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Homeowners' new reality: You're suddenly poorer

LORI MCLEOD AND JOSH WINGROVE

From Tuesday's Globe and Mail

Latest comment posted at 11:34 PM EST 12/11/08

Average home values set to drop to below $300,000 threshold ...Read the full article

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  1. Adil Burney from Canada writes: For 2009, CREA is delusional. Suppose we end December 2008 at -9% YoY. To end up a -2% for the full year 2009, we would probably have to bottom in December 2008 and then get to a around 7% by late 2009.

    CREA is talking about this severe recession as if it just a garden variety slowdown in Canada. US GDP in Q4 2008 is likely to be -3 or -4%.

    My prediction for 2009 is -10% minimum:

    http://canadahousingcrash.blogspot.com/
  2. Antonio San from Canada writes: Property taxes should come down... or at least this is supposed to happen with market value assessments...

    And reading this column, one senses the gleeful cheer of this reporter about the fact... but beware soon there won't be anyone to buy the stuff media peddle...
  3. bob gervitz from United States writes: Pardon me for saying so, but anyone who pays over $500,000 for a 705 sq ft condo, anywhere, is a fool. Don't forget, there are also monthly condo fees in addition to the mortgage, assuming you have one, which, with mortgage interest payments, makes the end result cost more like a cool million for some. Even if one could pay cash the idea is nuts in my book.

    I don't know about you, but I'd rather have a million in my pocket and live in a modest house that is paid for, than have nothing in my pocket and have an unpaid-for million dollar house.

    Had buyers shown a little restraint the market wouldn't have gotten so out of whack with reality, but then 'restraint' isn't a word boomers are familiar with I guess.

    Or at least not until now. Such an unnecessarily painful lesson.
  4. B C from Canada writes: Sellers are in denial. Prices will drop more than 50% from the peak, before all is said and done. The only stuff moving in my neighborhood is listed at 30% below the peak. This is the same city as 5 years ago, and if prices can more than double in that time--without much in the way of wage gains-- prices can also drop by a similar amount.
  5. Angry West Coast Canuck from Canada writes: Only poorer if you bought for quick resale. Not poorer if you bought to live in the house you purchased. Prices going down benefits those who want HOMES not just 'investment properties'.

    I'm also of the opinion that since my property tax is based on my assessment, and my assessment is dropping, so should my taxes. But hey, that's never stopped my municipality from increasing tax rates anyway, and never stopped the local voters from voting in spendthrift idiots who looted the city budgets to pay for white elephants just before the crash.
  6. The Middle Finger ..I.. from Canada writes: House poor? Cry me a river.
  7. The Middle Finger ..I.. from Canada writes: Antonio San from Canada writes: Property taxes should come down... or at least this is supposed to happen with market value
    assessments...

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    No they aren't. You don't understand property tax and the relation to the assessment.
  8. Paul Bayer from Parksville, Canada writes: I'd agree with Bob ... $500,000 and up for a barbie doll condo is just silly. Somethin had to give... Anyone renting now and waiting to buy in is in great shape. We will see more than 10% declines in real estate.

  9. gao gao from Canada writes: you don't become 'poorer' until you sell your current home and not buy a new home.
  10. The Middle Finger ..I.. from Canada writes: A $ 500,000 condo / home implies a cost to live in it of about $3,000 per month plus utilities, insurance and maintenance ( condo fees ). It doesn't matter if you own the place outright or you are mortgaged to the hilt. Your cost to live in the place is the same. Why would anyone do this?
  11. Little Bear from Canada writes: Paul Bayer That is true if you in fact saved your money all the time you were renting. Most did not.

    Many took that money and invested in equities, low yeield bonds etc. and are now even worse than the guy who bought the property provided that guy was not leveraged to the hilt, lost a job or got one of those low cost mortgages which are a thing of the past.

    In addition to the above you usually have to get a mortgage and that is not easy any more. Money is tight.

    I am not letting any money out right now nor buying any seconds.
  12. Bryce Richards from Calgary, Canada writes: As I said before delclines of 25% in real estate values this year next year and the year after that are very possible. A $400,000 condo in Calgary will be worth only $225.000 in another year or so.
  13. J. Michael from Canada writes: To those happy with where they live and either have no mortgage or can afford the mortgage; no worries.

    To those playing in the no money down, negative gearing game with 10 homes in your portfolio and all are mortgaged to the max; based on the strategy of spiralling upward property appreciation - you may be getting out of the real-estate business and out of the home you own!
  14. tim johnson from Ottawa, Canada writes: Things are about to really go downhill in the Canadian economy. This is wishful thinking on the part of the CREA. What most people don't realize is that there is a global recession coming and like it or not Canada is going to be severely impacted. The US, Japan and Europe will be in a recession soon. China is slowing down really fast so is Russia. All industries in Canada will lay off hundreds of thousands of workers. Just think about all the things that are produced in Canada and are consumed by others around the world. It could be oil, natural gas, coal, lumber, steel, automobiles, trucks will be in for a reduction in demand. Construction will be affected resulting in thousands of layoffs. Government will have layoffs as well due to severely reduced tax revenues. The financial industries, tourism, manufacturing will all be affected and layoff tens of thousands of workers. This is not even accounting for the 40% drop in the S&P 500. Alot of people have seen their life savings and retirement savings vaporized in the last few months. With the job losses, there are going to be a lot of foreclosures and bankruptcies resulting in an implosion in housing prices. For people who have not paid attention to what happened in the US, when there are foreclosures, and bankruptcies, the housing prices go down a lot faster than they went up. To top it all off there is a credit crisis making it hard for businesses and individuals to get loans which means it may take a while to get out of this recession. I think this recession could last a few years. I have done a fair bit of reading on this crisis and there seems to be a lot of economists in the 30% range who think this could be a real bad recession (approaching the great depression in 1929 in terms of economic havoc). I know that leaves a 70% chance it may only be a bad global recession but even if that were the case, I think the probabilities that housing prices will plumet are fairly great.
  15. The Middle Finger ..I.. from Canada writes: The concept of ' worth ' is about as solid as the answers to the questions ' Why is there air ' or ' why is the sky blue '?
  16. mighty conan from Canada writes: Will the picture brighten next year? Depends if you're a seller or a buyer & where you're talking about. In Calgary if you're a buyer things are looking pretty sweet. If you're a seller forced to sell because you've been 'downsized' or something else maybe not. If you're a seller in Vancouver in the same boat I'd say not very good for you. If you're in bland old T.O. it's not going very well either way.
    For those predicting a 'soft' landing & deriding those 'bitter renters' hang on. The best is yet to come & I predict you'll be eating a big helping of crow.
  17. The Middle Finger ..I.. from Canada writes: J. Michael from Canada writes: To those happy with where they live and either have no mortgage or can afford the mortgage; no worries.

    To those playing in the no money down, negative gearing game with 10 homes in your portfolio and all are mortgaged to the max; based on the strategy of spiralling upward property appreciation - you may be getting out of the real-estate business and out of the home you own!

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    They might be better off than those who own and stay put. The zero down homeowner is not at any risk of loss, only use.
  18. Moe Unting from Calgary, Canada writes: What goes down must come up. The population of the world is increasing exponentially and sooner or later they are going to want oil and wheat and cars; that means everything is going to gear up again once that pent up demand pops off.
    If you bought last year, keep it for at least 5 years if you can. And look to 2005 prices by next year as the bottom. Easy come easy go, sigh.
  19. justice peace from vancouver, Canada writes: It gives me pleasure to watch the reality check in Vancouver where most jobs pay $8.00 to $17.00 dollars an hour and a leaky tar paper hollywood movie set chicken wire plaster simulacra condo sells at $500,000.You cannot base an economy solely on building and flipping substandard shacks you have to produce products of real value and pay real wages and build real homes .
  20. Kat Wilson from Canada writes: With any luck I'll be able to afford to buy a home soon! Greed and speculation sent prices skyrocketing beyond affordability. Housing should not be beyond the means of the the average wage earner. I hope they keep coming down.
  21. Robin Hannah from Canada writes: Buried in this article of home-ownership hardship is, 'A sense of irrational exuberance had people stretching to buy homes [and Muskoka cottages] they couldn't afford'. In my world that's called stupidity. And it wasn't encouraged by real-estate agents, was it? And it certainly wasn't exacerbated by greed. Was it?
  22. Jeremy K from Canada writes: One of the main challenges sellers face is that its very hard to for a buyer to get a good deal on a mortgage as the banks have tightened lending. So the buyer is forced to pay more for financing over the first term of the mortgage and things like discounts on variable rate mortgages have all but evaporated. Suddenly the deals suddenly don't look so good after all.

    the banks problems have become the seller's problems.
  23. J. Michael from Canada writes: The Middle Finger, you say:

    'They might be better off than those who own and stay put. The zero down homeowner is not at any risk of loss, only use.'

    Not sure I understand your statement; provided the investor can rent the homes to support the negative gearing (this could be challenging as people lose jobs), but if forced to sell 3 or 4 homes for much less than the mortgage, requires deep pockets.

    It is like any investment – if you were heavily leveraged with Tech stocks around 2000, you probably got hurt real bad; well it is now the same with those heavily leveraged with real-estate stocks. However, at least real-estate is a tangible investment and will eventually come back.
  24. evelyn robinson from Canada writes: The Middle Finger ..I.. from Canada writes: J. Michael from Canada writes: To those happy with where they live and either have no mortgage or can afford the mortgage; no worries.

    To those playing in the no money down, negative gearing game with 10 homes in your portfolio and all are mortgaged to the max; based on the strategy of spiralling upward property appreciation - you may be getting out of the real-estate business and out of the home you own!

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    They might be better off than those who own and stay put. The zero down homeowner is not at any risk of loss, only use.

    Where do you come up with this idea> The zero down owner is liable for the loss if he sells.
  25. left leaning ontarian from Canada writes: A friend of my has bought a condo in Vancouver. Bought a 3 bedroom condo for 250K. The building is about 35 years old. The condo fees are around 285. Got a good mortgage because he had been preapprove before this meltdown. All the properties being sold where he bought are going for 60k more. He feels that he got a good deal but thinks that prices will come down to his level by next spring. Vancouver is way over price. He thinks that who ever does not sale now will have a much harder time next spring. He told me that there are at least 10K to 15K empty condo units in Vancouver. These are units believe to be investment properties. He has found that Vancouver to be a very expensive place.
  26. a k from vancouver, Canada writes: I love all the naysayers...... doom and gloom!!!! look at the real estate market in Vancouver ... over the last 30 years they go up, they go down... Properties invested then...during the downturn, investors MADE money...

    We live in one of the GREATEST cities... world class...top 6 in the world, do you think that this market is going to collapse?... With so many people around the world with deep pockets, do you think they wont grab at the oppertunity to buy, if given the chance?

    c'mon vancouverites, long term, we are sitting on a gold mine... even if it takes another 5 to 10 years.
  27. Little Bear from Canada writes: Left Leaning. I sure don't know where your friend got this condo unless it was Van East or East Hastings and nobody in their right mind would buy there.

    The prices of property certainly has come down a bit but depends a lot on where you are.

    Just down the street from me two weeks ago a property house and 3 acres went on the market for $16 million. They probably will get 12-13.

    There is still a lot of money out there but will they part with it is the question.

    The properties here between $1 million and $1.5 million are the ones that are not selling. The very few that are lower$800 are still selling but not fast.

    The properties over $2 mil are still selling but not quickly.

    This is all area dependant.
  28. con hack losers cannot silence the truth from Canada writes:
    What goes up....

    Here's laughing at all the greedy gouging profiteers who stuck it to people for the last two years, especially here in Calgary, and are now seeing their just desserts.
  29. Rollo T from je me souvien, Belgium writes: gao gao from Canada writes: you don't become 'poorer' until you sell your current home and not buy a new home.

    Robin Hannah from Canada writes: , 'A sense of irrational exuberance had people stretching to buy homes [and Muskoka cottages] they couldn't afford'.
    --------------------------

    It's the American model, interest payments on mortgages are tax deductible, so they remortgage to buy their cars, renovate their houses, take vacations and so on. You see the problem with negative equity on the economy?

    Your principal residence shouldn't be an investment. Regardless, since she can get tenants easily enough, her money is protected.
  30. J. Michael from Canada writes: I am starting to think that once the world economies rise out of the ashes and the smoke clears we will be looking at a shift away from Europe to Asia.

    Rather than the central focus being the Atlantic, between NA and Europe, it will become the Pacific as central between NA and Asia.

    Good news for Vancouver and the rest of western NA.

    Not 100 percent sure, but I think Europe is toast; even while it's waving its hands saying; 'Please follow me, I'm the new world leader.'
  31. Chris H from Formerly Vancouver, Canada writes: My friend told me that the Vancouver market looks a lot like the Miami market did two years ago, and that prices will probably fall the same amount (50% and still going).

    I must say, it looks like they're both facing a very similar situation. But personally, I think it will be different in Vancouver.

    After all, Vancouver has great weather, lots of baby boomers moving in, and a lot of rich foreigners wanting to buy property, unlike Miami.

    /facetious
  32. R Miller from Halifax, Canada writes: Is this trend universally true for all regions of this country ?

    For instance, Atlantic Canada never had the kind of real estate bubble that most others did.

    I have recently met a number of people from BC (namely young couples looking to start families) who have moved to Nova Scotia to take advantage of the lower housing prices on the Right Coast...

    That makes a lot of sense to me...

    Who wants to have to choose between having a family and a house anyways ?

    Slainte
  33. truth betold from Canada writes: a k from vancouver writes: I love all the naysayers...... doom and gloom!!!! look at the real estate market in Vancouver ... over the last 30 years they go up, they go down... Properties invested then...during the downturn, investors MADE money...We live in one of the GREATEST cities... world class...top 6 in the world, do you think that this market is going to collapse?... With so many people around the world with deep pockets, do you think they wont grab at the oppertunity to buy, if given the chance? c'mon vancouverites, long term, we are sitting on a gold mine... even if it takes another 5 to 10 years.

    Is that supposed to be satire?
  34. Pete T from Vancouver, Canada writes: The person who said 50% price declines in Vancouver is probably the closest.

    That 70 year old woman is one of the people responsible for this bubble - you'd have though someone that old would have learnt a bit more about personal finance.

    The city simply can't sustain $500,000 700 sq ft condos. They need to be $250,000 at the most to be affordable for the average salary in the city. I'm aiming to buy in 2011 - not before, especially as rents will be coming down soon due to a glut of properties forced onto the rental market by accidental landlords/greater fools (ie people who hoped to make easy money from property in Vancouver).

    And no amount of mythical 'rich Albertans,' 'down-sizing baby boomers,' and 'rich foreign investors' will change that - I means why would they buy in one of the wettest cities anywhere (and at a premium to boot) when real estate worldwide is crashing and you can pick up three place for the same price somewhere else.

    And even if somehow all the things the Vancouver real estate boosters say are true turn out to be true (foreign investors, baby boomers, retirees young and old) - the city will die as there won't be any jobs and services will be strained with those kind of demographics. As someone else said, all the young families will move to Toronto or out East.

    Who wants to live in a giant, damp retirement home? Not even retirees I would think. Did someone mention Miami as an alternative?
  35. Misery No one from Toronto, Canada writes: The government created the housing frenzy with their 40yr no down payment mortgages.

    With commodities dropping 50% and more can we expect any thing less from the housing market?

    As for your investment there was none, all you had was a rent to own home the only thing is now your on the hook for the mortgage short fall.

    How's that for a ponzy scheme. Did you ever think you'd be suckered into a deal so easy?
  36. Roop Misir from Toronto, Canada writes: Those who speculated and took out an option to buy a house (using ... zero down) may not be out of pocket?
  37. Pete T from Vancouver, Canada writes: Roop - If you bought a condo for $400,000 and it's now worth $300,000, you still owe the bank $400,000 (plus interest). You are liable for the full amount. Many will be walking away from pre-builds and taking a hit on the deposit. I wonder what the legal ramifications of that are - can developers sue buyers who break their contracts?
  38. Fred Draper from Kingston, Canada writes: The media has done an outstanding job of knocking the stuffing out of any remaining consumer confidence.

    Recesssions can become self-fulfilling prophecies.

    There's enough real bad news out there, without going to the first derivative in search of a headline eg. 'rise in house prices slows to 2.1%'

    I mean, really...
  39. jason rohlig from Guelph, Canada writes: I agree with another poster, the goverment and banks created a mess allowing people to buy homes with zero down or five percent down thirty and, forty year mortgages. Of course people stretched to the maxium limit they could afford borowwing on equity of their homes.
    What is too bad for these people, like another poster mentioned if you bought for 400k and your home is only worth 300k your still on the hook for the difference.
    depressing thought,
  40. samuel cogley from toronto, Canada writes: i see there are a lot of deiners here. they are everyhwere it seems. when housing prices went retarded i was priced out of the market. i watched rabbit hutches going for ridiculous prices.

    i watched the entire spectacle unfold in the united states. i heard as so called experts denied anything was wrong and yet the problem got worse by the day. finally it hit the fan and housing imploded.

    what do we hear now?. it wont happen here, it cant happen here,etc,etc.

    the american economy has gone beyond collapse. and it isnt over yet. there are still companies and store going for one last good sale at christmas. and this year it is going to be a bloodbath.

    it will be the same thing for housing prices eventually. already many are on the market for much longer and for lower prices at that. nearly every day i see the words 'new price' or 'reduced price'. looks like all that greed is coming home to roost. looks good on ya!
  41. Stude Ham from Outremont, Canada writes:
    Where do these stats come from... Some areas of the country, like millerville, have been hit by double digit property value increases, thanks to the tyranny of the market value assessors... market value assessments are as phony as they come and the system must be abolished.
  42. Pete T from Vancouver, Canada writes: Fred - the media were partly responsible for the current situation vis a vis house prices as they have been among the biggest real estate boosters - especially out West. So it's only fair they do something to redress that by at least reporting accurately - they're still underplaying the real situation. Go to blogs for what's actually happening in local housing markets.
  43. CallofDuty . from Toronto, Canada writes: I have no remorse for people who bought into this mess. A person with common sense should have known better.
  44. Plus 8 from labelle, Canada writes:
    It is impossible to disagree on the media comment above. Media like the G&M have acted irresponsibly in this most important of times. Their offerings are unbalanced and hammer incessantly away at consumer and business confidence. They ignore how well Canada is set for this crisis compared to all others in the Western world and make bad news out of good with lopsided bottom feeding.

    This article is one example but here is a sampling of yesterday's headlines;

    'Homeowners suddenly poorer'

    'GM target price: Zero'

    'Lipstick in, economy out'

    'At noon: Goodbye, gains'

    'AbitibiBowater: Still a dog'

    'The close: Death to optimism'

    ....and these were on a day when the TSX rose 1%!

    One cannot blame the writers. Most of them have little or no business/economic training. They pick their doom with a lack of understanding that is consistent with their training. They write well and analyze incompetently, often incomprehensively.

    Those responsible are the owners and editors of the media who hire and sustain them. It is they who profit from these silly headlines. It is the community confidence they batter and the citizenry they hurt. It impossible to quantify the additionally and ongoing damage they have done and do, but it is real.

    I have begun reading the BBC business news on line. The UK situation is far more serious than Canada's, but the reporting is balanced and guest commentators often well informed and educated.
  45. Jay Bronwin from Gatineau, Canada writes: Vancouver, Toronto and in Alberta are the only places where prices are falling. Everywhere else in Canda prices are still going up.

    Using a broad average to perpetuate doom and gloom is a little irresponsible,
  46. Brett DAmelio from St. John's, Canada writes: R. Miller - yes - I would love to get some information on smaller atlantic canadian prices. I would have to say that in St. John's - we've seen a big housing boom (for here), but we're still not even close to approaching the Cdn. avg. housing price - 180k/house - even if prices drop to 225.000 across the board - we're still below the halfway mark but I still think we'll see losses. It's a reason I have to look really hard at selling my properties (I run a B&B - 3 houses live in a 4th out here). The problem you'll see is that the market is sticky - and until this summer you couldn't possibly sell a house in a week. It's more like 3 months.
  47. Pete T from Vancouver, Canada writes: Plus 8 - so homeowners aren't suddenly poorer? The headline is accurate. As I said, the G&M are actually downplaying the current situation - it's worse than they say.

    During the bubble, I don't remember any articles about the folly of buying when prices are so high or stories of people in debt up to their eyeballs or articles advising people to live within their means. All I saw were headlines like 'Buy now or risk being left behind' and 'Real estate always goes up' or 'Vancouver: Hottest real estate in the world' - all complete with quotes from people with interests in keeping house prices high - realtors and developers and housing associations. How many people bought after thinking they were reading balanced opinion?

    The BBC is more balanced, I agree - they don't accept advertising from developers and the RE industry. Unlike the G&M and other commercial media.
  48. Pete T from Vancouver, Canada writes: Jay and Brett - the key thing to look at is prices in relation to income. The average price of a house should ideally be 3 to 4 times the income of the average buyer in an area to make it affordable.
  49. joe london from london, Canada writes: I have to agree with Plus 8 and other people here who are tired of the Globes perpetual doom and gloom reporting.If you click on the home national or business tab this story pops up.It becomes frustrating for readers who wish to be informed but are continually told what we already know.I to have started to seek out other sources for news that have a greater degree of integrity .
  50. Fred Draper from Kingston, Canada writes: Plus 8 from labelle, Canada:

    Clearly we agree, although my posting isn't in the same league as yours.

    Well put!
  51. Plus 8 from Mont Tremblant, Canada writes: ' jason rohlig from Guelph, Canada writes: I agree with another poster, the goverment and banks created a mess allowing people to buy homes with zero down or five percent down thirty and, forty year mortgages. Of course people stretched to the maxium limit they could afford borowwing on equity of their homes.
    What is too bad for these people, like another poster mentioned if you bought for 400k and your home is only worth 300k your still on the hook for the difference. depressing thought, '

    Jason this did not occur in Canada..the G&M only gives the impression it did. Unlike the US and UK, Canadian mortgages are policed, requiring insurance if they go beyond a certain percentage of the appraised value. If the borrower does not meet reasonable criteria, (the ability to pay the mortgage/expenses, a good credit history, a suitable down payment ) they get no insurance,. No insurance, no mortgage.

    It was the US (for certain reasons) and the UK (for other reasons) that allowed the scenario you describe to occur, not Canada. In the US it was thought politically and economically expedient in the Bush years to find a way to allow people who could not afford a house to buy a big new one. Ergo, 'subprimes (aka totally irresponsibile) mortgages. Wall Street packaged and leveraged these 'loans' and then offered them to the world as 'security backed investments'.

    Outside of Canada, the western world banks gobbled them up and they will not stop regurgitating their consequent losses until the US housing market finally bottoms.

    Though we, like everyone other country on the planet, must suffer for these sins..we are not starting this thing off with record government deficits before the crash and bankrupt banks after. Thank Canada for that.
  52. Karen Morris from Toronto, Canada writes: I find myself agreeing with Plus 8 Labelle, that much media coverage has revealed an irresponsible tendency on the part of print editors and broadcast media producers to craft events into dramas, rather than provide useful and factual information in perspective with our times and past events. If you have to juice something up by inserting an air of drama into it, maybe you don't understand the subject matter? I have always found that if something is worth reporting at all, whatever weight may be in the information will be apparent to a reader, if the writer is thorough in gathering information brings in perspectives from all sides, and maintains a very neutral writing tone, or 'voice'.
  53. Pete T from Vancouver, Canada writes: Plus 8 (and the others - are you all the same realtor) are living in cloud cuccoo land.

    Canadians are actually in as much personal debt, if not more, than Americans and there are plenty of stories and surveys to back that up (Google 'canadians debt'). Think HELCs and zero down 40 year mortgages, think of all the students soon to graduate with useless degrees that cost them 10s of thousands of dollars, while in other countries education costs much less. Think of all the massive credit card debt Canadians are in. Many people have used their houses as ATMs and now they'll have to pay off those loans in an environment of less growth, less employment, less stability. And I haven't even mentioned the fact that many people's pensions and investments have been decimated. There goes early retirement for many.

    That's not doom and gloom - it's all fact and people should wake up to it and start altering their behaviour - by not buying overpriced shacks to live in for a start. Canadians have huge amounts of debt and our economy is tied to the US, which is in deep deep doo doo.
  54. Brett DAmelio from St. John's, Canada writes: well - I'd say that's quite difficult in an area like st. john's - there's a fair bit of money that is and will be invested here. I'd say wage growth has been significant as minimum wage has gone up quite a bit % wise, $6 - $8/hr in the past 4 years. Now while that doesn't seem to mean that much in Ontario or Calgary, it's huge here, as I would say a lot more people work for bottom end wages here than out there. Now making 15/hr ~~ $30,000/hr (but lets face it - you have 2 people working when you only make that much) - so that's $40-60,000/hr , which should support $180,000 houses.

    I would say that of a couple it's highly likely that at least 1 person is making $12-16/hr (waiters/waitresses get min wage tips), and the other makes minimum, $8, that's $20-24/hr or $40-48,000.

    It should support higher housing prices, but I'm not looking just at affordability - but at liquidity.
  55. Pete T from Vancouver, Canada writes: Karen, PLus 8, Joe, Fred, Brett and Jay - three easy questions.

    Would any of you buy a house at today's prices or wait and save up for a while?

    Would any of you lend your kid $100,000 for a downpayment on a Vancouver condo at today's prices?
  56. Fred Draper from Kingston, Canada writes: Pete T from Vancouver, Canada writes: Plus 8 (and the others - are you all the same realtor) are living in cloud cuccoo land
    ____________________________________________________

    You're the doom and gloomer. The average Canadian's asset base worth is 7x their debt levels. We carry smaller mortgages, fewer credit cards and have better FICO's than our American cousins. We also have less forgiving bankruptcy laws.

    That's the upside to being in a peace, order and good government country, with five strong banks.

    Maybe things are gloomier in la la land, but here in cuccoo land, not so.
  57. Brett DAmelio from St. John's, Canada writes: I don't live in vancouver - and no I wouldn't (there). In Toronto - one of the uber high end condo's $1500/sq. ft. - maybe. But I wouldn't buy a $1200/sq. ft. copycat. Only the highest end places. And only because the ultra high end properties haven't budged in price over the past couple years - while the copycats have gone up from 800 to 1200. You get a hell of a lot more value for the last $300. If I wanted to continue to run the business that we have - yes - I think that the price is accurate for the property (1.2M for 2 houses furnishings - 12 rooms B&B, and 800k for the other 2 houses) - I think it's appropriate, especially considering location. However, I have a 19month old child, a BMath, and the business was my wife's dream. While we do the utmost in serving guests and maintaining the property, I do not relish looking 4 years into the future to reap the rewards of being in business today. I want to be further ahead than where I am now, and the business is in maintenance mode, not growth for me. I've done it - I can still do it, but I'd rather find something more exciting, and more in line with my skillset. If I was new to the industry - I would look at getting in now. There's a bit of a lull, your competition will be more in debt, you have a new kept up set of properties that have grown significantly (sales wise - we saw our sales increase 50% over 4 years). In 4 years you get the boom of the hebron construction/jobs being brought in to the city.
  58. John Connor from Canada writes: When it comes to desirable things, prices go up and prices go down.
    It's happened like that for centuries.
    Just ask the Dutch about tulips some time.
    And take your lumps.
  59. Pete T from Vancouver, Canada writes: Fred - the fundamentals say that owning the average house in a city in Canada is unaffordable. Canadians are in deep debt no matter what you say. In Canada we also have higher taxes and lower incomes. Then there's our various provincial economies - the outlook for the motor industry in Ontario is bleak. Vancouver's economy is built on construction and services - not looking good as construction is grinding to a halt and an economy built on services is a very low wage economy - hence prices will come down significantly. Calgary's boom relies on high oil prices and investment by the companies involved in extracting from the tar sands - a very expensive business. New projects are already being cancelled. It's not the end of the world, but it's time people started realising they can't keep consuming and spending.
  60. E B from Canada writes: I have been telling friends and relatives for the past few years that real estate prices were over inflated in many areas of Toronto. I told them not to buy, but did they listen? Of course not. They bought and bought and now they are stuck with negative equity in their properties and no light at the end of the tunnel. Lemmings everywhere.....
  61. Seb Investor from Canada writes: I was lucky enough (or wise enough) to come into Van's condo market in 2000 when it had been flat for 5 years. Every condo was for sale. Calculations made sense, Van is a great city to live and relax in. Thats all personal taste anyways.

    The down side to Vancouver is the bad construction quality of expo86 years..A lot has been said about this, and a lot of ink will keep flowing about it.

    Got out of this market in 2007 for different reasons, but the biggest one was ''could I afford coming into this market'' simple answer came with a quick earnings to debt ratio calculation

    Of course this has no relevance if you cant buy into another market when the opportunity is at hand. Good luck to those who bought at peak...this is true in any market.
  62. Don Adams The Centrist Conservative from Canada writes: One has only lost money on real estate if one has to sell right now. The majority of us don't. Housing will come back..... always has, always will. Just might take 5 years.
  63. 1938371 1938371 from Vancouver, Canada writes: A house of any size and almost any condition will hold its value because there is freedom to occupy and make changes small or large subject to the building code. A condo is like living a foreign country run by a dictator. The strata council tells you what you can and cannot do. You can smell your neighbour's food. Most have limited window lighting and the noise level varies from condo to condo. Additionally, you have monthly maintenance fees in addition to mortgage payments, and annual property taxes to be paid. But long term, a single family dwelling on a single lot will keep its value because once paid for, you only have property taxes divided by 12 annual payments to make which is pretty simple and pretty cheap. Today, in Vancouver, for example, a single family dwelling on a single lot with a combined assesssed value of half a million is roughly $7 per day in property taxes. In the last 30 years property taxes have gone up an average of 28 cents a day.
  64. Ryan Ginger from Canada writes: Canada has needed this correction for 10 years. A pretty good index is to compare the rising cost of housing to normal inflation. The rise in the housing market has outpaced other costs of living for far, far too long. Why? Because of pressures caused by home flippers, second-home owners, and overextended buyers, who should be kept OUT of the market.

    Canada should enact a Homeowner legislation to ensure affordable home ownership (not rental) for all, but at the same time, to discourage home flipping and second-home buying.
  65. Bev McDowell from Canada writes: Ontario just finished sending our MPAC reassessments, raising our taxes to what our homes where valued at on Jan 1, of this year. Now that our homes are worth less will this reassessment be cancelled??????? It should be. Why should we be paying taxes on more than what our homes are worth?
  66. Tony . from Waterloo, Canada writes:
    The sky is falling! The sky is falling! We're almost back to where we were in, gasp, 2006!

    Yes the housing market will take a bit of a correction, especially in those markets where prices appreciated the fastest (Vancouver, Calgary and a few others). However with the exception of people buying houses as short-term investments it's hardly the doom-and-gloom people are making this out to be.

    Prices go up, prices go down. Housing market cycles are long, look at them over AT LEAST a 5 year period and really more like 10 to 25 years to find an accurate picture of things.
  67. Don Adams The Centrist Conservative from Canada writes: Ryan Ginger. Home ownership is NOT a RIGHT. It's a PRIVILEGE. With your attitude, you ought to go live in Cuba!
  68. E B from Canada writes: Bev you are a victim of a very confused and complicated property tax system. Your taxes can only go up, no matter how low your assessment will be in the future. Cities need forever increasing tax revenues and the present tax system allows them to do so irrespective of your assessment.
  69. Rusty Waters from Canada writes: $500,000 for a 700 sq foot condo...crazy prices...crazy fools who buy them..housing prices need to come down, its a good thing because most people can't afford them. With the aging population in Canada, within ten years there will be a massive number of houses on the market and prices will decrease dramatically, unless we increase immigration, but by then more alternatives to oil will be discovered and improved and there will be less jobs and reasons for immigrants to come to Canada. Those economic thieves flipping houses are just as bad criminals as the thieves on Wall and Bay street. Let's face it the general public have been taken by the financial people. The best investment to make today is to pay one's bills.
  70. M M from Canada writes: It really depends on where you are in the cycle - I bought my house in 1992 for $68,000 and was mortgage free three years later. It is now worth $260,000 (I put in about $50,000 worth of upgrades). So I'm still ahead even IF the market drops. But if you bought real estate at its highest last year and are looking to sell - then too bad you lose. But if you are not looking tos sell you probably have time on your side to see it increase again. Articles like this are really quite silly because they provide crisis information which is usually of little use to anyone.
  71. Plus 8 from labelle, Canada writes: 'Plus 8 (and the others - are you all the same realtor) are living in cloud cuccoo land.'

    Dear Pete T,

    I can understand you anguish. Vancouver, along with TO and other areas enjoyed incredibly hot market for years. To watch sales and prices drop now must be frightening against a Globe and Mail and American media back ground.

    Hot markets give great returns while they are happening but fall off in uncertain times faster than anywhere else. However, prices and even rising are elsewhere.

    Calm down. The market will slow in Vancouver and prices will decline a bit, but only a small fraction of what the amount they have risen in the last 2-3 years, then they will steady and start to rise again.

    Canada is a BIG country...incredibly diverse. That is our strength in good times and bad. If you want to make solid real estate profits in the next two years..switch your money from Vancouver to St. John's. By that time Vancouver property will start rising sharply again.
  72. E B from Canada writes: Tony from Waterloo, you wrote that the housing market will take 'a bit' of a correction? I guess you think that our battered economy will start turning around in the fourth quarter or so... Maybe Obama will produce this miracle for us ;-)
  73. bilbo baggins from Canada writes: Bev McDowell - I saw that and reacted the same way. However the increases are to be phased in over 4 years so you need to take that into account. If you are in Toronto, the stated official plan is to transfer more of the costs to residents from businesses so expect higher property taxes alongside the user fees increasing.
  74. Mike Toronto from Canada writes: Thank you to the author of the article for getting more than CREA's opinion. Past Globe articles have done nothing but recirculate the real estate industry's press releases.

    When has CREA ever urged caution during a boom time or accurately predicted the extent of problems during a down turn? BIG surprise: now that 2008 is almost over, they admit that the market has been worse this year than they had forecast. BIG surprise: they predict that the problem will be largely over by 2009. A broken clock is right more often than these guys.
  75. Pete T from Vancouver, Canada writes: PLus 8 - 'I can understand you anguish.'

    On the contrary, I've been renting and saving and didn't buy into the hype. No investments and no debt. Cash savings only. You say 'switch your money from Vancouver to St. John's' - in other words you'd like a property boom there, artificially inflated by speculators, which is what I would be?
  76. double mike from Canada writes: .
    Whatever you might think Vaughan is not a Silicon Valley city. Neither is Mississauga. So if anybody can explain how Vaughan RE prices can be on par with prices in San Francisco Bay Area, please do so, I beg.

    On my book only huge asset bubble and I mean HUGE – can be the reason. Otherwise the world’s gone mad and everyone prefers low wages and miserable climate of Southern Ontario to everlasting spring and highly paid jobs of Northern California.

    Poor Google. What are they going to do when their last programmer escapes to Toronto?
  77. V Patterson from Freddy, Canada writes: It should be a requirement to show a 5 or ten year chart on home prices when they write a sky if falling article on real estate. I lived in Vancouver ten years ago, prices were crazy then, and have been increasing since at a totally unsustainable rate. G&M should also emphasize that it is a paper loss only, until you choose or are forced to sell. Most folk, who bought their homes to live in long term will not realize any real loss as they were not planning and will not be selling in the short term.

    Not a huge problem in the maritimes. Houses are reasonably priced, property values have increased over the last decade but not by 100%-200% like in Van, TO & Calgary markets. It also helps to have no big time developers, flippers and speculators here creating and feeding an artificial condo market.....
  78. Mike McFee from Ottawa, Canada writes: It would be naive to think that the market over the past 5-7 years has been over-valued in terms of stocks, oil, housing, and everything else for sale....

    We are now seeing a market correction that will continue for a year or two I think......

    Do we really need to be soooo greedy??? Look at the CAW and how they have priced themselves out of the market..... $70 an hour to turn a few screws, not likely.......
  79. Accountant from Toronto from Canada writes: Note that CREA blames falling commodity prices, a slow economy and credit crisis.

    Price gains decelerated from December to April in Vancouver and Toronto. By May prices began to drop. As Canada's economy peaked in August, home prices had already fallen 5%.

    Bears who were watching the market could clearly see that price increases were no longer sustainable. The result: Speculation left the market and with it, an over supply of homes and a huge reduction in demand.
  80. Luke R from Toronto, Canada writes: Do you all remember just a few months ago when the usual crowd was spewing all kinds of BS how things in Canada were so different and we wouldn't see housing prices drop here. Some even went as far as to say that we wouldn't have a slowdown in the housing sector. Delusions.
  81. Kman Willi from Canada writes: Just waite until all the baby boomers decide to sell their homes because they are to difficult to maintain! That will be the one, two punch..
  82. Luke R from Toronto, Canada writes: Jay Bronwin from Gatineau, Canada writes: Vancouver, Toronto and in Alberta are the only places where prices are falling. Everywhere else in Canda prices are still going up.

    Using a broad average to perpetuate doom and gloom is a little irresponsible,
    ******
    Those 3 regions combined make up the majority of the Cdn housing market (population!!!) so it is an accurate reflection of what's going on in most of Canada.
  83. John Peterson from Canada writes: Well if housing prices decrease and the government bought $25 billion of mortgages .. guess who is stuck holding the buck if there are defaults - tax payers. Guess who had the idea to allow 40 year amortizations with 0 down payment thereby directly increasing the CMHC's exposure to risk - Jim Flaherty.

    I know they marketed it as a 'no risk' bailout. And touted the 2 point gains they would make on the spread between the mortage at 5% and the government bond interest at 3%.

    However, no one mentioned that housing prices on these 'high value' properties can lose as much as 25% of their value. So the 2 points upside seems meagre compared to a 25 points downside. Don't you think?

    Now you know why the bankers were so eager to ditch the mortgages and re-capitalize eh??

    And I was one of the people who said that tax payers should get equity stakes in the banks in return for money instead of buying out the mortgages that were going to lose their values.
  84. Cameron Jantzen from Halifax, Canada writes: Fred Draper from Kingston, Canada writes: The media has done an outstanding job of knocking the stuffing out of any remaining consumer confidence. Recessions can become self-fulfilling prophecies.

    >>>>>>>>

    Same thing for the housing run up. The media spouted 'Buy now or else.' It became a self-fulfilling prophecy. The media is doing what it does, it reflects us. But people have to think critically, and buy into our human herd instincts, or not.

    I moved from Van to Halifax this spring, and our young family bought a house. I'm one of those mentioned in the comments. Waiting for Vancouver to correct didn't work for us. There's sanity in the housing market out here.
  85. gender bender from Espanola, Canada writes: So let's ask the 'professionals' the realtors since they are on our side.Bet if you ask one they will say it is a good time to buy or sell!
  86. Rudy Krueger from High River, Canada writes: When I moved from the country to Calgary for the first time in 1961, the new house cost $19,500.00. Neighborhood houses averaged under $15,000.00. Everyone was absolutely sure there would be a collapse. There was! $15,000.00 houses became available for $12,000.00. Ours dropped a staggering $2,500.00. Family members still in the country loved to remind us that the house pride we have stuck ourselves with would have paid for a quarter section of irrigation land with buildings.

    I have been through this rubbish a dozen times. Bought our first Toronto house in The Beaches for a staggering $75,000.00. Second one for $56,000.00. Third one a few years later for $210,000.00 Every time the damn-sure prognosticators confidently and meanly predicted we'd lose our shirts, socks and underwear.

    We had other houses in Fot McMuray, Calgary, Edmonton .... Every time the same thing.... 'What happens when the boomers retire?'

    It would like to invite all these pathological ego-frail dummies to shut the f... up. What you don't know is lots.
  87. Frank Enstein from Canada writes: Remember CREA is an industry source- their vested interst lies in being optimistic - and not beeing bearish. In 2006 US real estate industry sources were continuously stating there was no US housing bubble , and that prices would only moderately increase in future and anyone suggesting a crash was a dumb scoundrel who knows nothing about the real world. The real estate and banking industry have a vested interest in real estate, so you need to take their projections with skepticism. Just look at a housing price graph in your city- over the last 5 years does the graph look like a bubble? if so, like all bubbles the risk of the bubble bursting is vey high. And look at the graphs in many US cities- you will see similar upward graph in the 5 years up to 2006 with 2 years of bubble bursting afterwards. The difference is only that 2006 was the peak in the US, while Canada the peak was early 2008 - we are 2 years behind the US.
  88. Pete T from Vancouver, Canada writes: Rudy - 'What you don't know is lots.' Questions as you seem to know it all...

    Why all the houses? How many houses does one man need?

    Would you buy right now and if you bought in the last year or so, when do you