Why did the finance minister call Manulife this week and chew the company out? Because the feds know what’s happening to the housing market, and what comes next. It’s time we all did.
Manulife’s crime was jumping into a mortgage war with BMO on Monday, dropping its five-year rate down to 2.89%, or a tenth of a point less than the bank. F was already pissed at Big Blue for resuscitating the cheapo loans partly responsible for last spring’s hormone-fuelled, bubblicious, bidding-war housing market which drove prices skyward.
Of course, the lenders are doing this because business sucks. New mortgage originations have collapsed in the last eight months, call centres have been raked and v-ps sacked. Bankers never imagined that slicing mortgage amortizations, making cash-back loans illegal or stripping million-dollar listings of CHMC insurance would end up in this carnage. And so a mortgage war seemed like the quick and dirty way to grab some dwindling market share.
But here’s what F knows. Buyers today could well be defaulters tomorrow. Like Kim Campbell wiggling out of her $1.8 million Vancouver condo deal because the value has collapsed, thousands more could simply decide walking away is better than death by mortgage.
Late Tuesday came more evidence of the unfolding drama. Total sales of new housing units in the six-million GTA market were barely more than two thousand, with only 952 condo deals. This is a withering 22.2% decline over last February, and a 25.1% tumble for 2013 compared to the same point one year ago. There are more than 20,000 new, vacant and unsold condos, another 6,800 resale condos on MLS, and scores more being flogged on Craigslist, Kijiji and FSBO sites. There’s no doubt where this is headed.
In fact, could Toronto be catching the Van disease? Where sales go, prices follow.
The Mouldy City is abuzz with ‘secret’ internal housing numbers from the Vancouver Real Estate Board which do two things: (a) give irrefutable proof the realtors’ frankenumber is misleading consumers and (b) show there’s a US-style HouseAgeddon in full flower in Richmond – that burb where Asian money was supposed to make everyone a millionaire. The leak started here and spread here and now it might as well be here.
In the Terra Nova hood the average sales price in the past year has declined 38%, while the median price has travelled from $1.388 million to $688,000. That’s a drop of 50.4%. In the Riverdale area, the average price is off 27.5% and the median lower by 28%. And over in Seafair, the average price is down 34% and the median by 25%.
These are numbers you’d expect crawling out of Vegas or Youngstown in 2006. But what has the real estate cartel announced to homebuyers and sellers? The Frankenumber for Terra Nova, where houses are now selling for half off, is a decline of just 4.6%. For Riverdale it’s -9% and for Seafair -15%.
Kinda makes you wonder about the veracity of the latest media release from the board: “Since reaching a peak in May of $625,100, the MLS® Home Price Index composite benchmark price for all residential properties in Greater Vancouver has declined 5.6 per cent to $590,400. This represents a 3.3 per cent decline compared to this time last year.”
Clearly the Home Price Index is not intended to give an accurate view of current pricing or reflect market momentum – critical to an informed home-buying decision. Instead it’s there to mask those swings, obfuscate reality and create an ‘it’s-always-a-good-time-to-buy’ mentality. So, it’s about helping realtors sell houses, not helping citizens know when to buy them.
In fact it takes the cartel twenty-five pages to explain it. Including this:
So, back to F and ManOne. This may be one of those rare moments the peckerettes got it right. Housing’s a dangerous asset class in 2013. Sales will continue to fall, making it increasingly illiquid. Prices will follow, rendering those who buy it with extreme leverage vulnerable. But with 2.99% mortgages and government-sanctioned 95% financing, that includes an ocean of buyers. Do they know what they’re doing? Given what realtors are telling them, is it even possible?
Banks with teaser rates and realtors who lie. Welcome to America lite.
241 comments ↓
Does all this Frankenumber business lead to a time where governments would track the numbers on their own? Something like StatsCan does for CPI or would it more likely lead to an abolishment of this meaningless number?
Just stop f..ing CHMC, that’s it. This will solve the problem.
I am now openly questioning whether F actually does want to solve the problem with the frankly substandard mortgages in Canada.
Let the banks take the risk!
1st,2nd,3rd,4th,5th,6th,7th,8th,9th,10th,11th,12th,13th,14th,15th,16th,17th,18th,19th,20th…I think.
This used to be a serious blog. — Garth
Terra Nova, Riverdale , Richmond and Seafair ,no Italians there, that’s why prices are falling.
Plenty of Italians in the GTA to soak up excess RE supply.
Woodbridge prices positively going to the moon. ! LOL
Not such a slow melt after all, eh OldPol?
PS – I was/am actually far more concerned about the political fallout from Cyprus than ‘contagion’, per se.
3rd?
So what happens now that Cyprus has given the EU the finger?
The disclaimer pretty much states that the report is garbage. The math didn’t even give me so much as a tickle.
Futurist!
Richmond has been abandoned ever since the tsunami hit Japan. Richmond is done now that the Chinese are leaving out of fear their investment could get swept away.
Speaking of fleeting investments. Any guesses yet how this whole Cyprus disaster is potentially going to play out on our shores?
Foreigners can still buy and own property in Canada. Safer bet than keeping money in European banks. The genie is out of the bottle and I’m willing to wager that HRM (Hot Russian Money) might be finding its way into the Canadian real estate market. Vancouver has a well established Russian community. That money wants to find a home somewhere. Other investors might follow suit.
#4 just don’t tell me that Italians have built Toronto or New York
#6 My Russian cousins move their money somewhere else
How does Garth know that F chewed out Manulife? Enquiring minds wish to know.
CBC radio had a finance guy on this morning who said interest rates wouldn’t rise as long as the economy was slow, but I always thought mortgage rates were tied to the bond market. Can you comment Garth? If Dale from Calgary is reading this you need to google ‘Tom Steyer’. Things aren’t lookin’ so hot for the Keystone and the “patch’
In fact it takes the cartel twenty-five pages to explain it. Including this:
Actually, it looks more like <a href="http://htmlpaste.com/3abb28fc9d1afa038ab602bf2999f9d6be4bacbe">this.</a>
There is something I don’t understand. How are you going to pay off the mortgage if it is lets say $600,000 WITHOUT house price going up? Even if it is 0% financing.
The only way to pay off the mortgage that I know is to go to work and bring home a paycheque. Lets say you have $3,000 a month to pay down your mortgage. It is still almost 17 years. And as I say – 0% financing.
Two problems: 1) How many of borrowers have $3,000 a month to spare? 2) How much bigger than 0% is the mortgage rate going to be during the life of the mortgage… 17 years?
And what about kids? Daycare costs? Vacations? Sports? Is that going to be a LIFE without all that?
In fact it takes the cartel twenty-five pages to explain it. Including this:
Actually, it looks more like this.
Some juicy Brad Lamb stupidity
http://www.youtube.com/watch?v=Gde6jaCMbMA
Russians have been buying up apartment blocks in Victoria for some time. A friend got kicked out of her apartment by one. It may be better than having money
in Cyprus but they’re taking a haircut here as well. I see that one apartment block they bought is back up for sale.
It may not be about preserving the capital you’ve got but being where the haircut leaves you the most hair.
The race to the bottom is on…
I have available 5 yr fixed rate at 2.74%
America lite eh? us canadians are following or neighbors finally… Our house prices will probably equal the americans soon …. This
will not end well
CHMC insures between 900 billions and 1 trillion in mortgages. This would be the equivalent of 9-10 trillions in US. Imagine that. Who is in deeper s..t would you think?
WHAT 2 F DID F EVER KNOW ?
So the story behind today’s photo is the guy posing ate at the Vegas burger palace almost every day and became their self proclaimed spokesperson.
Of course he recently died of a massive coronary at age 54.
Heart Attack Grill:
http://articles.latimes.com/2013/feb/13/nation/la-na-nn-unofficial-spokesman-heart-attack-grill-dies-of-heart-attack-20130213
CBC radio had a finance guy on this morning who said interest rates wouldn’t rise as long as the economy was slow
—————————
interests rates are set by the bond market. Or you eventually get very high inflation or hyperinflation when deficits are large. If somebody thinks that with high inflation rates could be low for long time, he/she is delusional. Currency crunch would be imminent and I care not what Paul Krugman says.
I don’t want to sound like conspiracy theorists but it seems that either F is completely incompetent or he is intentionally screwing the country’s economy (hence the food for conspiracy theorists).
Just shut down the f….ing CMHC!
Richmond city council won’t pursue ‘Chinese-only’ sign ban
http://www.cbc.ca/news/canada/british-columbia/story/2013/03/18/bc-chinese-signs-richmond.html
=============================
This is a “COMMENT” to the above article:
This isn’t racism. I’m Chinese, don’t read Chinese and I’m sick of not being able to read certain restaurant menus or promotions because they’re all written in Chinese. Just go to Parker Place and you’ll see what I mean. The food court there, while the store sign may have English means nothing when the menus are all written in Chinese. Thankfully, my wife can read Chinese and can order for us, but if I’m there by myself, I just don’t order from the fast food places that don’t have English on them.
Only in Canada do you find ethnic groups like Chinese people not willing to assimilate to the local culture. As a doctor, I am forced to try to speak broken Mandarin to give service to people who will not learn English. I’ve even encountered UBC students who refuse to speak English with me. Our strata corporation is owed a lot of money by owners who refuse to check their mail. We send them letters asking them to please pay, and of course, they can’t read the letters because they’re in English. Curiously, this has all been with Chinese people. It is rare that people of other ethnicities refuse to speak English with me. Am I racist? No, I’m Chinese. But I do wish we can all communicate. That doesn’t make me racist. It makes me a realist.
==================================
QUOTE:
“Our strata corporation is owed a lot of money by owners who refuse to check their mail. We send them letters asking them to please pay, and of course, they can’t read the letters because they’re in English.”
====
Hmmmm
I wonder how widespread this is….aka that the rest of the strata has to pick up the slack?!?
So…global banks that were subject to national oversight, external audit opinions, board oversight and market scrutiny were, in the end, shown to be publishing wildly inaccurate numbers. CREB and TERB, have none of these (unless you consider a highly biased board of vested insiders capable of oversight). What is the prospect that these numbers are even remotely accurate? Is there no federal consumer agency that has a mandate to ensure such bodies don’t just pump BS to the consuming public???
#11 bragging or complaining
Anybody have any ideas when rates might reset to the historical average?
Giving away money for what may not even match inflation doesn’t seem like good business. Are these banks betting that 5 years from now all those extra locked-in mortgages will be making so much money it’s worth paying people to take the money today?
The heart attack guy is comparable to Turnernation, this blog’s unofficial fan club president, ending up with his house underwater by 50% home and foreclosed upon.
Anybody have any ideas when rates might reset to the historical average?
————————————-
Interest rates will not reset to historical average.
Inflation in the years to come on things that matter will be in double digits.
we will either:
1. keep interest rates low and screw all the savers, getting very high inflation or hyperinflation
or
2. Get real interest rates of 20 + % as we now are in much worse shape than the 80es when the interest rates reached 18 %
I just checked MLS and couldnt find any SFHs in Terra Nova (boggy cow pasture when I was growing up) for under $1 mil, what gives?
Two things I see everyday in Vancouver in newspapers and billboards; 2.99% mortgages and ZERO-down ads for condos.
Personally like the idea of using cheap mortgage money to pay off higher debt, but I can see why this could get ugly.
Garth, to ask another question similar to my last one, with this ‘war of mortgage’ rates the banks are waging against each other, will this not have some sort of impact on the bank’s bottom line in the next year to come? If they’re so desperate for mortgage business…
It doesn’t matter how low prices go now in Richmond–unless you can speak Cantonese…
Why doesn’t the Macleans writer do a story on the bs that it is the frankenumber creation…
#4 bigrider:
“Plenty of Italians in the GTA to soak up excess RE supply.
Woodbridge prices positively going to the moon. ! LOL”
That’s why Sicily has always been broke…
You can’t argue with the Calabrese or the Sicilians. The Renaissance never made it to Palermo.
Woodbridge: It’s different here…for real.
You’re right. Prices in Jersey Shore North will never go down because if it’s not expensive, they won’t buy it.
Having said that… Hi Nono!
Looks like some of the math geniuses involved in the CDO debacle in the States have found contract work with CREA.
RE will be fine as long as the lenders keep
On lending. It’s buyers who crash the market
It’s lenders and they want your business
Wow….thanks Garth for all sharing all this info and exposing the real estate cartel. Without your voice of reason, I’m sure there would have been so many more who would have been sucked into mortgages they would come to regret later. I have noticed though that there seems to be quite a few blogs of late exposing the Vancouver market. While there doesn’t seem to be too much out for the GTA. It sure would help to hear area specifics here in the GTA- as I am sure the mainstream media would be the last source. Maybe some of the blog dogs with real estate connections would like to take on this onerous task of leaking CREA/TREB/MREB dirty secrets!
Why doesn’t F just make the qualifying rate different than the interest rate one pays? Then everyone wins.
– The banks can compete for business all they want with low interest rates
– Consumers can pay less interest
– F can price-fix on mortgages as much as he wants without having to place angry phone calls to the banks?
I don’t get it.
HPI is like CPI. Government says there is no inflation yet everyday my $ 20 basket of goods gets either smaller or I’m forced to substitute with a different product. What 20 dollars bought 10 years ago vs 5 years ago vs today it’s not the same. HPI it’s almost the same but little more creative.
Strange, but I agree with Claudius (to a degree).
Instead of calling up Manulife and having them cease and desist the mortgage rate war, it would be better to lower the amount of CMHC coverage.
If the banks assumed more of the risk, they would lend in a more responsible manner.
As for Cyprus, while it may appear insignificant, the global economy is a house of cards. Now that it was voted that Cypriot residents won’t be taxed, what will be the result?
Will Cyrus be “evicted” from the EU?
What will Italy do as a result? Will they elect to tax savings accounts? Withdraw from the EU?
Interesting times.
I wouldn’t be surprised to see banks featuring trendy products such as “interest only” mortgages like they do in Netherlands.
“This may be one of those rare moments the peckerettes got it right.”
Edited for clarity?:
This may be one of those rare moments; the peckerette’s got it right.
#31 pathcontrolmonk on 03.19.13 at 9:39 pm
I just checked MLS and couldnt find any SFHs in Terra Nova (boggy cow pasture when I was growing up) for under $1 mil, what gives?
+++++++++++++++++++++++++++++++++++
Just cuz someone asks a million doesn’t mean they get it. I’m still want $240 for my Bre-X stock, but so far no takers there either.
Price is set by the last sale, not the asking price.
I apologize for how I acted earlier. But I honestly don’t see what the picture means about anything. It’s a big hamburger. Usually I see some hidden meaning in your picture. Today I’m blank.
It’s about you. — Garth
Am I the only one that see’s the obvious here.
Back in the 90’s when I had the mfg company, I had a retail outlet, a guy down the road by the of rodger was the compitition. We got into a bit of a price war, I realized this was stupid, we went out to the cannon ball shared a few pints and lap dancers, then desided to push our prices back, we took out prices from our adds.
This was highly illegal ,price fixing but we where the only game in town.
Now we have the minister of finance involved in, well illegal price fixing on mortgages, no back room deal. It’s out in the open.
You guys all wonder why insurance companies, gasoline , airfare are all super high with little variance in price.
But heaven help two small retailer owners that get caught having a game of golf together. The f-en diati…
Garth,
You have mentioned some areas may go less scathed than others; serious question, could Estevan Sask be one of them?
– youngest city in all of Saskatchewan and also ranked #1 in all of Canada in terms of discretionary income
– broad and rich resource base, which includes oil & gas, lignite coal, potash and some of the most fertile agricultural lands in the province
– $106,680 3rd highest Median family income in Canada
– Average resale home price 2011 $216,000
If this cant weather the storm, what will?
http://www.huffingtonpost.ca/mobileweb/slideshow/1631912/235441/?icid=hp_canada-business_gallery
http://www.estevanchamber.ca/estevan.html
http://www.estevanchamber.ca/estevan.html
http://www.chbasaskatchewan.com/estevan
Bet you Will Hunting can solve that formula in no time and get the girl.
I thought we lived in a free market system? When does a federal Minister call a private company and demand they change policy and business decision? Demand that the company go against the interests of its board and shareholders?
Realize you applaud the fact Flaherty did finally react, however, these are rash actions of a man/govt that needs absolute control.
Considering it was this govt that built this RE bubble.
This was far from any conservative minded govt would ever consider.
The Manning conventions assertion that a calmer libertarian/conservative ideology is an illusion. If their lead Finance Minister throws himself on his cellphone to scream at a bank CEO with threats.
Hmmm… What kind of threats?
The only reason any lender in Canada can offer 2.99% or 2.75% to kids without savings to buy a $600,000 house is because the government backs the loan with mortgage insurance. That gives F all the legitimacy he needs to set the rules. Any bank is free to opt out and assume the risk itself. None does. Get off your pony. — Garth
O’leary’s replacement on BNN today said there are more then 30 choices out there today that offer a 5 year mortgage of 2.75 and even lower. Whats one more?
Terra Nova
Avg price Feb 12 $1,245,556 Feb 13, $772,200 -38%
median feb 12,$1,388,000 Feb 13, $688,000 -50.4
Hpi Feb 12 $918,000 Hpi Feb 13 $876,000 -4.6%
Average DOM for Feb 13, 85 DOM
Inventory 66
Sales 5
How to digest this data (for realtors):
First, calculate the sales dollar volume by multiplying average price x sales: $772,200 x 5 = $3,861,000
$3,861,000 is the amount of dollars spent from buyers (actual money or mortgage debt transacted), however, if multiplied using HPI x sales, it equates to: $876,000 x 5 = $4,380,000. This is a difference of $519,000 dollars pulled out of thin air. It doesn't even exist, nor was it ever transacted, but it sure makes the headline price look better, which is the entire point of having an HPI.
The HPI is basically a rolling six month moving average on average prices. Chart Its purpose is to take all the squiggly lines away (volatility) so realtors can point to a chart and tell clients a home is less risky then the stock market. Can you imagine the TSX closing price being quoted based on a moving average? That wouldn't fly. Yet for some reason in realtor world, this is a valid quote. This is completely absurd.
The bid and the ask price is a fundamental function of all markets. No matter what new metrics are used to justify home values, the number of buyers and actual amount of dollars they're willing to spend is what determines value. Nothing else.
Estevan:
– I will also add A rental vancancy rate of 1.3%
– in the center of the Bakken oilfield which is on the verge of being one of the 10 most productive conventional oilfields in the history of the planet
Nowhere to rent i may have to buy, nees your opinion!
http://www.estevaneconomicdevelopment.ca/esthousing.html
http://www.financialpost.com/m/wp/news/energy/blog.html?b=business.financialpost.com/2012/11/12/is-bakken-set-to-rival-saudi-supergiant-ghawar-oilfield
I know why we get screwed by the machine…..
When I brag, pat myself on the back, it irritates a lot of you, it doesn’t seem quite natural to you does it..
But if an authority figure, be it a teacher, a politician, a celebrity praised me and pat me on the back. That would be acceptable to most.
It’s conditioning kids, you are trained to serve the machine since birth and not yourself first…that’s why people pay crazy prices for cement cubes. Conditioning is all it is. Individisum is tabo, the calm-unity comes first.
So when you see a poster say Smoking Man your awsome that is some one with a free mind. The chirpers owned but to deep into the matrix to see it…
Ok I’m on here with fake name, no
F should have known where his 40 year mortgages and low rate policy was leading. The short term gain and majority government was wort the risk. And tis said Harper will win next election unless Grits and NDP merge. LOL not so fast eh.
So…
The Canadian housing bubble looms. Garth, what do you think the housing bubble in China will do? Empty condos are bad… empty cities are terrifying.
https://www.youtube.com/watch?v=2LhRfsisl7w
http://business.financialpost.com/2013/03/13/chinas-property-bubble-will-burst-in-latter-half-of-2013-says-research-firm/
Put your global hat on sir, because I think this will effect the Canadian market more than the Canadian market will effect the Canadian market.
Namaste (said because I enjoy see through Lulu Lemon pants).
-Ghenghis Khan Build It
I hate typing on an iPad, egnor last line of last post, don’t know how it got there, probably from yesterday.
“Of course, the lenders are doing this because business sucks.”
Outside in the driveway slush this morning I found a crumpled but expensive looking glossy flyer from a credit union calling itself IC Savings, a place with a few branches in Toronto and the Italian suburb of Woodbridge.
This 4 page ‘Community Report’ was largely propaganda about real estate, with a couple of bits about retiring Italian-Canadian politicos.
One page talks about how lending standards are slacker at credit unions, how the CMHC rule changes are unfair and the banks use “automated adjudication systems to approve their mortgage applicants” and that “bank employees became unaccustomed to making exceptions”……
but …..”We believe that lending decisions require a human touch”
and…. “Automation sterilizes all applicants with one keyboard click, without taking into account underlying circumstances that may impact a customer’s credit rating, or economic profile.”
(Sounds like Italians don’t trust math…?)
And then another piece, “Ontario Housing Market to Recover Slowly from Slump” which says….
…”Home sales will rise this year and prices will start to bounce back,” said Helmut Pastrick, Chief Economist for Central 1, the trade association and financial facility for credit unions in Ontario and British Columbia. ‘ “Fewer sales have led to softer prices, but declines have been insignificant,” notes Pastrick.’
On condos, the flyer says “….developers will slow construction and continued population growth in Toronto will fill the units”
These guys picked about the worst weather day of the year to drop their glossy flyers on Toronto.
Looks and smells like desperation to me.
P.S. Just heard on CBC radio that Manulife is backing down on its mortgage war pricing.
Appears Russia is stepping in to bail out Cyprus.
#39 Slightly Less Foolish – he was presented with the option (actually a recommendation) and chose not to go that route. Bewilderment has not yet subsided.
I just don’t get it – F goes on record that banks need to keep in line with rates. I was listening to the news and some analysts are freaking that F has no right to alter the direction of a free market – bs, it’s the tax payers that will get hit with the bill as banks throw out any caution to gain clients. Let the banks take the risk and then they can charge what ever rate they want.How can it be all reward with no risk!!
Our a-hole neighbour who works in construction appears to be home earlier and working 4 day work weeks – maybe that is a sign that new home construction is getting a kick in the pants – this guy is gonna lose his home if the housing market seizes – cross my fingers it does…
Tipping point
The grounding sensation of reality.
Lest We forget!
Who thinks tighter regulation regarding realtors and false advertising (or stretching the truth in any form) is coming?
FAT MORTGAGES LIVE FOREVER
Turtle at #14 asks: How are you going to pay off the mortgage if it is lets say $600,000…
*************************************
Well that is just the horrible point. A mega mortgage like that is $2000 per month for 25 years even at zero interest.
If the homeowner happens to somehow scrape up another $5k to plunk down on the mortgage it hardly makes a noticeable dent. These large mortgages are huge mill stones and almost impossible to pay off early.
It would seem almost futile to try to pay off a beast like that. Just have to treat it almost a permanent fixture of your life. Hey, your boss will love it, he knows you would be scared to death of losing your job if you have one of these monsters to feed. Pretty effective birth control method too.
#6 MJG on 03.19.13 at 9:08 pm
“So what happens now that Cyprus has given the EU the finger?”
——————————————————————
http://www.euroweek.com/Article/3174955/0/Cyprus-the-great-exit-experiment.html
Can anyone tell me if these low low mortgage rates are ‘collateral’ mortgages, where the rates can be reset at any time?
F should threaten to raise the down payment requirements to 6, 7 or 10%. Not only would it cut down on over-leveraged buyers and speculators, but it would conserve CMHC’S cap space.
I should add…qualifying rates are geared to (but higher than) the actual mortgage rate. Problem with this is that as the mortgage rate falls, so does the qualifying rate. It was recommended to F that a fixed qualifying rate (of say 5%) be put in place which would allow interest rates to float as low as you want but low rates will have no impact on qualifaction and therfore credit quality. This way you maintain high quality borrowers AND healthy market competition. Bureaucrats don’t always go with what makes sense.
THE GOVERNMENT HAS NO BUSINESS IN THE BANK-ROOMS OF THE NATION!
F. should probably resign over this move. He has lost it!
He should work instead on asking/helping (but not telling) the banks to offer decent terms on 10 and 20 year fixed mortgages. (In fact the 10-year rate has come down dramatically and that is a very good thing.)
Wrong. The banks would not lend so recklessly without fed insurance. If they take it, they must play by the rules. — Garth
# 47 Sir Finance,
I don’t even hardly know where to begin… I guess all one can say is the hellhole known as Estevan is began at the bottom, is currently at the bottom and will continue to be at the bottom so no, it will be largely unaffected…
Nothing cures high real estate prices like unemployment. Stay Tuned….
@#42
CMHC does not insure interest only mortgages, only amortising mortgages.
And why would anyone finance interest only in a market with declinung housing prices for the foreseeable future (like the next 10-15 years)…?
You might want to do a little more research into such topics before you post on this blog (we didn’t all just fall off of the apple cart that YOU apparently just did!) ;-)
First time in the big city?
Love the pic Garth.
You couldn’t have chosen a better photo!
Garth – unless I missed it, I don’t see a CMHC qualifier on his comments. He is dictating rates for both CMHC and non-CMHC from what I see. I agree – if you go the CMHC route, you play by his rules – but he’s reaching beyond that.
#55 Dan from Calgary
Namaste (said because I enjoy see through Lulu Lemon pants).
You jogged a fond memory of my last place of work. There were inexpensive lunchtime yoga classes in some unused office space.
Some guys used to question my masculinity, but I never paid it much mind.
After all, I got a bit of relaxing, calming lo-impact physical activity……..with the added bonus of lovely scenery.
Being the incorrigible perv that I am, I liked to grab the last spot at the back of the room, beside the freaky little bi-curious number who was my most treasured work mate.
The two of us then had a great time ogling the fittest and lovliest of our lady colleagues…..all of which sporting lightweight, formfitting designer athletic wear.
Show me your downward dog, baby! ;-)
Wrong. The banks would not lend so recklessly without fed insurance. If they take it, they must play by the rules. — Garth
It’s still price fixing…..So The end justifies the means, it’s no excuse for braking the law, if you where a business owner and you got charged and paid fines for price fixing. You would be extremely mad right now…
So dogs you can use your TSFA in sanctioned wink wink good old boys operations but freely trade forex. You don’t qualify.
O, and Garth last time I checked only under 25 present deposit are insured the rest are not the bank takes the risk, and cmhc you pay a premium.
Nope. This is pure unbridled Price fixing. F SHOULD BE CHARGED BY COMPITITION PEOPLE..
But then they to busy going after small retailers playing golf together
Buyers today could well be defaulters tomorrow.
________
This is obviously the worry that has F losing sleep, but what is the likelihood that we will see default rates on par with what happened in the US? If I’m not mistaken, default rates are extremely low (less than 1%). Benjamin Tal released a note saying that unemployment rates and interest rates are unlikely to rise any time soon.
Good lord… I have a PhD (shut up, Smokingman), and I can’t make heads or tales of that frankennumber.
Obfuscation at its finest.
Having said that, I’m still just merrily sticking money into my ETF laden TFSA. Sure, it went down 1% over the last two days due to this Cyprus hullabaloo, but it’ll recover in a few weeks. Can you say the same of real estate? Nein.
guelphstudent: just don’t tell me that Italians have built Toronto or New York
I remember the 60′s, Woodbridge was still farms. One summer job was in the flooring business. One job was to pour a floor at Mary Miles Meat Packing Plant. The crew was Italian. We had mostly finished the floor when somebody noticed a flaw in the concrete. The boss said to ignore it. Without saying a word, one of the workers waded through the freshly poured concrete, repaired the flaw and troweled his way back.
http://www.greaterfool.ca/2012/10/16/seasonally-adjusted-2/
hahaha – Muclair and Rae calling out Flaherty on this Manulife debacle:
http://www2.macleans.ca/2013/03/19/flaherty-blasted-for-pressuring-manulife-to-reverse-mortgage-rate-cut/
“That’s Banana Republic behaviour,” said NDP Leader Tom Mulcair, who added the minister has no business interfering with the free marketplace.
Liberal interim leader Bob Rae called the minister’s actions “ridiculous” and in essence working to increase borrowing costs for Canadians.
“Either we have a market or we don’t,” he said. “The banks have huge profits. The idea that they shouldn’t be able to give a break to consumers is ridiculous and the idea that the Minister of Finance would basically be trying to create some kind of a cartel among the banks and the financial institutions as to what they can offer consumers by way of interest rates is I think completely inappropriate, completely wrong actually.”
Let me get this straight: having CMHC backstop 100% of the risk on every mortgage is ok, but asking Manulife not to start a “race to the bottom” on mortgage rates is interfering with the free market???
Here’s an idea — let Manulife offer whatever rate they want, but only on mortgages that aren’t insured by CMHC! How many brain cells does it take to come up with that? (not many if I typed it)
#65 Axxman
[ It was recommended to F that a fixed qualifying rate (of say 5%) be put in place which would allow interest rates to float as low as you want but low rates will have no impact on qualifaction and therfore credit quality…. Bureaucrats don’t always go with what makes sense.]
______________________
Clearly!
Thanks for the clarification & information. I agree that makes complete sense. People should be (at minimum)borrowing with rate hikes in mind anyways… but they don’t… and the banks don’t stop them.
It seems to me that one move would help a lot. When interest rates do rise, there would be less people freaking out. And who ever complained about more money in their pocket?
GTA Observational Economics report…. Was in the Hugo boss store in yorkville today for 40 min, not another person in sight. Had lunch with some clients yesterday, owner of restaurant says business is terrible. 25 year olds in my office panicking about tnot being able to sell their vertical shoeboxes. IMHO when rates start to move we are absolutely cooked in the GTA, far too much is tied to RE. I would not be surprised if we see 30-40% drop overall. The two RE agents on my hockey team have a lot “going on this summer”, so they are not playing… Translation I have not sold anything in a few months nd think the market is tanking.
Get rid of cmhc and you will see what a free market is really all about. The banks would turn off the GPS instantly on any deals that weren’t perfect, ie the us banks in 2008
Wrong. The banks would not lend so recklessly without fed insurance. If they take it, they must play by the rules. — Garth
GET RID OF IT! Christ you “Paperheads” can’t grasp the real problem. Of course the banks Garth so loves to invest in are going to privatize the profits and force the public to cover the loss, why do we give them the option?
#17 prairie person
If that’s all you want, you can buy government bonds, put your money in money markets, or even a bank account in a large economically diverse country? Why buy apartments, which take money and lots of effort to run? Or Cyprus? What genius thought of that. Clearly some other factors at work.
Westernman,
Im a young guy and will go where the best opportunity is. Career stepping stones can often be in the locations least desirable. Pay some dues and move along…
FAIL !!!!!
Observe photo:
How can the person on the left(wearing Smoking Old Man’s clothes) maintain the ass-u-med position ?
Looks like suspended in space….what happen to gravity and terminal velocity?
Look at size of their fingers..OMG…is this relative of E.T. ???
Person on the right from Toronto looks like have camel foot… maybe elephant’s foot ?
This is photoshopped
#58grasshopper on 03.19.13 at 10:24 pm
“Appears Russia is stepping in to bail out Cyprus.”
Probably told them they would give them double what IMF wants to give them but they will take the 14 tonnes of gold that Cyprus has in reserve as collateral.
Another excellent and necessary post, Garth!
How is this deception allowed to go on?
F doesn’t have to do anything. Just don’t raise the CMHC ceiling at 600,000.
Once the money dries up then all loans will be to the private sectors (BANKS).
You think they are going to insure 0 % down at super low rates. No way I can see 10% down and 25% on second houses (like in the old days). Also automatic 5% for loan insurance and add additional percentages to high risk vs premium lenders.
#55 Dan from Calgary
Maybe those empty Chinese cities will be new trendy off shore FEMA Camps for Yanks & Canuks.
Can just see it… Yuppie North Americans starting bidding wars to get into the better prisons with granite counter tops.
I’m hungry….
–
“Of course, the lenders are doing this because business sucks. It’s time we all did. Late Tuesday came more evidence of the unfolding drama.” — But of course, no one knows what the unfolding drama will be, and is why all the charts, graphs and gobble-dee-gook fuddleduddle numbers don’t mean a damn thing.
Yes, it would be nice if we all knew beforehand what was going to happen so we could make the necessary changes to our lives, but it would take the fun and spontaneity out of life.
*
Scooter Commuter Fits into backpack; Cyprus – France Hollande introduced a new 75% tax on everyone in France, now Cyprus has done it. An emerging pattern? Cyprus – Germany A lot of Fourth Reich stuff happening; Bitcoins Surge Is Bitcoin the new safe haven currency? Plus Russia – Cyprus Interesting if this plays out; Hmmm. Headline (and rest of story) is interesting; JPM and SAC Fraud allegations. ,cite>”The reason Cyprus is in trouble; the reason EVERY nation with a private central bank issuing the public currency as a loan at interest, is because the very nature of that banking system, by design, always creates more debt than money with which to pay that debt.” wrh.com; Chase Bank Customers see a zero balance temporarily. Isn’t Chase owned and run by the Rockefellers? Nine bankers indicted Someone’s been fooling around with the market; Globalists and IMF Interesting, but not sure where to place it; Troops betrayed Russians grab the lolly; Rich CEOs Means they want the WH to shift responsibility to the taxpayers, who will pay more tax; Argentina Taking umbrage with HSBC; No cash? Do a Mel Lastman and send the military in; Inflation Gaining in UK, and 700 Jobs gone; Miami Condo Buying Foreigners.
*
Sovereignty and the NWO; Smartmeter info.; 2:20 clip See how fast an implosion happens (esp. financially); Signs At least these are funny; Grumpy toad, meet angry cat; Discrimination? Guess it depends on how one sees it; Google Glass Like anti-depressants, they’re unpredictable; New Decision You bought it, you own it (gun control); China’s smog and Beijing has a weather modification office; Heart Attack Planet ‘Quakes here, there and everywhere; 13:03 clip alCIAquada. No wonder the “terrorists” get on so well with the west. They’re all part of the same group; NATO Cyberwar declares hackers as terrorists; US Infrastructure D +; Newtown Increase in gun applications; m$m ratings continue to dry up.
#6 MJG on 03.19.13 at 9:08 pm
3rd?
So what happens now that Cyprus has given the EU the finger?
Maybe the Russians spooked the parliament?
RE: #62 Shawn Allen
FAT MORTGAGES LIVE FOREVER
……………………..
So, if these fat mortgages are impossible to pay off, then people make their decisions with only two exit strategies in mind:
1) House price will rise and sale of the house (in future) will cover the mortgage.
2) House price will fall and people default on their mortgage.
Knowing about that banks DON’T CARE about mortgage repayment as long as government insures the mortgage. Why does anybody need to go work and do anything there if the paycheck is coming no matter what happens?
We need new government.
#25 Dr. Hoof-Hearted
Yeah! Now you understand how French Quebecers feel in their home province, especially when they can’t get service in French in MONTREAL!
#16 mark on 03.19.13 at 9:19 pm
Some juicy Brad Lamb stupidity
http://www.youtube.com/watch?v=Gde6jaCMbMA
______________________________________________
Never have I seen anybody so unconvincing, he was stuttering, nervous and had no hard evidence to support anything he said, he was floundering badly.
Doing away with CMHC as many have suggested would certainly go a long way with tuning up the banksters. Lots of comments tonight about F keeping his nose out of private enterprise, if we, the taxpayers weren’t backing all the loans there may be some merit in that but as long as we are guaranteeing the loans, he has the right to dictate some of the rules. Garth has made this clear many times.
On page 6 of the MLS Home Price Index Methodology manual it states:
“To mitigate volatility, a moving three-year sample period is used, since the use of a shorter
sample horizon may result in an insufficient number of sales over the period and cause index
inaccuracies.”
With regards to the relevance of the HPI in understanding recent price changes, this alone renders it a joke.
AS a renter I say… Just shut down the f….ing CMHC!r I say…
Why the f$$k would i pay my tax dollars to make some mortgage taker asshole rich…..is it just me ???????????????????????????????????????????????????????????????????????????????????????????????????
I heard that Jim Flaherty finance minister wants to privatize the CMHC. I heard the same thing being discussed in the U.S. with Freddie Mac, Fannie Mae. I don’t know how they would do this but I heard that if mortgages were not guaranteed by any federal government Canada, U.S. than fixed mortgage rates would be much higher than they are today.
Also, most banks,mortgage companies and other financial institutions would not lend money for 15,30 years. They would want higher down payments of at least 10% to 15% and would charge at least 1.00% to 1.50% higher fixed mortgage rates than today’s low mortgage rate. The U.S. 2.87% 15 year fixed or U.S. 3.67% 30 year fixed mortgage rates would not exist today if Freddie Mac, Fannie Mae basically U.S. taxpayers did not guarantee or back these mortgages.
Ok..almost 50…never heard of Camel Toe! Wiki’d it and never laughed so hard in my life.
Smoking Man on 03.19.13 at 10:22 pm
I hate typing on an iPad, egnor last line of last post, don’t know how it got there, probably from yesterday.
————-
Apple product? – looks like smoking man really conforms to the crowd.
69er,speaking of interest only loans I know a couple of guys in richmond who have a 2mil plus new build on credit lines.already they have dropped 300k in 3months for asking price.KICKER bcass.1.7mil.asking now 2.3 mil.
[…] via What F knows — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate. […]
#4 bigarider
Hey bigarider, why you a complain on Saint Joseph’s day? You supposed to be appy! You no find Zeppole in Woodbridga? C’mon, you and me, we go find Zeppole.
Nice – we’re now grouped in with HAM and Russians on the Miami condo speculation stage!
http://globaleconomicanalysis.blogspot.ca/2013/03/flash-and-fantasy-miami-condo-bubble-is.html
“Prices are up nearly 25 percent from a year ago, according to the Miami Area Association of Realtors.
How did it happen? Foreign, all-cash buyers like Venezuelans, Russians, Chinese, Canadians, and Brazilians. They were either looking for a safe-haven to park their money or were taking advantage of a weak dollar. Whatever the reason, they came, they saw, they bought.”
@ #71 Axxman on 03.19.13 at 10:47 pm
Garth – unless I missed it, I don’t see a CMHC qualifier on his comments. He is dictating rates for both CMHC and non-CMHC from what I see. I agree – if you go the CMHC route, you play by his rules – but he’s reaching beyond that.
I don’t know that you’re missing any official statements here, but you are missing a key fact: the vast majority of mortgages in Canada are CMHC-insured. Since Flaherty took over, nearly all new mortgage debt in Canada (hundreds of billions of dollars) is insured by the government – either directly, or via the 90% guarantee on Genworth and others.
So – your question is basically rhetorical… Flaherty doesn’t need to say that this is for CMHC-insured mortgages or not — simply by saying that this is for mortgages in Canada implies that CMHC is involved.
Garth, any ideas as to why, if the govt is serious about the debt load of people but is reluctant to raise interest rates, it doesn’t simply raise the required downpayment for homes?
DELETED
Love the pic Garth! Those 2 guys remind me of the movie “Dumb and Dumber”. I would next like to see a photo of this guy smoking a cigarette, and smiling, in front of a pic of a healthy non-smokers pink lung, and a smokers black lung. aaaahhhh forget it Garth, the same people who missed the meaning of this photo would miss that one too……while making “dumb and dumber” comments about it:) ….kind of like trying to reason with the CREA, RE agents, bankers, MIL’s, the house horny and now screwed house horny:) …….keep this blog going Garth, many have been saved!
Rock and frickin Rolla, Garth! You are gawddamn hero! This blog is going required reading material in Grade 11 economics!
I’ve been watching a lot of documentaries on the financial crash and what I’ve learned is this: it’s freakin serious! What is happening in Spain or ‘Merica will slowly make it’s way here. And you’ve been warning people for years. People should be on their knees thanking you. I’m going to do my part though. I’m starting a rap video about you and the Canadian Crash inspired by Gordon Lightfoot.
If anyone would like to collaborate and suggest lyrics or would like to wear sexually suggestive clothing and dance beside me, let me know.
Garth, I love you, bro!
This was highly illegal ,price fixing but we where the only game in town.
Now we have the minister of finance involved in, well illegal price fixing on mortgages, no back room deal. It’s out in the open.
You guys all wonder why insurance companies, gasoline , airfare are all super high with little variance in price.
But heaven help two small retailer owners that get caught having a game of golf together. The f-en diati…
——————————————————————-
Careful……when you talk the truth here Garth calls you a conspiracy tin foil hat wearing theorist. By the way….Zeus and I have an open order to give anyone $10,000 cash if they can show credible evidence a 40 ton jet plane hit the pentagon on 911.
We have not paid it out in 10 years.
“Like Kim Campbell wiggling out of her $1.8 million Vancouver condo deal because the value has collapsed”
Did Lil Kim get the money back or she is still trying? I thought she was a lawyer no? If yes, you’d think she could understand the contract.
Real estate is only a place to live, not an investment.
#68 Retired Boomer – WI on 03.19.13 at 10:41 pm
“Nothing cures high real estate prices like unemployment. Stay Tuned….”
You won’t have to stay tuned long-
Every day I am hearing bad news from my customers; businesses winding down, layoffs, reduced hours, reorganizations, contracts delayed or cancelled.
Everything returns to the mean. I love math!
Messing with the System
Rae and Mulclair attack F on intervening in economic function? Where were these two paragons of free enterprise when F was cutting the interest rate and allowing 40 year amortizations? Backstopping corporations with tax dollars, picking winners and losers and now they have a problem with a phone call to a bank?
Never fight the Fed! The implicit guarantees by the F to the banks are according to the quality of the due diligence on the banks part. This bar will ultimately be raised as the Canadian taxpayer weighs in with Fed money paying off bank losses.
Word on the mtg front is that banks have made mtg. qualification much more difficult to obtain, with much more documentation required. A little late possibly?
Be thankful that we are not getting all the government we pay for!
#27 neither.
Garth how did you manage to get data for new home sales in the GTA? Insider info lol ?
Hog town indebted:
That Italian credit union is well connected. The fellows on the board are best pals of our Federal Minister in Vaughan.
This credit union fellow received bad publicity last year for Elections Canada audit/investigation into the Fed Ministers campaigns. Seems the credit union buddy is also the Ministers campaign chair and sits on his EDA board.
Many questions concerning unaudited campaign accounts, movement of money. Elections Canada has moved into the investigation stage on it all now. There will be more to come.
Unfortunately, ethics and lawfulness are empty words in Vaughan.
Garth, I don’t own a pony. It’s a stallion. :)
I believe we are both correct. But we both know when Flaherty loses it, it isn’t pretty.
Re: #104 T.O. Bubble Boy on 03.20.13 at 3:30 am
More than likely real estate is up zilch year over year in Miami. Here’s the real world a company that bought American real estate about 6 months ago. Note the 6 month chart. Just like the real estate market in America has flat lined since last November so has this stock even with a rising stock market indexes.
Silver Bay Realty Trust Corp. (SBY)
Cyprus seeks Russian bailout aid, EU threatens cutoff
http://finance.yahoo.com/news/cyprus-throws-bailout-disarray-seeks-074339383.html
Why cannot a public company (MFC) lend at whatever rate it wants? Tomorrow if F says “we are taxing all bank pref holders at a higher rate” will you stand for that?
MFC should be able to lend at 2% if it wishes.
Not when it expects every high-ratio mortgage to be guaranteed. — Garth
So why exactly is it that Farty comes down on Manulife, but leaves the other banks to do what they want?
As you keep saying, Garth, the minister (and canadians) has a vested interest in these rates considering all the mortgages are backed by CMHC (aka our tax dollars)!
Why is it, then that BMO and Scotiabank, et al. are allowed to offer <3% mortages backed by CMHC, but Manulife receives a slap on the wrist for trying to do the EXACT SAME THING?
Where's Farty's call to all the other banks!?
Very fishy.
Back to my hovel.
I got it; Brad Dlamb invented the Franken number as a leak, and then his scheme of 282% gain was the flood. Wait a minuteeee he is too dumb to do this, there must be someone else!!!!
Kenneth Rijock’s Financial Crime Blogrijock.blogspot.com/Cached
Panama has bearer share corporations which can own a bank account. These corporations have no ownership records. The person in possession of the share certificates owns the corporation, and thus the bank account.
Free trade Panama
Finance Minister Jim Flaherty said: “This agreement supports our fight against international tax evasion. Our Government remains committed to continuing to implement the international standard for the effective exchange of tax information.”
Under the terms of the TIEA, tax authorities in both countries will be able to exchange information relevant to the administration and enforcement of their respective domestic tax laws. It is based on the international standard developed by the Organization for Economic Co-operation and Development (OECD). Canada’s 2007 Budget legislation stipulated that all new treaties and revisions to existing treaties must include the OECD standard
http://news.nationalpost.com/2013/03/05/russian-businessmans-20-year-bid-to-enter-canada-spawned-top-secret-spy-agency-probes-but-never-citizenship/
You +1’d this publicly. Und
ponzi schemer’s book exposes organised crime in panamarijock.blogspot.com/…/ponzi-schemers-book-exposes-organised.htmlYou +1’d this publicly. Undo
8 hours ago – (4) A Russian real estate group from Canada was given millions of dollars for laundering and subsequent investment; they purchased …
OECD Enables Companies to Avoid $100 Billion in Taxes
By Jesse Drucker – 2013-03-18T04:01:00Z
.
http://www.taxresearch.org.uk/Blog/2011/09/27/tick-the-box-was-no-accident-this-was-tax-abuse-by-design/
F shakes a finger at the mortgage rate wars while the banksters, realturds and experts cry foul saying that doesn’t reflect a “free market” when he intervenes in such a manner.
F, if you are reading this, please take heed of their cry and truly make it “free”. Wagging your finger doesn’t work, just ask your sidekick MC.
In free capital markets risk and return go hand in hand. Yet your CHMC insurance removes the risk for the banks. Gov’t intervention to the banks advantage and yet you still scratch your head and shake your finger when they act accordingly.
Take away CMHC insurance and load all the risk on the banks. There. You solved your problem. Watch and see how the mortgage rates will change. It’s ridiculous the banks make $ hand over foot throwing caution to the wind while we as taxpayers take all the risk.
Sigh.
Cam has gotta start flying Italians from the GTA over to Richmond..forget the Asians. Pick em up at Vaughan Mills mall straight over to B.C.
Have some homemade gnocchi and sugo waiting at the landing site ( they`ll be hungry) some of nonna`s cookies and presto, sales galore , housing slump solved.
LMAO
Looking at the TREB Market Watch for February. Sales volume was $2.9 billion in Feb 2013 versus $3.5 billion in Feb 2012. That’s a 17.25% hit off the number that drives income in the real estate business. The $613 million drop in volume translates to almost $31 million in revenue to agents (assuming 5% commission). There are approx 34,000 RE agents in the GTA. This translates to $900 less revenue per agent in February alone. Put another way, after various adjustments etc, that’s a Beemer payment.
To the Smoking Rambling Man. Get off your high horse already. Ya talk and talk and talk about the machine but YOU keep contributing to it. You #itch and complain everyday. Its getting boring. Whats the matter? Your own site ain’t amusing you enuff.
@#122 MeMeMe on 03.20.13 at 8:37 am
So why exactly is it that Farty comes down on Manulife, but leaves the other banks to do what they want?
As you keep saying, Garth, the minister (and canadians) has a vested interest in these rates considering all the mortgages are backed by CMHC (aka our tax dollars)!
Why is it, then that BMO and Scotiabank, et al. are allowed to offer <3% mortages backed by CMHC, but Manulife receives a slap on the wrist for trying to do the EXACT SAME THING?
___________________
Flaherty personally called out BMO too — not just Manulife.
I'm taking this all to mean "don't start a public marketing campaign for these race-to-the-bottom rates… keep them a 'secret'".
Why – I have no idea… Canada Mortgage Trends points out that
I never laugh so loud this year! This is amazing! My association of Realtors are charlatan! Live bu the sword die bye the sword. When the public discover they have been lie to for so many years, layers and notary will have their (crea) business.
… whoops: Canada Mortgage Trends points out that anyone can get even 2.74%:
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2013/03/flaherty-talks-another-bank-into-higher-rates.html
patent troll deterent
WASHINGTON, D.C. – The Coalition for Patent Fairness (CPF) is pleased to support HR 845, the bipartisan SHIELD Act (“Saving High Tech Innovators from Egregious Legal Disputes Act of 2013”), sponsored by Congressmen Peter DeFazio and Jason Chaffetz. Members of CPF believe that America’s patent system needs to be updated, and introduction of the SHIELD Act is a step in the right direction.
http://www.patentfairness.org/media/press/
http://www.patentfairness.org/
Peeved politicians want “loser pays” rule for patent trolls
SHIELD Act would target patent shell companies, exempt inventors, universities
..”DeFazio was inspired to create this legislation when a small software business in his Oregon district was attacked. He noted that patent trolls are “morphing” in alarming ways. Specifically, DeFazio cited the new wave of scanner-trolls demanding around $1,000 per worker from businesses that “use routine technology” like scanning documents to e-mail. “They just broadcast letters—they’ve done this in Georgia, and for some odd reasons, North Dakota, so far—to any and all small businesses that they think might have scanners and tell them they’ve got to pay $20,000 if they want to keep using their scanners and attaching e-mails,” said DeFazio….
QUOTE:
“Our strata corporation is owed a lot of money by owners who refuse to check their mail. We send them letters asking them to please pay, and of course, they can’t read the letters because they’re in English.”
====
Hmmmm
I wonder how widespread this is….aka that the rest of the strata has to pick up the slack?!?
———-
wow … maybe this strata type stuff will eventually be reclassified as co-op housing?
Garth is too afraid to touch the Toronto real estate market. Scares the @#$T outta him.
‘In fact, could Toronto be catching the Van disease?’
Read much? — Garth
Let’s assume the overall goal is to make real estate more affordable for the average person. What does more affordable mean? Affordable means the average person can buy RE, not expose themselves to huge risk (interest rate risk, not requiring two salaries to pay the mortgage and monthly bills, etc.), and pay it off in a reasonable amount of time.
I see two challenges to this affordability. The first challenge are investors, whether they be Canadian or international, individual or institutional. Investors will buy properties when the price to rent ratio makes it a good investment. They often have the advantage of being able to pay with cash, or capital raised elsewhere, which shuts out the average person who doesn’t have cash. This is why mortgages are purported to be important, so a regular buyer can eventually own RE with just a down payment to start.
On the other hand, the second challenge lies in how mortgages are used. This pathetic blog’s focus is how easy credit and government-secured loans led to average people bidding up RE prices to stratospheric levels.
So what’s the alternative? Getting rid of the CMHC and raising the mortgage qualification requirements would make the banks act responsibly and not give out easy money, but then we come back to the first challenge of investors shutting average people out of RE.
I think we need to emphasize that RE is for living in, not for investment. I propose we close the CMHC, require 20% deposits, calculate the qualifying rates on mortgages as 10% interest, limit RE to citizens, and limit how many pieces of RE an individual may own.
Spot The Vancouver Speculators #100 – Couple In 20′s Desire Light Workload, Early Retirement And Free Money From Their RE ‘Investments’; Current RE:Networth 10:1
see:
VREAA 20 Mar 2013
http://wp.me/pcq1o-5oS
#110 Richard and Zeus,
Only when that “truth” consists of fact-free innuendo, as in your case
Hey Garth,
stories like the one below must make you cry.
http://www.thestar.com/business/personal_finance/2013/03/17/divorced_570000_saved_but_worried_about_retirement.html
#9, #11, #17, #104 According to Stanleys [1] studies, people of Russian heritage rank first among all ethnic immigrant groups in the US for wealth accumulation. They cannot be that significantly stupid (compared to other more native groups) to now buy into the Condo market in BC. I guess, you guys have just given Global yet another ethnic group to marginalize to pump real-estate. I’m already seeing the ads of cold-faced Russians allegedly buying out BC…
[1] http://www.thomasjstanley.com/pub-books/1/The_Millionaire_Next_Door.html
Denial is what we have in all sectors or the building and sellling of the reality market here in Victoria .We have Bear Mt here, which I never could get a handle on .Company had two projects up there still both on hold and now they are going to tear up 9 holes to build SFH instead? Crazy .NO ONE HERE in victoria wants to hear it they all think anyone that thinks there is a correction coming is soo wrong!!! I get, it is a great time to buy ,now right now as prices have come down and you better get in now
.http://utopiacondos.ca/price-list
This is the closer reality of what is happening .If you look on MLS map there is only a few units listed . Yup looking not so good for many in the market here .
If Flaherty has a problem with the lower rates, he should only guarantee mortgages with rates above a certain percentage. Is this kind of stupid, because it sounds stupid now that I’m righting (typing) it. This way, those who have an adequate down payment can get the lower rates, and those who haven’t saved enough have to not only pay insurance, but also a higher rate.
Head of IMF Raided, some payola seems……. Ah the elite…
Back to F more I think about it, he broke the law… And garth as far as the risk associated with cmhc and tax payer guarantee, fine rase the premiums on the rates,
If the 5 CEOs of the 5 big banks got in a room and agreed to keeping 5 year rate at 3p they could all be facing prison time and fines.
I guess in a dictatorship when an official of the government does it its okay… Free markets should be free
T.O. Bubble Boy: let Manulife offer whatever rate they want, but only on mortgages that aren’t insured by CMHC!
exactly
#83 Sir Finance –
”Career stepping stones can often be in the locations least desirable. Pay some dues and move along…”
Good for you. You have to be prepared to sacrifice a bit along the way. I did and was never out of work my entire working career. You will go places.
Harvard Grad, why is your neighbour an A-Hole?
Mel.
#66 Shawn:
“Wrong. The banks would not lend so recklessly without fed insurance. If they take it, they must play by the rules. — Garth”
***********************
I agree. Banks have to play by the rules.
But posters are correct in their assessment. The ‘cons’ made all this ‘recklessness’ possible…and they’re now into damage control.
#94 Oceanside
”Never have I seen anybody so unconvincing, he was stuttering, nervous and had no hard evidence to support anything he said, he was floundering badly.”
Claiming that the problem with real estate right now is due to manipulation by the gov’t and not market driven. He didn’t have a problem when the 0/40 and the 4.5% drop in interest rates in 2009 caused the greatest real estate bubble we’ve ever seen. Like so many others like him in the past who were heavily into the real estate market themselves, they lost their shirts. I would be panicking too.
Carney at work in the UK already. He’s like a virus. From today’s budget:
“Second, the Government will create a
mortgage guarantee for lenders who offer mortgages to people with a deposit of
between 5 per cent and 20 per cent on homes with a value of up to £600,000.
This
will increase the availability of mortgages on new or existing properties for those with small
deposits”
Hmm.. where have I heard this before?
When it comes to CMHC insured mortgages, F. is correct to dip his oar in the water. But for uninsured mortgages, the bank should be able to offer any rate it feels is competitive.
And CMHC shouldn’t be insuring properties bought by investors.
#9, #11, #17, #104
Russians went through the awful experience in late nineties when the new russian “reformers” purposely devaluated the ruble and defaulted on its debt. They did a good job, those “reformers” : one of the richest countries in the world turned into a beggar within a blink of an eye. At that time not 10% but all 100% savings were confiscated. The lesson was learnt. None of the Russian would ever participate in any Ponzi schemes especially in those supported with obviously lousy propaganda… and then, you know… Russians think – so they don’t trust to anybody.
Are other bloggers noticing those who work in construction being affected by the slowdown in new home construction.
I have 2 brother-in-laws who are directly impacted by any changes in the trades. One who is a plumber talks like all is fine while they have laid off half the guys – while the other BIL who does commercial painting hasn’t landed a decent job in over 3 weeks – what gives!!
Sir Finance @ # 83,
Average resale home price in Estevan is 216000.00 dollars – 216 grand to live in Estevan? You gotta be kidding me.
I’ve been to Estevan many times – I especially enjoy mud streets and the unburned soot from the flare – offs wafting down from the skies at -40.
Beautiful venue – just beautiful…
In fact it takes the cartel twenty-five pages to explain it. Including this:
So, back to F and ManOne. This may be one of those rare moments the peckerettes got it right. Housing’s a dangerous asset class in 2013. Sales will continue to fall, making it increasingly illiquid. Prices will follow, rendering those who buy it with extreme leverage vulnerable. But with 2.99% mortgages and government-sanctioned 95% financing, that includes an ocean of buyers. Do they know what they’re doing? Given what realtors are telling them, is it even possible?
Banks with teaser rates and realtors who lie. Welcome to America lite.
Garth you have to remember that all of the executive accountants that generate this calculus riddle meet at the end of the day with the boss. When the manager asks them what the extrapolated data has concluded in the summation of the equation, the accountants cleverly retort, “What would you like it to say”
#99 Chasicakes on 03.20.13 at 2:03 am
Ok..almost 50…never heard of Camel Toe! Wiki’d it and never laughed so hard in my life.
=================================
Thank Smoking Old Man for adding to contemporary vocabulary.
He is at Zoo wearing long trench coat and no pants.
#9 Screwed on 03.19.13 at 9:12 pm
There are far better places to park wealth than declining Canukistan RE.
In the meantime, the Brits announce a new scheme to cover up to 20% of new home costs with interest free loan that doesn’t need to be repaid until the home is sold…
“But in an unexpected move Mr Osborne also announced a new scheme to help homeowners move up the property ladder. In future anyone wanting to buy a new-build home will be able to access a 20 per cent Government loan as long as they have a five per cent deposit. The loan will initially be interest free and only re-payable when the house – which can be worth up to £600,000 is sold”
Source: http://www.independent.co.uk/news/uk/politics/budget-2013-price-of-beer-cut-by-1p-fuel-duty-rise-is-scrapped-and-no-income-tax-on-first-10k-of-earnings-8542360.html
E-mail Flaherty, Mulcair and Rae and let them know what you think of CMHC supporting these financial institutions, if you want CMHC out of the risky loan business then tell your politicians, many voices are heard, even in Ottawa…..
As financial institutions have “no skin in the game,” as mortgages are in most cases by backed by CMHC, the lenders will continue to lend to anyone who comes through the door. Privatize the profits from lending and socialize the mortgage losses.
Haven’t we seen this movie before?
@#76 JM_Saskatoon
Cyprus is just the warmup. You ain’t seen nothin’ yet.
The good news is F stopped those low teaser rates yesterday. The bad news is a lot of the damage is already done and we, the taxpayers, will be on the hook for bailing out CMHC. Meanwhile the big deficits run up by Italy, Greece, and Spain are due in part to to rampant tax evasion in those countries. When taxpayers here see how much of their money goes to bailing out CMHC, more people here will be tempted to evade tax than ever before. Do you blame them? I don’t.
If F is so concerned about low rates and fuelling of the spring housing market, why does he not take other actions instead of intervening in the free market and ‘rob’ people of lower rates/payments.
eg, why not change CMHC rules to gtee only mortgages less than $500K??
Re #25 – Dr. Hoof,
Really well made points regarding no english speaking signage in Richmond.
I worked in Germany for 5 years. I had to learn German to function even though most Germans speak better English than Canadians – after all German is the language of the country, right? Isn’t this just common sense? Further, before I rec’d my VISA to reside in Germany, I had to pay out of my own pocket and pass HIV Blood Tests to be sure that I was uninfected (they wanted to protect their citizens as best they could). I had to pay for and pass Chest X-rays to be sure that I was not bringing TB into the country and a series of other necessary procedures aimed at protecting the German System – which I thoroughly accept and applaud. To the best of my knowledge testing like this is not done in Canada on anyone wanting to reside here (politically incorrect, right?) – we Canadian citizens just simply pay, pay, pay for our ‘acquired’ residents medical and social problems. Man! In Germany, they do not just let any willy nilly person into Germany. And if you are allowed to stay – you must assimilate. Keep in mind that Germany is one of the most generous welfare donors in the world. When I lived in Germany, they allowed almost 2 million refugees into the country from the Bosnian War. The German people housed them, helped them and took care of them. Now that’s a good neighbour! But no one ever hears this side of the story. Why do we refuse to learn and take the best ideas and things from our neighbours? I can’t stand going to Richmond and other parts of Canada anymore when I cannot even find street signs in English and are unable to communicate with anyone – even shopkeepers in the language of my country – english. What a travesty our crappy governments have made of a once great nation. What a pathetic job and no one has ever lost their jobs or been questioned because one must always remain ‘politically’ correct. What a pile! Many heads need to roll. I have lived the immigrant experience first hand and realize the stresses and pressures involved in functioning in a strange land. We have really managed to mangle everything here in Canada. No common sense. Kenny’s efforts – too little too late.
Bubba
#17 prairie person on 03.19.13 at 9:19 pm
The way things are going, they’re not in for a haircut, so much as a serious case of electrolysis.
#9, #11, #17, #104
Hey guys! I’m from “well established Russian community” in Vancouver. All homeowners I know (dozens families) have a mortgage and some of them are screwed as many other Canadians if rates go up. There is no such thing as Russian Hot Money in Vancouver. Probably in Toronto, but not here.
How will all of this affect the commercial real estate market?
Obviously land that has been zoned for residential real estate developments will decrease but what about other commercial real estate? Industrial lands, hotels, resorts, restaurants and retail? How will they be affected by the residential downturn?
#45 Brunette: “But I honestly don’t see what the picture means about anything. It’s a big hamburger…”
**********************
To me, it means we….just don’t get it. Oblivious to the real world around us, merrrily carrying on. After all, it’s ‘different’ here. (??)
Love that Brad Lamb interview on CTV. He throws Vancouver under the bus….. We’re an anomaly out here!
But he says… Toronto is Great, Toronto is fine.. and prices may go down a bit.. but not very much.
Not sure what’s bigger! The lie he’s telling viewers on MSM or his head on the screen!
#128 bigrider on 03.20.13 at 9:03 am
no prosciutto? surely that would make anyone sign on the dotted line. however I cannot claim Italian ancestry so I couldnt say…
what ever you do dont give them Haggis…deal breaker for sure.
#126 FarFlung
If you’re trying to figure out what is happening today, 2-3 month old numbers ARE wrong. They’re very reliable, and great numbers, just not in every case.
People believe only what they WANT to believe…even if facts are staring them in the face. It’s called ‘denial’.
In spite of ALL the federal government screw-ups these past few years…and even as I try to explain and reason with her, a friend blocks it out. She adores H and believes F is doing a ‘wonderful job’.
I give up….can’t fix stupid.
#112 The real Kip on 03.20.13 at 6:10 am
Did Lil Kim get the money back or she is still trying?
She ain’t Lil Kim any more…
Sent a scathing email to my MP about F calling Manulife about their interest rate offer.
I don’t write my MP that often (Usually don’t have the time and never get a reply back anyways, but this time I AM PISSED!)
More nonsense from corrupt Spaniards (like there was any other kind?).
http://www.murciatoday.com/lights-out-for-british-property-owners-in-andalucia_15609-a.html
Hi Garth,
Today’s picture is a perfect Illustration of mortgages. People take on bigger and bigger ones until they drop dead of a heart attack.
Remaxed-Out needs our thumbs up on the Globe and Mail website.
The link is the Share your mortgage stories with us.
Whazzup will appear in no time.
Leave the Zombies Alone
http://grizzom.blogspot.ca/2013/03/leave-zombies-alone-nemo-denovo20120211.html
=============================
A good take on wasting time preaching to the brain dead
#165 Bubba on 03.20.13 at 12:04 pm
Re #25 – Dr. Hoof,
Really well made points regarding no English speaking signage in Richmond.
Well said Dr. Hoof, please provide a prescription so we may fix this issue.
Oh yes I re-call it well. Under then Prime Minister Pierre Elliott Trudeau, he declared in 1971 that Canada would adopt multicultural policy. Thanks for that one Pierre! Oh and just to throw some gratitude around in 1982 multiculturalism was recognized by section 27 of the Canadian Charter of Rights and Freedoms. The Canadian Multiculturalism Act was then enacted by Prime Minister Brian Mulroney. Thanks Brian!
Now we have isolated ghettos all over the major cities in Canada. This is the only country where for example you can come here, not speak French or English, get immediate welfare as an refugee, medical and dental treatment, food and lodging, legal representation, and temporary green cards. Then to top it off you can go and get a license in your own language, read a newspaper in your own language, and watch the television and radio in your own language while watching shows about your old country. So why integrate or learn to become a part of the new nation? This is of course whilst you pine about the good old days in the motherland and complain about everything here. You hate the people here, the customs here, the culture here, the type of food here, the weather here, and the lack of everything that was like the motherland not being here. Khaddars’ family comes to mind on this one! Needless to say this multicultural stuff is something to embrace on a personal level within your own family, not in our national governments agenda. I have no issue with preserving culture from wherever you have come but this country is going to the dogs. We bend over again and again and take it up the posterior catering to someone to whom we have opened our arms and said “come and start over.” I know what you mean about signage in Richmond and have seen it locally here in city’s such as Brampton, Mississauga, East end Toronto and just about every other large city. You feel like a foreigner in your own nation. I speak three languages’ of which two are the official languages of Canada. Perhaps Quebec has the right idea! Je me souviens
Oceanside: E-mail Flaherty, Mulcair and Rae and let them know what you think of CMHC
good idea
but
the reigning political paradigm is the 10 second sound bite. It sounds good, you don’t explain, there’s no background. This blog is one of the biggest defences against the 10 second sound bite. Maybe the biggest.
Re 165
Thank the U.N. for all the abuse Canada recieves.They dictate what we can and can’t do.The only way this will stop if maybe 100,000 or more of the sick and destute come to Canada each year and declare refugee status.Eventually this country will have to pay the piper for its extreme socialist ways
#45 Brunette: “But I honestly don’t see what the picture means about anything. It’s a big hamburger…”
it might mean that if you buy a big burger/mcmansion
you could get a heart attack and die….
especially if they slash the price after you have already payed for yours.
#165 Bubba on 03.20.13 at 12:04 pm
Composer Richard Wagner made a very intuitive comment on ” culture “… If a nation has a culture, it has no need for Gov’t.
One could interpret that as the “unwritten rules” on how to conduct oneself. The old ” when in Rome do as the Romans do “. Enter a Japanese home = take off the shoes.
The other day I was taking out the garbage and an Asian lady walked down the driveway delivering the local paper. She motioned to some empty pop cans I had and I tried to speak to her, but she didn’t understand anything I said. How does this person exist in a country like Canada ?
This is why multiculturalism is a failure. The looney lefties cry racism and discrimination. Multiculturalism is not the melting pot nor the koom -bay -ya they dream of . What we are doing is re-creating the tower of Babel. We don’t have a culture, we are exterminating what is left. What is Canadian Culture…watching Hockey and Don Cherry ? Last Canadian Stanley Cup winner was_______?
Back to ” Gov’t “, which on a global scale is increasingly diametrically opposed to thier own cultures. People can’t wrap their heads around ” Cultural Marxism ” which fuels this culture collapse.
In Richmond, aka HAMville… Richmond Council is being perceived as sending the message that Gov’t won’t interfere, aka neutral….when in fact they are scared of being perceived as racists and losing votes. (This is the same council that recently voted that if you as a pet owner don’t provide ID upon request by a bylaw officer, the RCMP will be called ).
Now, I don’t blame the individuals. Gov’t has let this evolve to a point of no return. It allows groups to come in impose their old country culture.
Many people are waking up.
Gov’t is the culture killer , vote whores and feeds off this tension.
Oups, my comment lost a sentence when I posted (shouldn’t have used “<" sign :
—————————————————
F may have got it right overall, but he is wasting a great opportunity:
The additionnal risk on this Canadian market is in fact :
– Mortage terms that are different from the amortization duration
By requiring (by regulation) banks to issue mortgage only for the duration of the amortization, he would tackle two risks :
1- the impact from the volatility of short term borrowing and
2- the issue of renewal with higher rates
Coming back to 1) the current rates would be closer to our 10 to 20 years rates.
Side effect: Flaherty could then let the banks go in full mortage war , as the impact would be limited with rates at least 0.5% higher than today.
Canada is one of the very rare nation that don’t align mortgage term to amortization. This time, the usual “it’s different here”, just to point to an additional risk…. (and mitigation opportunity!)
Why doesn’t F simply amend CMHC rules to only insure up to say, 75% of the housing value, and be the first on the debtor list to re-coup in event of a foreclosure?
That way, the banks are on the hook for the first 25% in the event of a downturn.
In effect, banks have to assume a greater risk than 0%. I wonder what would happen if they had to assume 25% risk. Would they still be selling such cheap mortgages to anyone with a pulse?
TO LOWER RISK, DON’T INCREASE RATES, LOWER THE AMOUNT BORROWED.
Finance Minister F. would have been better to tighten the CMHC criteria by requireing mortgages to be qualified on a minimim rate of (pick a number) say 3% or even 4%.
This would still allow banks to compete on the rates while achieving the objective of limiting the debt since the borrower still has to qualilfy at the higher rate.
Given this avenue was availiable it was not right to encourage minimum interest rates. F., please stick to making regulations, stay away from price-fixing please.
I am curious what happens in a declining housing market with rental properties? Does the rental price usually follow a negative price reduction as people can’t sell so, they choose to rent their homes instead. Statistically was usually transpires to rental income in a declining housing market?
#165 Bubba on 03.20.13 at 12:04 pm
I agree with you. I am an immigrant myself and I worked hard to become part of the Canadian society. I see people at my work in Markham ON that speak Mandarin in the office when communicating with each other. Worst was when I was having a conversation with a Chinese colleague one time and another Chinese one comes along and interrupts us in Chinese, they both start to talk with each other in their language totally ignoring I was there. I told them they should speak English instead and I left. This is rude!!!! When are people going to understand that this is Canada, we came here to be Canadians. Show some respect for the country’s languages. At home do what the heck you want, outside be Canadian. If you like your language and culture so much why do you come here? To convert us? Rude, rude, rude…!!!
#169 Daisy Mae & #45 Brunette – my interpretation of the pic differs from both of you. Let me clean off my glasses a bit; ok see a hidden meaning within context, and it says: “Where’s The Beef.” I for one would take a pass on those two killer hamburgers for another healthy option in life.
oakville,oakpark, south of dundas condo crane up.
the hill, there is a cattery at the north west corner.
everybody is going, here kitty, kitty, they ignore you.
there is a bench there, sit down, pull out a half pint of milk, open at 4 corners.there will be 50 cats around you in very short order and every one agape.
and no, scotch does not work.
some guy that road a harley, showed me that one.
Are these numbers from Richmond really reliable though?
http://whispersfromtheedgeoftherainforest.blogspot.ca/
96 Babblemaster:
On page 6 of the MLS Home Price Index Methodology manual it states:
“To mitigate volatility, a moving three-year sample period is used, since the use of a shorter
sample horizon may result in an insufficient number of sales over the period and cause index
inaccuracies.”
————————
Wow, how is this allowed to go on?
Thanks for sharing.
I thought CMHC was tapped out at 600 billion, did they lift the ceiling to 1 trillion?
The Globe & Mail just came out with a funny attributed to F and I quote: Flaherty says ” concern for Canadian people ” prompted mortgage move. Now if any of you buy that nonsense have an oceanfront property that I will sell for a bargain in the State of Montana. F hear me roar, as your past deeds for the Canadian people do not square with reality, and the bell tolls for thee.
http://www.latimes.com/business/la-fi-court-copyright-20130320,0,6312211.story
In Kirtsaeng vs. John Wiley, the high court decided the copyright holders get only the protection for a first sale and not a protection against copies being imported into the U.S. for resale.
http://www.law.cornell.edu/supct/cert/11-697
It’s finally time for me to comment on the “Canada Issues”. I moved to Vancouver, BC which uses the slogan (The Best Place on Earth) five years ago. I have traveled the world and lived in different countries, but I haven’t lived in a place more overrated than Vancouver. Everything not only Real Estate is overpriced, no wonder people are buying their groceries, goods and services via Credit Card or Line of Credit. Almost everyone who’s local (Canadian) has a ton of debt. People in places like Greece or Cyprus are rich compared to Canadians as they don’t carry as much household debt, instead the governments have caused most of the headache. People in Vancouver just can’t afford to live off their paychecks , this is a reason why the top 5% that work in the city have already re-located to the US and rather fly in from California to work. Friends from DC, NYC or Miami have complained about cost of living and can’t understand what is going on where Vancouver is basically the end of the world. Just compare us with Seattle where corporations like Boeing, Amazon, Nordstrom, Costco, Starbucks and Microsoft drive the economy. How about Vancouver? Its a little fishing village compared to Seattle, where house prices have been higher then in LA, NYC, Miami or anywhere else in the US. Good Luck Canada!
Thanks Rinaldo.
Westernman,
The $216,000 is a 2011 figure and the most recent i found. Prices are higher now as are incomes. The point is prices are not as out of whack as other parts of the country. I am a Saskatchewan native so the flare stacks and cold winters are what ive grown up with. Ill be happy my spouse and i mid twenties with 185k annual household income in the surroundings you mentioned. Im not bragging perhaps its because we will take chances and move places others wont. At the same time you can enjoy whatever your doing, you know the saying… To each their own.
#14 Turtle
Paying off the 600k mortgage can be done. Just have to get your priorities right.
http://www.news1130.com/2013/03/20/vancouver-ranked-52nd-best-place-to-live-in-canada/
http://www.moneysense.ca/2013/03/20/canadas-best-places-to-live-2013/
People in Vancouver are having conniption fits that Vancouver scores at the bottom of this liveability index.
Vancouvers narcissism is being challenged.
Why is this a surprise for a city that has had the guts of it’s middle class violently ripped right out of it.
BC = Bring Cash.
#25 Dr. Hoof-Hearted
Ever been to Coquitlam, Billy? Same problem but with the Koreans. Signs only in Korean. Just saying.
#118 GTA Girl
Interesting point – so it’s not just their promotional material that seems a little sketchy.
There is a link to those credit union mortgage flogging propaganda items in this page if anyone is curious:
http://www.icsavings.ca/Client/communityreport.aspx
It is to laugh.
Banks are sucking the teat of a communist style financing system, and there are angry posts about a free market when an order is issued from the Politburo.
That’s like, hardcore funny.
The CMHC was designed to help returning veterans purchase places to live. It should have never EVER applied to the general public generation after generation.
Often times when prices return to the mean… they shoot right past it like it doesn’t exist. Be prepared for the extreme levels on the other side of that mean. Just because prices reach a historic mean, that does not by any means (pun there somewhere) mean that said prices are no longer falling daggers.
Sorry if this has already been asked – but just because they cant ADVERTISE the rate does that mean they can’t offer it to you when in private? A google search makes it pretty easy to find a 2.89%(or less) 5-yr fixed mortgage…and I’m sure those are with banks who use insurance too.
Manulife shareholders just said thanks for the free advertising!
I also received mail from Mr. Lamb for a commercial property – he obviously hasn’t seen my salary if he thinks I’m going to buy in!
F is obviously playing some sort of Public Relations mind game with the general public because, if he really IS worried about people getting into too much mortgage debt, all he had to do was raise the minimum down payment back to 10% (which is where it should have been all along).
Mortgage interest rates are so low at the moment that tinkering around with small decreases or increases aren’t going to make all that much difference to the overall debt picture. But it’s VERY bad optics for a Conservative Finance Minister to be seen to be interfering with the free market when it comes to interest rates. I thought the Conservative party was supposed to support competition, as opposed to encouraging rate setting between our various financial institutions. When the gas companies are accused of doing that its considered criminal. What the heck’s the difference?
Keeping mortgage interest rates artificially high only serves to deliver more profits into the coffers of already highly profitable financial institutions. I repeat, if Mr. F’s aim is to prevent young property virgins from getting in to too much debt, he should raisse the minimum down payment on a house back up to 10%.
Oakville houses relisted at lower numbers :) the smart ones got out already!
Another way F could limit the debt load some Canadians are carrying is to outlaw collateral mortgages. These mortgages are poorly understood by the sheeple who get sucked into them, and are designed to keep them forever indebted to their banks. The fact that Mr. F or the Tories have done absolutely NOTHING to outlaw (or at least make more transparent so that people know what they’re getting into) tells me that whatever his true motives, it has NOTHING to do with protecting people from themselves when it comes to debt.
“Bankers never imagined that slicing mortgage amortizations, making cash-back loans illegal or stripping million-dollar listings of CHMC insurance would end up in this carnage.”
No matter, the banks can just tax 10% of all deposits and keep their bond holders whole and all is well again.
#197 RonH on 03.20.13 at 3:19 pm
#25 Dr. Hoof-Hearted
Ever been to Coquitlam, Billy? Same problem but with the Koreans. Signs only in Korean. Just saying.
=====================================
Yes Captain…been all over….know the enclaves.
As was pointed out by others, European countries and North America had some say on who they would allow in and under what conditions. Ironically, they were tougher on intra – Caucasian immigration .
My folks came from Eastern Europe in the 1940’s and were not allowed in the Public School unless they learned English which they had to pay for on top of not having 2 nickels to rub together when they got here. ZERO handouts.
Now, we roll out the red carpet and allow our Politicians to cater to ethnic voting blocks.
This simply divides and conquers.
#188 Wibur
That was my experience, rents will follow price decline. Great for renters, bad for landlords, esp those buying places at these prices because “the vacancy is low and it’s a no-brainer”. Well low here anyway. I know way too many people that own rentals now for it to be the right idea.
#60 Harvard Grad on 03.19.13 at 10:27 pm
…it’s the tax payers that will get hit with the bill as banks throw out any caution to gain clients.”
The MSM seem to have omitted or missed this important point. It’s good that Garth is our truth monitor.
Other good news is that “fact checking” in journalism may soon be done by robotic “Truth Tellers”: http://tinyurl.com/cuhkbcy
#165 Bubba
“I had to pay out of my own pocket and pass HIV Blood Tests to be sure that I was uninfected (they wanted to protect their citizens as best they could). I had to pay for and pass Chest X-rays to be sure that I was not bringing TB into the country and a series of other necessary procedures aimed at protecting the German System – which I thoroughly accept and applaud. To the best of my knowledge testing like this is not done in Canada on anyone wanting to reside here ”
———-
You are completely wrong on this one. To get PR visa I had to do exactly the same tests and even more.
http://www.cic.gc.ca/english/information/medical/medexams-perm.asp
The Conservative cabinet minister, Maxime Bernier, attacked F about him messing with a bank, so some are turning on him. If F had any rocks he should have had the integrity to tell all Canadians that no new shoes this time, as the old ones will due just fine, as we all need to tighten our belts a bit. He needs to buy a new pair of socks as saw a hole in one with a camel toe sticking out.
#192 The Prophet Elijah on 03.20.13 at 2:24 pm
Are these numbers from Richmond really reliable though?
===================================
I wouldn’t doubt them….I drive by the area frequently.
Terra Nova area was built up in the early 1990’s. Large area of ex – farmland with hundreds of McMansion mega homes built . So the average homes are approx 20 + years old . It was the last such large SFH subdivision built in “prime” West Richmond .
My guess is, given it took advantage of the HAM $$$ , its getting old stale, mature all -at- once…and not enough $$$ out there to keep the bubble inflated…ie too much of the same in the area dilutes the value.
Meanwhile, over in Spain. http://business.financialpost.com/2013/03/20/spain-braces-for-tsunami-of-bankruptcies-as-banks-pull-plug-on-zombie-developers/?__lsa=fede-a085
This might be a useful tool for the developers, mortgage brokers, bankers, politicians and real estate professionals amongst us. http://www.presentation-process.com/ripple-effect.html#axzz2O73jax71
A new survey was just released for the top 22 places to live in Canada, and Toronto was nowhere to be seen, but three in close proximity were Halton Hills, Oakville, and Newmarket.
Even with Mr. Carney’s still in Canada, the Brits already feel his influence.
“Millions get help to buy new homes, says George Osborne”
http://www.telegraph.co.uk/finance/budget/9943167/Budget-2013-Millions-get-help-to-buy-new-homes-says-George-Osborne.html
#194 The Prophet Elijah on 03.20.13 at 2:27 pm
I thought CMHC was tapped out at 600 billion, did they lift the ceiling to 1 trillion?
____________________________________________–
Sorry if I caused the misconception. Total housing debt in Canada is $1.042 Trillion. Government backs CMHC’s $600 billion and, I think 90% of Genworth Capital and Canada Guarantee to the tune of $250 billion. I may be wrong on this but total is nearly 1 Trillion for taxpayers to pay is the shyte hits the proverbial fan. Time to stop propping up these banks and let them make money using smart business sense instead of us as “co-signers”
An interesting methodology to look at rent vs buy comparisons The cost of renting an upper floor or lower floor suite in a major city or suburb in Canada has not changed very much over the past 15+ years as many more suites continue to enter the rental market everyday, while the price to purchase a home sky-rocketed exponentially.
http://info.trulia.com/rentvsbuy
#214 Dr. Hoof – Hearted on 03.20.13 at 4:11 pm
#192 The Prophet Elijah on 03.20.13 at 2:24 pm
Are these numbers from Richmond really reliable though?
===================================
I wouldn’t doubt them….I drive by the area frequently.
Terra Nova area was built up in the early 1990′s. Large area of ex – farmland with hundreds of McMansion mega homes built . So the average homes are approx 20 + years old . It was the last such large SFH subdivision built in “prime” West Richmond .
My guess is, given it took advantage of the HAM $$$ , its getting old stale, mature all -at- once…and not enough $$$ out there to keep the bubble inflated…ie too much of the same in the area dilutes the value.
———————————————————
I know RE cartels aren’t always honest but that is a huge world of difference between what 2 parties are reporting.
……..The difference in numbers is epic, and the “melt” is just getting underway?! Geez where will this be in a couple years. If those price declines are accurate, that is.
RET board is so shady. I have tried to register to the forum for the last 10 years with a shaw/telus/hotmail/yahoo/gmail email addresses and nothing works. I have confirmed the same results from friends as well. I have come to the conclusion the board is closed to the public even though it tries to appear like an open discussion forum. Be very weary of that forum. Probable agenda/propaganda site…
F knows is that the Canadian banks can tax 10%, and deposit insurance will not protect you, because it is a TAX.
Furthermore, it is the IMF imposing this TAX, the same single institution that would be the authority for every other nation bailed out historically, including Canada if it required bailing.
A Cypriot deposit insurance claim is just as strong as a FDIC and CDIC insurance claim.
Actually nobody is going to impose a bank tax in Cyprus now. — Garth
The high ratio mortgage is backed at 3% Garth or 2.89%? He has other methods to slow housing – smarter would be a CMHC surtax, etc. Making a phone call to a private shop and saying please stop making money in a legal way is what I would say makes Canada a socialist land of fools.
Socialism is when the government backs 80% of all mortgages. — Garth
Sir Finance @ # 198,
So basically you’re saying if they paid you enough you would relocate to a landfill…
Good grief ! Maybe they could send in one of those minature drones with the three cameras…
…”if an individual US citizen exposes the cruel treatment of animals, and the public is repelled from buying meat or chicken from that company as a result, the animal activists can be sued for the loss of profit and treated as, essentially, terrorists.”
http://truthout.org/buzzflash/commentary/item/17872-animal-slaughter-industry-making-it-illegal-to-show-you-cruelty-including-veal-calves-skinned-alive
An undercover video that showed California cows struggling to stand as they were prodded to slaughter by forklifts led to the largest meat recall in U.S. history. In Vermont, a video of veal calves skinned alive and tossed like sacks of potatoes ended with the plant’s closure and criminal convictions.
Now in a pushback led by the meat and poultry industries, state legislators across the country are introducing laws making it harder for animal welfare advocates to investigate cruelty and food safety cases.
http://abcnews.go.com/US/wireStory/bills-seek-end-farm-animal-abuse-videos-18749763
The elephant in the room is derivatives.
Remember ABCP?
ATB alone lost a billion, with a capital B. Others were hit hard. Eventually Sun Life and Manulife were given billions by the big 4 banks because they could not mark to fantasy their derivatives.
In different shapes and forms this will continue until the bankers have it all. ABCP for Canada, TAX for Cyrpus, selling of national monuments for Greece, Lehmans for USA, MAssive printing in Japan, etc.
No one seems to notice and no one seems to care. Nothing to see here, just don’t be upset when your purchasing power is destroyed and you cant make that mortgage payment… the cycle that will unleash will be horrific.
After The Banksters Steal Money From Bank Accounts In Cyprus They Will Start Doing It EVERYWHERE
http://www.thetruthseeker.co.uk/?p=67363
Cyprus is a beta test. The banksters are trying to commit bank robbery in broad daylight, and they are eager to see if the rest of the world will let them get away with it.
Cyprus was probably chosen because it is very small (therefore nobody will care too much about it) and because there is a lot of foreign (i.e. Russian) money parked there. The IMF and the EU could have easily bailed out Cyprus without any trouble whatsoever, but they purposely decided not to do that.
Instead, they decided that this would be a great time to test the idea of a “wealth tax”. The government of Cyprus was given two options by the IMF and the EU – either they could confiscate money from private bank accounts or they could leave the eurozone. Apparently this was presented as a “take it or leave it” proposition, and many are using the world “blackmail” to describe what has happened.
Sadly, this decision is going to set a very ominous precedent for the future and it is going to have ripple effects far beyond Cyprus. After the banksters steal money from bank accounts in Cyprus they will start doing it everywhere.
If this “bank robbery” goes well, it will only be a matter of time before depositors in nations such as Greece, Italy, Spain and Portugal are asked to take “haircuts” as well. And what will happen one day when the U.S. financial system collapses? Will U.S. bank accounts also be hit with a “one time” wealth tax? That is very frightening to think about.
etc. etc.
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Shite…and I wanted to retire in Cyprus.
#93 Cici on 03.20.13 at 12:34 am
#25 Dr. Hoof-Hearted
Yeah! Now you understand how French Quebecers feel in their home province, especially when they can’t get service in French in MONTREAL!
…………………….
Could you provide an example please.
Did F stage a photo opportunity to make us cheer for a Canadian manufacturing company called Roots? This is really not a dress shoe company; more into boots and other clothing. The formal line for men’s shoes amounts to one in black called the Oxford Bullfrog for $158.00, and is not 100% identical but close. Well, that pair will see the closet in good time for a Cole Haan, and hope the opposition is checking.
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#81 Mark — “Of course the banks Garth so loves to invest in are going to privatize the profits and force the public to cover the loss, why do we give them the option?” — Socialism 101. We suckers get to cover the losses. Ain’t life grand?!
#151 CM — “Hmm.. where have I heard this before?” — Slowly but surely. See response to #81 Mark.
#153 all_we_need_is_mortgage — “At that time not 10% but all 100% savings were confiscated.” — Guess that TPTB would have moved their loot somewhere else, let the govt. put all sheeple in the poorhouse and make them completely dependent on govt. After all the mess was done and dusted, the elite probably moved back into their hiding places where their money continued to grow.
#190 Old Man — “I for one would take a pass on those two killer hamburgers for another healthy option in life.” — Mesquite burgers with honey mustard are a pretty good alternative.
#209 Dr. Hoof – Hearted — “This simply divides and conquers.” — Harper’s calling card. He has accomplished that he set out to do.
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Fraud and Deceit By their own hands will they destroy themselves; 1:14 clip Cyprus prez. explains why it’s ok for govts. to steal; To Pay SS — raid the disability fund; High Unemployment for some time; JPM and stuff “. . . that allows too-big-to-fail banks as well as many other corporations to reap huge tax benefits by taking out life insurance policies on workers – even low wage workers – and naming the corporation the beneficiary of the death benefit.” Life insurance. I answered my own question from yesterday.
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5:01 clip Special privileges, but nearly all of the hijackers on 9-11 are free as birds; 1:22 clip Harry Reid says gun control off; F-35 US$400 bln. jet can’t fly in cloudy weather; 2:37 clip Why does Obomba need 1.6 billion bullets?
Now in all fairness to Roots for some reason have never been in their store. They have a unique line of products, and already see 4 quality items that I need to buy as would be a one stop shopping experience to support made in Canada.
#229 live within your means
Yes, sure. My ex was a trilingual francophone (spoke perfect English and French and very good Spanish), but had a hard time getting served in French in Montreal, whether at banks or restaurants or other outlets. He had nothing against speaking or hearing other languages, but it did frustrate him to some extent that he couldn’t get service in his mother tongue in the very city that he was born in, especially since Quebec is technically, legally and officially a French-speaking province (contrary to the common perception, it does not fall under bilingual status).
Granted, I believe the situation is improving. Many English Quebeckers do speak French and have encouraged their children to learn French and go to French-speaking schools.
I just find it slightly hypocritical when English-speakers from other provinces freak out about not being able to speak their mother tongue in their own province; but bash French-speaking people from a province with French-language statute all the time for wanting to speak their own mother tongue in their own province.
PS – I’m anglophone from out west, but have been living in Quebec for 16 years, so I’d like to think that I have an objective viewpoint on the language issue.
Sir Finance
You have probably figured it out already … Westernman is a simple minded nazi who waits for any kind of post about Sask so that he can respond in his usual hate filled manner… it is pointless responding to this clown.
Thanks Marshy. I think ill take your advice on this one!
#225Westernman on 03.20.13 at 5:57 pm
Sir Finance @ # 198,
”So basically you’re saying if they paid you enough you would relocate to a landfill…”
Why not? I relocated to a “clear cut” and made enough cash in two years to cover the cost of building 50% of my home.
And Sir Finance, ignore this guy, he’s a Saskachewan basher probably kicked out of the province after being let out of the P.A. Pen. I think he’s hiding down in the states somewhere. lol
#116 Raven: “Rae and Mulclair attack F on intervening in economic function? Where were these two paragons of free enterprise when F was cutting the interest rate and allowing 40 year amortizations?
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Been wondering about this myself for a very long time, myself. Why didn’t we have a non-confidence vote?
#113 Sam: “I wonder how widespread this is….aka that the rest of the strata has to pick up the slack?!?”
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No one picks up this debt. A lien is placed against the real estate.
#170 Gramtmi: “Not sure what’s bigger! The lie he’s telling viewers on MSM or his head on the screen!”
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Well, he received a lousy 4%….and Garth received 78% of the popular vote. So…who ya gonna believe?
Ronaldo & Marshy,
Obviously neither one of you have been to Estevan…
You know, being right does actually matter…
[…] Garth Turner picked up on the story the scrambling started over at RET. First just the screenshots were removed. A couple of hours […]
Hello Garth –
I read but don’t write on your Blog. But, I can’t think that
anyone else could educate the high school youth in the real world of money.
Is this anything you could address?
bitcoins, virtual currency
The last 30 days of sales for single family homes in Vancouver & Fraser Valley appear to be trending worse and are actually 34% below 2009 which followed the financiqal crisis. Here are the combined numbers from the Vancouver & Fraser Valley boards computers:
Last 30 days sales SFH’s Van & FVREB combined:
2013 = 993
2012 = 2,165
2011 = 2,776
2010 = 2,142
2009 = 1,494
Trend is 54% below 2012, 64% below 2011, 54% below 2010, and 34% below 2009.
Cheers
pw