Where has the Equity Gone?

Where, oh, where has my equity gone? Oh where can it be?
Leave it alone it will come home wagging your HELOC behind it.

Finally, it is starting to happen. People have regained some sense and the housing boom in Regina has seemed to settle down and actually looks like it we are getting some price corrections downwards now. Someone must have informed the real estate agents that they were trying to drive up the prices of used homes to almost the same price as completely new ones.

Now the corrections down in my neck of the woods doesn’t seem to be huge perhaps around $10,000 to $30,000 from the peak. This is partly from a large number of listings this summer which has shifted us back to a buyer’s market.

So I wonder if real estate fever is finally going to die down a little?  I can only stand so many conversations that go “Did you hear? A house around from mine sold for $X.  What do you think mine is worth?”  And trust me I’ve been subject to a lot of those in the last year.

Perhaps the more interesting question is how many people bought new homes in the last year and are now potentially watching their house value drop and see how big their mortgage is.  Now it will take a while for things to settle down here, but I don’t think we are going to see any panic selling or people walking away from their houses.  The bubble here isn’t anywhere nearly as big as the US.

So what’s this going to do to my net worth?  Drop it of course, but I’m not worried.  Actually I’m sort of relieved this happened.  The prices increases were getting insane so it will be nice to have a net worth increase reflect more of my savings and less of my house.

So how is the market doing in your part of the world?

7 thoughts on “Where has the Equity Gone?”

  1. Wow, that’s pretty interesting, because the Regina Year over Year for May on the CREA stats page looks like it’s still rocketing ahead.

    In my neck of the woods, Saint John-NB, the CREA reported an average prince increase in May YOY of 22%. There is a rather large boom going on here with all the energy projects since the NB government wants NB to become an energy hub. This means an additional refinery, potash mine expansion, nuclear plant expansion, and possibly a new nuclear plant, LNG terminal, and LNG pipeline. Plus our average home price is still reasonable at 168K for May 2008, meaning you won’t have to offer up your first born just to have 3000 sq feet of land with street-side parking and no privacy. You actually can get a really nice place for 200K.

    For instance:
    http://tinyurl.com/5tyw63
    or
    http://tinyurl.com/6dptu5

    Either one attainable by any couple with descent jobs.

  2. In Winnipeg here our bubble seems to be deflating as well, although homes in the mid-range are still being gobbled up at above asking price. There is lots of new development happening so it will be interesting to see how that will affect the market in a year or two. I’m not totally clear how one goes about getting a “market value” on your house – do you get a real estate agent to come take a look? Peruse the papers to see what’s being asked in your neighbourhood?

  3. After the 100% price increases here in Edmonton in recent years, things have settled down considerably in the last year. We’ve pulled back about 10% from the peak and there is quite a bit of softness in the market which should slowly take prices down a bit more.
    I bought my house for $175k, so if its value goes from $350k to $330k, I’m not exactly upset… but people who bought a year or so ago will be.

  4. Well it is interesting to see a lot of places are seeing a bit more moderation to their booms. It gives me hope that any price corrections are going to be in for a softer landing.

    Thanks everyone,
    Tim

  5. You guys have got nothing on us in Vancouver! The “average” (crap shack) house here has sky rocketed up to $771,000… which if you make the “average” salary here means you’re paying 70-80% of your GROSS income to your mortgage.

    Yeah this market makes sense… the Olympics are coming! the Olympics are coming! prices can only go UP!

    Inventory is way up and I’m hoping to see official price declines show up in the news at month’s end. That will help this house of cards to crumble.

    I expect to see Vancouver have a very significant price reduction, 40% at least to return to normal levels. But I’m hoping it over corrects as the floor falls out of all the idiots that speculated on never ending appreciation and the other people who greatly over extended themselves.

    Fingers crossed!
    Jordan

  6. Jordan,
    As I am selling my Edmonton home in the next few weeks and moving to Vancouver this fall, and will be renting for a while as I scope out the market for a good deal, an overcorrecting collapse in Vancouver real estate values would suit me just fine!

  7. Whip out your rent vs. buy calculator and you’ll quickly see it’s not hard to be much further head renting if you have to live here.

    Hang tight and watch the market closely, I would recommend following this blog for very good coverage of the Vancouver market:

    http://langley-financial-planning.blogspot.com/

    Good luck to you!

Comments are closed.