He usually makes money while breathing. Real estate flips been kind to this dude. It shows in his Mercedes.
But how can anyone buck this: Seven big ones invested in a tired north Toronto suburban McMansion. Another hundred grand into glass, tile, granite and steel. On the market now for two years. The price is already two hundred off, and heâ€™s way underwater. â€œThis thing,â€ he says, toeing the $18,000 whirlpool bath with the sticker still on it, â€œhas been a total nightmare.â€
Later, after I did a hit for Calgary suppertime news at the CBCâ€™s downtown Toronto studio today I went and cruised the streets of my old political stomping ground. Yeah, the neighbourhoods that elected somebody else just because I told them they were doomed. I mean, can you imagine that? The nerve.
Anyway, theyâ€™re still doomed â€“ at least those who must sell. This is Canadaâ€™s future Stockton, CA, a place where the only reason anyone moved here was to get a big mini-McMansion cheap. And thanks to willing builders, and our own 0/40 subprimes, you didnâ€™t even need money.
Of course no equity made sense only when the market was escalating, filling young buyers with dreams of even-larger homes as they rode the property rocket higher. But like my Benz-driving flipper buddy, reality has a way of making things look different.
Milton, Ontario, on the 401 west of Mammon, has 65,000 people living in approximately 14,000 houses. Right now more than 1,500 of those houses are for sale, or one listing per 40 residents. Compare that with the GTA where there are 21,000 active listings and 5.3 million, for a listing-to-pop ratio of one to 260. Did I mention they were doomed?
In fact last month, of the 1,500 homes for sale just 60 sold, and even fewer the month before. This means a homeowner listing today (and new offerings are flooding in by the vatfull) could expect a two-year wait to find a buyer.
This is what happens when you let inexperienced people buy big houses without money. They paid too much because financing was cheap and easy. They didnâ€™t need to save or struggle to own â€“ just have a job. They took possession without equity. They believed their â€˜investmentsâ€™ would never decrease in value. They were greedy and myopic. They wanted more in their first homes than their parents had in their last. They paid a big premium for new and shiny.Â They had absolutely no financial reserves. And now they are being hollowed out by the market.
Who’s to blame?
* The banks who gave these pups big loans.
* The feds who mandated that subprimes come north.
* The developer who did deals for only closing costs.
* The municipality, drunk on growth and property tax.
* And the buyers who wanted, and wanted, and wanted.
Hours later, I left.
The burbs with their fake turrets and faux beams faded in my rearview. I had seen things this day no man might forget.
For today’s blog, ‘Beyond the grid’, go here