The PROVINCE has turned on us!

If you live in Vancouver then you know about the Province newspaper. Thats the handy small tabloid-sized daily paper with headlines like ‘DEADLY KILLER KILLS MAN DEAD’ and ‘WET T-SHIRT CONTEST ENDS BADLY’ as opposed to the other local canwest paper (the Vancouver Sun) that uses more multi-sylabic words, i.e. ‘CATASTROPHE SEEN AS DISASTER LOOMS’.

Anyways, my point is that the Province has always been there for us simple folk. It was the paper to turn to when you wanted to find out what Jessica Simpson is wearing and whats on tv tonight. You could also often find heart-warming stories about 23 year old real-estate investors and which new condo developement they are lining up to buy in.

The one thing you would never find in the Province newspaper was articles like this:

Canada Mortgage and Housing Corp. recently announced moves that critics say will drive many homebuyers to the poor house, as it were, and could leave Canadian taxpayers on the hook.

CMHC is offering mortgage insurance for interest-only loans and on amortizations of up to 35 years, while also scrapping the typical $165 application fee on high-ratio loan products for people with a down payment of less than 25 per cent.

With an interest-only loan, a borrower can pay interest only for the first 10 years, then pay both interest and principal.

Payments are initially low, but since the loan must still be paid off within the original amortization period, payments balloon as the principal starts being paid down, even more if interest rates rise.

That’s right, ladies and gentlemen – I am very sad to report that the Province newspaper has joined the dark side of real-estate negativity, and it gets worse. Much worse:

If a person spends 10 years paying down only interest, he or she saves nothing if the value of the house doesn’t appreciate during that period.

In fact, many people are now buying at the top of a housing boom, particularly in Western Canada, and face the likelihood of selling after the market has cooled off.

Said the Edmonton firm Hendrickson Financial in a recent commentary: “When home prices begin declining, homeowners who have recently purchased with 100-per-cent financing will have to come to terms with owing more than their home is worth.”

That’s when you get people walking away from their homes — when they have no equity to lose and can start all over with a cheaper house that will require smaller payments.

Can you BELIEVE it?!? The TOP of a housing boom?!? Walking away from their homes?!? What is with these people?!? What makes them so cranky that they feel the need to ruin our party? Is it jealousy? Some sort of new-found intellectual ellitism?

I don’t know about you, but I intend to write a strongly worded letter of complaint to the editor. It will be brief. It will contain my own ‘facts’ and ‘figures’, but one thing that it will NOT have is words with more than two syllables.

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first_time_buyer
first_time_buyer
14 years ago

"Is it debt though? You can always sell a house, its not like stocks that can lose all their value. People that say prices are going down are just hopefull because they didn't buy earlier. "Not exactly, if you diversify. Even in the last post dot boom crash, dow lost just 35%. Now, that is 35% of what you invested, not what you borrowed. Leverage my friend, works both ways. 10% drop in housing prices may sink all your 10% equity in it and any further sink would sink you in debt upto your eyeballs, and upto next 7 generations, no one would talk of owning a house in your family.

treefrog
treefrog
14 years ago

anonymous said "You can always sell a house, its not like stocks that can lose all their value."Yes, it is true that houses won't lose all their value, but it sounds like average prices in tokyo have only reached 60% of what they were before they crashed.Thats a big drop that has lasted a loong time.

the pope
the pope
14 years ago

Is it debt though?Hmm.. That would be a question for the bank. If you figure out a way to convince them that its not let me know.

WoodenHorse
WoodenHorse
14 years ago

Anonymous said… Is it debt though? You can always sell a house, its not like stocks that can lose all their value. People that say prices are going down are just hopefull because they didn't buy earlier. Let us see….

Anonymous
Anonymous
14 years ago

Is it debt though? You can always sell a house, its not like stocks that can lose all their value. People that say prices are going down are just hopefull because they didn't buy earlier.

folhaseca
folhaseca
14 years ago

Uh, yeah – except that you have a house!And a huge debt.

Anonymous
Anonymous
14 years ago

If a person spends 10 years paying down only interest, he or she saves nothing if the value of the house doesn't appreciate during that period._____Uh, yeah – except that you have a house!

treefrog
treefrog
14 years ago

Where are we going and why am I in this handbasket?