The side of the road

 

July 02 V959872 $1,348,888 $-350,112 -21%

“Will you live in a box by the side of the road? Will you live in a tent? Or in your car, if it hasn’t been repossessed? Will you sleep on the WalMart parking lot? Will you, will you?”

To hear some “experts” this will be the fate of those who have large mortgages. The fate of people who will be bankrupted by interest rates climbing even a percent or two. The fate of people who, when their mortgage has to be renewed, can’t come up with the difference between what is owed on the mortgage and the new, lower assessed value.

The Norns

The doomsayers say that house prices will drop 25%, 40%, 70%. All equity will be lost. Foreclosures will happen. It will be slow  but relentless, just like when the bank foreclosed on my grandfather’s house. The furniture will go out on the street. Or to the auction. Or sold off for whatever you can get at a garage sale.

The doomsayers, rubbing their hands with glee, are selling their properties, hoarding cash, waiting for when the banks and credit unions, desperate to unload properties they’ve foreclosed on, put up wall dividers, pin hundreds of pictures of houses and condos on them. Just like they did in the 1980s. I remember those wall dividers and pictures. If you had cash, you could bargain for 50% of the mortgage. Mortgage of 300,000? Buy it out for 150,000. The person foreclosed on may have paid off 200,000. Doesn’t matter. They couldn’t come up with the difference, they couldn’t make the payments, they couldn’t keep their job, they couldn’t stop getting sick, they couldn’t keep their marriage intact, they couldn’t. They couldn’t.

Tent city, New Jersey, USA Photo by Robert Johnson

Of course, there are the flippers, the ones who have been buying condos before they are built, get in early, get in cheap and when the condos are built, sell and make a big profit. Make a really big profit by buying five with as little down as possible. Now caught with prices falling. There goes the Ferrari.

And the builders. You’d think the builders, being in the business, would be the first to avoid disaster. Never. They never see it coming. They’re building houses for which they want twice the assessed value. Except the doomsayers say that soon assessed value will mean nothing. In the Vancouver area, in Victoria, in the Okanagan, the unheard of, the unbelievable is  happening. Houses are selling below assessed value. Even more unbelievable in these places where the only direction for prices is up, asking prices below assessment aren’t bringing in sellers, aren’t even bringing in viewers.

That, of course, is the doomsayers point of view. But the real estate agents are saying nonsense, the bankers are saying nonsense, the mortgage brokers are saying nonsense, they’re not making land anymore, immigration creates constant demand, rich Chinese will pay any price to have a haven.

Will we, like the Americans, have tent cities of those foreclosed on, tossed out into the street? Will we have people who, over campfires, reminisce fondly about when they had granite counter tops? Solid maple cabinets, Molteni Range Cookers, with  a Combination Oven, the Blast Chiller, the Precision Vacuum Sealer, and even a Stand Mixer. Will some men weep with memories of a lost P.D. Part Cooker? Will the dispossessed as they spoon beans out of tin, despair over their lost Perlick Outdoor Fridge and Beer Dispenser? Will there be one upmanship as someone mentions the Kalamazoo 900 Series Hybrid Grill? Will someone lie awake at night, tossing and turning, as she remembers her Cal Spa Outdoor Super Sports Cabana (35,000) at the edge of her swimming pool, now someone else’s at half the price or less?

If you listen to the doomsayers, all this will come to pass. The Lexus will be lost. A shower at KOA will be a treat.

Not here, mortgage holders scoff, not here. It’s different here, in Calgary, Saskatoon, Winnipeg. The real estate agents, the bankers, the mortgage brokers say, that’s right. Calgary is booming, Saskatoon is booming, Winnipeg never felt the recession. Here, we will get to keep our granite counter tops, our Kaos lamp fixture by Orazio, our Vividus mattress.

Take your pick. Place your bets. Ask the Norns for guidance.