LACKIE: Where are all of the power of sales?

A sold sign is shown in front of west-end Toronto homes Sunday, April 9, 2017.

If things are so bad right now, then where are all of the power of sales that Twitter bears swear are coming?

Rates went higher faster than anyone could have anticipated and they appear to be staying there. We know that during the run-up, particularly at the peak, private lending was at record levels with people unable to qualify by traditional means under the stress test but still looking for access to capital in order to get in on the action.

I was recently introduced to a lawyer whose firm specializes in “mortgage enforcement” work. Firms like hers would be where the lenders turn when mortgage defaults occur and it comes time to initiate a forced sale.

He told me that while work flow has been humming — back to pre-COVID levels — the banks have been making preparations and getting their ducks in a row. I was told that for the first time in his career they are sending out teams to physically audit firms like his in order to ensure they have sufficient bodies (lawyers, clerks, administrators, etcetera) to handle the files when they come.

Once upon a time this type of audit would have been handled over email. It’s serious stuff.

And it makes perfect sense. Beyond just mortgages, rising interest rates have resulted in skyrocketing payments on credit cards and lines of credits, all while inflation rages. It’s hard to imagine how some people are hanging on. But somehow, some way, they are.

As of Friday afternoon, a basic search on MLS yielded approximately 63 properties currently listed under power of sale in the GTA, ranging from $448,800 to $10,000,000.

You’d think there would be substantially more power of sale properties on the market right now. After all, rates have gone up way higher, way faster than anyone could have imagined. And following the almost incomprehensible bull run we have witnessed over the past three years, and the number of people who decided to take advantage of the low rates and get in on the action by dabbling in speculation, I’d expect to see more visible signs of distress.

There are a number of people out there being squeezed by investment properties they really had no business acquiring. What might have been positive cash flow at 2% rates suddenly gets a lot harder to carry at 6%, especially when rents are in many cases capped by rent control and a barely-functional Landlord Tenant Board.

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Yet, here we are, bracing for the deluge that may never come. Particularly if there’s a chance that the banking meltdown south of the border will bring some reprieve sooner than later.

Canadians are known for their ability to hang on, with some of the lowest delinquency rates anywhere. If anything was going to test that resolve, one would think now would be the time.

But if we have learned anything over the past three years of chaos when all but certain outcomes never actually came to pass, it’s to expect the unexpected.

@brynnlackie