Living in Vancouver this may seem unrealistic. Is it possible a house costs the same as a swanky fashion label handbag? Reports say, “Yes, it is.” In view of the current financial crisis real estate prices have been reported to be as low as $1000 for a house in Detroit and Cleveland.
Are the media making a mountain out of a mole hill? Curiosity got the better of me and I decided to dig in deeper on the looming financial crisis in North American real estate. Media offerings from major online news websites in both Canada and the US provided an interesting contrast. Despite a sub prime mortgage crisis Forbes magazine reported what $1 million buys in homes worldwide, while the Canadian Real Estate Association (CREA) reported a 12.3 per cent drop in sales of houses.
Experts are still divided over what the future hold. Ted Tsiakopoulos of the Canada Mortgage Housing Corporation (CMHC) could not foresee a “…U.S. style housing market meltdown in Canada.” But Ontario MP Garth Turner has a different view. The author of a new book, “The Greater Fool: The Troubled Future of Real Estate,” Turner thinks the pieces are in place for a real estate collapse in this country.
“I ain’t got a motorboat but I can float ya boat”
As we shovelled our snow ridden walkways, promises of a sun-soaked house in Florida with a swimming pool in the courtyard seemed like a dream come true.
Last year alone, Canadians bought 56,000 Sunbelt properties, says Brian Ellis, vice-president of Brampton-based Florida Home Finders of Canada Inc.
“The absolute biggest bargains are in luxury product,” Ellis adds. “You can get a house on the water with its own private dock that sold for $3-million a year ago for not much more than $1-million today.”
Every time I went online my heart sank as I read about the distressing real estate failure in the market. I wondered on ways the media have jumped on the story of our economy, making it constant front page news.
The online news websites constantly updated the financial crisis timeline and sidebars to make sure finances are on our mind at all times.
Then there is the threat of job losses which makes the real life get even more “in your face”. With the Canadian budget around the corner ready to be announced at the end of January and Finance Minister Jim Flaherty said, “We regrettably are going to have to expect continuing job losses in Canada,” he said, hours after new Statistics Canada data showed that the country lost 34,400 jobs last month, more than expected.
The unemployment rate was 6.6 per cent. However, Mr. Flaherty stressed the Canadian job losses are not as staggering as those in the U.S.
I ponder now whether I’m not considering the severity of our financial situation, as implied by talks of further bailouts and threats of recession.
In the midst of all the ruckus and rumblings of economic carnage, I feel I am conducting myself in the same way I’ve always been. Except now, I’m seriously considering whether I should be more worried. The media are predicting long term financial crunch and here I am still buying a Louis Vuitton bag, at the price of a house in the U.S.