Tasha Brown counts herself as a victim of Calgary’s last economic boom.
The 2006 spike in housing prices and the near zero rental vacancy rate spawned a variety of illegal real estate schemes, and Ms. Brown, then a part-time child care worker, full-time single mother of three, lost a hefty damage deposit to a scam.
The situation left her family temporarily homeless and shuffling between church basements for shelter.
“It was three months, but it felt like three years,” Ms. Brown recalled.
Pledging to never to be homeless again, she embarked on a single goal: becoming a homeowner. And just a few months ago, the 33-year-old woman and her children, aged 15, 11 and nine, finally moved into their first home.
But she couldn’t have done it without help.
Ms. Brown’s quest for financial comfort lead her to Momentum, which was at one time an arm of the Mennonite Central Committee of Alberta. But from its past focus on employment programs aimed at new Canadians, it has expanded to include small business and computer training, micro business loans and personal finance education.
In the last 10 years, 12,400 people have gone through the Calgary-based group’s financial management courses, with 3,000 participants in the last year alone. The courses teach everything from household budgeting to managing credit cards as well as where to find deals and how to use coupons.
“It’s an everyone issue,” said programs director Jeff Loomis, “But financial literacy has a disproportionate impact on people with lower incomes.”
The non-profit organization also offers a matching program for people to “earn while you learn” as long as they have their eye on a “productive asset,” such as education for themselves, their children or to buy a home.
Momentum has a number of funding partners including governments, businesses and other charitable organizations. It offers a three-to-one match with a cap, but it usually means if a participant saves $50 a month, Momentum will kick in another $100.
“If we can get more funding from business and from government, then we can have more programs,” Mr. Loomis said.
It takes a long time and a lot of work to save, but over the past decade, 80 people have use it to help purchase their first home. Ms. Brown was one of them.
She also added to her savings through another Calgary charitable group, the Owen Hart Foundation That organization, which was established by Martha Hart in memory of her late husband, a wrestler who died during a performance, also offers a savings match program to those who have completed the Momentum financial education program.
Between both programs, Ms. Brown amassed enough savings for a 10-per-cent down payment on her first home – a two storey with three bedrooms, two bathrooms and a fenced backyard. Her mortgage payment per month is less than what she was paying in rent.
“They helped you step by step,” Ms. Brown said of the programs.
She is also working full-time and has a home-party business on the side to put away more savings.
“We will never be homeless again,” she insisted.
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More than three quarters of Canadians are not fully confident with their math and money skills, and more than half say they could use some help. … The poll, conducted by Ipsos Reid, also found that respondents saved on average, $211 per month, but a shocking 40 per cent didn’t sock away a single penny. The admissions are particularly striking at a time when household debt, driven by rock bottom interest rates, has risen to a record high, which even prompted the International Monetary Fund to raise red flags.
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– excerpted from ‘From homeless to home owner‘, Globe and Mail, 4 Nov 2011
[hat-tip 4SlicesofCheese]
So now homes are “productive assets”, and all fiscally responsible citizens must own one, even if they can only come up with one third (or is that one sixth?) of a 10% downpayment. This is the ‘financial literacy’ that is being taught. Hallelujah!
“Lifelong Debtorship? One house each, first door on the left.”
– vreaa
Vancouver Real Estate Anecdote Archive 
CREA’s probably one of the sponsors…
Home a productive asset? Yes… But for whom? Real estate agents, certainly…
Wow, that article is devious. Clearly an attempt to polarize the issue: you’re either homeless or a homeowner.
The power of the RE vested interests is truly astonishing.
even a homeless person can become homeowner; she has a will to do it. however, a supersmart-extra-intelligent-able-to-see-the-future VREAA can’t? Only Garth can anwer that!
She isn’t a home owner, she’s a mortgage owner. Almost anyone can be a mortgage owner, not everybody can be a home owner.
I wonder what the numbers are for her to claim the mortgage payment is less than rent. (what about strata, property taxes etc?) My brother lives in Calgary and has a friend who recently bought a place with 10% down, but he’s still paying a whole lot more per month now than he did in rent (and the place is falling apart so he has repairs to factor in now too). Just wondering.
Part of this particular person’s problem is having difficulty finding rental accommodations with children; this is not an uncommon problem, where landlords can afford to be discriminating. Solving addiction to housing speculation involves ensuring there is a healthy rental market for all means.
I was in Calgary for the 2006 “spike”. It was incredibly disruptive. I can’t say I blame this person.
I hate to be a devil’s advocate here…but I myself was provided lots of incentive to become a homeowner by less than stellar landlords. The cockroaches in my first place were disgusting, I remember using a shop vac under my sink to cut down the numbers. Then the next one was stealing my stuff and increased my rent by scratching out the old rent on my lease and writing in my new rent.
I can’t say I blame her…she’s paying less than she was paying before in rent, so I can’t say it is a bad idea. In return she gets added security, no rent increases.
Don’t forget in Alberta, tenants do not get security of tenure, unlike BC and Ontario. They move out at the end of lease and there is no ceiling on rent increases. With three little kids to care for…even if real estate prices go down, I’d make the same call.
Again she is paying less than she was paying in rent! If she was paying more like she would in Toronto or Vancouver then that’s different.
Rachelle -> As those above have asked, are her monthly costs really less as an owner than as a renter? Is she still getting support from one or more programs in that regard? Is she factoring in all costs of ownership? (taxes, maintenance, etc)
For the most part, SFH prices in Calgary have dropped so far along with interest rates that buying is cheaper than renting even including property taxes and utilities. Don’t forget that there’s large sections of Calgary where it’s possible to buy a good SFH within easy commuting distance of the core for well under $300K despite other areas where you will not find a liveable house for under $800K. I would argue that that’s one of the best things about Calgary RE, there’s something for everyone regardless of income level which is certainly not the case for the GVRD. Definitely, night and day.
This is a good comment Rachelle — the desire to own for stability reasons arguably would allow this woman to overpay slightly given the externalities involved. Nonetheless there are risks on the other side: line up 100 families in similar situations and arguably a few will face hardship due to some unforeseen but realistic event (job loss, structure damage, illness, etc.). It’s a tough one to balance.
I agree it is worth it to pay a small premium for housing when kids enter the picture (of course not Vancouver premiums).
What irks me in this story is that this person now thinks she is financially stable and educated. The fact is she would have never been able to buy her home without the programs and I do not believe now that she has a home she is somehow more financially stable. Like Jesse said alot of things can happen. Job loss etc. If this person went homeless after losing a security deposit. Imagine what can happen with some other unscheduled even happens.
Didn’t the states have these pro-ownership programs that were funded by governments as well. Some people are not financially ready for home ownership for a reason.
there is no certainty beside death and taxes.
“It’s a tough one to balance.” argee! and she did make her choice, a good choice by having a roof over the three children. this choice is priceless.
So wait… the rentals over there don’t have roofs? Then yes – I’d say she definitely made the right call.
time for winsor or deadtroit.
Oh, I see. Because she was a renter she was taken in by a scam but as a homeowner now she is protected from being scammed. Also as a renter she was only working part-time but as a homeowner she is now working full-time + has a party business. She obviously couldn’t have done that as a renter. Wow. Being scam-proof and all the work you want… clearly everyone should be a homeowner.
It turns out homeowners can be scammed too.
http://www.cbc.ca/news/canada/british-columbia/story/2011/11/04/bc-homedefect.html
I think the most important aspect of the story is that it’s possible outside Vancouver to provide a SFH for your children and build a future without making a 6 figure salary. That’s just not the case for Vancouver anymore which is obvously why so many people are leaving. And it’s not just about people leaving, it’s also about people making an easy economic choice to not move to there.
There’s no “bring cash” requirement to settle in provinces outside B.C. Now, many Canadians are choosing to retire to a warmer climate by purchasing real estate in the US and staying put for the summers in their home province which is far more affordable than buying on Vancouver Island, for instance. Just look at the weakness in the Victoria RE market and you can see the impact of much less expensive alternatives for retirees (and the absence of HAM).
BC real estate is simply too expensive for many people now that there’s cheaper and more attractive alternatives especially if you are not that fond of the cold, damp winters. Most people I know that are in or close to retirement are purchasing winter homes in Nevada and Arizona because of the excellent dry weather and fantastic affordability compared to Canada. There’s simply too much risk of loosing money to buy in BC at current prices given all the available options.
“Because she was a renter she was taken in by a scam but as a homeowner now she is protected from being scammed.”
at least, there is no more damaged deposit scam for her and the three kids.
“clearly everyone should be a homeowner”
you already have your own answer.
Sandy Garrasino on housing affordability problem in Vancouver: http://themainlander.com/2011/11/05/interview-sandy-garossino-on-affordability-and-real-estate-speculation/
I’m torn on this story. Sure the attitude of everyone involved is a bit twisted, but if this organization has her back, ongoing, I’d say the outcome for the kids outweighs other considerations. Calgary’s market is down 10% from the peak and while energy prices may be volatile, it is likely on a long term rise. I have to say, congrats to the lady for surviving, frankly. I do sincerely hope it works out for her.
The average price trend doesn’t tell the whole story for Calgary SFHs. Many areas are down over 20% from the peak and this is generally where first time buyers are very active. If the buyer in the story was able to buy at 25% off and after interest rates have more than halved, she will probably do well if she can hang on for the next decade.
Well I can only take at face value what is in the article. If it is true that her costs are lower buying than renting, why not? This is how it was when I bought. I replaced a place I was paying $750 plus utilities for with a place I was paying $750 plus utilities. In the house i actually had a basement apartment I could rent, so the true cost had I not been making double mortgage payments would have been lower.
I manage a condominium in Hamilton that was converted from rentals and in that case it is cheaper to buy than to rent. The only real difference is that if the toilet breaks you have to replace it yourself but considering that we completely upgrade the place prior to sale…the risk is pretty low.
There are place where it is possible to still buy a livable place and pay less than rent. Not every location is like Vancouver or Toronto.
In any case a single parent home is always more vulnerable to changes in employment or illness…this has not escaped landlord’s attention either. If you have to choose between couple or a single with three kids – well it isn’t rocket science.
The other thing I touched on was that in Alberta the rental laws are very different. In fact I’ve heard of landlord’s proud of only making 6 month leases because at the end of the lease they can ask you to leave or raise the rent as much as they want. So this too might affect your planning.
There are no rent controls in Alberta but there are laws that limit the amount and frequency of rent increases depending on the lease. You are right that some landlords try to take advantage of renters that haven’t read the Landlord Tenanct Act. Also, month to month leases are common – usually at the tenants request as most landlords prefer a minimum of a one year lease.
Let’s not forget that this woman has better job prospects in Calgary than anywhere in BC. Calgary’s housing prices are not currently primed to fall, either. Interest rates are low and staying low for the medium term. Cash flow is superior to renting. A low risk scenario. All in all, a good-news story. This is why young families should move to Calgary pronto. Of course, Calgary’s proximity makes Vancouver’s situation seem even more untenable.