10.10.2006

dominos

We're one step closer to finding out if we can stay in this house or not.

As you may know, we rent a small, old house, in an neighbourhood where property values have skyrocketed. Most owners have torn down the original houses and built McMansions, but our landlord doesn't seem inclined to make that investment.

LL lives nearby, in a larger, more modern house (but not one of the monstrosities), the home of friends of his who are living and working in the US. Each year, his friend's contract is extended, the family stays in the US another year, LL remains in their house, and continues to rent out the one we live in.

We've known all along that the friends might come back from the US, in which case LL would move back into his little house, and we (especially I) would be very sad. On the other hand, the friends might stay in the US indefinitely, LL could buy their home, and keep ours as a rental. This idea has become more appealing, now that he has such excellent tenants. I.e., us.

I can't tell you how much I love where I live. The location and the house are perfect for us in every way. We've always known about this one potential glitch, that it might not be available long-term. We knew this as we painted, we knew this as we ordered custom-made shades. We decided to proceed with optimism. Allan's very good at not worrying, but for me, it's been an exercise in living in the present. A healthy challenge, and one I couldn't have coped with, say, 15 years ago.

Last night, the first domino fell. It appears to have fallen in the right direction, but it's too soon to tell.

LL's friend has been offered a permanent position in the US, and his company is pressuring him to take it. His family is homesick for Canada, but they might have to stay that way.

The next question is whether LL will buy their home. It's in one of the most desirable sections of Port Credit, and his friends might make a killing on the open market. Or they might not, and LL could buy it. LL knows we want to live here long-term, and he'd like to buy his friends' house and keep us as tenants if he can afford it.

Our agreement is 90-day's notice on either side, so we're not worried about being kicked out with nowhere to go. But I so do not want to move. Oh boy do I not want to move. We are very settled in here, and very happy. We lived in our last apartment in New York for 13 years. After a young-adulthood of moving constantly, I've put down roots.

Fingers crossed.

moving in 013
our little house


moving in 012
the end of our street


And since someone is guaranteed to ask, no, we're not looking to buy a house ourselves. Can't afford it, and not interested.

* * * *

Restoring the photos to this blog is a breeze, thanks to Flickr, and to my being so organized. I did about half the blog yesterday. I won't have time to work on it again until next week, but next time I do, I should finish the whole thing. Whew.

37 comments:

Ferdzy said...

At any rate, I would be very, very, leery about buying anything right now, even if you could. The U.S. is IMO, poised on a MAJOR downturn in prices. Canada seems to be 3 to 6 months behind, but I'm pretty sure it's coming.

That's such a cute little house. I have to say, I hate McMansions with a passion. Hope it all works out they way you want.

L-girl said...

As I said, can't and don't want to.

I'm under the impression the US is smack in the middle of that downturn right now. If the same happens in Canada, it will work very much in our favour.

Thanks for your good wishes!

Lone Primate said...

Boy, this puts me on the horns of a dilemma... I'm all for expat Canucks coming home... but it bumps your from your comfy nest. :) Ummm... well, maybe they'll only stay in the US long enough to sell the house and THEN change their minds later. There, problem solved. :)

L-girl said...

Sounds good to me :)

I think these are people whose lives are ruled by the corporations they work for: Microsoft and IBM.

Lone Primate said...

The U.S. is IMO, poised on a MAJOR downturn in prices. Canada seems to be 3 to 6 months behind, but I'm pretty sure it's coming.

There'll be a downturn here but I'm not convinced it'll be as hard a landing as in the US. Down in the States they've been offering 0% downpayment mortgages. I don't think the banks in Canada followed suit. Show up with some principal or start saving... we'll show you how... So in theory, there ought to be fewer defaults, and for those that do, the resale value is more likely to cover the cost of the loan and at least people don't lose the home AND remain in debt as often. I can't claim to know if the housing bubble is as proportionately large as in the States, but again I have my doubts. A lot of it is driven in the US by the fact that the Fed just cranks out bills to paper over the vast trade deficit... foreigners can do one of two things with those dollars: hold onto them (bad idea, since they're worth less with every unbacked dollar the Fed prints), or invest them in property in the US. The more property that's bought up, the more property values rise, until at last the music stops... which is probably what's happening now. Canada's property values are not being driven by the same phenomenon.

Interestingly, I noticed a press release from the Bank of Nova Scotia announcing they'll be offering zero money down mortgages, dated October 6, 2006... a few days ago. Wow, and I was thinking of moving my accounts to Scotiabank (among others). SCREEEEEECH! U-turn, VROOOOM!!

Ferdzy said...

LP, I think you are quite right that it won't be anything like as bad here as in the U.S.

BUT my impression is that they are already starting to feel the pain in Vancouver and Calgary, and that those places are in trouble.

Also, we sold 7 houses in 2005/2006 and I have to say I was AMAZED at some of the loans that were handed out. Again, not as bad as in the U.S.; as usual we were lagging, but definitely, uh, "highly leveraged".

I think one other thing that will help out is that the economy in general is in better shape here. Of course, whether that will continue to be the case once the U.S. economy is in trouble is another question. And a bizarre amount of the U.S. economy seems to rest on housing* at the moment.

I nearly typed "hosing". That too. :p

M@ said...

The thing that's really scary about the US market is not only the 0% downpayment, but also the interest-only mortgages. If you buy a house and then sell it when property values increase, it's a great idea. If your house drops in market value by 50%, you're staying there forever -- or until you can't make the payments for some reason -- or until the mortgage ends and you can't renew it at the old price.

The only thing keeping it from a crash, I suspect, is that the banks don't want to lose the money they've got in what amount to bad loans. As long as we keep the market values high enough, everybody's fine, right? And nothing will ever change that, right?

Idealistic Pragmatist said...

Oh, man. That really is a nice little house.

Fingers crossed.

MattInTO said...

And I don't get the advantage to buying something, certainly not something hideously expensive in this country, considering mortgage interest is not deductible as it is in the US. Where's the benefit?

Oh, sure, there are ways to do it via the Smith Manoeuvre but that's sh*tload of paperwork and requires waving a dead chicken around one's head, too, if I'm not mistaken. So again, I ask, why buy? I'm in no hurry to. With the right landlord, the property's practically yours anyway.

I'll keep my fingers x'd for ya that you get to stay where you're at.

orc said...

A good reason to buy a house: «But I so do not want to move. Oh boy do I not want to move. We are very settled in here, and very happy. We lived in our last apartment in New York for 13 years. After a young-adulthood of moving constantly, I've put down roots.»

A good reason to not buy a house: «Our agreement is 90-day's notice on either side» (== change your mind? You can leave without having a multihundredthousanddollar albatross hanging around your neck.)

I bought a house with my sweetie about eight years ago, and since we haven't moved it's turned out to be on the most part a positive thing; we're paying less in mortgage + taxes than we'd pay to rent a house, we'll get our money back if we all agree to move south (we bought at what we thought was the height of the bubble. We were wrong), and sitting on this huge chunk of immobile capitol makes the local bankers very happy to loan money to us (not a concern these days, but it's nice to be sitting on an asset that can be leveraged if the bottom falls out and we have to scramble for shelter.)

On the negative side, we've got a backyard that's yellowjacket central, and we've got a garage that's slowly disintegrating because I don't have the six months of free time it would take to strip it to the frame, rebuild the foundation, and rebuild it as a strawbale house. If we don't deal with those features, the value of the house drops substantially (as does only having one bathroom, a non-modernised kitchen, and not having the offensive modern development known as a "master bedroom suite"), and if we rented fixing those features would Not Be Our Problem.

And there is the teeny detail of wondering just how steep the other side of the housing bubble will be, and whether Maximum Leader Genius will deal with that problem by turning the printing presses up to 11. All the assets in the world aren't worth very much if people aren't willing to pay for them or if the money isn't worth much more than toilet paper.

L-girl said...

So again, I ask, why buy? I'm in no hurry to. With the right landlord, the property's practically yours anyway.

And without the headaches. If something major is wrong, we pick up the phone, and someone else fixes (and pays for) it.

It's refreshing to hear someone who thinks like me! We discussed this here not too long ago.

I've never had any interest in owning a home. There are disadvantages to that, for sure - but most people act like there are no disadvantages to home ownership, which is just not true.

L-girl said...

we're paying less in mortgage + taxes than we'd pay to rent a house

That's a big part of it for me, too. I have never paid rent that would come anywhere close to what I'd pay in mortgage plus taxes, let alone a downpayment.

orc said...

«we're paying less in mortgage + taxes than we'd pay to rent a house

«That's a big part of it for me, too. I have never paid rent that would come anywhere close to what I'd pay in mortgage plus taxes, let alone a downpayment.»

We were extraordinarily lucky. From about 1993 on we were paying US$1000-1200/month for small apartments on the west coast, and when we bought the house (admittedly with a huge downpayment, but I didn't know what else I could have done with that sort of money at the time) we started paying US$1400 for mortgage+taxes. And then the bubble really took off and rental prices just couldn't keep up (these days a full house in our neighborhood rents for US$2500/month, which seems scary until you look at the average mortgage of US$3000+ for the same sort of house. Our neighborhood is a slightly more urban version of your neighborhood in Port Credit (much smaller lot sizes, and the trolley line was ripped out years ago), and I'm not sure how people can even afford to rent here. I'd certainly be an unhappy camper if I had to fork out US$30,000/year just to have a place where the three C's (cats,children,computers) wouldn't have to be wedged in like sardines.

Owning property is a bit of a personal obsession for me; my family has owned property of one sort or another ever since they bilked the natives out of some prime New England real estate in the early 1600s. But there's no way I'd pay half a million dollars for a ~460 square meters of suburban lot, and I'm allegedly upper middle class and can theoretically afford it.

If the bubble pops spectacularly, you might have the chance to purchase the lot you rent for less than your rental charges. But I'd suspect you could also go and negotiate a _very_ attractive reduction in your lease, because there's something nice about being on the receiving end of a steady income stream instead of dumping your revenue source at fire-sale prices.

L-girl said...

Interesting.

In NYC, we had a rent-controlled apartment and never paid more than $1050 for a huge (by Manhattan standards) 2 bedroom. We now pay $1600 for a small three-bedroom house. (Neither rent includes utilities.)

If the bubble pops spectacularly, you might have the chance to purchase the lot you rent for less than your rental charges.

A, The owner of this house isn't interested in selling. He'll either rent to us or live here himself. B, we wouldn't use our hard-earned nest egg (the move-to-canada fund) as a downpayment, and that's all our money in the world. C, I don't care about owning. It's simply not important to me.

Apparently I'm weird this way, but it's good to know what your priorities are.

MattInTO said...

$1050 for two bedrooms. oh my g-d. And I thought the sublet we had a for a precious two years on the UWS for $750 was a good deal. That's astounding. More typically, we were paying what you're paying now for the house for a railroad in Park Slope. Toronto's not cheap but boy is it a bargain by NY standards.

L-girl said...

Oh yeah, it was incredible. We moved in when Washington Heights was still considered the ends of the earth, decidedly unhip, but very affordable. Our original rent was $750 for a pretty good sized 2 bedroom, then we found a better apartment on a better block for $800. In 13 years, it went up only to $1050.

When we moved out, the landlord did some renovations and was able to raise the rent legally to $1700, which is more than we're paying now for our house.

I always said we'd live in that apartment until we left NYC. When you give up a rent-stabilized apartment in New York City, you are burning your bridges! You know you're never coming back.

Only a fellow ex- New Yorker can truly appreciate that.

L-girl said...

$1050 for two bedrooms. oh my g-d.

Oh, and it was a big 2-bdrm - pre-war building. Eat-in kitchen, hardwood floors, big foyer area that was like another room, with a recessed wall where we had all our bookshelves.

The living room was so big, we used part of it as Allan's office, and I used the 2nd bedroom as my office, so we each had our own workspace.

A gorgeous apartment.

Add to that a great day-job where we only had to work 24 hours a week, and you have some serious incentive to stay.

Which gives you some idea how badly we wanted to leave. Not New York, but the US.

orc said...

«Apparently I'm weird this way, but it's good to know what your priorities are.»

If it is weird, it's the sort of weirdness that about 32% of United States residents and 35% of Canadian share. (I'm just looking at raw home ownership figures here; I don't know how much of that 30+% rents because they can't afford to own, but even if you discount redsock and you, there is still a large chunk of the professional class (including my parents, who bailed on the family house as soon as the dust settled from the last of their children moving out) who are perfectly happy to not own a large wooden box.)

I'd claim that for most people it's pretty weird to actually own a house. You tie a pretty big chunk of money down to buy in, and it's hard to actually justify it when you run the numbers. (The only claim I can make in favor of a house is that if you've managed to pay it down you can weather extended periods of unemployment without paying rent. This would be a more compelling argument in a country with a functional medical system, of course; in the US, mortgage vs. rent pales when placed alongside health insurance or the emergency room shuffle.)

A more unrealistic reason to own a house is that you can dismantle and rebuild it if time and whimsy are on your side. This probably doesn't apply if you've got a life, or have had enough of sleeping under the stars while the house slowly grows around you :-)

doug said...

I'm embarassed about my deal in the Beaches, it's a large one bedroom, with a huge kitchen, outside deck on the 3rd floor where I sit and watch the fireworks etc. at Ashbridges bay, one block from the boardwalk..I don't tell my friends I told my brother and he never believed me I had to show him my month's rent receipt....it's in immaculate shape I've lived here for 6 years and will never move unless kicked out...I have half the 2nd floor and all the 3rd floor...the landlord on the first floor and half the second, mine is a totally separate unit...I re-did all the kitchen as I feel quilty I pay $450 a month utilities included, so my rent is paid in 2-3 days of work...

L-girl said...

If it is weird, it's the sort of weirdness that about 32% of United States residents and 35% of Canadian share.

Really, wow. I would have thought it was much higher. Does that include condo ownership? That's the big thing in Toronto. The "condo lifestyle", as it's called.

there is still a large chunk of the professional class (including my parents, who bailed on the family house as soon as the dust settled from the last of their children moving out) who are perfectly happy to not own a large wooden box.)

Interesting. Almost everyone I know owns or intends to own - so I always have the impression we are odd this way.

Thanks for sharing. :)

L-girl said...

Doug, that's insane. You're like we were in NYC, only more so: never moving unless you leave T.O. altogether.

Good rent frees you to live your life without worrying. That's how we were able to get out of debt, save for moving to Canada, and still have a grand time while doing so.

L-girl said...

My first apartment in Brooklyn was a share, a huge pre-war one-bedroom. The huge living room was easily partitioned off, so I had my own bedroom and there was still plenty of common space.

This was rent controlled - better than rent stabilized, and very rare. $262 a month, total. We each paid $131.

The landlord was trying to intimidate us to get us to move out, but he had no legal leg to stand on. Once in a while we would come home to an eviction notice on our door. We would just throw it out and continue on our merry way.

doug said...

yea my landlords are in the toronto symphony with a grand piano(pianist, and a cellist so I also get this beautiful chamber music drifting through the house...they like me here as they are 60ish and travel so I look after there cat, housesit...but in a way it's a conumdrum as I was offered this job in Victoria and I went there and checked it out, was going to take it...then I gave my head a shake as I would be paying a $1,000 a month out there..so here I stayed...u r right it frees up your cash for everything else in life, like baseball trips...Tigers winning again, so far...

Ferdzy said...

I'm certainly the last person who would try to convince anyone they should buy rather than rent! But someone mentioned real estate and I did my pavlovian drool thing.

I want to own, but it's all just part of being a control freak. And having done a whole bunch of renovations with an eye solely to selling and making them pay, I would love to renovate a house to suit me.

Ferdzy said...

By the way, Doug, I think it's really cool to have musician landlords. I remember living in a condo as a kid where the woman upstairs was a singer, and we could heare her practising her scales quite frequently... there's something about people actually creating music that is entirely different to listen to from electronic devices.

L-girl said...

For a time our downstairs neighbours were a cellist and a violinist (they met on the job). They played for Broadway shows. I'd be at my desk and their music woudl come wafting up. It was so nice, not at all intrusive.

Might not have been the case trumpets or drums, but with chamber music, it was great.

L-girl said...

but in a way it's a conumdrum as I was offered this job in Victoria and I went there and checked it out, was going to take it...then I gave my head a shake as I would be paying a $1,000 a month out there..so here I stayed

Yes, in a way it can be a trap. Our great-paying jobs and affordable apartment were becoming a trap in NY.

When life is easy, of course it's great in many ways, but it can be too comfortable, keep you from taking on new challenges, moving on to a new part of your life. I started to realize that was happening to us, or at least to me.

L-girl said...

I would love to renovate a house to suit me.

That would be cool. I am a closet interior designer/decorator. I love that stuff.

Ha, unconscious pun there: closet.

doug said...

you are right it gets too comfortable at times but I do enough travelling I feel freedom like I wouldn't if I was tied down to a big rent or mortgage, but I'll move on someday...you know what I've discovered there are 2 kinds of music people don't feel negatively affected by...when my friends, family whatever come over no one complains about the chamber music it seems to transcend all tastes...and someone else oddly enough who you can play, or hear and no one complains is Van Morrison, it seems again everyone likes him...

James said...

A more unrealistic reason to own a house is that you can dismantle and rebuild it if time and whimsy are on your side. This probably doesn't apply if you've got a life, or have had enough of sleeping under the stars while the house slowly grows around you :-)

For some reason, this is a huge trend in Leaside right now. We've seen something like six houses torn down to just one wall and the foundation, and rebuilt.

lindsey starr said...

The view at the end of your street is beautiful! I can see why you don't want to move from the cute house you are in.
I have always agreed with not buying, and we got sucked into home ownership 7 years ago. Now we could sell our house for a profit.... if we do it soon enough, as the market is already soft around us. yuck. We are hoping to move soon, and RENT in the next place.

I remember back when we were in our last house, a rental, and everyone kept telling us how they thought we should buy, and then 2 minutes later would be telling us how much time they were spending working on their house, and what they had had to spend on fixing things, etc. And I kept saying to them... and why should we buy? and then the owners decided not to rent anymore (long story- but that is the short version) and we had to buy.
And our rental was killer too (150 acres, pond, barns, beautiful property)-

I am hoping for another great rental to be in our cards... and I will keep fingers crossed for you to stay where you are too!

L-girl said...

Doug, I hear ya. I think it's great. Funny about Van Morrison. :)

For some reason, this is a huge trend in Leaside right now. We've seen something like six houses torn down to just one wall and the foundation, and rebuilt.

You know it's the trend in Port Credit. We've been surrounded by construction since the day we moved in. Sweet little brick houses built in the 1950s all being torn down, hideous McMansions taking their place.

L-girl said...

The view at the end of your street is beautiful! I can see why you don't want to move from the cute house you are in.

That view and acres of beautiful waterfront park are just steps away. Plus a huge backyard, we're in walking distance from the main street of Port Credit and all the shops, and walking distance from the GO (commuter) train. It's ideal. A mere 20-30 minutes out of downtown Toronto.

We are hoping to move soon, and RENT in the next place.

Interesting! I don't know if I've ever heard of anyone selling a home and going back to renting, unless they were retiring. Probably because for a long time in the US, you had to reinvest in real estate, or lose a ton to taxes. But also just the mindset, that you aren't "supposed to" rent.

I remember back when we were in our last house, a rental, and everyone kept telling us how they thought we should buy, and then 2 minutes later would be telling us how much time they were spending working on their house, and what they had had to spend on fixing things, etc.

Boy that sounds familiar!

Thanks for your good wishes - best of luck to you, too.

deang said...

I don't know if I've ever heard of anyone selling a home and going back to renting, unless they were retiring.

After his three kids were done with college ,the father of a good friend sold his home in Dallas and eagerly moved into a rental unit. The main reason he gave was that he was sick of the maintenance, especially yardwork. This was in the mid-90s, about 8 years before he retired. Since his retirement, he's moved to California, where he continues to rent and says he never wants to own a home again.

mister anchovy said...

We bought a very modest house about 5 years ago. Previously I had only rented. I found myself in a much more committed relationship to my living space, and that surprised me a little. I've had some rental spaces I've really liked. We don't think much about the value of the place or upturns or downturns because we don't feel any need to move. By kismet, our neighbours are great and we feel very much part of a community. We really didn't know the area well before we moved here though, and didn't know what to expect.
I hope you are able to keep living in a place you like.

L-girl said...

Hi Mr Anchovy, nice to see you here! Your house and situation sound lovely. Thanks for your good wishes.

L-girl said...

the father of a good friend sold his home in Dallas and eagerly moved into a rental unit. The main reason he gave was that he was sick of the maintenance, especially yardwork.

It's funny, although we rent, yardwork is our responsibility. I'm enjoying it, after living in an apartment all my adult life. If we ever stop enjoying it, we could rent a townhouse, and cut way down on that.