Saturday Toronto Star Headline A Big Exaggeration

Much Ado About Nothing

Last Saturday’s weekend Star had on its front page a headline “Big Spike In Number Of Homes Lost In GTA” and then “Banks Seize Properties As Mortgage Defaults Grow”.

You had to read in the deep body of the article to find that there are about 475 bank-owned properties for sale on the Toronto Real Estate Board MLS system. In Canada those properties were taken back from defaulting borrowers under what’s called “Power Of Sale”. That’s the Canadian equivalent of foreclosure in the USA.

Now, let’s put some perspective on that number. In places like Las Vegas, almost 75% of the listings that sell are foreclosure listings. In many Florida locations, foreclosures take up between 40% and 50% of the market and home prices in those locations have been driven down by 30% – 60%.

Now, if you divide 475 by the number of listings on the Toronto MLS (about 22,500), you’ll get a percentage of around 0.02%… that’s 2/10ths of one percent. So what if it’s up 1/10th of one percent year-over-year? In terms of significant numbers, it’s a non-issue.

That just shows how strong our Toronto real estate market is and a credit to the fact that our banks didn’t get involved to any great extent (less than 5%) in the subprime type of mortgage. The US has about 35% of their mortgages being sub-prime!

So, no worries. We’re not going to be inundated with ‘bargain listings’ to drive Toronto real estate prices down. It’s just NOT going to happen folks.

It would be nice if the public media (both print and TV) would report more on the truth of situations and perhaps ease people’s concerns rather than attempt to sensationalize things to sell more papers or air time.

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