The power of this blog rests in its readers. Google tells me there are 17,000 visits a day, or 5.5 million a year. About 1% of people leave a comment. Some are dorks. Some inspire.
For years I was a media guy, before losing my mind and wandering onto the floor of the House of Commons. Now I blog. My day job pays better, but this pathetic site proves to me that truth now lies in peer-to-peer communications. No media filter. No editors. No corporate agenda. No advertisers. Just the occasional deleting of a nimrod.
In this age of suspicion, most mistrust markets, banks and salesguys. And why not? The housing industry has kidnapped Global TV and the Toronto Star while politicians pushing us over a debt cliff escape scrutiny. People know. They see such things, and bring reality with them to places like this.
As demented and wild as it is, the comments section’s thick with value. And then there’s my email inbox. It is a daily miracle. Lives, in progress.
Hello Garth. First off – I understand you are probably overwhelmed with emails, I can only hope you are able to read this one. If so – I thank you for your time. I am addicted to your blog, and promote it every chance I get – often to the annoyance of those who disagree with your points.
I am a generation Y born to parents that started with nothing. My mother immigrated to Toronto from Ireland in the late 70’s, and my father came from a large poor family from a small town. Needless to say they both had to work and save hard to be able to establish a home and a family. I believe that they bought their first house in North York in the early 80’s for around $125,000.
Fast forward to today and the house down the block just sold this week for $1.18 Million by some horny Asians, almost 55% above the asking price of $759,000. Unlike previous examples, this house was NOT priced substantially below market value. The house is a 1960’s bungalow with an unfinished basement, with few if any updates. The Yonge/Finch – Yonge/Sheppard North York area has morphed in the last 10 years to the place to be for Asian and Iranian immigrants.
The major issue is that continual price appreciation has blinded Boomers like my parents who take a great sense of pride over their home. My parents, like many of those in their generation are unable or unwilling to recognize the effect on my generation. We are a generation of kids that grew up in houses around Toronto.
I am 30 (the same age my dad had me) working as a mid-level manager, reporting up to layers of boomers. There is NO WAY I could afford a condo anywhere in the GTA, let alone a house at the current levels. As with many of my peers, we have put home ownership and the prospect of starting a family on indefinite hold.
Unlike some of my more fortunate peers, my parents have always been unwilling to assist (“if we could do it, you could do it”). Whether it’s a down payment, or having tuition/rent paid while in school – these children of privilege are the small minority relatively unaffected by the price disparity gap.
When I walk around my parents’ neighbourhood I see hundreds of children speaking a foreign language, shooting basketball in the school I attended as a child. I can only wonder if things were different, in a few years, if I would be playing with my non-existent kids, instead of trying to survive in the big city.
Your Boomer parents helped turn shelter into a commodity, properties into assets and neighbourhoods into hedge funds. Your bitterness and regret are well-founded. After real estate blows up, it will take another generation to render houses back into homes. — Garth
Hey Garth. Our neighbour accepted an offer this weekend on their condo in Abby. Asking price $225k, sold at $214, original offer was $209. They bought at $230k. We are very happy for them because they wanted out, very nice family, two kids stuffed into 960 sq ft..
This isn’t an earth shattering reduction, but it does break the belief that RE goes up 10% every year. When you take into consideration that for their unit costs $1700/month minimum, and would rent at $1000, you’re paying $8400 extra a year just to own. Considering you hardly make a dent in your principal at zero down on a 30 year, that is a loss of $50k on a $230k investment over the course of 4 years, or 22%. So when people say “you are paying your someone else’s mortgage when you rent” you usually aren’t, your just giving their bank money.
We are running the math now trying to figure out if we can afford to sell and take the hit. Paying $25k to walk away is very tough to swallow. Cheers, Jon
Tip of the iceberg. In every major Canadian city, renting’s cheaper than owning. For each bidding war the media slobbers over, there are a thousand people sliding into negative equity. Many will be utterly bewildered, feeling alone and unique, because real estate always goes up. I mean, why else would they put the Re/Max guy on TV? — Garth
Long time reader, been renting ever since I moved out of the home several years ago. I’m 25 now, have a decent paying job, $121,000 last year before tax, I’m single, no kids, no real monthly expenses aside from my rent which is $925 for a Gastown condo in which I share with a roommate who pays $1050. Car is paid for, insurance for a year is paid for, and my assets (70% liquid) stand at $300k.
My situation is this: The place I’m living in now, is in the Woodwards building in Vancouver’s Gastown. Its a 2 bedroom 2 bathroom, 1154 sq ft condo, with a 93 sq ft balcony. Fairly low down, with a neat view looking straight down Cordova Street. I absolutely love it, and wouldn’t and don’t see myself moving for the foreseeable future.
My problem: I rent directly from the developer, and it’s for sale. Not listed, but for sale. When I moved in in November of 2010, they were asking $639,000. A year later they were asking $599,000. Now the Realtor acting on behalf of the developer, tells me it will probably sell for the $560k – $580k range, and that I may be able to purchase for the $545k range. To me, this is a hard decision. It goes against almost everything I believe in, mortgages, owning a very expensive liability, property taxes, maintenance, building assessments, a crumbling real estate market, etc.
That being said, $100k cheaper than original asking is definitely attractive, and when I first moved in, I told myself this place is worth $520k to me, no more and no less. That’s what I’m willing to pay. Now that the price has come quite a bit more inline with my thinking for true value, this could be one of those opportunities where a purchase might be the better of two options. As I said, I really enjoy the area, the building, the hot tub on the roof (43rd floor) and the developing area.
So with your experience, is this one of those times where it might actually be worthwhile owning vs renting that you infrequently talk about? Or am I out of my mind…
Let’s recap. You’re 25, make a bundle, have three hundred grand, are free and live in a cool place, for peanuts. You’re considering dumping your savings, adding a quarter million in debt and losing your mobility, so you can pay a lot more to live in the same space. Yeah, out of your mind. — Garth
Hi Garth. I forwarded you an article from the Vancouver Sun, stating basically real estate will never go down. If you believe this you might also believe we still have sasquatch’s wandering around the backwoods of B.C.( another myth)
Back in the late 80′s early 90′s, when Hong Kong was being handed back to China, we had a similar real estate explosion in the Lower Mainland, there was a frenzy of real estate buyers picking up anything and everything in the west side and Richmond, multiple bids, for sale signs dotting the landscape. At this time my wife and I were just starting out and looking for a home, we were young and foolish never having heard of a bubble or speculators, we chased the market up over a two year period as we were outbid for a home, and then just as the market peaked, we purchased.
This was 1994, we did not know at the time it was the peak, but we watched our house value decline for 7 straight years, till it found a bottom in 2001-2. We did finally sell out about 10 months ago, and boy have I slept well since. This new group of buyers have bid up the Vancouver market and also have no vested interest here, they have enough wealth that can make their home anywhere in the world, they parked their money where there were profits to be made. They, too, are reading the international publications saying the real estate market is near the top, so they are selling out. Which is why I suspect that Vancouver’s listing are twice that of the GTA.
If I can save one person from stepping off the cliff with the rest of the Lemmings, than my job is done. Thanks you for your website, books and keeping it real.
What’s real are stories and experiences told by those who lived them. This medium allows us to touch and share, after so many years of being told and misled. The fact most people you know embrace debt and worship granite proves you’re completely weird for coming to this blog. Just don’t tell your mom. — Garth