On Tuesday the second phase of “Aspen Ridge” McMansions in the distant GTA burb of Vaughan went on sale. People started lining up on Friday for the chance to buy a particle-board monster home with endless toys. A detached house on a 50-foot lot started at $1,641,990. With closing costs the premium model came in at over $2 million.
This was special pricing for the ‘VIP’ waiting list – people who still felt they had to sleep three nights in a lawn chair. There was another ‘VIP’ event for potential buyers on Wednesday, too. But this time there was an added surprise – a $150,000 increase. Now the basic fifty-footer was going for $1,791,990. By the way, that represented a half-million-dollar increase over the same house sold by the same developer in the same project one year earlier.
Guy lives not far away. “The houses are gorgeous,” he says, “but to go up $500,000 in a year is ridiculous.” By the way, these places are available to the general public this Saturday. If there are any left.
While obsessed people willing to swallow unbridled risk camp out and pee in jars for the chance to shell out two million on an unbuilt suburban pile, it’s a far different reality in others parts of the country. Like Alberta.
Matt check in from Fort Mac. “Don’t judge me Garth,” he says, “but hookers and blow have gone through the roof here!” Good thing, because real estate is peeling in the other direction.
“Well, one of my workmates bought a lovely little shack in the Mac for $765,000 in the spring of 2014 and then lost his job at Suncor a month before Christmas,” Matt tells us. “He and the wife and baby put said anchor up for sale in late January 2015 for $785,000, it is now listed for $760,000 along with all the other ones mushrooming up on his street. They also had an offer in on a detached home in Edmonton for $450,000 pending the sale of their Northern Albatross. That ship of limes has now sailed, leaving them with scurvy and bleeding gums.”
Actually, across Alberta, sales to the end of April were off 24% with listings up and the average sale price down 2%. That’s consistent with Calgary. As of yesterday sales for May are off 25% and the length of time it took the lucky people to sell is up 52%.
Ratings agency Fitch said this week it forecasts Cowtown prices are still too expensive by a whopping 17%. “With oil prices off more than 40 per cent from a year ago, there are broader worries of a contraction in the region … with employment prospects shakier in a region highly dependent on commodities pricing, uncertainly has begun to chip away at demand for housing.”
You bet. For the first time in half a decade, the number of Canadians collecting jobless payments has increased – and we are supposed to be in year six of a recovery fostered by government stimulus and the lowest interest rates since ever. Unemployment insurance claims have swollen by 9% in Alberta, leading the nation in claims for the third month running. EI ranks are also growing in Saskatchewan and the Martitimes.
Anyway, back to Matt: “Now let’s talk huge oil paycheques: they’ve shrunk. Contractors making $125hr last year are working for $85hr, and many staff hires are working for $65hr instead of $80hr…the pain continues. I (like all great authors) have resorted to selling my self-published novel out of the back of my pick-up truck to make ends meet…300 sales and counting. Jeez, I wish truck-nutz weren’t so damn expensive.”
David Madani is the chief egghead with Capital Economics. In his mind the Alberta misery is vastly overweighing the hormones in Vaughan. This week he upped the ante with a forecast saying things are bad enough the Bank of Canada will cut rates again. And again. “We expect the economy to struggle over the rest of the year, disappointing policymakers. In our central scenario, we have pencilled in another 25 basis point rate cut in July, and another again in October. Reflecting this, we expect the Canadian dollar to resume its downward trend, ending the year at US$0.75.”
So it’s almost like there are two Canadas. On one hand, moany Millennials with six-figure incomes say the system’s unfair and broken because they cannot afford detached houses the way their parents did four decades ago. In this Canada people sit in lawn chairs waiting to spend millions on an unbuilt house in a former field that even the cows thought was boring. On the other hand, economic growth for the nation disappoints, job creation is dry, exports are thinning, houses go unsold and we’re told money needs to get even cheaper to rescue things.
In between the extremes is the most indebted middle class in history, and Albertans voting in socialists.
Can you imagine a better time to be unencumbered and liquid?