 credit score.

Comment by tango_uniform
2018-04-12 15:51:39

Sure they will, if there’s security behind the loan. To the Shylocks on the inside of the FIRE-place a property used as collateral worth $1.5M today will be worth $2M next month so what’s the risk? Add the FED backstop and its a no-brainer.

How I long for the days of MBS. At least they traded in something that had a passing resemblance to an open market.

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Comment by azdude
2018-04-12 15:52:24

back in the day my house made more money per hour than I did.

Comment by In Colorado
2018-04-12 23:15:42

It also made more money for the tax man.

Comment by BlueSkye
2018-04-13 04:28:19

Yet somehow you went bankrupt.

Comment by In Colorado
2018-04-13 08:59:06

Well, yeah. It stopped “making money” and became a money losing alligator.

Drove down a street in San Jose a few days ago. On one side of the street were gang banger infested hovels. Across the street were newish McMansions. And that is “normal” over there.

Comment by rms
2018-04-13 09:32:41

“back in the day my house made more money per hour than I did.”

In San Jose your house will pay you $800/day. Sleep ’til Noon.

Comment by Mortgage Watch
2018-04-12 16:13:38

Bellevue, WA 98005 Housing Prices Crater 11% YOY As Seattle Economy Stumbles


*Select price from drop-down menu on first chart

Comment by Apartment 401
2018-04-12 16:34:23

No “pent-up demand” for $500,000 starter homes happening here:

“Heavily indebted Americans are readjusting to a deterioration in living standards. Many of society’s lower-income consumers have already reshaped their lifestyles — towards living in a home with at least two adult generations. In other words, more Americans than ever in the last half-century are returning to their parents’ basement.

According to a new Pew Research Center report of census data, a record 64 million Americans, accounting for some 20 percent of the total U.S. population, lived in multi-generational family households in 2016, representing a three-decade continuous progression in this type of household formation — despite government propaganda that indicates economic improvements since the Great Recession.”


Comment by jeff
2018-04-12 18:15:50

I want to hear about the used heroin needles in the Wendy’s Chili again. Or was that face scabs in the Chili?

Regardless, I want to hear about the Chili and the stuff the Homeless people drop in it.

Comment by MacBeth
2018-04-13 05:08:44

“Heavily indebted Americans are readjusting to a deterioration in living standards. Many of society’s lower-income consumers have already reshaped their lifestyles — towards living in a home with at least two adult generations.

The quality of elder care out in the marketplace is poor, and the cost is outrageous.

Our family is debating this now…whether to multi-generation, and if so, who and how. My parents are in their late 80s and understandably are having an increasingly difficult time. Otherwise healthy. Each has potential to live another 5-7 years. Neither they nor any of their six kids are indebted.

It’s about: (1) practicality, (2) care, and (3) cost.

Comment by Professor 🐻
2018-04-13 07:17:28

“My parents are in their late 80s and understandably are having an increasingly difficult time.”

Same boat here, plus my dad has a disability that forced my parents to sell the family home and move into a retirement community. So far they have managed in an independent living apartment. It’s not cheap, but it enables them to maintain most of their previous existence as an independent household in a safe space that has on-site amenities, with some support from their adult children. Luckily my parents were lifelong savers, so are able to maintain their modest level of financial independence. This works in the Midwest, but they could not afford a similar living situation in California.

Comment by ChuckA
2018-04-13 07:35:46

Same here. My MIL is 80 - gets around very well - but she is 80. I mentioned we could sell our house - and look into buying hers. She would stay there (1st floor master) while the wife / I and two kids room upstairs.

It would make somethings easier - like me only having one house to take care of (though she is only 2 miles away..).

My MIL in the past has mentioned selling her house - wife and I selling our house and getting a place with a MIL suite. My idea seemed like a simpler soultion - but it was poo-pooed.

Crazy old people - they want you to live with them but they don’t want you to live with them..

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Comment by Professor 🐻
2018-04-13 08:35:46

It’s tough merging households, especially for adult family members who are accustomed to ruling the roost. My MIL gets sick of having my family around her very large place after a three day visit. Then she misses us terribly after we leave. My mom is similar…she finds visits from her adult children somewhat intrusive, but we also help my parents maintain their lifestyle. This seems to be the natural order of things.

Comment by Carl Morris
2018-04-13 09:41:41

Crazy old people - they want you to live with them but they don’t want you to live with them.

They’re human :-). Everybody wants a certain amount of company but everybody wants to be the one in charge.

Comment by jeff
2018-04-13 07:43:00

“My parents are in their late 80s and understandably are having an increasingly difficult time. Otherwise healthy. Each has potential to live another 5-7 years.”

At about 87 Dad passed roughly ten years ago, Mom at 96, one and a half years ago.

They had saved a lot of money for their retirement, had Mom lived another 6 months their house (paid off long ago) would have needed to be sold.

Had interest rates held at 8% a couple of $ million would last a while without touching principal, take that away with “(1) practicality, (2) care, and (3) cost.” it can go pretty quick.

Don’t get me wrong, they both lived well even with Dad’s Alzheimer care and Mom for 10+ years after that in her own house but I don’t know what happens to people who live that long without that kind of nest egg.


Like me but I don’t plan on living that long.

Comment by Apartment 401
2018-04-12 17:07:33


Ron Paul is right. No neocons. No deep state Democrats. No war in Syria.

Who makes money from this war? Follow the money…


Comment by jeff
2018-04-12 17:55:54

‘Shut Up and Obey’

Tucker Takes on Critics Over Skepticism of Syria Strikes: They Want You to ‘Shut Up and Obey’

April 11, 2018

Tucker Carlson said Tuesday that many in the mainstream media want skeptics of potential military action in Syria to “shut up and obey.”

One night earlier, Carlson blasted “talk-show generals” and hawkish lawmakers, like Sen. Lindsey Graham (R-S.C.), for calling for immediate war on Syrian President Bashar Al-Assad for a new gas attack on civilians.


Comment by In Colorado
2018-04-12 23:17:31

Funny how leftists are fine with endless wars, as long as their kids won’t get drafted to serve in them.

Comment by Professor 🐻
2018-04-13 07:33:21

Sounds more like a description of certain wealthy DC politicians, some of whom I assume are Republicans, than leftists…

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Comment by In Colorado
2018-04-13 09:06:59

I wasn’t referring to politicos, I was referring to voters. People who in their youth might have had a “No Draft, No War” bumper sticker (remember those?) on their car don’t seem to care so much now since there isn’t a draft and we can now rely on economic conscription instead.

Comment by rms
2018-04-13 00:29:26

This is pretty clear without taking sides. Enjoy!

Syria’s war: Who is fighting and why - 7 minutes

Comment by toby
2018-04-13 07:57:52

but it does take sides……..says russia came in and spent all its resources against anti assad rebels, fails to point out the hundreds of ISIS tanker trucks, etc that the russians aggressively struck, obama policy had hit NONE of them, major sea change in entire war……. presentation was biased……

Comment by rms
2018-04-13 09:39:50

“…presentation was biased…”

Admittedly I know little about world politics, and I can’t imagine any cost-v-benefit for the U.S. to be involved.

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Comment by MacBeth
2018-04-13 04:59:19

NeoCons = Progressives.

They have since the beginning.

Comment by Mortgage Watch
2018-04-12 19:36:43

Centreville, VA Housing Prices Crater 19% YOY As Federal Budget Cuts Decimate Fairfax County Housing


Comment by Taxpayers
2018-04-13 07:02:37

steady here in N VA as orangeman signs 1.3 omni-bust
sprinkles $ on my lawn

Comment by azdude
2018-04-13 06:21:23

“As profits erode due to over-capacity, corporations turn to financial engineering to boost profits: profits come from either accounting trickery or stock buy-backs that reduce the number of outstanding shares.

With credit cheap and profits scarce, corporations borrow to survive.These become zombie corporations, kept alive only by super-low interest rates and ample credit.

Meanwhile, consumers have over-borrowed and over-consumed, taking on more debt than would have been possible in the pre-financial repression days.

As a direct result of these stimulus policies, private and public debt loads are expanding at rates far above the expansion of the real economy. This is why we read that each new dollar of debt is generating almost no real-world gains, as debt service consumes most of the “new money.”


Comment by In Colorado
2018-04-13 07:17:08

FWIW, stock buybacks don’t boost profits, but they can in increase EPS, if the stock price remains steady.

Big biz is more likely to increase profits via layoffs, outsourcing, reduced R&D spending and other cost cutting. Of course at some point that can no longer be done.

There is now talk of not just $1T deficits returning, but of $2T deficits coming soon.

We’re already in a depression, with a low labor force participation rate. The Hoovervilles that have been popping up everywhere are only going to grow and multiply, especially once automation and AI’s decimate menial jobs.

Comment by aNYCdj
2018-04-13 07:30:26

A lot of that low participation rate has to do with the lack of English and math skills among large groups of Americans

Thats why it needs to be mandatory anytime you apply for assistance you have to sit in class 15 hours a week and learn English and math. You dont need to drug test anyone or force them to work menial job.

Speaking English and doing homework will thin the crowd out very quickly.

Comment by azdude
2018-04-13 07:31:53

well wall street reports earnings as earnings / share to the lemmings.

earnings / share if your earnings stay the same and u take away shares by buying them back then it makes your earnings / share go up. this not rocket science my friend.

the media never reports the actual earning number by itself because for a lot of companies it is going down or flat.

Comment by In Colorado
2018-04-13 09:09:13

I’ve seen both reported.

But if real profits collapse, buy backs won’t help.

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Comment by Taxpayers
2018-04-13 07:01:03

sept 2018 10yr 2.60% ? futures not too bullish

Comment by Professor 🐻
2018-04-13 07:36:14

Yep. Considering all the consternation about rising rates, they sure haven’t risen much yet.

Comment by azdude
2018-04-13 07:10:19

“This is one big fat ugly bubble.” DJT < election

Comment by Mortgage Watch
2018-04-13 07:57:24

Oakton, VA Housing Prices Crater 10% YOY As Flippers And Speculators Flood DC Market With Inventory


*Select price from dropdown menu on first chart

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