It’s rather stunning how rich some homeowners thought they were when interest rates crashed to near zero and the real estate market began to soar. Today, though, at least a few of them don’t feel so rich anymore.
I have two questions: Firstly, why did the bank approve this inflated mortgage in the first place? Secondly, how many more like this were also approved?
At the time, the property was listed for $465,000, but Hartmann says she paid $200,000 over the asking price.
“It was quite ludicrous, there were bidding wars and it was just really stressful,” said Hartmann.
But just seven months later, she was laid off from her well-paying job at Microsoft and at the same time, soaring interest rates nearly doubled her mortgage.
Hartmann said she tried to sell her house through two different realtors and ended up handing the keys over to Scotiabank in November.
“An Ottawa woman has had her life turned upside down and is now facing bankruptcy in a perfect storm of unfortunate events.”
A ‘perfect storm of unfortunate events’? The woman got into a bidding war and paid $200,000 over the $450,000 asking price. Exactly how much sympathy should anyone have for someone that hoists her mainsail when a storm is approaching?
Too much passive voice in that article.
She chose to pay 45% over the asking price, to get what she wanted.
She chose a short term mortgage, even though it was foreseeable that rates had to go up.
Lost her job, which she may have played a part in.
Wasn’t able to get an equivalent job.
Tried selling the house, twice, but one might guess that the asking price was at least $520k, and it’s still not worth that. No word in her story if any offers were given.
And obviously there wasn’t enough value there in order to go to a mortgage broker and get a private mortgage, so it went back to the bank.
I was trying to downsize at that time and gave up in frustration.
First, why are “smart” people getting completely useless degrees in college, and Second, why are they paying $100 of thousands for them?
I doubt she’s a dumb person, having a job at Microsoft.
There’s an entitlement problem in our society – they have it, I should too. And I can if I pay way more and get an adjustable balloon mortgage….
There will be more bailouts….
Because they’re not really that smart and neither is your average HR department.
@Galt
She may not be dumb at her job but she certainly made dumb financial decisions.
She needs a man to guide her financially.
(no apologies to any Karens out there who will undoubtably take offense at what I said)
THEY should learn how to work with their hands.
Coding will get you a tent on a sidewalk w/Free Fentanyl..
She thought she was educated when all she got was training. Now she’s educated.
Paying for credentials does not mean that one becomes educated. Education doesn’t always come with a fancy piece of paper, but it is never forgotten either.
All the kids are doing it.
I’m shocked she can use “ludicrous” in a sentence; but perhaps she was referring to the rapper.
In the Good News department, she has finally obtained a education!
Very reminiscent of the (government-created) recession of the early 80s here in Alberta — lots of “jingle mail” (house keys being mailed back to the mortgaging bank) from homeowners who quickly found themselves in over their heads when the economy imploded.
I sure remember that too. That was during the time of Trudeau 1.0 and the first National Energy Program. Mortgage rates got to north of 20% and there was a steady stream of drilling rigs heading south to tha US.
I read this article yesterday and could only shake my head wondering, ”Why the heck would someone paid $200K more than the list price of $435K?” That is just plain stupid
Real estate agents love listing a house a bit below market price so they get an avalanche of offers.
They’ll usually have an open house or two then accept bids after a certain date.
A few years ago (2014-2015) back when the Spousal Unit and I were looking for a house in the Lower Rainland, such scenarios were distressingly common. One house we put in an offer for had forty-five offers put forward. It also sold for hundreds of thousands above asking, and needed (conservatively) $150K to fix the numerous obvious problems of a botched partially-completed reno.
It’s amazing how strange extreme seller’s markets can be.
I ACTUALLY ENJOYED the high prices in 2020 when we lived in Osoyoos….we SOLD in late 2020 at the PEAK and moved back to Alberta where hoes were way way more reasonable……SOLD for 1 MILLION and bought a bigger place with 3 car garage for under $700,000 GST INCLUDED………..gotta love those PEAKS
Lol at reasonable hoes.
$700,000 for a hoe?
Must be a helluva garden.
Actually, Osoyoos peaked the year after, prices went up further. Still, the market has softened significantly, but the homeowners there aren’t living in reality. Sales are stale, but many still want multi-millions on their 2 acre vineyards.
This, for a town that pumps dirty water to homes, has a poorly functioning sewer system, and has chosen to raise their city taxes 40% this year. Council mismanagement. Current mayor and council will have to sell and leave town when they are kicked out of office.
We were going to move to Osoyoos, but when homes are almost the same price as Greater Victoria, with worse weather, no doctors or medical offices, poor choice of grocery stores and any shopping, those plans got tossed out.
Osoyoos is overpriced by 50%, given the lack of amenities. Beautiful for 4 months a year, the rest of the time it’s just another brown interior town where one has to spend 1 to 2 hours on the road for shopping and doctors.
last I looked there were something along the lines of 256 HOMES FOR SALE, in a town of 5000 population……..and as far as the peak goes??? I doubt they went higher than what we got for our house BUT in any case you can raise the price as much as you want BUT when you have 256 homes for sale in a little town like that GOOD LUCK SELLING YOUR HOUSE………………glad we left when we did DODGED A BULLET
I’ve said it before, I’ll say it again. It’s not the interest rate when you buy the house, it’s the interest rate when you pay the mortgage back.
Proof that “Me Now” over rides “Whoa now” in a sizable chunk of our population. Banks too.
Very much like the people taking on $3,000-a-month car payments. Get woke and car-broke; and be the envy of all your friends.
My youngest granddaughter is my hero – she drives a 28-year-old Honda Civic. Wanda the Honda will never die.
Agreed RD.
Especially when yer avg SUV is ~ the $50-60k mark.
The Auto industry is about to implode.
No one wants EV’s
No one can afford a new car.
Car lots are overloaded as are their manufacturers lots.
70-100 days before it moves from the lot..??
I’ll stick with what I have, a 17 yr old GMC Diesel truck with 490k on it = gets 13.1L/100km city/hwy & hauls my RV just fine thanks… and Im pretty sure I am NOT alone in this…AT ALL.
this is easy to say. and thus l acknowledge luck came into play.
l bought 1st time 1976.
following that was the first ‘bubble’ l went thru, the place l shelled out 17K and sold soon after tipped the scales at 70K.
then when mtg rates hit record levels 15% whatever during TURDeau 1.0’s tenure, well it went up then back down. l renewed on ‘either side’ at th time ie it peeked right in the middle of my amortization. thus unaffected.
the quick version, my rules avoid variable rate, and if a bubble is going on BACK AWAY if its well underway, YOU my be the one ‘holding the bag’ when it pops.
aaaaand as me brudder the hi school dropout with more business sense in his baby finger than l ever had observed: when prices are down, it just means that the ones who waited for any number reasons, NOW HAVE THEIR KICK AT THE CAT.
those housing bubbles. man, from a distance they just look like the tulip bulb thing in holland.
in any event with a doofus like the TURDeau 2.0 in orfice, the unpredictability is off th scale. no limit the fc**ups he can add.
I struggle to understand why anyone would pay $665,000 to live in a Communist country.
also, another thing, when we bought the 2nd place in 78? 79? iirc the real estate agent explained any offer over asking basically halted the bidding war and locked in the offer. obviously not a rule now.
was this true? do l recollect correctly? if so when did that change?
When I bought in 2002 (in BC), the realtor said that if they presented the seller with a full price offer and they refused it, both realtors could walk away from the deal with their full commission.
I imagine that provision has been tweaked since then, or simply is removed in the case of a planned bidding war.
Certainly not true in the US. I made an offer above asking price on a 1930’s victorian bungalow in 2019 and got outbid.
Im rich.. Or sort of I suppose.. Mortgage free.. Good job.. Paid a song for my home and it worth more than a million.. But where am I going to go and what an I going to do?..
I think its best to work until I die.. Kinda funny that I started out washing dishes and I will end up washing dishes..
But that is my fate.. and I don’t mind..
Like me, you have to downgrade to get the life savings.
geez guys that is precisely what lm phasing in right now pulling out all the stops. l rent rooms and 1 tenant is given a kickback on the rent.
if l can do without that month we negotiate pc work at flat rate.
he’s never out of pocket l provide all materials and tools in fact we agreed its a form of paid training so l get away with a pay rate equivalent 5-10 bucks an hour.
but he aint doing anything else so whats to lose.
l tried to extend the offer to his overnite visitors but it failed 3 times gawd some people are such hard core lazy.
last one the neighbor is in front in stocking feet the last one is with her shopping cart making claims about me. neighbor threatens to turn the hose on her l offer to turn it on.
now policy no visitors except ones the dogs recognize.
l calculate with proceeds, plus CPP at a rate basically doubling my worth plus l got tons of tools l can do reno for pay instead of ‘banking’ the value.
lm 72 and dont even wear glasses. blood sugar always tad high now GP told me to think about insulin. my feet tingle lm going to. lm pegging my life expectancy 82
what lm saying best of luck to all of us.
letting go these headaches means l can learn elec guitar finally, resume my 35 MM photography and every waking moment wondering what l can do for my doggies.
Excellent work, John”.
My tent is paid for.
When we bought our house we knew what we could afford, we had a good down payment, we knew how much we needed to borrow and went to the bank to get a mortgage. The bank then tried to sell us a mortgage about four times what we needed/wanted. if the banks go broke lending money that people can’t pay back, they’re as much to blame as the borrowers.
RS: bankers cows never die
Yours will, and they will happily lend you more to buy replacements!
I wonder what was her position vis-a-vis the Freedom Convoy. If she was against the truckers, I hope she enjoys her bankruptcy.
We saw the problems with ARMs several times over our lifetimes. No way would we, nor did we, ever get anything other than a fixed rate mortgage.
noooooo kidding.
this is my 5th place not once even temporary considered variable.
its a gamble
plus fix rate monthly commitment doesnt vary a penny.
highly predictable in the pay chq to pay chq realm.
First world rich people problems that the poor have been dealing with for decades, even centuries.
YW, You messed up and left out the word “white”…
Yes, mortgage rates have plagued the poor for centuries. I believe they have medieval tapestries illustrating the problem.
True that. They revolted. Ever hear of the magna carta? It means big (empty) shopping cart. 🙂
I’ve listened to this sort of nonsense all through the past 10, or even 15 years…
The refrain is: “THEY will never let interest rates go like in the early 80’s!”
In other words, all these realty millionaires do actually believe in the power of government. They was smart, and so is gubbmt.
They don’t realize that in the 1980’s, the US Gov’t under Reagan was almost forced to raise interest rates that high in order to maintain confidence in the US Economy. France was refusing US dollars for a cup of expresso in Paris!
Greece recently went through this, back a decade ago, and had to raise interest to I believe 18%, else no-one would hold their debt.
So sorry you real-estate millionaires… you not only impoverished yourselves, but also your buyers!
The government only has limited control! The free market decides the ultimate price and interest rate.
Your 1 million dollar house, if you sell it, nets 15k to 20k per year in returns, given safe returns re. GIC’s and term deposits… if that!
That same freakin house, back in the late 90’s, was worth 150 to 200 k, and netted you 12 to 16k per year in returns.
But back in the 90’s you could rent for 400 to 600. Now you rent for 1500 to 2500. For an apartment.
Yesterday, at 1million at 7%, you could earn 70k, and rent a place for 6k.
Today, You sell at 1 million and get 1%, earn 10k, and pay 18k for a 1 bedroom.
For myself, renting at that rate, I AM LIVING LIKE A MILLIONAIRE, and beyond… truthfully, as a millionaire, I’d be living in a van down by river, if I wasn’t supplementing my income by working!
Soon we’ll all be wearing $1000 suits and driving $100k cars… or wait? Are we there already?
Bought and sold and had businesses through all the ups and downs from 1964 until I decided I should stop working. During every decade I prospered by, my humble opinion, not being greedy and pushing for profits that were unrealistic.
Sadly government avarice was always problem and is now crippling. Money that should be keeping me from needing government interference in my life has been devalued by successive governments. Liberal or conservative all are incompetent socialists. At my age I hope to be gone before that happens.