Do you need to own that home? Or are you panicking?

Magrath

Do you need to own that home? Or are you panicking?
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Alexandra Zabjek
The Edmonton Journal

& M+ _3 f+ l$ @5 t. SMonday, May 21, 2007

2 k! P  p5 h+ n% cEDMONTON - You hear the conversation at dinner parties, across cubicle walls and even amongst chatty passengers on the bus.

" @% W/ G9 D- P" e+ ^) C0 ^, OReal estate. How much prices have risen. How much homes are worth. How crazy the market has become.
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  }- U& a0 i5 I+ @"It's just like the new weather conversation but instead of talking about the weather, people talk about property values," says Megan MacKenzie.

MacKenzie and her husband Jason Carnew, both 28, purchased their first condominium last October. Statistically, they're now part of the buying frenzy that has taken over this city, but they're not buying into the psychology.
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8 ?# x6 N* A) w1 v; z"Our thing was that if we don't buy, it's OK," says Carnew. "I think a lot of people attach it to their identity."
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It wasn't always this way.
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8 ~4 [& d) C) Z9 D0 x8 a* |% |& pIn the late 19th century, home ownership wasn't part of the Canadian Dream. In those days, the middle class put more emphasis on living in big houses, rather than owning them, says Richard Harris, an urban historical geographer at McMaster University.
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8 {1 r  A( G, j1 nBut in the 1930s, Ottawa was desperate to stimulate the building industry. It introduced the amortized mortgage, which let buyers stretch out payments over a longer term than the existing five-year mortgage.

After the Second World War, the government continued to steer Canadians towards home ownership with the creation of the Central Housing and Mortgage Corporation, which helped scores of returning veterans borrow money to purchase homes.

"The federal government has been very proactive in shaping the Canadian psyche in its views about (home ownership)," says Michael Haan, a sociology professor at the University of Alberta. "The unwritten expectation is that once you retire, you'll sell your home and then you'll have more money and be less of a burden on other taxpayers."

7 j5 J- K1 l8 h$ K# R+ K3 Q" HPerhaps a bigger factor in the need-to-own mentality is the steady upward trend of prices over the last 50 years.
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"Buy now or buy never" is a phrase that rings through the heads of many renters. They talk about feelings of panic and fear of rising prices. It creates a dynamic that can artificially heat up a housing market -- then just as suddenly disappear.
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Analysts warn potential homebuyers to carefully think before leaping.

"Are you ready to buy a home, are you a person who is not going to be moving in the next five years, is this an investment you want to make?" says Carl Gomez, vice-president of research at real estate company Bentall Capital. "Those factors never, never change."
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' j' ~1 f" z4 C; [, ZGomez recognizes the emotion that can accompany buying a home -- after all, it's usually the single biggest investment most Canadians will ever make. And for many, it also marks an emblematic transition into adulthood.
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) z; k# {( H+ r% a' m1 y5 Y9 n( Z"I felt like I was grown up finally," Haan says about his house purchase two-and-a-half years ago.

8 C+ E7 C9 i1 g* ]/ B"It was something that really marked an exit from adolescence and the teenage years and the partying years, because a 25-year obligation is sobering. But it's also liberating because now you're on the road to something in terms of equity building."
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- g, d( R4 O( q/ X5 i- H+ W& M' @azabjek@thejournal.canwest.com
, w) L; F1 K( z$ W# L2 g© The Edmonton Journal 2007