This from DownTurnLiving on 2009 May 27, 1:35pm –
“A friend in early ’07 bought a 2 bedroom in a development on Pender east of Cambie and fell for the buy now or be priced out forever, hook line and sinker. He thought by the time his building would be complete that somehow magically the neighbourhood would be gentrified in time, and the street wanderers would no longer be there.
He and his girlfriend have since had a child but found the street crowd hasn’t magically changed there; so realizing it’s not the best neighbourhood to raise a one year old, their only option was to move the family in with girlfriend’s mom into her west end rental apartment. Meanwhile, take out a mortgage on their 2 bedroom unit when complete and roll the dice by putting it into the furnished rental pool, while enjoying the benefits of negative cashflow. And yet to this day, he’ll still boast about what great RE decisions he’s made.”
Now there are anecdotes emerging of sellers who are in debt:
This exchange on RE Talks:
Johnny Horton on Tues May 26, 2009 7:51 pm –
“I’ve heard so many stories of Sellers not having any dough.
It’s not getting any better, either.”
Greenhorn on Wed May 27, 2009 12:46 am –
“I know some investors who would love to sell, but won’t because there is no profit on the table. They are underwater on the deals. Now they are bleeding money every month, paying a tenant to live in their investment. They tell me the negative cash flow each month is like Chinese water torture. I wonder if there are any homeowners in this situation?”
meeeeep on Wed May 27, 2009 5:21 am –
“I think it’s a pretty common scenario. There is a newish house in Shaughnessy that the owner picked up in the fall of 2007 for $2.8m. He now can’t sell it even for $1.9m. While he waits (for what I’m not sure), he’s got it rented out for $4000/month.”
There’s been a bit of a ‘spring bounce’ in sales and prices, in some areas. But all is not what it superficially seems. This from ‘Johnny Horton’ at RE Talks on Wed May 20, 2009 8:01 pm –
“My buddies in the business tell me that a lot of Sellers are tapped out of equity in the properties that they are selling.
Many of the mortgages are very close to the selling prices, ie…..no equity left.
Although there are a lot of first time Buyers purchasing these properties, the Seller’s don’t have the equity to buy “up” or buy “down”.”
This from VanBanker at vancouvercondo May 12th, 2009 10:43 pm –
“(I) was having lunch with someone who works in another department and mentioned I was renting, they said I should jump in now since we’ve “hit bottom in Vancouver,” I said we’ve got a lot further down to go, they suddenly sat up defensively and said “I just bought last month”, very awkward, lol And I was wondering where all the greater fools were coming from, apparently they all work for the banks, and I thought my co-workers would know better…”
This from ‘JeffSkilling’ on 2009 May 05, 1:27 pm –
“The saying goes when your neighbour loses his job it’s a recession, and when you lose your job it’s a depression. Well it’s now a depression at my house, my firm laid off 25 professionals this morning, including me . Anyone out there have any tips for the newly unemployed in terms of keeping up with mortgage payments, job search consultants, etc…
BTW my next door neighbour lost his job three weeks ago (architect) and the lady across the street (lawyer) has been unemployed for three months she is thinking of becoming a bus driver! Until these last 6 months I’ve never known a “professional” who had ever been unemployed, it’s kind of disturbing.”
This from Whybuywhenucanrent on 2009 May 02, 3:04 am –
“4597 W 14TH AV sold for $1.69M on April 1 (2009).
As of Feb 1 at a $1.79M list, I estimated they were $260K underwater. At 2 more months of $15K debt service and a $100K hit on the price, they’re underwater $390K when all is said and done. To drive this home, they bought the place 12 months previous for $1.25M, bulldozed a house, built a brand new house on the lot, and sold it for a whopping $1.69M. That’s only $340K more than they bought the lot for. And they paid $50K in Realtor fees if they did a standard contract. (And I left out landscaping costs in the original post, so subtract another $10K?)
Another way of looking at it — to break even, they would have had to have brought construction costs from $250/sf to $90/sf. “