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By Trying To Make A Profit, They Took A Hit On The Deal

A report from the Globe and Mail in Canada. “During two years of soggy sales after prices in the Toronto market peaked in 2017, many people sat on the sidelines, says real estate agent Ira Jelinek, as they tried to figure out whether prices had farther to fall. Mr. Jelinek cautions that sellers still need to be realistic about the asking price. Mr.Jelinek says that well-priced listings will move but sellers who want to test the waters with a higher price risk having a listing that appears stale.”

“He points for example to one recent sale, for example, where the homeowners sat with an unsold property for months, then took a hit on the deal. The couple moved to Canada from the United States when one of them took a new job in 2017. At that time, they paid $3.73-million for a newly built house near Avenue Road and Lawrence Avenue West. Earlier this year, the pair decided to return south of the border.”

“They listed the house for sale in the late spring with an asking price of $3.78-million, or $50,000 more than they paid for it. Mr. Jelinek says the house languished through the summer, but the owners never lowered their asking price. Eventually, they accepted an offer of $3.5-million, or $230,000 less than they paid.”

“By trying to make a profit, the pair had to wait months for a sale, he explains. He estimates they’re down about $300,000 after real estate commissions, land transfer taxes and legal fees.”

“In many cases, the sellers of properties that sat were investors trying to make a profit on a newly built house. Now some of those investors are letting their listings expire and quietly planning to hold off until the spring in anticipation of an upturn. ‘Some people who were burned by overpricing or didn’t have good product are now saying forget it. I don’t think it’s the right position to take.'”

From Domain News in Australia. “Home buyers and sellers are being left in the dark as the sale prices of nearby properties are kept private despite new laws pushing for more transparency.
Privacy concerns from well-known sellers and buyers or those with multimillion-dollar properties are leading to some relevant results not being disclosed, leaving a gap in information about the market.”

“Rob Westwood from First National Westwood in Melbourne’s outer west said prices were often shrouded in ‘secrecy’ when a result was not as good as expected. ‘They don’t want people to know they’ve accepted less, so they don’t disclose the price,’ he said.”

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  1. ‘He estimates they’re down about $300,000 after real estate commissions, land transfer taxes and legal fees’

    On a 2017 buy. Well it was cheaper than renting. And goes to show the Toronto UHS are a lion.

      1. Well think about it. Just moved to Toronto: gotta buy, can’t throw money away on renting! “It’s too cold, lets get the fudge outta here!”

        DONG! These fools were speculating.

        1. For two years – $300,000 could have rented an amazing place.

          Hot and cold running women included.

          3. Did Fairbanks, AK ever get involved in the bubble? Or did wolverines eat the Realtors?

            Don: Hey, Napoleon. What did you do last summer again?
            Napoleon Dynamite: I told you! I spent it with my uncle in Alaska hunting wolverines!
            Don: Did you shoot any?
            Napoleon Dynamite: Yes, like 50 of ’em! They kept trying to attack my cousins, what the heck would you do in a situation like that?
            Don: What kind of gun did you use?
            Napoleon Dynamite: A freakin’ 12-gauge, what do you think?

    2. He estimates they’re down about $300,000 after real estate commissions, land transfer taxes and legal fees

      Uh, so, they don’t have HOA, insurance, property tax, or maintenance in Canada?

      Pretty sure it’s more than 300K.

    3. What is it with these people, 2 years time to sell the house? The mentality of stupid is mind boggling

  3. Well, the taxman will want to know.

    “Rob Westwood from First National Westwood in Melbourne’s outer west said prices were often shrouded in ‘secrecy’ when a result was not as good as expected. ‘They don’t want people to know they’ve accepted less, so they don’t disclose the price,’ he said.”

  5. Speaking of price discovery, is the BOJ about to resume letting the market set long-term sovereign bond yields?

  6. The Financial Times
    Sovereign bonds
    Weak auction shakes Japan’s bond market from its slumber
    Demand lowest in three years as investors prepare for policy shift from central bank
    The Bank of Japan (BOJ) headquarters stand in Tokyo, Japan, on Tuesday, July 16, 2019. The BOJ would offer support for a government spending package likely to be unveiled in October when a national sales tax is increased, according to a former central bank official. Photographer: Akio Kon/Bloomberg
    The BoJ is reluctant to go deeper into negative interest rates than the current minus 0.1 per cent © Bloomberg
    Leo Lewis and Robin Harding in Tokyo and Tommy Stubbington in London
    2 hours ago

    For years, Japan’s giant government bond market has slumbered on the edges of global finance. Dominated by the country’s central bank, prices rarely budge, leaving traders with little to do.

    But at the start of this month, a sale of 10-year debt failed to stir the usual interest from investors in the ¥1.1 quadrillion ($10.3tn) market. Unnerved by new plans at the central bank to shift to buying more shorter-term debt, some private buyers stayed away, making it the worst auction in terms of demand since 2016.

    Japanese government bonds, JGBs, stumbled, sending ripples through other markets including US Treasuries and even, briefly, UK gilts.

    Behind the drop in demand was a rethink by economists and investors about the next steps for the Bank of Japan ahead of its meeting on October 31, as policymakers fret about the health of the global and domestic economy.

    One option for the BoJ is simply to cut interest rates and accept the dent to profitability at the nation’s commercial banks, which have chafed against further easing measures. Alternatively, the BoJ could go further with its rejig of bond purchases. Analysts are increasingly shifting towards the second view and bracing themselves for what could be one of the central bank’s most market-moving meetings in recent years.

    “JGBs remain in the eye of the storm and will continue to influence the direction of global rates,” said Priya Misra, head of global rates strategy at TD Securities. Poor economic data and a rise in the country’s consumption tax are likely to keep propping up debt prices, she said.

    Still, the lacklustre auction on October 1 reflected expectations that the BoJ could pull back more forcefully on its massive purchases of long-term JGBs, which have underpinned the past six years of market action.

    Its aim is to push long-term debt yields further above short-term interest rates — an effect known as steepening the yield curve that is crucial to the health of the country’s banking system and the returns of its massive public sector pension fund.

    The ensuing sell-off demonstrated markets’ acute sensitivity to central banks’ support. But its fleeting nature highlights the challenge the BoJ faces in pushing up longer-term yields in a world where investors are anticipating rock-bottom interest rates — in Japan and beyond — as far as the eye can see.
    …

    1. Back a few decades ago, around when I began paying attention, the conventional wisdom was that central banks controlled the short end of the yield curve through monetary policy, using the Fed Funds Rate which banks charge each other on overnight loans as their principal policy lever.

      At what point did it become standard operating procedure to control interest rates at all durations along the yield curve? And was anyone concerned about the possible deleterious effects this could have on the incentives facing financial market participants?

      1. “…using the Fed Funds Rate…”

        This is a US-specific example. I’m not sure how universal it is.

      2. I realize your question is rhetorical. For others if the Fed is governed by member banks and has really no congressional oversite (at least none with any teeth), then logically the Fed will act to the benefit of the banks and not other market participants. As such the Fed does everything it can to avoid deflation so as not to reduce the asset base the banks use as a capital base for operations. In turn everybody else takes it in the a$$ in the form of inflation + chasing yield in risky assets.

        1. Yes the FED hates deflation and will do anything to save banks we have seen that. I think around 2008 the FED started buying longer term treasuries to save banks with bad loans etc.. This way the Banks can borrow money at low rates to make up for all the RE loses I think around 14T.

          Normally this would be crazy inflation but because it was replacing money that already inflated RE and that money went away it just kept deflation at a minimum. How long can they do this? IDK ? I am surprised its still working or maybe its not working and I just have not figured out who will be screwed, which means I will be. great.

        2. As such the Fed does everything it can to avoid deflation so as not to reduce the asset base the banks use as a capital base for operations. In turn everybody else takes it in the a$$ in the form of inflation + chasing yield in risky assets.

          Very astute observation. It’s important to know who the Fed’s real constituency is.

    1. Clean air, clean water, and clean soil are priceless. Lots of ways pollution is destroying lives. A story this morning in our local paper highlighted the residual Uranium that has been found in the blood of local native Americans from unregulated mining operations.

  8. Chinese citizens who have escaped the grip of your government censors, enjoy!

    South Park
    Band in China
    02 October 02, 2019

    Randy lands in big trouble on a visit to China. Meanwhile, Stan starts a band to work out his frustration over having to move away from South Park.

  9. Any thoughts on why Wall Street stock traders are so glum on this beautiful October morning?

    1. Hmm 🤔… trade talks, largest ever deficit, impeachment inquiries, low sales numbers for homes, auto,and retail, employment numbers, GE, GM, fake meat and flying car stawks underperforming, global bank freezes, foreign capital unable to enter the US, squirrel near extinction, high cost of gas, Elon’s shuttle to mars not ready. Just to name a few

      1. “…Just to name a few…”

        What ever happened to the invasion of the killer bees?

        Next REIC excuse: “The killer bee invasion is responsible for low foot traffic at open houses”

          1. I listened to James Harden’s statement towards China regarding Hong Kong protesters and it made me ill.

      3. Which of the factors you mentioned are new information which would be expected to move the markets? Seems like most of what you mentioned was already known yesterday.

  11. Baltimore Business Journal
    Hickory Ridge estate for sale in Columbia gets price cut
    Columbia’s nearly 300-year-old Hickory Ridge estate has dropped its asking price from $9 million to $5.5 million. The $3.5 million reduction came on Sept.
    22 hours ago

      1. Well-ran gangs are money-making enterprises. Some could argue local politics in Baltimore is also a rather profitable business sector.

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