Do you think Canada is in the midst of a housing bubble? You might if you live in a neighbourhood like mine, the eternally up-and-coming Toronto hood where we bought a house six years ago. Back then our tatty rowhouse was at the top of our price range – today it would be far beyond our reach. That’s a big change in just a few years, especially to the old timers on my street who bought their houses decades ago for peanuts (you couldn’t buy a parking space downtown for what they paid 30 years ago).
Then last week a house around the corner sold for over $1 million – a full $200,000 over the asking price. The day after it sold, neighbours were gathered on the corner, talking about the couple who bought it, rumoured to be in their 20s with no kids. We all openly wondered, “How can they afford that?” “Who are they?” “Do they have rich parents or are they overmortgaged?”
Then one of my neighbours came out and said something a few of us were thinking: “I hate them already.”
It’s not an uncommon reaction these days, as streets in former working class neighbourhoods become newly minted millionaire’s rows. Sure some of us are feeling a whole lot richer because of soaring real estate values but there are also some bad feelings running through hoods that have suddenly become split along income lines – drop a million dollar homeowner in the middle of a street where other homeowners paid half that a few years ago and you’ve got a serious demographic split.
Neighbours can react to the high prices with bitterness and anger – something we saw a few weeks ago here in Toronto when this rundown bungalow sold for $1,180,800 – $421,800 over the asking price. The deal drew headlines and hostile (even xenophobic) commentary from would be homebuyers who have been priced out of the market and still feel entitled to own a home the way their parents did. I’m willing to wager a bet that the neighbours won’t be bringing cookies to the young student whose parents bought the place for her.
This new kind of division makes for poorer neighbourhoods, not richer ones – and while we might think that high real estate prices make us wealthy, I think dynamics like this mean we’re worse off than ever before.
What about you? Are high real estate prices making your neighbourhood less friendly?