“Thanks, Flaherty, you’ve just put millions of Canadians ‘underwater’. Thanks for making my home worth less than what I paid for it 6 months ago.”

“Thanks Flaherty, you’ve just put millions of Canadians ‘underwater’. Thanks for making my home worth less than what I paid for it 6 months ago. I have no problem affording my mortgage no matter if rates went up or whatever. I waited years and years to buy a home, people keep telling me to wait and wait, so I did but there seemed to be no end in sight to the prices. After waiting 7 years I decided to just do it. I don’t have any regrets but I fail to see how changing mortgage laws is going to help people, it only serves to help corps renting out to people making home ownership even further out of reach. In the past 7 years of renting and waiting I’ve spent nearly 100,000 on rent. What a waste. You [bears] are always telling others to wait…do you even own a home yourselves?”
– Jasonn in two comments at the Globe and Mail, 21 Jun 2012

“..people keep telling me to wait and wait, so I did..”
No, you didn’t, you bought.
“I fail to see how changing mortgage laws is going to help people.”
Easy: prices will drop, then drop more, and eventually come vaguely into line with underlying fundamental values (plus, of course, the modest Vancouver-warm-weather-premium). Then people will be able to purchase homes at remotely reasonable prices.
“In the past 7 years of renting and waiting I’ve spent nearly 100,000 on rent. What a waste.”
How much have you wasted on food during that same period?
“I don’t have any regrets..”
(translation: “I have regrets..”)
– vreaa

22 responses to ““Thanks, Flaherty, you’ve just put millions of Canadians ‘underwater’. Thanks for making my home worth less than what I paid for it 6 months ago.”

  1. Ralph Cramdown

    People kept telling him to wait and wait? An unusual circle of friends.

  2. Renters Revenge

    “it only serves to help corps renting out”
    Obviously a leftist. 😉

  3. Everybody else's fault but mine

    Unfortunately Canada is full of Jasonns …..

    “Think of how stupid the average person is, and realize half of them are stupider than that.” — George Carlin

    Let the blaming game begin. “But, but, they said, he said,the realtor said, the newspaper said, i waited, they said, i bought, but, but , but, …”

  4. Don’t listen to anyone but yourself. Do your own research so you don’t have to blame anyone. Right about now Jason, you need to bang your head repeadly and say “why” each time you bang. And do it hard, it might help with the process.

  5. How can he not get the connection between helping people and his house being worth less than it was 6 months ago?

  6. Nobody said life is fair or that your government is looking out for your best interests.

    Agree, some personal responsibility is a good prescription.

  7. I have a relative that purchased a Coquitlam home in 2010. She and her husband took a heloc on her parents home. Parents home bought for $520 and now worth $925. There’s about $300 mortgage on the home. Well, not anymore. They borrowed 130k for the coquitlam home. Put down 15%, and the rest went to reno’s and other home costs. they bought in pressure times. Paid 40k over asking too. They’re left with massive debt and put risk to the parents as well. The loc they borrowed, they have only paid interest on it. So that loan is still the same at 130k. So basically, the home was purchased with 100% financing. The home is worth about the same as the price they paid in 2010.

    • Van east guy -> Thanks for the anecdote; classic intergenerational wealth destruction scenario. Family goes from assets in RE to highly leveraged speculators.
      To summarize the current situation, what is the market value, and mortgage size, on each property?
      Parents: $925K with $430K Mortgage?
      Coquitlam: ? with ? Mortgage. (Estimating purchase price was about $750K?)
      Let us know and we’ll pop it up as a headline story.

      • Van east guy

        Parents house in van east bought in 05 for $520k. $300k left on the mortgage as of now. Value now at $925k.
        $130k heloc in van home to purchase and reno’d coquitlam home.
        Coquitlam home bought in 2010 for $640k with $80k down, $50k reno. Current value $650k

        That means there is $430k debt on the Van home.

        $560 debt for the Coquitlam home.

        I hope this makes sense. But as I see it, a total of $1,160,000 for the 2 homes with about $220k actual cash paid into the homes. Without a massive price gain on the Van home, there is no change of leveraging for the Coq home.

      • Sounds like a brewing disaster to me Van East Guy. I also know a few couples whose parents got all strung out on LOC’s in their zeal to help the kids. Similar scenarios too so it makes me wonder just how common the theme is everywhere else.

        Anyway, the parents saw their equity increasing as home prices went up. The kids got married. Mom and Dad do them a big favour and loan a fat downpayment right out of the family home. You know, to help the young ones get a good start in life…..

        Everybody needs a house, right? Now they will all be debt trapped together and nobody will get out without steep losses. Too bad.

    • 4SlicesofCheese

      This would have been very similar to my situation, but I did not take the money my parents tried to force on me.
      I think this might be fairly common, but in most cases the kids are willing to happily accept the money and have no other way to raise the dp otherwise.

  8. Watching Global TV last night they showed a realtor with his very happy client who luckily just closed on their new home because with the new rules they would not have qualified… I think they are missing the point.

    • Is there a name for this particular bias? It just seems difficult for most to think objectively about this, to “abstract away” the personal perspective (e.g. “I’m better off if the rules change/don’t change”) and take a more system-wide view to analyze what happens when the change applies to everyone

      • The quote shown above explains it

        “Think of how stupid the average person is, and realize half of them are stupider than that.” — George Carlin

        Just about every policy decision a government makes has a direct correlation between how unpopular it is to the general public and how beneficial it actually is to the public as a whole.

      • MM – I just finished reading “Mistakes were Made But Not By Me”. Interesting primer, although I think just the tip of the iceburg. But the authors showed it’s pretty standard for us to have cognitive bias when we’re justifying our own actions, and the more we’ve put into it the more intractable the bias. Even if we’re very smart, we all have huge blind spots that get in the way of seeing clear data, and the worse pain you’re in, the harder it is to see reality because you’re having to justify being in so much pain.

        It made me think of bears, and bulls, actually, and where our biases lie. There isn’t much *pain* in my housing, on a month to month basis – I have plenty of space in a good location and pay an acceptable amount of my income to housing. There’s a lot more pain in highly-leveraged new owners’ budgets. This is likely why it always strikes me as funny when bulls suggest we’re also speculating by not buying – clearly, I’m renting for my current lifestyle – leaving liquidity and diversification as options. But that’s not even a considered possibility in the discussion, *even when* rent is lower than interest and taxes would be for the same structure.

    • I’ve stopped watching GlobalTV and moved to CBCNews…Global (as much as I like their anchors and wx guy) is way too biased and sweet on RE stories (vomit…) 😀

  9. 4SlicesofCheese

    Jasonn is renting a place for about 1100/month.

    If he were to have bought the same unit, the strata for the place would probably have been around 250. In 7 years he would have paid out 21000 for strata alone.

    Property taxes around 1600 x 7 is around 11200.

    Those two alone that added nothing to his equity costs him 32200, and we thats not even including interest costs yet.

    • Froogle Scott

      Right. Homeowners ‘waste’ money on the following items, none of which add anything to the equity in a house:

      • mortgage interest
      • property tax
      • house insurance
      • utility bills
      • repair and maintenance costs

      Renters may have utility bills, if the utilities are not included in the rent, but they don’t pay any of the other things.

      Routine repair and maintenance stops a structure from depreciating, but unlike renovations, it only replaces what was already there.

      Homeowners and renters both have an accommodation cost. From a purely financial perspective, either can come out ahead, depending on a number of factors. One of the biggest factors is the mortgage interest paid by homeowners. As a homeowner, if you can minimize mortgage interest, you have a better chance of coming out ahead. And one great way to minimize mortgage interest is to shorten your amortization period. And avoid jumbo mortgages…

      • Froogle Scott

        Regarding ‘coming out ahead’, I should have added relative to each other. Accommodation cost almost always remains a cost, for both renter and homeowner. Which would probably surprise a lot of homeowners who think they’ve ‘made money’ on their houses. In fact, they haven’t made anything. I hope to elaborate soon.

      • Thanks, Froogle. And we look forward to the elaboration.

  10. Jasonn would have been patting himself as an RE expert if he would have bought 6 years ago when insurable amortizations were raised from 25 to 40 years. He would have been savy catching the run up. But he waited and now he’s a victim.

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