One week and 23 years ago my ass was handed to me by the voters of my federal constituency. Not alone, of course. When the rightist knuckle-draggers of the Reform Party came along and calved the conservative vote, all of my fellow (moderate) PCs – save two – were creamed at the polls. Libs sprouted like mushrooms.
Ouch. Didn’t see that one coming. And here I was with a life and a nice house in Ottawa, as well as one back in the riding. One day a cabinet minister with a driver and a shiny black car with bulletproof glass. The next day, an unemployed dude with two properties. And no job.
So Dorothy and I listed the house (it took agonizing months to sell – eventually to Jean Chretien’s media flack), packed, left town and went looking for work. In the wake of this, we left a bank account, too, at the downtown Ottawa branch of the Bank of Montreal. Just a few bucks there, unloved and forlorn.
Yesterday blog dog Darrell thought of me when he came across a form on the Bank of Canada’s web site. “Happened to think of you and typed in your name,” he says. “And voila, seems you have some money sitting ..!! While the amount showing won’t get you too far Garth, it should at least provide some satisfaction. After all what is yours, IS yours.”
Here’s what Darrell found:
Thirty-three bucks. Sent to the central bank by BeeMo in 2004. How awesome is that? It makes you wonder how many other people have forgotten about little piles of money, and what’s happened to them? The answer is simple – after a decent period of time (ten years), and after your bank’s sent a few letters to the wrong address, the funds are transferred to the Bank of Canada, where they live in the geriatric ward for up to 100 years, or until somebody claims it.
This is now serious coin. The Bank of Canada alone is holding $626,000,000 in unclaimed funds – almost enough to buy a foreign student’s house on the Westside of Vancouver. Or purchase 89,000 used Kias. Or get that poor Kardashian woman’s ring back with enough left to send her to the space station, forever.
So the central bank hangs on to unclaimed balances of $1,000 or more for a century, and just 30 years for little ones like mine. If I don’t claim my $33.70 in the next seven years, it gets transferred to the Receiver General for Canada – the dude you pay your taxes to. If the money is from a joint bank account (like mine) then the wording on the account dictates who claims it. An account between two people joined by “and” means they split it, while the word “or” means either party can grab it.
It takes about three months to get your cash after you file a claim, and the process costs nothing (once you provide the correct docs). Nobody will ever contact you to inform you of the money outstanding, and after ten years in captivity, your account will no longer interest-bearing.
Claiming your funds is pretty simple. Just download a two-page form, take it to your old bank and have them validate your signature. Send it to the feds. Wait for your booty.
So, here is the search tool to see what amount of loot you’ve forgotten in your murky, sordid past.
Let’s have a contest. Who’s got the most outstanding? And who’s got the best story about why they abandoned that cash so many years ago.
The grand prize winner collects $33.70.
“Hard landing.” No, not the Trumpster. Your house.
In living memory, those two words have never before been uttered by an official of the country’s largest bank and mortgage lender, so this is a big deal. Here’s exactly what RBC’s senior economist, Robert (Mayday! Mayday!) Hogue told bank clients in his analysis of what happens next for Canadian real estate:
“We believe that the new measures – that include more stringent and uniform qualifying rules for mortgage insurance across mortgage types – will both speed up and harden the landing that we previously expected to occur in the year ahead, although they are unlikely to cause a crash.”
So, what’s a ‘hardened landing.’ What’s a ‘crash’? What, exactly, is the bank telling us to expect?
The definitions are hazy, fluid and ill-defined, but we know this: the benchmark of a ‘crash’ is now the American experience of 2006-10, when the housing market peaked on excessive debt, over-borrowing and bloated prices, then tumbled for an average price drop of 32% across the nation. It then took a decade before valuations were largely restored, although trillions in equity were forever lost by millions of families. We also know some areas of the States (Phoenix or south Florida, for example) saw price plops of up to 70% in certain zip codes. These had been the epicentres of speculation and bubbly markets.
So RBC says it’s ‘unlikely” we’ll repeat that experience. That’s good. It would drop the average Canadian house by $156,000. The typical detached in Toronto would shed $429,000 and in Van a SFD would be worth almost $500,000 less. But if the US experience were to hold sway here – markets with super-sized gains ending up with King Kong losses – the carnage in the GTA and YVR would be worse. On the West Coast, terminal.
But, relax. The bank says that’s unlikely. Not impossible. Just (fingers crossed) not a certainty.
So how hard is a ‘hardened landing’?
Even Royal LePage boss Phil Soper is hinting at something bigger around the corner. He’s just called the diminishing year/year gains made in Vancouver that market’s “final hurrah.” It kinda evokes General Custer, doesn’t it? Or the charge of the Light Brigade, or Mike Pence’s career. Sales dropped another 23% last month and in the last two months YVR has already recorded the biggest price plunge in history. Foreign buyers have split. Speculators have vanished. The locals are sitting on their hands. And all that came even before Wild Bill Morneau dramatically raised the bar for moister mortgages, while lowering the boom on the brokerage industry.
An already-teetering market, adds Soper (this time switching to a sports motif), doesn’t need much of a push to fold completely.
“You take a lineman in professional football — a great, big human being — and they’re sort of teetering on their heels. A child comes along and pushes them on their chest and they topple over.”
That’s what the foreign buyers tax did, he says. And the tough-guy mortgage changes which come into effect tomorrow (Monday, October 17th) are likely to have an even more consequential impact.
This is what a hard landing is made of. The federal government itself estimated the impact on sales nationally to be about 8%. Mortgage brokers figure the average moister couple will be able to afford about $150,000 less in mortgage financing, so instead of shopping for a $650,000 house, they’ll be in the $500,000 range. That, of course, means $650,000 houses will eventually become $500,000 houses – since it was cheap money that sent things in the other direction.
A reasonable expectation, then, is a decline 50% less severe than that which tanked America – because we’re (of course) special. So a hard landing might well equate to 15% or a tad more. But not across the whole country. Moncton, Trois Rivieres, Windsor or Estevan will probably see no movement in the needle. Toronto, with its giant economy and undiminished in-migration, likely a 5% to 10% erosion, depending on the hood. Victoria is at risk for a 20% decline over time, and Greater Van will be lucky to escape with a 35% haircut.
Naturally, nobody believes this. It’s what makes accidents so entertaining.