“I found a blog post through the Wall Street Journal and while the post is from mid-2011 and pretty standard, the comments from US RE victims was very interesting. Take a look at the post for a good example of fallout.”
- ‘MC’, via e-mail to VREAA, 27 Feb 2012 [Thanks, MC. -ed.]
In the article, the blogger ‘Thursday Bram’ writes: “When you purchase a house, the general rule is that you want to be sure to be in the same location for at least five years. Otherwise, financially, you’re probably going to take a hit.”
Some comments on the post:
‘houseregrets’, June 6, 2011 at 7:06 am -
“You might want to take into account the millions of people like us who bought a little starter home back in 2006 (just to get in the market– advice was to get in and build equity to sell for a bigger home). We didn’t buy at the top of what we were told we could afford, and we chose a 30 year fixed mortgage, not being persuaded into an adjustable rate. Now, two kids later, 5 years later, our house is worth $100,000+ less than what we paid, we have way outgrown this starter home. With 2 stable incomes, we aren’t approved to do a short sale and just have to live with the situation. With forecasts that the bottom hasn’t yet hit and might not for a few more years, you might want to adjust this advice to say it’s a 10+ year rule.”
‘Also bought in ’06′, June 12, 2011 at 6:03 am -
“I agree with houseregrets. We bought a modest starter home in early 2006, snagging a 3 bedroom, 1500 square foot Cape in a quiet neighborhood. Rather than doing stupid things with balloon or interest-only junk loans or maximizing our borrowing power, we calculated a comfortable payment and worked backwards to figure out our max house price. We have a 30 year fixed rate loan and got a wonderful rate. The assumption we made was that we would likely sell and move up to a bigger/better house in 5-7 years. 5 years later, comps in our town have nosedived in value. If we had to sell today, we would be lucky to get what we owe on the house (and it would take 6-12 months to sell, assuming it did). After realtors’ commissions and closing costs we’d walk away owing money. So paying our mortgage faithfully and on time for 5.5 years has gotten us zero equity, and in fact we have essentially “lost” the tens of thousands of dollars we put down on the house and have invested into improvements.”
‘Michael Henson’, October 30, 2011 at 11:14 pm -
“Not true. I bought for $300K in 2006, put $60k down, made all payments on time, and I even paid an extra $20 k on the principle. My rate is 6.5%. My house is now worth $125k, if I’m lucky. I now owe $209K. So where was my stupid mistake and overstepping my means?”
‘Pete’, January 4, 2012 at 7:59 am -
“Your stupid mistake was when you bought a house that was overinflated by over 100% of its actual value and didn’t see the writing on the wall that housing prices can’t keep increasing 10% a year indefinitely.”
It gets real.
But it’s different here. This will never happen. Nobody will let their property values fall in Canada.
Especially here, in the Best Place On Earth!
I suspect that none of these home buyers did market research or was very diligent in their decision to buy a home. Sounds familiar.
House prices are so low in these examples, Van will blow hard when it comes tumbling down.
I’ll add my own personal stupid mistake and try to localize this a bit:
My wife and I bought a two bedroom condo (Vancouver suburbs) when we had our first child. Had a second child, things were fine. Had a third child, and things went off the rails. The third ended up having a laundry/pantry room as a nursery with a portable crib. At the same time the condo (our building, but not our unit) sprung a massive multi-million dollar leak.
We bought a house with some family help and moved out, but decided to keep the condo because we couldn’t sell it while it was tarped up. We rented it out (for less than the mortgage payment) to a family that burned every countertop, the carpet and the vinyl balcony deck with a hot pot. They moved out and another family moved in – with a cat, and with a kid that drew on walls. All while we were paying out an ever growing series of special assessments for the building repairs.
We finally decided to cut our losses and sold the condo for half of what we paid for it. Net net we LOST an amount equivalent to the original purchase price.
Moral of the story: Don’t buy a home that doesn’t match your stage of life and that you don’t plan to be in for a good 10-15 years. And don’t buy a leaky condo.
You are in the extreme case with raising 3 kids. Most people without kids or even 1 child would not be in the situation you are in.
I concur. What a stupid bunch of irresponsible twats, having the audacity to put having children ahead of their condo. What were they thinking, having a third child! The sense of entitlement and arrogance! They deserve everything they got.
The problem once you get 1 or 2, never mind 3 kids older than 5yrs is that not many people will want to rent to you, assuming you can find a good rental to start with. A lot of Chinese landlords will not rent to families with young kids between 4 to 16. Foreign university students are ok but young kids are no no because they will damage and draw on the walls, floors, furnishing, dirty the carpets etc. Foreign students, especially female students, are fine because they would like never draw crayons on the wall. The worst they would do is just smoke, drink, and party late in the night which we all would is just perfect for keeping a rental suite in mint almost never lived in condition.
I’m not an expert, but BC does have a pretty strong legislated set of renters rights, etc. My bet would be that refusing to rent to someone because of kids would be a major no-no. The type of no-no, in fact, that could get you dragged up in front of a human rights tribunal.
Just guessing, though…
I’m sure it’s against the law but how would you prove it without actually video taping all conversation with landlord and get him/her to say they wouldn’t consider renting to you because you have young kids? It’s not a first come first serve situation and you can make up tons of reasons why I choose 1 renter applicant over another.
E.G. That’s fine in theory, but taking anything to the human rights tribunal is a long process and aggravating process and wont solve anything in the immediate term. Renting in Vancouver is hard enough with the race to get to the potential landlord before anyone else only to find the condition is so poor you wouldn’t leave your dog in it, that following up with the human rights tribunal to file complaints about the last 5 landlords you just met is pretty far from your priorities. And another reason why we left Vancouver!
I find it offensive that someone calls these people victims. They were willing participants in the whole scheme: “get in and build equity to sell for a bigger home”. If the bubble continued inflating like it did here, they would be bragging about their savvy investments.
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‘houseregrets’, June 6, 2011 at 7:06 am -
Oh come on, but I thought it was renters who put their life on hold!
On the other hand, people like houseregrets have awesome housing stability! The bank will never kick them out as long as they keep making payments (and probably even if they stop) because they’d have to sell at a massive loss.