They’re thirtysomething engineers married to each other and working in Alberta’s capital city where taxes are unknown, even straight people wear hats and real estate will never go down so long as idiots in Ontario drive Hummers.

Until, sadly, now.

In case you missed the news, house sales in the country’s hot markets have crashed. Last month, down 30% in Vancouver, off 23% in the GTA, weaker by 42% in Calgary and fading 37% in Edmonton. Right on sked. The agenda I laid out some months ago: Listings pop first (late Spring), followed by Maalox-gulping sales reductions (summer), then by the din of tumbling prices (frost) and finally the growing spectre of a US-style, multi-year slow melt.

The reasons are many and, as you know, now don’t even include rising interest rates. Mortgages can go to zero and this worm will keep turning. Real estate’s finally being seen for what we’ve made it – an overvalued, burdensome, expensive, illiquid wealth trap. Looks like legions of people will learn now what experience has taught me: easy to buy, queasy to sell.

Of course, to the list of negatives affecting real estate – crappy economy, negligible job growth, tapped-out households, tighter lending, falling confidence, higher taxes – you can now add bugs. An epidemic of bed bugs in Toronto has prospective buyers adding pest control dudes to the home inspectors they insist sweep through any potential properties. Oh yeah, and they both now charge HST.

Back to Edmonton, where bugs are also illegal.

“I purchased the condo in 2007 for $291K with $28K down and a rate of 5.6% for 5 years…over 40 years,” he says.  “I’m reasonably confident that my down payment is gone.  By my estimate, our place might sell for what we owe. Taking realtor fees into account along with the lost down payment, we’ll be out just over $40K and left with a sizable bill upon closing.  I’m not complaining… that being said, I’m not interested in making any more bad financial decisions.

Here’s my question.  Should we:
* list now, drop the price until it sells and pay off the remainder?
* refinance right now (incurring the penalty) and aggressively pay the sucker off over the next 15-20 yrs while we rent it out once we need a place that has room for kids?
* wait until 2012 to refinance and then do the same?
* follow a different path?”

Well, cowboy, not much of a question there.

The housing market is now in a spiral, pushed merrily over the edge by a media which until weeks ago was slathering and fulfilling its usual function of filling in around the ads with words. Based on the last couple of days, I may have been too gentle in my oft-repeated prediction of a 15%  price reduction by the end of the year. Just as the end of government cheques to new homebuyers in the States killed that market (quelle surprise!), so has the HST extinguished ours in BC and Ontario, with the toxic juices seeping into that flat stretch between.

I mean, look at this: It took, on average, 47 days to sell a house in Edmonton last month, up a full week in the last eight. The number of homes for sale is closing in the highest level ever experienced – a whisker under 10,000 – and soon there will be a six months’ supply of houses on the market, just as buyers go on strike.

This, of course, will make your condo unsalable unless you hack the price back until it’s vulture feed. So, instead of taking an even bigger loss than you anticipate (did you parents tell you ‘real estate always goes up’?), should you stay there, refinance, rent it out and buy a house?

Is this what they teach engineers? If so, I just drove across my last damn bridge.

If you keep the condo you paid $291,000 for and shovelled tens of thousands more in financing into, it could well be worth $189,000 (or less) in three years – when you still owe $250,000 on it. Sure, you can rent it out for a loss every month for the next 15 years, while buying a house in a declining market at higher mortgage rates, but by then you’d probably be single and not need it.

Look, cowpoke, you screwed up. You drank the real estate Kool-Aid. You read the Journal Homes Section. Microscopic Phil Sopers got into your blood stream. It’s time for a purge.

Sell the damn thing for whatever.

If you’re bitter on closing day at the guy who vultched you raw, then open the note I sent you.

Carefully. Lay it on the bed.