The death of the American Dream

Remember when all you had to do was buy a house and live in it as the price went up? It’s only been a few months of dropping prices here in Vancouver, but in the US it’s getting harder to remember the good old days.

Call it the American dream that died. The slump in U.S. housing, now more than three years old, is the most severe since the Great Depression. A move by the government to revive the market – through a tax credit for first-time home buyers – met with some success earlier this year, but after the credit expired, sales collapsed in July. Now economists fear further declines in home prices, which have already fallen 30 per cent since their peak in 2006.

The days when Americans could count on their homes as the pillar of their financial affairs – a seemingly magical asset, bought with borrowed cash but steadily increasing in value, tapped to fund college tuitions, second homes, and retirement travel – are past. Even if the market eventually recovers, as many expect, the era of the home-as-nest-egg is over for the foreseeable future.

In this brave new world, housing prices don’t always go up, and if they do, the pace is more likely to be in line with inflation. People can find themselves trapped in their homes, unable to sell because their house is worth less than what they owe on their mortgages, a condition now shared by one in four U.S. homeowners.

Read more about the fundamental shift in the US housing market over at the Globe and Mail.

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Jimmy
Jimmy
10 years ago

Is Canada really different? 2 links:

Why Canada's housing market may be heading for a correction

http://www.theglobeandmail.com/report-on-business

Is Canada in a housing bubble?

http://www.theglobeandmail.com/report-on-business

buff_butler
buff_butler
10 years ago
Best place on meth
Best place on meth
10 years ago
Best place on meth
Best place on meth
10 years ago

@Anonymous: #87

Harper does have balls but they're in his mouth and belong to someone else.

Looks like it's open season on realtards and boy are they pissed.

http://www.theglobeandmail.com/report-on-business

Go propertyguys.com, wipe those douchebags off the face of the earth.

Mikey
Mikey
10 years ago

It seems that at least one developer is getting out while the getting is good, however his greed may be getting the better of him.

http://www.realtor.ca/propertyDetails.aspx?proper

Looks like he bought the lot last September for $600k, spent $15K on soft costs, and now wants $830K.

Is this a desperate hail mary at the end of the boom, or a valid business model?

chip
chip
10 years ago

@Best place on meth:

You can golf, sail and water ski on the same day. But more importantly, you can finish work on a Friday and within a few hours be having a drink in Bali or Phuket for the same price that Air Canada charges for a one-way flight from Vancouver to Nanaimo.

Anonymous
Anonymous
10 years ago

@SamanthaD: I'm sure real "ellites" (elites) such as yourself should be able to spell "layers" (lairs) and use proper grammar.

Anonymous
Anonymous
10 years ago

That Guardian article says the D.P. requirement in the UK was increased from 10% to 25%. It would be nice to have the same in Canada. That would definitely kill prices. I remember before the latest mortgage rules were introduced there was quite a bit of speculation in the media as to what the changes would be. The possibility of an increase in the DP requirement from 5% to 10% was met with great consternation by the RE industry as you can imagine. I recall reading the opinion that an increase to 10% would cause a "crash". 10 percent!! That is how leveraged this market is. I would love for it to go back to 25% but I think we all know Harper government will never do it: a) He has no balls, and b) Harper is all about pandering… Read more »

McLovin
McLovin
10 years ago

The brokerages – including Century 21, Royal LePage and ReMax – will meet Tuesday to try and agree to an alternative listings site that would pool their offerings. The meeting comes a day after Yahoo Canada announced it will offer listings on its main search page using database and real-time search technology from Toronto-based Zoocasa.com.

In related news, Rotary dial telephone makers team up with wagon wheel companies to fight what they are calling "absurd claims of fantasy" that their businesses are in decline due to technological change. President of the new association called REALTOR for short, claims that business is better than ever. Only 0.05% of the world has made a rotary dial telephone call so the future growth is endless!

ReadyToPop
ReadyToPop
10 years ago

The brokerages – including Century 21, Royal LePage and ReMax – will meet Tuesday to try and agree to an alternative listings site that would pool their offerings. The meeting comes a day after Yahoo Canada announced it will offer listings on its main search page using database and real-time search technology from Toronto-based Zoocasa.com.

Big-name realtors plot rival listings site

VHB
VHB
10 years ago

@Boombust:

August Units 1994-2009

1994 = 2159 = 44%

1995 = 2326 = 47%

1996 = 2141 = 48%

1997 = 2096 = 55%

1998 = 1589 = 49%

1999 = 2002 = 59%

2000 = 1805 = 51%

2001 = 2659 = 77%

2002 = 2558 = 73%

2003 = 3413 = 88%

2004 = 2570 = 61%

2005 = 3800 = 82%

2006 = 3092 = 65%

2007 = 3493 = 75%

2008 = 1611 = 35%

2009 = 3496 = 74%

2010 = ???? = ??%

Best place on meth
Best place on meth
10 years ago

@chip:

All your points regarding Singapore are spot on, BUT, can you go golfing, sailing and skiing there all in the same day?

Because to some of our local mouth breathers that seems to be a critical selling point when trying to pass Vancouver off as the best place on earth.

You know, the kind of stuff the average person cares about.

chip
chip
10 years ago

@oneangryslav2: Government-free isn't the same as limited government, which is the practice of the Singapore govt when it comes to the economy. Singapore has the second freest economy in the world. It took me two days to incorporate a new business here, all online. My first year tax rate on income up to S$100,000 is zero in the first three years, and only 8.5% on the remaining amount up to S$300,000. My personal tax return is one page. Singapore is constrained politically with limits on the media that you won't see in Canada. That is partly due to the newness of the country and partly due to the nature of its neighbourhood. Whereas Canada shares the world's longest undefended border with the world's biggest economy, Singapore has the sometimes hostile Indonesia and Malaysia and their associated religious tensions. Singaporeans are… Read more »

Boombust
Boombust
10 years ago

"One of the employees at the Harrison Hot Springs hotel said she thinks the recession is still on."

Well, I think she's got that right. It was never really "off".

oneangryslav2
oneangryslav2
10 years ago

@chip: But isn't Singapore the antithesis to the government-free libertarian utopia that you and your co-ideologues revere?

Best place on meth
Best place on meth
10 years ago

@chip:

At least Singapore actually does have a lack of land.

It's 1/4 the size of greater Vancouver with more than twice as many people – 9 times the density.

Boombust
Boombust
10 years ago

"…and they own three properties in Vancouver."

Maybe it's that huzbah or his wife we saw on the News.

Lilypad
Lilypad
10 years ago

I was in Harrison last week and it was a ghost town. One of the employees at the Harrison Hot Springs hotel said she thinks the recession is still on.

Boombust
Boombust
10 years ago

VHB,

How do your stats compare MoM, and YoY?

chip
chip
10 years ago

And my anecdote of the day, with no meaning attached whatsoever, is that I was at the Canadian embassy getting a passport for my son when a Chinese couple (mainland not Singaporean) asked the admin officer what they need to do to move to Canada because their daughter is studying there and they own three properties in Vancouver.

I really wanted to ask them how they bought three properties outside China despite that $50,000 annual cap on taking funds out of the country. I'm truly curious as to how this works.

VHB
VHB
10 years ago

Days elapsed so far 20

Days remaining 1

Average Sales this month 105

Average Listings this month 181

Projected Sales 2207

Projected New Listings 3803

Projected sell/list 58.0%

chip
chip
10 years ago

Singapore's property market continues to go on a tear, helped along by some 30% annualized GDP growth in the first half and a very high immigration rate that has brought in almost 150,000 people a year since 2005 (note, the city-state only has 5 million people and these immigrants are all vetted to a much stricter education and current-income criteria than those in Canada). But the government doesn't have a reputation for economic management for nothing. Yesterday, they introduced measures to yet again rein in the property market, and the minister responsible spoke with a clarity that Canadian politicians sorely lack: "If the current momentum in the market continues, what will likely happen is that a property bubble will form. And when the bubble bursts, and not if, but when the bubble bursts, there will be severe implications for individuals,… Read more »

paulb.
paulb.
10 years ago

New Listings 191

Price Changes 116

Sold Listings 102

Anoymous
Anoymous
10 years ago

@The other Garth:

"I was in Yaletown on Sunday. Ran across a gaggle of asians clustered around open house signs. I have no idea if they were wealthy and just flew in from China. I didn’t really care, as I was spending my Sunday relaxing, doing some recreational woodworking at the Roundhouse, and going for a walk. Life as a renter is pretty difficult."

Ya, cos no homeowners had a relaxing weekend either. Jeeesh.

realpaul
realpaul
10 years ago

Reality is the real estate slump, denial is the fantasy.

""It's either feed your kids or pay your mortgage," says Omayra Delgado, a 33-year-old special education teacher whose Miami house has slumped in value from $160,000 (£103,000) to $60,000. "My home is in foreclosure. I'm trying to keep it."

http://www.guardian.co.uk/business/2010/aug/30/us