Addicted To Something So Easy To Get
Macleans reports from Canada. “With all the rage, greed and animosity, the country’s already overheated housing market has hit yet another level—one where desperate, would-be buyers clamour, wild-eyed, for a slice of the action, while existing homeowners go to extreme lengths to protect their property nest eggs. Meanwhile, the rest of the world looks on and wonders: Has Canada gone crazy? ‘We’re seeing the bully offers take over, and it’s chaos,’ says David Fleming, a Toronto realtor, adding that he’s been involved in 20 bully-offer deals so far this year, about triple the number he saw last spring. ‘In theory, your offer has to be so incredible that [the seller] just has to take it.’”
“All it takes is one frustrated couple to bid $100,000 over asking on a property to turn a street of $500,000 homes into $600,000 ones. Toronto lawyer Michael Kril-Mascarin calls it the ’stupid premium,’ meaning how much extra buyers are willing to pay to get into the Toronto real estate market. ‘When people have lost a couple of places already, they’re at the point of ‘Screw it,’ says Kril-Mascarin, who’s lost his fair share of bidding wars, including one on a house with no kitchen and graffiti-covered walls that still drew 19 offers and a selling price of $601,000. ‘Banks are willing to lend, and money is cheap, so they’re offering crazy money, in my opinion.’”
The North Shore News. “A $4-million ‘teardown’ that sold for $1 million over asking price in West Vancouver this week is renewing debate about money flooding into the top tiers of the Lower Mainland’s real estate market and its ripple effect on affordability. The buyer, from mainland China, already owns a home in the Lower Mainland, and plans to tear the existing home down and rebuild on the lot, said Viv Harvey of Royal LePage Sussex, who represented the sellers in the deal. He hasn’t decided if he’s going to live in the house or resell it, she added.”
“While a deal like this is still unusual, it’s indicative of what’s going on in high-end real estate markets like West Vancouver. ‘It’s a market on steroids,’ said Harvey. ‘The market has gone a little crazy.’”
From CBC News. “Murad Ali and Arsheen Haji live large thanks to easy access to their home equity lines of credit, joining the many Canadians succumbing to the same temptation. The wedding, trips and high-end purchases were made possible with cash from two home equity lines of credit secured against a couple of investment condos the family owns. The debt from those loans now totals $370,000.”
“‘We are addicted for sure. Who wouldn’t be addicted to something so easy [to get]?’ says 35-year-old Ali about the free-flowing lines of credit that have enabled him to splurge on the finer things in life. ‘It’s easy, accessible cash at a very cheap price. The banks make it so easy for you to obtain it,’ says the Toronto-area software engineer. They’re still undecided about another loan. ‘If you get a line on this [house] and God forbid something happens to me or [my wife] and we are unable to sustain our lifestyle or stream of income that we have, then we would be in trouble and that may lead to us losing this house,’ says Ali.”
“And that’s why some rooms in the family’s home remain empty. Ali shows CBC News his large, mostly barren master bedroom and talks about his grand plans to furnish it — sometime in the future. ‘Without the credit line, it’s slow,’ he laments. But things could always change. The couple says just last week the bank called, inquiring if the family was interested in another loan.”
The Sherwood Park News. “While the projected housing starts for Edmonton and area are down, the resale market continues to be strong. Sherwood Park realtor Catherine Missiaen said she’s noticed that housing starts have been down. ‘I believe that people just don’t have a great deal of confidence in the market, even though the interest rate is really low,’ she said. ‘As well, the resell market is really booming — there’s so many new listings coming on at an unbelievable rate.’”
The Globe & Mail. “Home prices climbed in Canada in May for the fifth month in a row, though Calgary suffered the sharpest tumble in the history of the Teranet-National Bank house price index. Today’s reading of the index underscores what the Bank of Canada said yesterday is ‘apparent trifurcation’ of the country’s housing market.’This was because Calgary prices fell 3.3 per cent from April, the largest monthly drop recorded for that region, subtracting 0.3 percentage points from the gain of the composite index,’ senior economist Marc Pinsonneault said. ‘The monthly slide left Calgary prices the lowest since April of last year.’”
“Prices in Calgary are down 1.4 per cent from a year ago, and 5 per cent from their peak of last October. The decline in Calgary, Mr. Pinsonneault noted, was concentrated in houses rather than condominiums. ‘This is consistent with anecdotal evidence that, so far, Calgary’s market for high-end expensive homes has borne the brunt of the collapse in oil prices,’ he said.”
The Calgary Herald. “Royal LePage says Canada’s recreational property market is “flourishing,” except in Alberta where sales and prices are declining. In a report Thursday, it said the depressed energy sector is to blame for the slowdown in Alberta, some border areas of eastern British Columbia, and in Newfoundland. Ted Iverson, a sales representative at Royal LePage Network Realty Corp., said prices in Sylvan Lake have softened, which could present a buying opportunity for some.”
“‘I think we’ll have some good sales this year based on lower prices,’ he said. ‘It’s a chance for people to buy a property here who couldn’t previously afford to buy. Once the price of oil gets better, the market will improve.’”
