Seriously, I’m going to make a great old man!

You know those nasty old curmudgeons that shake their fists at young whippersnappers as they fly by on skateboards?  I’ll be the old guy on the front porch yelling, “Slow down!”  Then I’ll go inside, read the entire newspaper, and grumble to myself at the state of the world detailed on those inky pages.

The “old man curse,” as I see it, is growing more and more disenfranchised with everything out there, completely unable to allow the world around you to change, and constantly talking about “how things used to be.”

Consider me guilty.  But I just can’t help it.

Last week, I read perhaps the most insane real estate article I’ve ever read, and that’s saying a lot, considering I’ve claimed to have read the most insane article ever at least a few times per year, for eighteen years.

The headline alone was enough for me to shake my fist at the computer screen, and not because of my occupation and that this headline hits me personally, but because I know where these sentiments are going:

“Realtors Are Making Big Money Flipping Houses.  But Should They?”

Society in 2021; complain, complain, point fingers, complain more.

It’s always somebody else’s fault.

We label things “problems” when they aren’t, and from there, the solutions border on the absurd.

You’ve heard this line of reasoning from me before.

April 14th, 2021, I wrote: “Problems, Solutions, & Everything In Between”

Reasoning, eh?  Fat chance in 2021, says the inner-old-man.

But I tried!  That, I did.

April 16th, 2021, I wrote: “Problems, Solutions, & The Problems With Those Solutions”

There were over one hundred combined comments from the readers on these two posts as people really did attempt to discuss “what to do” about the real estate market in Toronto, but also to opine on what “problems” really do exist in our market.

I’ve long argued that the “problem” is expectations, entitlement, and a lack of logic and reasoning, which is exacerbated by a vote-buying government that tells people they can, should, and deserve to have whatever they want in life.

From there, the true “problem” with our market is supply, but rather than focusing on the hardest part of the equation to fix, the government has always worked to hamper demand, through the biggest misnomer in all of government problem solving: taxation.

The media is not blameless in all this.  We have created a form of “real estate porn” over the last decade, with newspapers and magazines constantly flaunting pretty pictures of houses as clickbait, which is no different from targetting impressionable teenage girls with disposable income and addiction to posting selfies on Instagram, with ads for that designer dress that will be the envy of all the other girls.

But aside from the click-bait, it’s the columns and opinions from some publications that, in my opinion, feed the anger of the have-not’s in society who feel that “the system” is stacked against them.

The latest example comes from a Toronto Star columnist, which is no surprise, as so much of their content these days takes on the plight of the poor and unfortunate.  And when there’s no poor or unfortunate to be found?  Or they’ve run out of fresh material?  Create some!  Find some!  Invent some!

Seriously, who’s idea was this column?

“Realtors Are Making Big Money Flipping Houses.  But Should They?”

I promise, I’m not taking offense to this because I’m a Realtor.

I’m taking offense to this because I have a brain.

This is the kind of journalism that’s giving a reason, a name, and a face to the evil real estate market and how “unfair” it is.  This column didn’t just show up out of nowhere.  It wasn’t by chance.  It was an idea that somebody had.

“Hey, can we blame Realtors for the hot market?  Yeah?  Okay, let’s find a way.”

How is this helpful?  How does this help push the government to build more affordable housing, provide incentives to developers, build long-term infrastructure that helps urban sprawl, or allow hyper-density in the city centre where infrastructure is already there to support it?

Bitch, complain, repeat.  That’s the M.O. of so many media outlets today.

I understand though, I do.  The average reader isn’t interested in a headline that reads, “Public-Private Partnership Could Provide Decreased Transit Times & Urban Sprawl,” but they would be interested in a headline that says, “The Following Assholes Are Responsible For You Not Being Able To Buy Your Dream Home.”

So maybe the media are simply catering to the lack of intelligence of the common man.  So be it.

The article itself is so ridiculous, it pains me to even go down this road.

Here’s the intro:

The house sold in two days. On a Wednesday late last November, 122 Woodfield Dr., a bungalow off the shore of Lake Simcoe, emerged on the real estate market at an asking price of $355,000. By Friday, it had sold for $365,000.

The buyer? A realtor and local politician who would resell it at a profit two months later.

Grace Simon, a real estate agent with eXp Realty and the city councillor for Ward 1 in Newmarket, Ont., bought the home with her husband before listing it at a higher price in January. The couple made some minor additions to the space: freshly painted walls and kitchen cabinets, new lighting, a new toilet and a new bathroom sink. In January, they put it on the market again at $399,000.

This time, the property sold for $450,000, almost 25 per cent more than what the couple had paid for it.

Ah, I see what they did there.  Clever.

The antagonist in this story isn’t just a Realtor, but “a realtor and a local politician who would resell it at a profit two months later.”

They were writing about Realtors flipping properties, right?  But they added in that this person is also a politician?

“Scary boogeyman under child’s bed also has terrible personal hygiene and hates puppies.”

Is this Realtor/politician also a personal injury lawyer and part-time traffic cop?  Only then would we have found the perfect culprit for the real estate market!

Buried within this, of course, is the entire thesis of this child-like essay:

…who would resell it at a profit two months later.

Egad!

A profit?

Nooo!

It simply can’t be!  Not in a democratic, free-market society and economy!  Somebody bought something and sold it for more money?

This too is the problem, according to many minds at The Star.

And this is why my inner-old man is about to bust out.

Once upon a time (here he goes…), it was lauded and celebrated to do well.  Back in my day (he just said that…), the kids who received an “A” on their science projects had their work pinned up on the bulletin board for all to see.  It was a way to showcase achievement, and it made those children feel great, in addition to providing them with reinforcement for their hard work as well as the incentive to work hard in the future.

But somewhere along the way, a person with two left hands stood up and said, “But maybe this makes the other children feel bad!  Maybe we shouldn’t celebrate achievement at all, but rather hide it away so that nobody else sees it.”

From there, it’s been nothing but catering to the lowest-common-denominator ever since, both in the public schools and in society in general.  Those who work hard, generate income, and spend that money how they like, are shunned and made to feel guilty for having more than others.

Once upon a time, the front cover of Toronto Life would feature a headline that read, “These Two Gym Teachers Flipped A Property And Paid Off The Mortgage On Their Home With The Proceeds!  Find Out How!”  That headline was a good thing!  Today?  The peanut gallery wants to blame them for increasing house prices and then throw them in jail.

Somewhere in Toronto right now (I can’t give the address since it’s a current listing and it’s a total mess…) there is a property listed for over $3,000,000 where the owner/seller is going to lose $500,000.  That’s real money.  Not Monopoly money, not the icing on the top of a tall cake, but real.

This property was sold several years ago and the buyer was going to redevelop it.  Tear down the decrepit, rat-infested (literally) structure and build two new luxury homes in its place.

The neighbours didn’t like the proposed designs, the local city councilor was anti-development, and in the end, the project was thwarted.  The city slapped a heritage label on it, and nobody will be able to tear that sucker down – rats and all.

The owner is now forced to sell to mitigate his losses, after holding the property for years and incurring carrying costs, having paid for zoning applications, architectural drawings and designs, and legal fees, and likely get several hundred thousand dollars less than what he paid for it.

So what does he do with that $500,000 loss?

He eats it.

And while the Toronto Star editorial board or Vice will probably opine, “That’s fine, he can afford it.  Anybody that can afford to buy a $3M property probably has $500K to burn,” that’s just not the case.  A half-million dollar loss is real.

What’s the moral of this story?

Just as every coin has both heads and tails, every business venture has a potential loss or gain.

The excerpt from the Toronto Star article seemed to take issue with the idea that somebody (gasp!) made a profit from an “adventure in the nature of trade,” as the Canada Revenue Agency defines it.  The fact that this person was a Realtor simply gave them a slant for their ridiculous story.

We’ve talked at length about the commoditization of real estate.

September 12th, 2018, I wrote: “Should Housing Be Commoditized In Canada?”

This has been a topic of discussion for years and years.

And as recently as last week, we talked about the securitization of real estate in Canada.

Last week, I wrote: “What In The World Is Fractional Ownership?”

So commoditization of real estate is alright, and securitization of real estate is okay, but a Realtor buying a house as an investment needs to be “banned?”

This article is so full of holes, it’s borderline dangerous.

In a frothy real estate market, house-flipping is the closest thing there is to a get-rich-quick strategy. For little expense — minor renovations, or none at all — investors can often earn far more than their annual salaries by purchasing a home and reselling it a few months later.

First of all, the article reads, “In a frothy market…”

The author is assuming that a crystal ball exists?

Should we “ban” real estate agents buying and flipping houses in hot markets, but permit it during slower periods?

Secondly, when I read “…the closest thing there is to a get-rich-quick strategy,” I know that the person using the phrase is not rich, but rather somebody who points out people who are, and likely has no idea how those people got there.  I mean, Bitcoin is a get-rich-quick strategy, right?  Nobody ever lost money on that!

“For little expense,” except the land transfer tax on the purchase, the real estate fees on the sale, and the legal fees on both.  Oh – and “minor renovations – or none at all.”  Right.

So Remmy-the-Realtor buys a house for $1,000,000 and pays $32,950 in land transfer tax, and would pay $56,500 in real estate fees on the sale at the same price, and $6,000 in legal fees in the process.  So he’s already in for nearly $100,000.  How is this a “get rich quick scheme,” exactly?  And he does “no renovations at all,” according to the expert, experienced renovator/flipper who wrote this article?

This is nonsense.  Utter delusion.  It’s almost as if this publication is trying to create content specifically geared toward the perpetually disenfranchised.

The author is just digging for garbage:

One agent flipped a bungalow in Toronto’s coveted St. Clair West village in four months at a $70,000 price increase, without any discernible renovation made to the property. A mortgage broker in Caledon, Ont., raked in a $355,000 gain from a house that was resold five months after purchasing.

Oh, so now it’s mortgage brokers that are on your shit-list too?

What’s next: mortgage brokers shouldn’t be able to get mortgages?

Now, The Star connects the dots:

Since 2014, the number of total registrants, which includes salespeople, brokers, provisional salespeople, brokerages and branch offices, registered with the Real Estate Council of Ontario has increased to 93,948 from 70,284.

A-ha!

It’s Realtors that are responsible for John and Susy not being able to afford that detached home in Allenby!  It’s not supply, demand, interest rates, government intervention in a free market, tastes and preferences, life cycles, population growth, et al.  It’s the fact that the number of real estate agents in Ontario has grown by 33.7% in seven years.

Bob Aaron provides the voice of reason:

“It’s not uncommon for real estate agents to buy and invest in homes,” he says. As long as the agent isn’t taking advantage of the people they buy from or sell to, he says he doesn’t see anything wrong with the practice.

No kidding.

But the best part comes when an agent I’ve never heard of decides that the public burden for affordable housing should be placed on the backs of individuals in the private sector.  Get a load of this:

While he thinks the practice should remain legal, Fochs said he wishes house-flipping realtors would turn to investment properties that help create affordable housing for Ontarians. There are plenty of realtors, he notes, who invest in properties that provide affordable rental space for tenants.

Oh, for the love of God!

Now Realtors should be buying and investing in affordable housing?

This is peak insanity, folks.  We’ve simply run out of people to blame.

And all the while, I feel like it’s “The Emporer’s New Clothes.”  I’m the only one that’s watching what’s happening, while everybody else is standing idly by with their mouths closed, as I prepare to get “cancelled” when I point out the insanity here.  House-flipping Realtors should be creating affordable housing?

Really?

REALLY?

Peak insanity.

Can we take a quick break to define two things?  Yeah?  Okay, thanks…

Public Sector: Public sectors include public goods and governmental services such as the military, law enforcement, infrastructure, public transit, public education, along with health care and those working for the government itself, such as elected officials.

Private Sector: The private sector is the part of the economy, sometimes referred to as the citizen sector, which is owned by private groups, usually as a means of enterprise for profit, rather than being owned by the state.

The public sector and the private sector are two different things; almost opposites, if you will.

But for some reason, this ridiculous Toronto Star article concludes with the suggestion that private sector individuals should take on certain responsibilities of the public sector.  Anybody reading this article, who suffers from naivety or average intelligence, is suddenly confused between the two roles of private and public.  More to the point, this article, the author, and the publication collectively fail to hold the public sector accountable for their lack of action on the housing market at all three levels of government.

Just look at the comments on the story:

This makes absolutely zero sense, and while I know that comments on online newspapers is often the lowest form of thought in 2021, this is what people are thinking.  And are they thinking it because the Toronto Star wrote this article, or were they thinking it beforehand and now just have a forum?

Insider trading?

Do they actually know what insider trading is?

The CEO of a biotech company knows the results of phase three clinical trials which will be made public in an announcement on Monday and cause the stock to double in value, but today, he goes long on the stock through his shell company.

That is insider trading.

When a real estate agent sees a property listed for sale on the MLS, purchases the property, pays land transfer tax to both the municipal and provincial governments, takes on the risk and the time commitment associated with renovating the property (not to mention the financial investment), thereby employing electricians, plumbers, painters, flooring installers, contractors, other tradespeople, and helping Home Depot in the process, all in the hopes of selling the property for more money, that is called commerce, and it actually benefits the economy!

If the Toronto Star writer and the commenters had their way, the guy working for Bauer wouldn’t be able to walk into SportCheck and buy himself a pair of hockey stakes.

Case of beer to somebody who can think of a better analogy, since I’m sure there many out there, but hot-damn am I ever tired.

Ranting and raving takes energy, you know.  And I may look spry, if this blog post is any indication, I’m actually an old man on the inside.

Have a great long weekend, everybody!