First, more lies. Then the Tragedy of F.
Yesterday I referenced the mischievous and devious way the real estate industry reports stats. This, I said, is sad enough. That the little buggers of the media just report it, without critical balance or even fact-checking, is inexcusable. When we lose the free press, we lose freedom. No wonder this is a Wikileaks world.
Even worse, however, is the now-common practice of running advertorial drivel as news – making it virtually impossible for dewy-eyed and impressionable hormonal young buyers to discern self-serving opinion from fact. This has turned our once-great newspapers from champions of their readers’ interests into bootlicking support for anyone with an ad budget. It’s also spawned the practice of accepting articles from people unburdened by ethics.
Which brings me to Mark Weisleder.
Once a lawyer, he’s now a real estate shill, teaching aspiring moist young realtors how to manage clients, while generating referrals and sales leads. He gives seminars for industry groups, and recently wrote a book about how to buy a house. Plus, he writes for the Toronto Star, which has also lost its way.
This week the paper carried a Weisleder piece, “Our housing market to sidestep US-style bubble.” It’s typical of the material a desperate industry is using, and makes us all think we’re living in Phoenix, circa 2005.
Says he: Fret not about Mark Carney’s debt warning. It’s all crap. We’ll never repeat the US housing meltdown experience because those lazy Americans were given “no incentive” to pay off mortgages since US bankers were lax with loans (“if you had a pulse, you got approved”), mortgage interest is tax-deductible, and in many states you can walk away from a home loan debt.
In contrast, Weisleder writes (making many people happy he no longer practices law):
- “Canadian banks have made sure over the last few years that even if you qualified for a 1-year mortgage rate of 2.5 per cent, you had to have the ability to pay the 5-year rate, which was closer to 5.5 per cent, in order to qualify for the mortgage. Thus, even if interest rates rise, as the Governor has warned, most Canadians will still be able to absorb the increased payments.
- “Banks have been much stricter in requiring evidence of real down payments before lending any money. There are no free down payment programs in effect in Canada.
- “In Canada, because you cannot deduct interest from your home mortgage on your tax return, you are encouraged to pay down the principal on your mortgage.
- “Most Canadian mortgages, except in Alberta, are recourse mortgages, so if you don’t pay, you can be sued by the lender for any shortfall.”
What do we make of this? Are these valid reasons why our real estate market will continue to rise when housing has taken a hit in 47 countries, most spectacularly our nearest (and most similar) neighbour? Has Mark Weisleder passed his Best-before date?
Hmm. Well on the issue of mortgage qualification, the rules changed in April, not years ago. And as for new buyers having to qualify for a 5-year fixed rate – ensuring those with lousy incomes don’t make it – check out the rates in the squirrely little box on the top of this page. Yup. All the money you want, you house-horny kids, just a few hairs north of 3%. So when you renew in five years at 8%, you know who to blame – email@example.com.
Strict bankers and no free-down payment-programs in Canada? Hold me. My walls hurt.
Actually, as this blog has given ample evidence of, 0%-down financing is commonplace, through mortgage brokers financed by the big banks. So are cash-back mortgages, showering any new borrower with up to 7% of the amount borrowed – ideal for a down payment you don’t have. Liar loans are also available from among the Big Five, where self-employed people “don’t need to prove their income.” That’s a relief.
And in Canada we encourage banks to be anything but conservative by having the federal government backstop potential losses on high-risk loans with public money. This is probably why nine out of ten new mortgages are high-ratio. Hell, those tightwad Yanks have nothing on us when it comes to selling houses to people without money.
On tax-deductible mortgages, little Mark has a point. But he conveniently forgets we allow people to keep all the money they make flipping their principal residences 100% free of tax, as well as being able to borrow tax-free from sheltered retirement plans. Ottawa can sucker people into real estate speculation just as efficiently as Washington.
As for the ability of Americans to walk away from mortgages while we have our snowy asses sued off, you’d think an erstwhile lawyer would know this stuff. Some US states are recourse and some are not (like provinces here). How much difference did it make to the housing crisis in those various areas? Nada. Not a whit. Another Canadian myth. Besides, American homeowners who walk still face big tax bills, while Canadians can wriggle from a mortgage debt through bankruptcy – and keep their homes to boot.
In short, Weisleder, others of his disingenuous ilk, the CREA harlots and media sell-outs floundering in a bed of their own making, deserve each other. We deserve better. Truth be told, though, it’s probably too late.
Holy crap, Look at the time.
Sorry, F. We’ll do you tomorrow.