Some people who shall remain nameless, like Brad Lamb, Phil Soper, Sherry Cooper and Cameron Muir, think I hate real estate. Pshaw. I love this stuff. In the last few weeks I’ve sold two houses, bought a commercial building and leased a condo. There’s nothing like the thrill of acquiring something, except the relief of walking away.
The premise of this blog hasn’t changed. Real estate’s a declining asset for economic, financial and demographic reasons. People who own a house and not much else are rolling the dice. If you want to survive the next decade, here’s the advice: get liquid.
But all the logic and good arguments around don’t change the fact most people treat houses like babies. They don’t need ‘em. They just crave them. Then they try to justify them.
Here, for example, are three stories from three couples in three different places who seek my Holy Father blessing to take plunge at this, the worst moment.
Great blog. I used to watch you all the time on TV during the news when I was a kid. Hoping you can provide some of your expertise. My wife and I recently sold our home in Bowmanville Ontario making about 18% after commission/closing costs (after 4 years in the home, our first home).
We were worried about the crash and if we held onto the home we’d have difficulty selling. We’ve been trying to move closer to Toronto for work/family reasons. We want to have kids, and free babysitting has been offered and being closer to grandparents was important (they don’t drive). We both have stable jobs with good pensions.
Unfortunately, we took the ‘old school’ approach and attempted to pay down the mortgage rather than investing in our portfolio. I’m very afraid of debt, and the idea of being mortgage free was luring. If we’d have stayed with our investment strategy we’d have some nice returns.
Here’s where it gets odd. I’m writing this in the basement of the home I grew up in. We’ve been here close to a month now. We’ve got roughly 220k in fairly liquid assets, and no debt. Maybe we’re taking these real estate warnings too far…but when do you think this impending real estate crash will happen. Or a better question, how long do I tell my wife that we have to stay in the basement?
We don’t want to take part in this crazy Toronto real estate market just yet (buying homes over asking price, with no conditions). I know you don’t have a crystal ball, but do you have any advice for us? Tom
No crystal ball Tom, but more of them than you. Sounds like you sold for completely emotional reasons, and now understand how dumb that was. Sure, you made some money (although 18% in four years is only inflation) and you may have sold out before losing it all. But, dude, where’s the logic of selling and then buying within a month or two, and into the same market?
Right. There is none. You sold because she wants to be closer to her parents and have kids. Now you have no house, live with spiders, and have I-told-ya-so parentals above you. And I bet your fortune is moulding in ING.
Man up. Leave the basement. Invest the money. Rent a townhouse close to mom and never, ever write me again.
I’ve been a loyal reader of your blog for years and really appreciate the advice. I’ve been renting, saving and waiting to buy since 2008. With a growing family, I just can’t wait out the market any longer. The rental market for SFHs in Winnipeg is virtually non-existent, unless you want to live in the hood. So, I will take my lumps from your blog dogs and purchase a home with the advanced knowledge that its 20% overvalued.
My question is this: given that sales have slowed substantially, and that I think that real estate agents are parasites, is it possible for a buyer (me) to write an offer to purchase that demands either:
1. a kickback from the selling agent of say 1-2%?; or
2. that the price the house be reduced by 1-2% by the agent, which represents the amounts that would be paid to the buying agent?
In both scenarios, the seller gets the same money at the end of the day, and we’ve reduced the purchase price by the commissions that would have otherwise gone to the buying agent. I would love your advice on this. Thanks! Scott in Winnipeg
Nice try. It took me 14 seconds on Kijiji, Peg Edition to find this: “Very nice 3BR home in St. Boniface in great neighborhood. Dishwasher, central air, 1.5 baths. w/d in laundry room, rec room and office in finished basement. Garage with carport, Nice patio area in back yard. Near Hospital, Schools, bus stops and the Forks No smoking. No pets. Available IMMEDIATELY. Rent is $1495.”
C’mon, we both know Winnipeg real estate prices will be falling significantly over the next few years. Already sales have started to decline and in a regional, isolated market like that it doesn’t take much to shift the power from sellers to buyers. Why on earth not rent for a year or two and save yourself tens of thousands?
But, yes, if you do jump in you can certainly be prickish and try to gouge the listing agent. But it’s Winnipeg. I wouldn’t walk anywhere alone for several years afterwards.
Garth: When we lived in Cambridge Bay I worked as a bylaw officer so I dealt mainly with dogs in rough shape and I ended up adopting two huskies and we already have a german shepherd. So finding rentals isn’t the easiest and I won’t give up my dogs. The only place we could find in Yellowknife is a trailer for 2200 a month plus 400 in electrical and 400-600 in fuel. The pipes constantly freeze as this place hasn’t been maintained and is lacking the necessary insulation BUT we can rent it with 3 dogs. We pay so much for this trailer that smells like someone smoked daily in here since 1972. Not to mention we can’t use the front bathroom because its frozen. The landlords say they’re doing the best they can. They’ve had numerous plumbers over. This place just sucks. It makes me want to buy a house no matter what the consequences. Now I wish we could find another rental but there’s none. We’ve been looking since we arrived in September. Housing prices are ridiculous here.
I look up to you and I will take your advice even if it means I have to stay in this shag carpet smoke box house. Please can you give us some advice. I’m not giving up the dogs:). Alison.
Finally, a reasonable letter. A women with attitude from the frozen north who collects giant dogs and lives in a gold-plated, shagged trailer without toilet water, huddled in the dark reading a pathetic blog. Go forth, Alison, and get thee a home. I know there are only 37 properties for sale in the entire town, but this one doesn’t look too bad, and there’s room for more dogs.
Or, come south and move in with Tom. He deserves you.
Now, regarding yesterday’s plaintive request from a writer at Maclean’s to do his work for him, he sends this along: “Hey everybody, thanks so much for your help. We were originally hoping to just get Garth’s picks, but this was a far better idea. The challenge will be whittling it down to just ten items. I guess that’s why I have editors…Thanks again!”