For almost 28 years, I have been madly, monogamously in love with the same … house. I love the way the light streams through its copious windows, I love its gleaming hardwood floors, its oak French doors opening to our small pretty garden, its tiny main floor powder room with the curved wall painted a bright poppy shade. It was this powder room and its aspirations that a writer friend sarcastically described as “very ruling class.”
But the only “ruling class” element to our modest Toronto house, purchased long ago in a mixed downtown area that is now astonishingly regarded as “blue chip,” with its front yard now badly needing a new landscape job, is what it is worth today. Piles of money.
As I absorb yet another scare story telling me the real-estate bubble that created this cash cow is about to burst, I can’t help feeling a sense of urgency. Is it now that we are supposed to pull up stakes and clear out, pocketing what we can in an overheated market that has nowhere to go but down?
“Let’s run the numbers,” sighs my husband, who clearly has little intention of leaving his garden or a livable house only a short stroll away from civilization – cafés, book stores, city life.
Thinking about this bubble bursting can drive you crazy. For most Canadians, the only wealth they’ve managed to accumulate is their house, give or take some hefty credit lines against it.
Right now, mortgages, led by BMO at 2.99 per cent for a five-year fixed rate, are so absurdly low that they could be viewed as irresponsible, luring first-time buyers who can’t afford it into the market. In our neighbourhood that market is still ruled by vicious bidding wars and eagle-eyed couples scouting for the first real sign of spring – not crocuses, but “for sale” signs. What happens when these rates rise?
In other parts of the country, some breathing room has emerged. “In Calgary, it’s actually a buyers’ market, and people can take more time deciding, “ says BMO mortgage expert Laura Parsons, who confides that she is going through the same decision-making process about her Calgary home.
“When you sell, you are starting over, maybe giving up a beautiful yard and a lifestyle,” she muses. And as for those owners who think they are sitting on a million, but might get even more moolah by quickly sprucing up their abode with an upgrade or two, she cautions: “Don’t do all the renovating bells and whistles. Get an appraisal first.”
There’s also the much more pressing question of where you can afford to move to after you cash in: “Get top dollar, pay top dollar,” says Ms. Parsons. A timely, if depressing mantra.
While a discussion like this can seem like a privileged rant, it’s not. Houses are never just investments, and the desire for a home cuts across every generation and all income levels. A house is the single most powerful metaphor for “happy family life.” It is the embodiment of the dream. Twentysomething friends of my children have started buying into this dream, at what seem like hideous prices in a debt-laden society.
The morning, 28 years ago, after we moved into our new home, which, at well under $200,000 was still so scarily expensive to us that we hyperventilated in our car before making the offer, we sat in our living room, marvelling at our good fortune – and courage. In some cities, no matter what era, it’s always been a financial stretch to buy a house. We couldn’t possibly have predicted real estate’s astronomic rise, fuelled by greed and other economic vagaries.
We would bring two babies home to this house, and raise them to adulthood. It would be the go-to house for extended family celebrations – birthdays, holiday parties, seders. It would harbour secrets of adolescent lapses. “Remember the time you came home from your trip and found the front porch canopy ripped and the light fixture pulled out?” began one such amiable recent confession. “What you didn’t know was these two jerky friends had bent a garden chair in half and we had to hide it ...” Oh well, we all survived.
Somehow, for me, running the memories is still more satisfying than running the numbers. BMO’s Ms. Parsons says she hopes people will pay less attention to alarmist stories about bursting bubbles and have “better conversations” about how they want to live and how to make it happen. Many first-time buyers, she says, are not even aware of a federal program that allows them to borrow from their RSP tax-free and pay back later. But how many first-time buyers have RSPs? And so it goes, financial reality chafing against eternal house lust, with banks out to make a buck.
The conversation I ended up having was not with my husband: “House, you may run out of steam and start sagging in value, but spring is here, and the garden is filled with new shoots. Looks like we are betting on you for another year.”