Bling

Laxness warned you. Did you read Independent People? Did you make an effort to understand it? Did you realize that unless you are one of the 1%, you are Bjartur of Summerhouses. You don’t think you are? Really? Denial and vanity won’t keep you from being Bjartur.

Bjartur worked all his life to be independent. That’s in the title, right? Independent People. Owe no money to anyone. Never trust a money lender. I remember my grandfather saying the same thing. Both grandfathers, actually. They never believed that debt equaled wealth. Bling wasn’t their goal in life.

Yes, I know, Laxness was first a Catholic and then a Commie. He was looking for something, anything that would make more sense than the system in which he grew up. They didn’t. He threw them off. The way one tries on coats at the clothing store. That didn’t keep him from seeing the crazy way the Capitalist system worked. Boom and bust. Power to the bankers. Success judged by how much you can spend. He should be alive now, in the age of Bling.

When I bought my last house, I didn’t have much money for furniture and drapes, the kind of stuff with which you fill up a house. Stuff to sit on, eat off, eat with, sleep on. I saw an ad in the newspaper saying that some people were selling all their household goods. Second hand, I thought, maybe cheap enough for me to be able to buy a few things.

I drove out there. Mamma mia! Or whatever they say in Icelandic. Mega house. New. This couple had built it, furnished it. Nothing but the best. Twelve months had passed. They didn’t like their stuff anymore. It was piled up on the property and in the three car garage. When you’re competing for the blingiest of the bling, you’ve got to have the latest. You don’t want your blingy relatives and friends to see your couch, your mixmaster, your latte maker and sneer. I fought with the other peasants for whatever I could get. When you’re a peasant, you use your elbows and knees to claim and protect stuff that came from stores that wouldn’t even let you in the door.

What made Bjartur and you spring into my thoughts today was Garth Turner’s blog, http://www.greaterfool.ca/. This post is called geezernomics. Since I’m now a geezer, it caught my attention. He’s got advice on OAS and CPP, the sort of things that are important to geezers.

Bjartur, of course, never had OAS or CPP. What he had was a sheep ranch at a place called Summerhouses. The reason he was called Bjartur of Summerhouses is that there were a lot of Bjarturs and when you mentioned his name people needed to know which one you were talking about. In this case, it was the Bjartur who started to build a house with cheap money when the market for sheep products was good and had it foreclosed on when he couldn’t pay his loan.

However, there are people who feel they, unlike Bjartur, can never have this happen. After all, real estate always goes up. Except in Vancouver there is already a property being offered 40 % below assessment. 40%. 30% below assessment is common. Don’t roll your eyes. This is coming to you. There’s an ad on Craiglist by a couple who bought something they shouldn’t have. In the ad they say you, yes, that’s you, can rent their place for $2500.00 a month and they are going to live in the basement along with the washer and dryer. Their bling has blung. People think they may have bought another house before selling (houses always sell really fast for more than you paid for them, right) and they can’t sell house number one. Imagine having two mortgages and living in the basement along with the washer and dryer. Maybe they can take in washing.

I know that the most brothers and sisters of Bjartur are the young and the indebted but I also know of any number of geezers who bought or built bling, houses that said in spite of the fact that they’re part of the Viagra crowd, they’re going to have a pile more kids. I mean, why would a couple in their sixties build a place with four bedrooms, five bathrooms, unless they’re going to have more kids? Maybe they figure in tough times (have you been watching the stock market these last few days?), their kids and grandkids can move in. Or maybe they’re going to provide room and board?

Garth Turner says get liquid, sell your house, rent until whatever is happening quits happening. Only a short time ago, I could have done that. In my neighbourhood, when a For Sale sign went up, two days later a sticker went on saying Sold. Not no more, no more. DOM (Days on the Market) has gone from hours to months, many months. A beautiful house in our neighbourhood has been on sale for at least three months. Today, as I walked by it said “New Price.” Betcha, betcha, the price hasn’t gone up.

Life’s funny. When I read Independent People it never occurred to me that I wasn’t any smarter than Bjartur of Summerhouses. Cripes, I thought, couldn’t he see what was coming? Nope. And neither could I and neither could you. We keep making the same mistakes over and over again.

Sorry Halldor, I ignored your good advice. You may have been a Catholic and a Commie but you got it right.

 

Real Estate Gossip

Address:# 5 1483 BEACH AV, West End, Vancouver West

March 09 V903565 $7,500,000 $0 0%
April 08 V903565 removed
April 18 V944049 $6,900,000 $-600,000 -8%
May 30 V944049 $5,999,000 $-1,501,000 -20%
June 20 V944049 $5,899,000 $-1,601,000 -21%
July 31 V944049 $5,799,950 $-1,700,050 -23%
August 14 V944049 $4,950,000 $-2,550,000 -34%
August 17 V944049 $4,695,000 $-2,805,000 -37%

This table is from the blog site, Vancouver Price Drop. It’s for shock effect. I mean even after the price is off 37%, I couldn’t afford it. Even if it goes down 80%, I couldn’t afford it. Neither, I expect, could you. What would anyone expect to happen with a house priced at 7,500,000?  I mean, how many buyers are out there with 7,500,000 burning a hole in their pocket?

But that’s what has people on the internet whispering, whispering that  the rah rah promo of real estate always going up is becoming less believable. That some real estate agents are now delivering pizza.

Of course, the whispering is about the two major Canadian housing markets in Toronto and Vancouver. I don’t follow the Toronto market but Vancouver has been nuts. Tear down shacks sell for more than a million dollars, more than a million dollars. That means someone is willing to pay a million dollars for a lot, plus closing costs, taxes, and the cost of tearing down the tear down. No price has been too  much because you know prices always go up, houses have gone up ten times what they were bought for in the seventies.

Even in sleepy Victoria, the land of the newly wed and nearly dead, the land of few decent paying jobs, lots of crap jobs selling trinkets or sandwiches to the tourists for minimum wage, house prices have had nothing to do with local employment. There’s the Legislature and, therefore, civil servants but, contrary to what most people believe, most civil servants do not make large salaries. There’s the university. There’s dockyards where ships get built and repaired. The navy. But Victoria isn’t an industrial town. Tourists never bring the locals big money unless the local owns a few tourist traps that employ minimum wage workers. There are the hospitals and the schools.

Real estate agents have been making out like gangbusters. They’ve been selling to the retirees from the provinces on the other side of the mountains. The kind who have sold the farm and want to spend the rest of their life golfing instead of shovelling snow.

My first house, 1971, cost me 47,000. I sold it for 85,000. The buyer sold it for 250,000. It is now assessed at 520,000. Same house. 1915, 2.5 bedrooms, kitchen, formal living room and dining room, lots of built in cupboards and paneling (the builder/owner was a Welsh shipbuilder), one bathroom, an old fashioned basement with a low ceiling. The people I bought from had owned it for three years. They paid 18,000. Can you say “Nuts”? 18,000 to 520,000. For what? A house built in 1915 on a small lot.

I then bought a house that had been on the market for a year. Heritage, double lot, 1929. It needed work.I sold it two years ago for 3.5 times what I paid.

The whisperers say it is coming to an end. People have been buying the most expensive they can manage because real estate only goes up, didn’t ya know. Except anyone who knows anything about the history of real estate (this does not include real estate agents), knows real estate tanks and when it does, it takes everyone and everything with it. Or so the rumour goes.

My grandfather used to regale me with stories of real estate in Winnipeg. He bought a two story brownstone around Osborne. Then his employer cut his wages, then cut his wages, then cut his wages and there were no other jobs. And my grandfather no longer could pay the mortgage and his house was repossessed. He never got over being bitter about it.

He used to tell me about the big houses off Corydon that the owners couldn’t afford to keep up and rented them out, not for cash, but for someone to live in them, heat them, pay the electricity, cover the taxes.

Like the lots around Winnipeg Beach that had gone up to 1,200 dollars. When men were making a dollar a day. And which went down to 50.00 a lot and stayed there for a very long time.

But that was a long time ago and things are different now.

Houses aren’t just homes, they’re ATMs, they’re assets. That’s those things you can turn into money. I’ve got this asset, honey. I think I’ll sell it and we can go on a vacation to Southern France. Except, sometimes, the whisperers say, assets stop being liquid, like nobody wants to buy them anymore. Happens all the time. Businesses go under because no one wants to buy their product. Can’t pay the bills. The creditors refuse any more credit. I worked for a short time for a company that evaluated credit for businesses. Every day I saw small businesses where the stock was illiquid. It hadn’t sold. It was out of fashion. Credit payments were over ninety days late. It’s called going bankrupt. But houses aren’t like that. Someone always wants them.

The whisperers say houses are becoming illiquid. Imagine. You bought a house in the last few years. Your plan was to sell it to finance your retirement. Your assumption was that real estate always goes up, that there is always an eager buyer, no, not a buyer but buyers, just waiting to bid on it, paying even more than you imagined your house was worth. But what if buyers disappear? What if nobody bids? What if there are no offers? What if you lower the price to create, as the real estate agents call it, a better price point but nobody makes an offer? You get the idea. IIliquid.

All the chatter is about Toronto and Vancouver. Of course, what do you expect? The people living in those cities think they’re the centre of the Universe. Everywhere else the prices are still going up, the buyers are outbidding each other in a desperate competition to own a house with granite countertops, Jacuzzis with more jets than anyone else, places like Calgary, Edmonton, Winnipeg, Saskatoon, Regina. Places where there are lots of jobs. I was in Calgary two days ago. There were posters everywhere asking people to apply for jobs, begging people to apply for jobs. Oil is 95.00 a barrel. The crops in Saskatchewan and Manitoba are bumper crops, magnificent crops, fantastic crops, I can afford a bigger house, a new truck, bigger farm machinery, a winter in Mexico, kind of crops.

But there are whispers like those on the blog site “Whispers from the edge of the rain forest”. Gossip on the internet, nothing but gossip. Urban myths. And, of course, there’s Garth Turner, that rabble rouser, with his blog. The sky is falling, he says. House prices are going down 45%.

At night when I think about the whisperers, I sometimes think, I shoulda rented instead of downsizing by buying a smaller place. I shoulda downsized into a rental apartment. Urban myths, that’s all they are, I tell myself. Real estate always goes up. It’s just internet gossip. People will always want to retire to Victoria, to Kelona, Salmon Arm, Kamloops.

I just had the balcony and the deck rebuilt. Why not? The price is sure to go up. I’ll get my money back.  It’s just internet gossip.