# Home Sales and Prices Falling



## sags (May 15, 2010)

According to Garth Turner on his blog..............the February report on home sales and prices will be nasty.

www.greaterfool.ca


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## sags (May 15, 2010)

I have been following prices in our area.......London, Ontario..........for a few years now, and resale home prices are definately starting to slide down a bit.

It isn't a major price correction........because resale homes here didn't go up as they did in other places, but definately a few thousand here and a few thousand there.

I have also been following "vacation property" in mid to Northern Ontario.

Prices there have fallen slightly..........but there is a mass of red dots on the MLS map, so listings are definately "up".


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## andrewf (Mar 1, 2010)

And so?

Sales have been trending below last year for about 6 or 7 months now. Prices are a bit trickier. Median is more relevant than average.


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## sags (May 15, 2010)

As a potential buyer of a condo in the next few months...........I am wondering if I should wait as prices fall or pay a little more to lock in the historic low rates of interest for a 10 year period.

I would imagine other potential buyers are wondering the same thing.


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## andrewf (Mar 1, 2010)

I think now is a really bad time to buy a condo. Depends on the city... but the condo markets in most cities are in a bunch of trouble.


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## Four Pillars (Apr 5, 2009)

sags said:


> According to Garth Turner on his blog..............the February report on home sales and prices will be nasty.
> 
> www.greaterfool.ca


February of which year?


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## none (Jan 15, 2013)

I can't think of anywhere that I would touch a condo at all. There is a good chance that you could rent a condo in the same building for cheaper than you could own a condo (barring any significant price increases). Plus you are insulated from any potential (and very likely as far as I'm concerned) correction in the market.

I feel I should say this is 'city specific' it's hard to imagine a place where it'd be worth it.


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## none (Jan 15, 2013)

Inventory sacks up before prices decline

Unlike stock market bubbles that burst, RE bubbles deflate. You still get the crushing losses just over a longer period.

See here: http://vancouverpricedrop.files.wordpress.com/2013/02/chart.png


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## sags (May 15, 2010)

Not just condos apparently......................this quote from the blog................

_Total *single-family home sales *in the Lower Mainland (combining the Van board and the Fraser Valley Board) total 1,548 so far this month. That’s a stunning 50% drop from last February and (get this) a worse showing than in the same month in 2009, when we were plunging into the economy abyss. There’s little doubt significant price corrections will follow_. - See more at: http://www.greaterfool.ca/#sthash.Q9Pev2pa.dpuf


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## sags (May 15, 2010)

Yikes.............that is one ugly chart.

Look at Las Vegas................total collapse and still down at the bottom.

There is still a huge inventory of foreclosures for sale in the US.

Also discussed on Garth Turner's blog is the CMHC is requiring realtors to NOT divulge when a home is in foreclosure to them.

Hmmmm.


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## none (Jan 15, 2013)

That's what I don't get about people looking to buy houses. Sure maybe the decline won't be as steep but it might be... Try to assign a probability on that and figure there might be a 5% chance (actually I think it's greater) that you may be down 200K+ Crazy crazy crazy. plus renting is usually cheaper.

Screw that, I'm thinking I'm going to rent until I'm dead.


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## doctrine (Sep 30, 2011)

There is lots of fairly priced real estate once you get outside the major cities. Vancouver is total craziness though. Take out Van, Tor, Cal, Mon, Ott and Edm and look at average and median home prices..


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## Sampson (Apr 3, 2009)

If you use traditional affordability metrics like median price to income, Calgary is actually a very affordable market.

It depends on the jobs, but affordability measures are all over the board within Canada. Painting with a single brush doesn't seem too useful.


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## andrewf (Mar 1, 2010)

But doctrine, 60 or 70% of Canadians live in those cities.


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## doctrine (Sep 30, 2011)

Yes, my point though is people have options, and not all real estate is overpriced. i.e. you could move to another area in Canada to buy property - it's a big country. I know lots of people taking 10-15% haircuts on their houses when they sell these days. I also know some people who are buying and they're usually able to get 10-15% off prices as well. For me, I'll stick with the "3 x annual income" rule before I jump in, unless rental prices significantly increase.


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## Plugging Along (Jan 3, 2011)

The population of Canada is about 35 mil, I believe the population of those 6 cities is about 9 mil, that's really only about 26% of the population. 

I agree with Samson, looking at just the price of housing without looking at other factors such as average income is really biased. 

My good friend moved from Calgary to a smaller place in the US. She is able to buy almost the exact same house I have in Calgary for under $150K where she is, mine is well over $500K, however, her income is less than a 1/4 of what it was here.


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## Sampson (Apr 3, 2009)

Plugging Along said:


> She is able to buy almost the exact same house I have in Calgary for under $150K where she is, mine is well over $500K, however, her income is less than a 1/4 of what it was here.


Where in the US? Maybe it is time to pack it in for warmer climates.


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## Plugging Along (Jan 3, 2011)

No where warm. Kansas.

The funny thing was she showed me pics of her house, and hers was the same layout, and maybe bigger. She sold her small 2 bedroom here for more than what she bought her place for.


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## HaroldCrump (Jun 10, 2009)

Sampson said:


> Where in the US?


In much of the US, leaving aside Manhattan, Malibu Beach etc.
Sq. ft. for sq. ft. prices are lower in most US metros than in Canadian metros.
In fact, I believe even during the 2006 peak, US housing was cheaper on a sq. footage basis than in Canada, in similar metros.
For instance, Boston, Atlanta, N. Virginia, Dallas, even suburbs of New Jersey within commuting distance of metro NY, etc.


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## andrewf (Mar 1, 2010)

Plugging Along said:


> The population of Canada is about 35 mil, I believe the population of those 6 cities is about 9 mil, that's really only about 26% of the population.
> 
> I agree with Samson, looking at just the price of housing without looking at other factors such as average income is really biased.
> 
> My good friend moved from Calgary to a smaller place in the US. She is able to buy almost the exact same house I have in Calgary for under $150K where she is, mine is well over $500K, however, her income is less than a 1/4 of what it was here.


The cities extend far beyond the borders of the municipality. Toronto is 5-7 million depending on how you measure. Montreal is 3.5 million, Vancouver is 2.2 million, Ottawa is 1.3 million.

Cities as political jurisdictions are irrelevant. What matters are the economic units. Ie, GTA, greater Montreal, GVRD, etc.


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## sags (May 15, 2010)

Houses did well for the baby boomer generation, because they had steady jobs with good pay and benefits. As their incomes increased, they could buy homes from each other.........moving up to more expensive homes.

Who is going to buy the homes from the boomers?

Their adult kids still living in their basements?

Contract, temporary, part time workers?

Workers who haven't had an increase in their wages for 20 years?

Service industry workers?

Immigrants with no money?

Home prices will probably go down significantly simply because there are a lot fewer qualified buyers than there has been for decades.

If the governments and banks are going to get together.......and give people money to buy a home.........it could continue, but I think those days are over because the bill is now due from the last go round.

People are going to have to try to sell their homes in an environment where buyers would like to buy.......but don't have and can't get the money.

When 70% of people own homes........and 70% of people retiring have no pension income, hardly any savings, and are increasingly carrying debt into retirement................they are going to have to sell their homes.

They will be the ones who will cave first in prices. They have lots of equity built up over the years and a 200,000 drop in prices won't affect them as it would a recent purchaser.

They may not like it the thought of those "paper losses", but what choice will they have?


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## sags (May 15, 2010)

The "system" isn't set up to deal with month after month house price declines.

How falling prices will affect municipal tax assessments, mortgage renewals, and HELOCs are all unanswered questions.


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## Sixth_Circle (Nov 22, 2010)

sags said:


> Houses did well for the baby boomer generation, because they had *steady jobs with good pay and benefits*. As their *incomes increased*, they could buy homes from each other...


These are points that many in my generation (40's) seem to be overlooking. Our jobs are much more unstable, transient, with benefits being clawed back and incomes that are stagnant. We grew up with parents who worked the same job for 30 years and retired with pensions. They bought homes near their workplace, raised families, and many retired in the same homes and communities where they lived and worked. 

It's a much different ballgame now, and for many a house is a shackle and a financial nightmare if you have to uproot and move every 3-5 years for work or other reasons. There is a need to be more flexible and transient these days, and ownership is a long-term commitment.

I see 900 square foot 2-bedroom condos in the downtown core going for $600,000, and I have to wonder - at what point does it stop? Is that unit really going to continue appreciating upwards until it reaches over a million dollars within the next few years? As you mentioned, who is going to have the money to buy it? I think the brakes are now being squeezed.


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## Sampson (Apr 3, 2009)

Plugging Along said:


> The funny thing was she showed me pics of her house, and hers was the same layout, and maybe bigger. She sold her small 2 bedroom here for more than what she bought her place for.


Its easy for us Calgarians to move to warmer climates though.

My wife has had many coworkers move to Texas, both Dallas and Houston, and what they 'trade-in' for is pretty spectacular. With all the left over proceeds from the sale of the Calgary house, one could even hire a pool-boy for the pool. That could be incentive for my wife 

@ Harold - I know most US markets are priced lower than the major Canadian ones, but wouldn't it be nice to live on Manhattan, or in Boston (at least inner Metro area), or San Francisco, San Diego, Seattle, Portland.

Wait one second - those are the expensive markets. Darn.


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## sags (May 15, 2010)

Getting to Las Vegas is still on my bucket list, but is there a reason Canucks out west aren't all that interested in having a winter place there?

It would seem ideal...........warm weather, lots of resorts to wander around, lots of dining and entertainment etc...........

And the biggest drop in real estate prices in the US.

There was an interview about a retiree and his wife who lived in Las Vegas and toured the casinos every day to play the free slot tournaments. They had won all kinds of money, trips, and gifts spending their days going from casino to casino.

Not a bad way to spend the winter.

Am I missing something about Vegas?


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## sags (May 15, 2010)

I know what you mean Sixth Circle.

I just can't get my head around small, average condos for 600,000 and average homes for over a million.

I think many will curse the day of cheap money.


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## none (Jan 15, 2013)

February stats of victoria are in - sales are down 20%

Median house prices down only about 5% from last year, which isn't surprising, sales are much more elastic than prices. It's just a matter of time.

Bloodbath starts in June.


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## marina628 (Dec 14, 2010)

lots of crime come with Las Vegas and any condos there probably won't qualify for mortgages as 50% of the buildings are empty.


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## Eder (Feb 16, 2011)

sags said:


> Getting to Las Vegas is still on my bucket list, but is there a reason Canucks out west aren't all that interested in having a winter place there?
> 
> It would seem ideal...........warm weather, lots of resorts to wander around, lots of dining and entertainment etc...........
> 
> ...


I spend 2 months a year average in Vegas. I had considered retiring here as I like to play poker,eat well,mountain bike,lots of stuff to keep me happy. 

If you want to live in a sh_t hole then ya Vegas offers good prices. Nicer areas are not so cheap but 350k will get you a decent house in a gated community. The place I liked was about 700k but the taxes were huge and hoa was 800/month. There is quite a bit of new home construction going on, prices from mid 300's to over a million.

Summers are hot...winters are cool...it is still fairly cool now. Not the Shangri La I want to spend my last years in.


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## sags (May 15, 2010)

Thanks for the info on Las Vegas.........now I know why people aren't flocking there for "low" real estate prices.


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## financialnoob (Feb 26, 2011)

marina628 said:


> lots of crime come with Las Vegas and any condos there probably won't qualify for mortgages as 50% of the buildings are empty.


Sure, there's millions of cases of theft every year, but that's mostly all legal by the casinos :encouragement:

Vegas is surprisingly not that bad for violent crime. When looking at crime rates from 2011 out of 72 US cities with populations over 250K, Vegas finished:

- 51st in murder/non-negligent homicide
- 30th in rapes
- 36th in robberies
- 28th in aggravated assaults
- 60th in property crimes
- 44th in burglary
- 64th in larceny/theft (non-casino variety)
- 39th in motor vehicle theft

I know the city has a certain reputation, but it really isn't that bad compared to the rest of the large cities in the US.

Not advocating people move there or anything, but it is a bit of a misconception is all.


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## marina628 (Dec 14, 2010)

I go there for about 6-8 weeks a year and have seen the great parts of Vegas and the skid row parts. Having shopped for a property myself in Vegas back in 2010 /2011 I learned a great deal about the market there and we were going to buy a Condo there but when we learned the building was not mortgageable we walked.Not because we needed a mortgage but thinking down the road.We have a friend who has a few properties in Vegas now that she rents year round .I have no problem being out on the strip any time of night in Las Vegas but you will see some crazy stuff if you venture too far from there.Last year I counted 5 times in 8 days I seen somebody laying across the road in hand cuffs and the cops on their backs. Can't say I have ever seen that in Toronto although I did see a guy running from the police in Scarborough with a bag of frozen shrimp in his hands lol


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## financialnoob (Feb 26, 2011)

LOL frozen shrimp??? That's awesome. 

And I don't doubt what you've seen at all, I mean, it is Vegas! :stupid:

There are probably some arrests for minor things or stupid drunken tourists, but compared to other large US cities, it really does have a pretty low rate of violent crime, approximately 1/3 less than the national average.

There are lots of sketchy things about Vegas ($5 prime rib dinner? Really?), but the crime rate really isn't as bad as one might think.


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## Eclectic12 (Oct 20, 2010)

sags said:


> Houses did well for the baby boomer generation, because they had steady jobs with good pay and benefits. As their incomes increased, they could buy homes from each other.........moving up to more expensive homes.
> 
> Who is going to buy the homes from the boomers?
> 
> ...


It will depend on the balance, will it not?

Some of those immigrants that started with nothing are now in permanent, "part time" jobs and have been working full time plus for years now.




sags said:


> The "system" isn't set up to deal with month after month house price declines.
> 
> How falling prices will affect municipal tax assessments, mortgage renewals, and HELOCs are all unanswered questions.


I'm not so sure municipal tax assessments will be affected. 



> Each year, when property values increase, the City is required by law to reduce its tax rates so that the amount of property taxes collected remains the same – the reassessment does not generate any additional revenue for the City.


http://www.toronto.ca/taxes/property_tax/assessment.htm

Wouldn't the same law mean the dropping assessments won't decrease property taxes either? Or is this a Toronto only thing?


I can see problems for mortgage renewals and those with a lot on their HELOC.


Cheers


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## fergusonsd (Dec 30, 2012)

It really depends on your location, I live in Halton Hills and home prices are going nuts do to the massive emigration from Brampton. There arent enough homes so the demand is just so high. Starter homes go for 360-400!

Devon


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## KaeJS (Sep 28, 2010)

fergusonsd said:


> It really depends on your location, I live in Halton Hills and home prices are going nuts do to the massive emigration from Brampton. There arent enough homes so the demand is just so high. Starter homes go for 360-400!
> 
> Devon


This is exactly what I wanted to get away from. I saw this happening, which is why I bought in Cambridge.

I am hoping eventually the same spill over will happen when Kitchener/Cambridge/Waterloo/Guelph/Milton all become one big "GTA", just like Brampton, Mississauga, Oakville, etc.

My "starter" home was only 235k. 

Do you foresee house prices falling anywhere in the GTA?

I don't. I would like your opinion, though.


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## none (Jan 15, 2013)

I will bet you $100 that the average price in Toronto will drop by at least 15% in the next 2 years. If you are really certain, you should give me decent odds.

We could even use this as a biased in your favour house price estimate.

http://www.torontorealestateboard.c...index/pdf/TREB_MLS_HPI_Public_Tables_0213.pdf


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## KaeJS (Sep 28, 2010)

At least 15%?

I would take that bet.

There are too many people buying, and too many people still believe "RE only goes up", too many immigrants, the interest rates will still be low in 2 years.

I think prices will just stay flat over 2 years. I think they will slightly rise in the summer, and slightly decrease in the winter, leaving a flat line.


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## KaeJS (Sep 28, 2010)

If housing prices are so high over on the west coast in BC,

Why can't they go this high in ON?


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## none (Jan 15, 2013)

How about if we go for Single family detached: Toronto E01: Current price is 590,900.

If the price goes below $500,000 in the next 24 months.

To keep it fun, why don't we do it for a charity (and the loser gets a tax write-off).

So how certain are you - what odds will you give me?


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## marina628 (Dec 14, 2010)

Well I am looking at Etobicoke and Whitby to purchase now and everything coming on market is selling for list or higher.I think the condo market in Toronto will probably take a hit but Detached housing prices not so much.


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## none (Jan 15, 2013)

marina628 said:


> Well I am looking at Etobicoke and Whitby to purchase now and everything coming on market is selling for list or higher.I think the condo market in Toronto will probably take a hit but Detached housing prices not so much.


In that case I think 3:1 odds in my favour is warranted.

BTW: also how about the loser gets to pick the charity too. I would have a hard time explaining to my wife why I donated $100 to the "Buy KaeJS a jetski" foundation.


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## andrewf (Mar 1, 2010)

I think detached housing will be less affected than condos, but if the condo market implodes, that will necessarily have an impact on detached housing. Fundamentally, prices have run pretty far ahead of income and rents. Immigration, lack of land, etc. do not obviate these facts. These are things people say in a bubble to justify to continued existence of the bubble.


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## none (Jan 15, 2013)

But wait!! What about the limited amount of land!! House prices must continue to go up - prices never go down because of land scarcity.

oop, oh right, Japan....

I agree with Andrewf - I thought choosing the condo market would be a little unfair - I think the area and detached housing makes it a bet somewhat in KaeJS favour - that's why I am asking for favourable odds.


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## marina628 (Dec 14, 2010)

i don't do virtual betting .... There is still money to be made in housing but like the markets you need exit strategy.I just bought new house which closes 2014 and in the 105 days since i bought they added 35000 to the price with smaller lot.


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## none (Jan 15, 2013)

Why do virtual betting when you can do real world betting and bet on RE?  Good luck with that.


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## none (Jan 15, 2013)

Is there a country wide bubble? Check this out:

http://www.remax.ca/ns/halifax-real-estate/na-5874-cabot-st-nsreb_00172064-lst

Isn't it a funny coincidence that the remax logo is a massive inflated balloon??


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## jamesbe (May 8, 2010)

LOL 383 sq/ft? My bathroom is larger than that!


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## jcgd (Oct 30, 2011)

none said:


> Is there a country wide bubble? Check this out:
> 
> http://www.remax.ca/ns/halifax-real-estate/na-5874-cabot-st-nsreb_00172064-lst
> 
> Isn't it a funny coincidence that the remax logo is a massive inflated balloon??


I'm starting to think you are bearish or real estate. :rolleyes2:


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## none (Jan 15, 2013)

You don't need to be bearish to think that 180K for a <400 ft2 house in the northend of Halifax is absolutely insane.


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## sags (May 15, 2010)

It might be worth 180..........if the seller included the wood boards under the stove...........keeping it level.


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## andrewf (Mar 1, 2010)

Teardown?


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## Haligonian (Nov 3, 2012)

none said:


> You don't need to be bearish to think that 180K for a <400 ft2 house in the northend of Halifax is absolutely insane.


180k may seem like a lot for that house, but, the value is in the land and not in the house. It is located in the Hydrostone area (a very sought after area in Halifax). It will probably be bought by a construction company and either renovated and expanded, or replaced with a new house.


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## none (Jan 15, 2013)

No, that's barely the hydrostone. Anyway, hydrostone is not some sought after place - it is once your done with all the half decent places.

Halifax is extremely poor and the north end is actually pretty gross. I know, I lived there until 2010. I was very happy to leave that over rated sea town.

I know Halifax has some romanticism surrounding it but I, and many, strongly disagree. Even the Barenaked ladies wrote a song about how much Halifax sucks.

That house worth $180 is beyond laughable.

http://www.youtube.com/watch?v=Ij-BKA2d_hs


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## none (Jan 15, 2013)

Hey! They already dropped it by 10K. Maybe if they drop it another 100K it might be worth it.

http://www.viewpoint.ca/property/cutsheet/00172064


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## Haligonian (Nov 3, 2012)

none said:


> No, that's barely the hydrostone. Anyway, hydrostone is not some sought after place - it is once your done with all the half decent places.
> 
> Halifax is extremely poor and the north end is actually pretty gross. I know, I lived there until 2010. I was very happy to leave that over rated sea town.
> 
> ...


It's one block outside of Hydrostone (hence why I wrote "Hydrostone area"), and Hydrostone has become a sought after area within Halifax (In 2011, the Canadian Institute of Planners named the Hydrostone the Second Greatest Neighbourhood in its Great Places in Canada contest - wikipedia).

http://en.wikipedia.org/wiki/The_Hydrostone

I'm sorry you don't like Halifax, but, it is far from gross. Halifax is a great place and Haligonians are friendly people. 

In regards to that house, the value is in the land, not the house.


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## none (Jan 15, 2013)

I will give you that Halifax is a half step above spryfield.

This:


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