|Original price: $155,000|
Sitting here in my old rocking chair, thinking back to the old days, (notice I did not say "good old days") I am reminded of the sensation we caused among our elders when we considered purchasing our very first house.
"$39,000!!!! For a mutual driveway? Are you out of your minds?"
The house was a gracious Tudor side entry, centre-hall home, on a large pie-shaped lot framed by mature trees, just north-east of Yonge and Eglinton. During our first visit, we had to step over the weeping, prostrate body of the young wife of the owner, who was chaining herself to the oak bannister in a pathetic attempt to discourage her husband from accepting the sudden transfer he was offered by his employer. It seems they had just finished renovating and decorating their dream home and now, as fate would have it, they had to abandon ship, to mix a metaphor, and be on their way to a new life, in a galaxy far, far away. They had to move quickly and so they had to 'give the house away', the agent confided. It was perfect, except for that mutual driveway.
All we needed, honest-to-god, was $5000 down and we'd qualify for a mortgage. But then, we'd have to suffer a lifetime of aggravation over the driveway, we were counselled.
We were at the start of our first housing bubble, in the early 1970's, when prices were increasing by the thousands on a daily basis. I don't want to make my younger readers weep, but this was when you could pick up a typical Toronto square plan, three bedroom, detached brick house in Upper Forest Hill Village for about $30,000. With $5-10,000 down, it would carry like rent. One couple we knew had just bought a home like this for $29,000 a few weeks before. However, other friends, who had been reluctant to buy a lovely mansion for $50,000 because it was too big for a starter home, soon had to fork over $75,000 for something considerably smaller.
The pressure was on.
The question, the previous year, would have been,
"Why would you bother?"
In those days, there was no hurry to get into a house.
There was an order to the universe. First things, first.
Remember that old taunt?
"First comes love,
Then comes marriage,
Then comes (insert your name here) with a baby carriage."
In between marriage, closer to carriage, came the appropriate time to consider looking for a home.
It wasn't about the money, just the responsibility.
We had moved into duplexes or exciting new dwellings called 'high rises' and we lived on one income, banking the second for a down payment sometime in the future. (I use the term 'we' rather cavalierly, since the gamut ran from those who barely survived on two incomes to those who would never have to worry about a downpayment, given their family circumstances). Some took wedding gift money or even money allocated for weddings to 'put down' on a house. The point is, nobody worried too much about housing. Prices were stable and fairly reasonable in that rent-to-purchase ratio we keep hearing about. The one that no longer makes sense.
Then, all of a sudden, things went crazy.
It had something to do with the baby boom....didn't everything? And because it was the first time in human memory this demand had so outstripped supply, those with the longest memories, our parents, thought the whole thing was an aberration and would soon blow over.
They counselled caution.
They were wrong.
They said we'd be sorry if we even considered a mutual driveway.
They were wrong again.
Within a year, we were paying double the amount that would have bought that dream house in North Toronto for a much smaller townhouse in far-flung Thornhill. (And, of course, that lovely house we passed up is now worth well over a million dollars).
Since then, we've been through several 'booms' and 'bubbles'. We've seen friends put their homes on the market for $800,000 and watch the value plummet to $400,000 by the time they could unload. We've known people who tried to play the rising market by buying high, hanging on in hopes that their present domicile would rise enough to narrow the gap by closing time, only to have to walk away from everything when the tide turned. We've had mortgages at 10% and even knew people who had to finance a first mortgage at 14%.
So I am in a quandry. Am I suffering from that same 'old tyme thinking' of my parents' generation when I think house prices are insanely inflated and young people will be sorry if they buy into this crazy market? That all hell is going to break loose, yet again?
Or am I prescient and wise?
The articles I read all emphasize the slowdown of sales and the glut of accommodations but there is still a lag in the area of 'price correction'. If, indeed, home sales in the GTA have "plummeted 50% from the year before" as the Financial Post reported a few months ago, and The Economist reports Canada as topping the list of the "most overvalued housing market IN THE WORLD", can someone please explain why prices are still creeping up? Does this make sense? Something is very fishy.
I love the rationale that these properties are really inexpensive compared to world prices. I guess that works for the international absentee investor, but for me? Nope!
After all, a cubbyhole in New York, Paris or London is IN NEW YORK, PARIS OR LONDON!
See what I mean about not making sense?
I am haunted by those images of empty cities and shopping malls, in China, rebroadcast on 60 Minutes last week, when Leslie Stahl toured these monuments to speculative greed. Unlike ancient cities, left abandoned by war or pestilence, these places have never known human occupation. Nor are they likely to. Their owners are still waiting to collect.
As for now, I think I'll avoid the Yorkville area for awhile until they crazy-glue those beautiful, shimmery glass panels back in place at the Four Seasons.
Call me 'Chicken Little', but don't say I didn't warn you that the sky was falling!