“I have no idea,” he said. And I believed it. There he was, a piteous figure, rumpled and hunched on the passenger door of his 5-series. A 2010 model. Pathetic. “I had a firm deal, but it fell through. Now I’m getting fourteen housewives coming through every open house looking for damn decor ideas. Lookers. No action.”
Tony’s a realtor I met who bought a lot in North Toronto for $825,000, tore down the wizened bungalow that had stood there since the bombs fell on Pearl Harbour, and built one of those skinny, faux, baronial, stone-faced, staged, mini-mansions which tries hard to pretend it’s on a better street. Price: $1.5 million. Tony’s exposure (mostly borrowed): $1.41 million. It was a high-stakes gamble. And it’s going badly. I looked at him idly picking lint from his sunglasses, knowing it would get worse. He knows it, too.
Even in the traditionally high-demand areas of the nation’s mega-city, it’s like a light switch is being flicked off, street after street. Houses like his which would have sold in three or four days now linger months. Absolutely gone are the bidding wars I described in March, where the asking price was just a silly suggestion. Sure, it’s summer. Summers suck for MLS. But this is starting to feel like 2009.
I flirted with the idea of telling Tony what comes next, but thought better. He stared back up at the unscuffed stone steps and shiny wrought iron, in time to see a jiggling tube top and pink flip flops disappear into the foyer, rich in imported ceramics and dark faux wainscoting. He moaned. There is only so much torture one man may inflict upon another.
Of course what comes next is part deux in the feds’ war on housing. A month ago F murdered the 30-year mortgage, effectively raising borrowing costs by almost a full percentage point for those now forced into a 25-year loan. The elfin deity also ordered CHMC to stop offering insurance on mortgages for any house selling over $1 million.
That means Tony’s buyer – if one ever materializes – will have to cough up at least $300,000 for a downpayment, plus $55,000 in land transfer tax for Toronto and Ontario, in addition to closing costs.
The above is a recent post on Greater Fool Blog.
Always good reading with good comments as well.
You can read the entire article, as I cut it short.
I wanted to hi – lite another aspect that lingers at the sidelines, the Tax Base that Gov’ts are reliant from property sales.
Each province is different, and B.C. has had such a tax since late 1990’s. I never agreed with it….I think it simply puts people further in debt.
In addition, if the Gov’t becomes dependent on such revenue, what happens when the market takes major swings.
In Ontario, using the example above, the average gross wage for middle class wage earner before taxes goes to pay just the property sales taxes to the Province and the City.
Simply ridiculous and UNsustainable.
Time will tell how a collapsing market will affect Gov’t coffers, but I anticipate quite a hit.
Then what….tax grabs from other sources from a shrinking revenue pie…blood out of a stone ?