In November, 1988, the artist Charlie Pachter fell hard for a 21/2-storey row house on Beverley Street in midtown Toronto.
The houses on Beverley are notable for their yellow-brick construction, and this particular house at 50 Beverley, built in 1880, beckoned. “The house was absolutely perfect,” Mr. Pachter recalls. “I fell for it.”
Mr. Pachter's mother, Sara, had witnessed her son's real estate endeavours go south in the eighties recession, during which Mr. Pachter lost what he describes as a fortune invested in properties on Toronto's Queen Street. That circumstance had caused Sara Pachter to note, wryly: “Charlie, if you went into the cemetery business, people would stop dying.”
Mr. Pachter paid $527,500 for 50 Beverley, the “top price paid on the street at the time,” he says. “They used to call me the King of Queen and then they renamed me the Baron of Beverley after I lost all the Queen Street stuff.”
Neighbours on the street took to whispering this observation: Charlie's house appeared not to be worth what he paid for it. Charlie, they were convinced, was lost in the land of “negative equity.”
The artist, known famously for his painting of the Queen saluting and poised on top of a moose, was and is very fond of real estate. Margaret Atwood lent him $10,000 to put toward his first house purchase, way back when.
He says it is important to note that the Beverley house was fully and gorgeously furnished. “It was a turnkey house right down to the last crystal wine glass,” he says.
Still. In the fall of 2000 Mr. Pachter sold the pretty yellow house, which he maintained as a rental property. The sale price? $361,000.
“I do think it's exceptional how much I lost,” he says. “I really did fall for it.”
You are at a dinner party. The topic of conversation arises: housing. Is this the end of the housing market? And what will it mean for me as a consumer?
You answer: This isn't 1991. And: That depends.
Today marks Day One of the pre-Christmas buy-buy-buy season and the country is in a slump.
The real estate market has fallen in the West and is slipping in Central Canada. (The Central 1 Credit Union in Vancouver this week declared the B.C. housing market to be in “recession.” “Some don't like that word,” says Central 1 chief executive officer Helmut Pastrick. “The ‘R' word. It has some unpleasant connotations with it. For an economist it rolls off the tongue fairly easily.”) It was puffed-up real estate values that fuelled the so-called aspirational consumption of recent years.
And consumer confidence is in the tank.
When the vodka martinis are poured this evening, the cocktail crowd will be clucking about the house down the street that sold for a million dollars six months ago – and the million-dollar house around the corner that has sat unloved on the market for two.
Suddenly, a whole new generation of homeowners is asking the question: Could what happened to Charlie happen to me?
On Oct. 1, KFC Corp. issued a $10 challenge to American consumers to create a family meal for less than $10. (Seven pieces of chicken, a “side” and biscuits.) Advising consumers on how to take takeout “to the next level,” the fast-food chain recommended that shoppers “spruce it up” by, for example, putting the “Original Recipe Chicken on a nice platter and garnish with parsley.” Setting the mood was another tip: “Add some ambience at home with candles, soft background music and other restaurant cues.”
In November, 2004, Eric Belsky at the Joint Center for Housing Studies at Harvard University co-authored a study titled Housing Wealth Effects: Housing's Impact on Wealth Accumulation, Wealth Distribution and Consumer Spending.
Two key conclusions culled from Mr. Belsky's research are these: “Wealth effects of real estate plainly ramp up to their long-run effects much faster than the wealth effects resulting from gains in corporate equities.”
