Wednesday, August 20, 2008

broaken dreems



I heard a piece on CBC Radio today about Brian Howell, who has been taking photographs of abandoned houses in Surrey. At first, I was wondering at why there were abandoned houses in Surrey; is it really that bad in there? Has the market really melted down, and it just escaped my attention? Upon reading the article (linked above), I realized that it was old (1950s, and '60s, and '70s) houses - on large lots that were being subdivided to build a bunch of small houses.

It is poignant to look at the photographs though - at one time, these were brand-new houses that people were proud to build and own. 50 years of Christmases, Hanukkahs, Easters, Diwalis, whatevers, birthday parties, first kisses and gropes in dark basements, fights, divorces, deaths, births, grandparents and kittens. Good grief, I'm getting maudlin and overly sentimental...

Really though, it's just about densification -
The population of Surrey is approaching 420,000. The city gains 1,000 to 1,500 new residents each month. Within 20 years, Surrey's population will be greater than Vancouver's.,
and houses are not (yet) being abandoned by distressed RE debtors.

That comes later.

14 comments:

arit said...

Solipsist,

I am with the opinion that we will not see many abandoned houses here. That might be on e of the diffs with the US.
People cannot 'walk away' here. The bank will chase you down. People will have to actually go down with the ship.

Sheep Deep in Cheap Ship

Regards

arit

kabloona said...

Hmmmmm...well, people walked away from the AHOP homes in droves when those went under water back in the 70s - and for a lot less money, too. AHOP was a Fed. Govt. plan to get people *who couldn't qualify for regular mortgages due to low income* into their own homes (sound familiar?). The result was the Feds/CMHC then became the biggest landlord in the country after all the defaults.

If a young person (25-30) should find themself chained to an asset that's $100k+ under water and the alternative is to declare bankruptcy, well....why not?

For an older person, it's not such a good idea....

Just my $0.02...

arit said...

kabloona,

Thanks for the info, I have never heard of AHOP before. Did it just fail? Why?

Regarding walking away: So if they do declare bankrupcy, the bank "forgives" them the money? Or can the bank come after them once they are back on their feet?

Thanks in advance,

arit

kabloona said...

Well, the loan is secured by the house....so I don't feel sorry for these dummy banks that issued these ridiculous mortgages. ;-)

Seriously, you can't get blood out of a stone. If a person declares bankruptcy, the creditors get some assets - usually not enough to cover the debt - and the bankrupt person walks away with a few assets the judge allows them to keep (car, assuming they own it outright)along with a real bad credit rating. However, if you are young enough, you should be able to scrimp and save and rebuild your credit rating by the time you are in your mid-thirties.

Again, I'm no lawyer or anything but that's my understanding of it. Bankruptcy isn't for everyone, but in certain circumstances it makes financial sense. Companies (and certain rich people) do it all the time....

Anonymous said...

All over the US, the story is the same. Possibly the worst in places like Las Vegas and Stockton that were handing out mortgages to illegal aliens like candy. When some folks "walk away" from a distressed house, we're not talking "walk away"; what it means is raw shellfish and chickens drilled and dropped into walls and doors to rot, plaster of paris and metamucil poured down drains, entire electrical systems shorted out and needing to be replaced, and wallboard, carpets, and wood flooring soaked in at least three months of saved up urine. The ingenuity they put into destroying these places that can't be unloaded for pennies on the dollar (sold as-is to adventurous people who can't smell or fools who buy sight-unseen "because it's such a great deal") would have, more properly applied, allowed them to have been able to make their mortgage payments.

But like the photo says, "Its fun to brake things."

Anonymous said...

bankruptcy anecdote

two people I work with have declared bankruptcy, they both drive new vehicles that they make payments on at 14% interest. both rent apartments and both have credit cards. during this past credit bubble, if you could fog a mirror, you could get a loan. if canada starts losing jobs the damage will spread very quickly.

j6p

Anonymous said...

Although it's not what our parents taught us, declaring bankruptcy in this day and age carries very little social stigma or financial consequences.

Banks make money by lending. They will find a way to put cash in your hands regardless of what a deadbeat you have been in the past.

If you're underwater on your mortgage by more than you have saved in the bank (a scenario we're seeing in the U.S. and will surely occur here) it takes some kinda crazy to keep paying off that mortgage.

Even in bankruptcy you're allowed to keep a vehicle up to a certain value. You're allowed to keep possessions up to a certain value.

And in no time you'll be getting credit card offers.

I'd wager that for every property manager who does a credit check on prospective tenants there are 9 homeowners with suites who don't bother.

I'd argue the sooner you pull the pin, declare bankruptcy and start clean the sooner you're on the road to recovery.

If runaway inflation teaches us anything, it's that saving is for suckers.

Anonymous said...

i have heard over and over that canada has not had the loose lending standards that the usa had. so how did my friend that works at mcd's end up leasing a brand new civic. and how do these guys that mow lawns for a living pay for the 40 000 dollar pick ups they drive? cash?

i guess all the real estate agents and construction workers paid cash for their vehicles and vacations because our finance co.'s have much tighter lending standards than they do down south.

several economists have told me so.

j6p

Strataman said...

arit "Regarding walking away: So if they do declare bankrupcy, the bank "forgives" them the money? Or can the bank come after them once they are back on their feet?"
Yes it's all over as soon as you hand it over to the trustee they all the creditors including banks can't even phone you.( The trustee will send THEM a nasty letter and threaten a law suit)! :-) For seven years you have no credit but if your employable you have lot's of cash. For the first year of your bankruptcy it's a good idea to take a fun menial job like run a ski lift or something, because you have to give the trustee about 20% of your take home earnings.If you can get under about $24000 a year you give them nothing. After year one is over you can if you have the skill make 500 G a year and guess what you'll have no debt! Don't kid yourself it's a very viable smart option! It's only a bit dangerous that first year if you make good bucks but then it still makes sense if your debt load is substantialy more then 20 % of your take home.

Anonymous said...

is there a way to play this?
can i go long on bankruptcy trustee co's?

j6p

Strataman said...

"can i go long on bankruptcy trustee co's?" Hmmm yes you could... so could I THANKS!!

solipsist said...

Thanks for all the commentary, folks!

Anonymous said...

somewhat off topic but please look at http://politisite.wordpress.com in the right hand column is an aug 22 entry about a recently slain realtor and real estate gang connections.

kabloona said...

From The Province:

"Murdered Chilliwack realtor Michael Gordon was buying and selling property for the UN Gang's jailed leader -- and hanging out with one of his sworn enemies, The Province has learned. "It doesn't matter how many times you associate with these guys, one time will get you dead," a police source said. "One time is too many." The source said Gordon, 33, was doing property deals for the UN Gang's jailed leader, Clayton Roueche, and spending time with one of Roueche's enemies....."

"Reported UN Gang member Elliott Castaneda, 29, was gunned down at a taco stand in Guadalajara, Mexico, on July 12, with fellow UN member Ahmet Kaawach.

Castaneda was a realtor with Homelife Glenayre Realty in Abbotsford until a few months before his death..."