Toronto – “I’ve earned more from the increase in the value of my home than I have in my entire professional career as a writer”

From ‘Housing: Real insanity’, Canadian Business magazine, April 25, 2011“Nino Ricci, [age 51], an award-winning novelist, purchased a detached home in Toronto’s Riverdale neighbourhood in 1997 with his wife, also a writer. The price was at the very limit of what they could afford, even with help from both sets of parents. They managed, however, and watched as the neighbourhood gentrified and the value of their home ballooned. “I’ve earned more from the increase in the value of my home than I have in my entire professional career as a writer,” Ricci says. “But the only way I can use that money is to run a credit line, and that’s a dangerous habit to get into.” Still, a line of credit against the value of their home is how Ricci, his wife and two kids fund a portion of their admittedly frugal lifestyle, particularly when paycheques become sporadic. During especially tight periods, Ricci makes interest payments on the credit line with money from the line itself. (“There’s nothing in the rules that prohibits that,” he says with a hint of mischief.) Ricci knows this pattern may not be sustainable. The implications of an interest rate increase worry him, but an even bigger concern is what will happen if his home drops in value. “I keep wondering, should I sell my home today? Is this my last chance to actually have retirement savings?” he says. “We’re both writers. We don’t have RRSPs or any assurance for the future.”

The RE market has led to a perversion of the way we view income.
Also, note the sentiment: “I keep wondering, should I sell my home today? Is this my last chance to actually have retirement savings?”.
Imagine the effect that earnest price declines will have on this owner, and on all other owners dependent on the market value of their homes for their financial future. They will watch their plans dwindle, and many will try to sell with urgency. -vreaa

19 responses to “Toronto – “I’ve earned more from the increase in the value of my home than I have in my entire professional career as a writer”

  1. “I’ve earned more from the increase in the value of my home than I have in my entire professional career as a writer” – ElNino

    As InkStainedWretches go, hardly an unusual phenomenon. 😉

    “There is nothing to writing. All you do is sit down at a typewriter and bleed.” – Ernest Hemingway

    “Writing is like prostitution. First you do it for love, and then for a few close friends, and then for money.” – Moliere

  2. Welcome to the 2000s where debt equals wealth.

    • Exactly. Look at my big house! Look at our expensive cars! I must be rich. Of course, I pay huge debt service on all of it every month, but still, I must be rich, right?

  3. This is off topic but anyone else notice the press is really staring to pick up on the ‘bubble thing’????
    This morning there was a very good but quick debate with Rick Cluff on the cbc; is Van livable, tearing families apart, workers leaving.
    this in the GM.
    and other stuff that doesnt come to mind now, could this be it? please god make it so.

  4. There is a large ad on scotiabank’s home page: “Borrow to get ahead”. Click the ad and you will come to a page that will explain to you that borrowing is saving!
    What’s next? “Eat poison to stay healthy”?
    Eat poison to stay healthy.

    • “Your personalized borrowing plan.”

      Has your household sat down to determine how it will run up a crushing debt load? Talk to an advisor today!

      Unbelievable.

    • Polly Pollyanna

      eat salt to ward off the evil hospice spirits!

    • WTF? Just saw a CIBC ad with the same message – “debt = savings” Am I dreaming?

      • Polly Pollyanna

        no, you’re having a nightmare

        go back to sleep, canada,

        the real estate/banking complex has everything under control.

  5. There is so much in this anecdote it’s tough to know where to start. Using a LOC for regular income. Using an LOC to pay interest on the LOC. Even if they sell, they won’t have any equity left.

    “Ricci knows this pattern may not be sustainable.”

    Tough times ahead.

  6. Does he really have no retirement savings other than his house? Did I read that right? His retirement is 100% dependent on the value of his home in Riverdale?

    • Yeah, you read right.
      We aren’t aware of exactly how many people are in this kind of position in Vancouver. We assume it’s a significant minority of mortgagees.
      This is why we are somewhat preoccupied with the “How much of your net worth is in RE?” question.
      For Ricci, the answer is likely something like 300%, perhaps even more (He likely has a mortgage of about 66%-75% of the current market price of the home, and no other savings).

  7. does this speak to her investment or her ability to earn as a writer? Probably a bit of both.

    • (Nino is a ‘he’, BTW).
      It’s hard to earn well as a writer, even as a successful one.
      Ricci has had a pretty solid and acclaimed career, see his wiki page.

      Regardless, it shows how surging RE prices distract the populous.
      How many who could have contributed in more constructive ways became realtors or flippers?

      • Yes, Canada pays very little to artists. Very sad and reflects our weakness as a culture.
        But Nino needs to think more about the word “earn”. Is an asset gaining value the same as earning money? Certainly not when you borrow against that increased value unsustainably just to cover living expenses.
        He would have been better off if he lived in a cheap apartment and blew every spare penny on Coke and Whores.

      • Polly Pollyanna

        lol

        i’d rather be underwater on a mortgage than have no septum and syphilis.

        (that being said, there’s a large chunk of young people in vancouver who will be underwater on their mortgage and who also will have to live without a septum and syphilis) food for thought – haven’t you heard the all night coke parties in the condos in yaletown? the bubble was a lot of fun on the way up for them.

        (i give my art away)

      • Yep, no doubt ’bout it – the DeviatedSeptuLifeSTyle’s a ‘bitch’, Poly…

        Better by far to engage in worthier pursuits…

        Speaking of which, in an earlier/prior thread you asked, essentially – and I’m paraphrasing here, “Where should I go?”…

        JackPalance knows, and has kindly offered to share a little of his CitySlickers ‘RoundUp’ wisdom with you.. (watch the entire clip, it’s that good – but the ‘payoff’ is the OneThing Monologue in the final :30). When you can answer question… you’ll know where you have to be… 😉

        http://tinyurl.com/3h6hv9v

      • Polly Pollyanna

        ah well in regards to the one thing, i was thinking of moving to the selkirks and just making a living however i can and skiing as much as possible.

        sticking with the jack palance theme – from a great bill hicks bit:

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