Two days after Wild Bill Morneau dropped da hammer on housing, a confused nation is still trying to figure it all out. But this much is clear: if you have the bulk of your net worth in your house, or sell mortgages, or real estate, or are a moister horny to buy a property, there’s nothing to be happy about.
Here’s why (part three):
The changes amount to a 2% enhancement in mortgage rates, effective a week from Monday. To get a mortgage after that you’ll have to pass a stress test proving you can handle payments at the Bank of Canada’s benchmark rate of 4.64%, and not the current 2.5% (or less). Why is this a big deal? Because 50% of all borrowers today opt for five-year fixed mortgages which do not require that test. Suddenly, in order to get mortgage insurance (everyone with less than 20% equity must) you must pass. It’s estimated at least a third of current borrowers would not.
Therefore they’ll qualify to borrow less money, and unless Mom tops them up, this should translate into reduced demand and lower prices. “Ottawa’s action this time around could weigh on home values,” says mortgage broker Rob McLister, “more than any of the government’s past amortization reductions or down-payment increases.” He’s right. Big impact.
So how about renewals? Will you have to go through this kind of stress test every time your mortgage term runs out?
No. But there’s news here, too. It’s estimated 2,000,000 homeowners will face renewals this year. If they stay with their existing lenders, no stress test at 4.64%. However if the renewal is refused (maybe your income changes or the house drops in value) and you have to deal with another lender, it’s a new mortgage. Yup, stress test.
Guess what? Your lender knows this, too. Do you think you’ll get a sweet, low rate just because you’re an existing client, or will the bank amp your rate up because it knows you can’t shop around? “Clearly giving a bank this much power over the consumer was one of the unseen consequences the poor design of these policy changes naturally created,” says housing analyst Ross Kay. “Anyone foolish enough to believe banks will not profit from this by reducing mortgage discount offers is fooling themselves.”
Maybe that’s why share prices of second-tier mortgage lenders were crushed a little after the news, while the banks fared much better.
Meanwhile, it took only a few hours for the draconian new rules to have an impact in the marketplace. Some of the biggest lenders in the mortgage brokerage business abruptly announced they’re suspending – immediately – several kinds of loans. They include new refinancing, mortgages for rental properties and stated-income loans for self-employed borrowers.
The feds have said flatly that mortgage insurance will no longer be available for anyone with a lower credit score (under 600), who takes an amortization of more than 25 years, who buys a property for more than $1 million or is not an owner-occupier. On top of that, Ottawa is launching a process that the industry is convinced will result in lenders having to foot part of the insurance cost or finance a hefty deductible in the case of default. That, you can be sure, will raise lending rates.
There’s more. Morneau’s own department projects home sales nationally will fall by about 8% in the next year because of the changes. “In the short-term, the change may lead to a temporary reduction in the pace of housing market activity over the next year,” an official said. “While historical data suggest that, nationwide, up to 8 per cent of new home purchases could be affected during the first year of implementation, the precise impact will vary depending on specific homebuyer circumstances and behaviours.”
That may not sound like a lot, but it comes atop a 7% decline in the past year, reflecting a collapsing market in Vancouver. Besides, this is a best-case-scenario number from the Department of Finance. Actual mileage may differ.
Finally, if you need more evidence of why the feds have done all of this, look no further than the Kingdom of 416. Last month sales were up 20% year/year and prices inflated along with them. The average detached is now $1.3 million, and that buys a beater. Values continue to rise because supply is so limited and competition intense. Buying has become painful, if not repulsive, as a result.
Why so few homes for sale? It’s a hallmark of ballooning, unhealthy markets in which people don’t sell because they relish more gains or could never afford to buy back in. But once markets turn and prices retreat, listings swell as homeowners stampede to exit at the best price.
Thinking of cashing in? Don’t mull too long.
197 comments ↓
HIGH-RISK, HIGH-RATIO MORTGAGES – DEFINITELY A VICTORIA THING
Which Canadian housing market has been the bubbliest in the past 3 years? It appears to be a 3-way tie: Victoria, Vancouver and Toronto.
The second chart shows that Victoria has led the country 2 of the last 3 years with 450% mortgages.
These subprime, high-risk, high-ratio 450% plus mortgages are extremely dangerous to own.
The 450% metric is extremely telling. There is no better metric to gauge how bubbly a housing market is. It tells us how much buyers had to stretch themselves in order to qualify for new and insured mortgages.
SHOCKING RESULTS
The chart shows that 1 in 3 new and insured mortgages taken on in Victoria over the last 3 years have been of the high-risk, high-ratio (450% plus) type.
Compared to Halifax, where only about 1 in 20 mortgages are of this sort, the percentage of these mortgages in Victoria is shockingly high.
The more bubbly the market, the bigger the correction. Americans learned that when bubbly west coast cities ended up being near the top of the list of biggest price losers in the American housing meltdown.
THOSE WHO SAY THEY’RE NOT REALTORS ON THIS SITE HATE ME
It’s always entertaining to read their lies, especially when they are directed at me. They continually twist my words in an attempt to discredit me. That hasn’t worked.
When asked to state the date of the comment of mine they’ve twisted, they simply drop the subject, knowing that I’ve exposed another lie of theirs.
I encourage them to continue with this. It’s always a nice reminder to others that their comments are full of lies and that they should be disregarded.
Hate on dudes.
I’m sure you like the new rule changes. Not.
I was just in YVR last weekend, everyone still in denial, many still doubling down. Now that the Chinese arent buying anymore, the locals seem happy to not have to compete in bidding wars for $3 mil Van Specials. Yay!?
Love my house…but the maintenance costs and taxes are ridiculous
VICTORIA’S UNLOVED
Those on this site who say they’re not realtors want you to think that all properties in Victoria are being sold “with multiple unconditional offers on day 1”.
Is it true?
Of course not.
EXAMPLES THAT PROVE THIS INFORMATION IS FALSE:
(It took me 5 minutes to find these examples from East Saanich)
——————————————————————————–
****** “REDUCED” – 785 Claremont Avenue ******
DAYS ON MARKET: 67
Google the entire next line to view the listing (4th or 5th result):
785 Claremont Avenue for sale Tony Joe
———————————————————————————
———————————————————————————
****** “ADJUSTED PRICE” – 888 Haliburton Road ******
DAYS ON MARKET: 70 +
Google the entire next line to view the listing:
888 Haliburton Road for sale Tracy Salvador
———————————————————————————-
Apparently one of the condos I had written about recently sold for $40 K under list after 100 + days on the market and just before the fun kicks in with the new rules. Did somebody say “seriously dumb”?
If not, let me: seriously dumb!
Their financial well-being will definitely pay the price in the next few years. I’m sure they’ve told all of their friends that they “got in just in time”. LOL
The new rules will obviously take prices down. How far down is bottomless? Victorians will be finding that out.
Prices can fall faster in a down market than they rise in an up market.
MORTGAGE INSURANCE WON’T BE AVAILABLE IF YOU HAVE A RENTAL SUITE IN YOUR HOUSE
This change will hit Victoria and Vancouver particularly hard.
MORTGAGE INSURANCE WON’T BE AVAILABLE IF YOU WANT A 30-YEAR AMORTIZATION
This can have only one effect on prices.
YOU NOW MUST QUALIFY FOR THE BoC’s POSTED RATE (4.6%) INSTEAD OF 2.5%
This one alone would have been enough to prick Canada’s housing bubble. Its effect on prices will be huge.
All of this comes after sales of detached houses across Greater Victoria had already fallen (tanked) 49% below April levels, signalling that the market had begun the correction process.
RENTERS WILL BE REWARDED
If you chose to rent instead of taking on a massive mortgage on a bubble-priced Victoria property, you obviously made the right move. You should congratulate yourself.
NOW GET OUT THE POPCORN AND WATCH THIS THING GO DOWN!
Lender’s don’t refuse renewal unless you are requesting new funds
They also don’t offer a tiered rate for customers based on whether they have low ratio MTG or a high ratio one
So are banks going to press the bar on high 5 year rates and risk losing losing existing low ratio MTG business to switches?
Your analysis is half-informed
Ah, but the whole point of the changes is to increase the cost of debt and ultimately transfer risk from taxpayers to lenders. There will be consequences. — Garth
I don’t understand why giving the banks the right to increase rates based on credit worthiness is a problem? If they accept the risk of default they should have the right to increase lending. Why should a borrower with little savings and few assets get the same rate as someone with more assets? I know it doesn’t sound fair but this is just risk.
We will see if this begin the decline of house prices, price go up quickly but tend to be really sticky on the way down, so this may be a long process.
Garth thanks for all the effort you put in to this blog! This blog dog really appreciates it!
Not sure if this will have a huge effect in GTA. There’s still a supply/demand issue.
Nice post tonight, Garth. Good info.
Therefore they’ll qualify to borrow less money, and unless Mom tops them up, this should translate into reduced demand and lower prices.
———-
As I said yesterday, the bank of mom and dad will bail out the first time homebuyer and keep the party going just as they did after T2 increased the DP to a whopping 7% for over 500k houses.
These changes – meh – the ponzi will keep going as everyone from every demographic is all in….
Will this have a big impact on smaller towns near Vancouver and Toronto, or since prices are still affordable will they continue to grow until they reach stupid city prices?
Also more cat pics plz
Yeah! VREU is back with reiterating what Garth has already told us!
VREU, could you please let us now how Victoria sales and prices are doing, especially since Teranet says everything is up 12% this year. Its not a realtor number so do you trust it? :)
I’ve sold my Toronto house and renting now! Will buy back in about 4 years when prices are half
#186 South Etobicoke Trump Campaign Field HQ on 10.05.16 at 12:06 pm
Why does Mark struggle with reality so much?
That’s a difficult q to answer. Maybe he hasn’t had any success in the past so it’s difficult to pin down reality? Or maybe he believes he’s the only one who is a realist despite what his bank account says?
Either way, all his predictions on this blog read like a what-NOT-to-do book (i.e. deflation, barrick, gold, Canadian dollar, u.s. dollar, Vancouver real estate prices, Toronto real estate prices, etc.)
Maybe he should pull a SM and start writing? It could sell!
Seems like it would have been a whole lot less convoluted to just raise interest rates. Oh wait then the economy might tank even further. So what the government is saying, is we want low rates so people will borrow and stimulate the economy but we want lots of lending restrictions so people don’t borrow and stimulate the economy. Got it? It seems to me we have reached the point, perhaps some time ago, where nothing sensible can come out of Ottawa.
…look no further than the Kingdom of 416. Last month sales were up 20% year/year and prices inflated along with them. The average detached is now $1.3 million, and that buys a beater. Values continue to rise because supply is so limited and competition intense
agree
Toronto is messed up. I don’t know what home buyers are thinking. Or maybe they’re not…
I’m taking a sick delight in this, knowing so many people living high on credit and feeling smug about it. Sadly, I also know a couple of new buyers who will probably be under water by the time they take possession of their new digs, digs that were purchased at the behest of their baby boomer parents. Oh well, the kids will get mom and dad’s wealth in the end so no harm done.
Will they allow people with suites to use the rental income to qualify? Sorry if you’ve covered that already but this is a lot to digest. Thank God I’m out of the market and now a filthy renter.
The only thing wild Bill did, was pave the way to his next round of interest rate cuts.So transparent.
It all makes sense. If I were in government, I would want the housing crash to happen now, rather than closer to the next election.
I’m surprised there has not been more of a shudder/out cry amougst the consumers of mortgages.
Are they unaware?
Over the last 7 years house-horny has been us (GTA) and debby-downer has been you Garth…. When do you finally join in because you can’t beet em????
Its already started in 416 as buyers are trying ti back out of deals. Mortgage brokers and banks don’t want to risk even a penny in this monster housing Ponzi scheme. Imagine no CMHC backing? No one would be lending a penny. Looks like useless mortgage brokers and realtors are going to be very hungry for money
Finally, something like common sense prevails. A few more months of this craziness and I was planning to leave YVR for ever. Now, perhaps there is hope for both local renters and buyers.
In the meantime, if you are planning to buy a condo have a good look at the depreciation report. No depreciation report by a qualified, insured engineer – walk away.
http://www.vancouversun.com/business/Muddled+legislation+condo+depreciation+reports+causing+confusion/7884991/story.html?__lsa=66d5-486e
The above is an old story, but worth reading.
Don’t have enough for a 20% percent down payment – walk away.
S.p.e.c.u.l.a.t.o.r.s – take a hike………….
Let reversal to the mean begin!
I’m sure banks are doing backflips about this. It was already difficult to move with collateralized mortgages vs. conventionally but these changes will certainly seal that deal and with higher rates for the banks.
Any financial equities (none are mortgage co’s) I have are showing strong moves to the upside. With all of this and the ECB rumors of ending their own “QE” it sure seems as if the writing is on the wall and rates will finally rise. Low rates are likely doing more damage than good now. Low rates have likely had their day.
While some (with agendas of course) might say the Liberals are evil they are really doing what the Conservatives should have done. All of it should never have happened to begin with anyway.
Joint ownership – what happens at sale time? Example: parents put child’s name on house because child will inherit house anyway. One parent passes away, and the remaining parent continues to live in the house. Second parent passes away and child is sole owner and sells house. Does the value of the house get split three ways, two of which are principle residence and one of which is not?
Cashing in is over.
Reduction are commonplace in YVR and the burbs right now. Sellers were hanging on to the Spring mania prices.
More realistic is selling at a sharp price and conditions are back.
This is good for employment of inspectors.
Also the MIL and family chatter has turned dramatically from BUY NOW OR BE PRICED OUT and YOU RENT? YOU’RE A FOOL..
to…
“I just heard that mortgage rates are being impacted and with this 15% chinese home tax, what’s going to happen”
uncertainty = masses freeze.
The party is over, government knew that Toronto will be the next Vancity and if this pop, banks will go down as well as the economy depend on it will suffer and withered. Next Spring gonna be interesting or this cold winter( suppose to be as prediction) may see listing rise and no pause during minus 30 open house sign everywhere in the hot neighbourhood.
Why so few homes for sale?
———–
Because people need a place to live.
TO and van people will sell when they are ready.
We live here for now. People will just to wait.
Record high prices still rising round here. No listing. Way over ask for all recent sales.
Everyone who mentioned the word popcorn better try some of the stale stuff from 2012 you guys were getting all giddy about then. No big drops in van or gta coming sorry.
Here is how i see it playing out.
By Christmas word is out, people start getting declined for financing, RE deals start to fall apart. By March the majority of people under 40 all know someone effected.
Wynne drops the 15% stamp tax. Already slow salea crater
Buyers remain firm on price but by July the new floor is being developed, divorces, estate sales and those forced to sell do so at a much lower price.
Next year sept the new reality sets in, inventory that is already high gets worse, now sellers are dropping but the buyers go on strike and then the fat lady sings……
Bettting against vreu seems like a sure thing.
Vic will do very well over the next 5 years.
Anyone have a good property there for sale?
Anyone else go big on energy recently?
Do I take a quick 50% or wait for 60plus, since there is no practical replacement coming for a long time?
“Because 50% of all borrowers today opt for five-year fixed mortgages which do not require that test.”
Do you have a source which proves that this is true? I’ve been trying to look for this statistic since the announcement was made.
So as a ‘moister horny to buy a property’ (but who has been wearing the Greater Fool Chastity Belt), who has 20%+ squirreled away, good credit etc, is there any downside to these new rules?
Seems like this is an outright win for the housing-cautious folk, for once.
Patience is still the order of the day, but its good to see things might be headed in the sane direction (for YVR).
Tightening of credit. Tightening of credit. Tightening of credit. If there is to be a dramatic crash, this will do it.
Look out below.
This should have massive entertainment value.
This is a first hand look at a Canadian train wreck.
Grab a coke, take a chair and watch the show.
Opportunity is about to be created by the greaterfools
May the force be with you
So realtors,
After the last Monday announcements what are your prediction for 2017? +5% +20% or -30%?
Oops in yvr will see minimum -30% because foreigners are out (-15% right there in prices) and locals can borrow -20% since October 17th.
Enjoy the ride down, nice meeting you #vanre bulls
RE: #18 Broader Mind:
“The only thing wild Bill did, was pave the way to his next round of interest rate cuts.So transparent.”
No he actually hasn’t done that.
He’s given everyone a hint as to how the govt plans to get out of the low interest rate hole.
Tax the rich, particularly capital gains, tax the crap out of Carbon, and make sure everyone taking out a residential mortgage can pay 4.46% on it.
The Feds have basically told us that in the next five years, they expect mortgage rates to normalise at around 4.46%.
They’ve told us where they’ll be looking to come up with the extra cash to make the payments on their runaway government debt.
This is really easy to read.
How can you not love T2 after this?
The correction is no long an idea but a tangible reality.
I got a mortgage 2 years ago, and the bank insisted on stress-testing me then. They added 2 percentage points and re-did all the numbers. I’m sure they have been doing if for years anyway?
The only thing wild Bill did, was pave the way to his next round of interest rate cuts.So transparent.
———-
So true – and the rate decline will effectively mute the impact of these ‘changes’ so that we are back to the status quo.
After a decade plus of a bull run in housing, its great to see that the bears have learned how toothless the federal and provincial measures are and how RE is the golden boy of investment and votes. Heck, I think the bears have become so cynical that they see the intended and unintended consequences before the policymakers do.
Think about it, preferred shares are next on the chopping block for the balanced portfolio once the BOC cuts.
And we are right back to where we were before the grand ‘deep dive’ by the feds.
The more things change the more they stay the same.
Meh – ponzi scheme on…
Is it finally time for the popcorn?
As a former bank employee, I have been trying to tell anyone who will listen to me that banks are not your friends. They don’t care if you can’t afford to do anything else with your after-tax money but pay your mortgage.
What’s going to happen to all of those non-owner occupied shoe box condos in Toronto bought by people hoping to pass their units on to greater fools?
While I am happy about all of the new policies the different levels of government are creating to tackle the housing problem. I think all of them creating policies at the same time will have unintended consequences.
Heard in YVR still in denial, many think prices are still going up. Interesting times.
I often visit the sales centers in Milton, Ontario, NW of T.O. and along Dundas (Highway #5) in Oakville.
Milton/Oakville builders each sell homes to hundreds of buyers for delivery 12-20 months out but want have buyers to start placing deposits immediately and bring in more funds on a set schedule. One buyer came in to add more deposit money with a Visa card.
Will buyers qualify at delivery? Will they get all, or only some of their deposit money returned if they can’t get a mortgage at close? This will be very interesting.
—————————————————————-
We live in the student area around McMaster. (We love the keggers!) I’m thinking that the owners of student rental properties are going to have a tough time getting renewals or CHMC insurance as easily as they have in the past as they don’t even live in these homes.
Many landlords can’t verify the income to even justify a mortgage or renewal as rental income often was not reported to the CRA. There is no CHMC insurance for rental properties in any event under the new rules.
Many own 3-5 homes and have aggressively gone all in financially buying as many properties as they can qualify for. Hey, it works on those income property shows on the TV.
Selling student rentals that have suffered years of neglect in a market heading south won’t be an easy task for those looking to bail. Banks won’t want student rental mortgage business and may refuse to lend money to new purchasers. I don’t see any good news for student rentals RE.
I expect RE in student areas to take a big hit with these new rules.
#30 bdy sktn – how do you reckon vic will do well over the next 5 yrs? Interested in why you think so. Enlighten me….
First National stock dropped 19% after Morneau’s announcement.
Beauty…the sublime subversive nature of the net kicks in,
and the death dance of the MLS begins…after this one
the realty biz becomes a shadow of its former self…
long popcorn, everyone!
8 Gasbag Boomer on 10.05.16 at 6:30 pm
Not sure if this will have a huge effect in GTA. There’s still a supply/demand issue.
—
agreed, and any flippers, investors, specs etc who bought in the last couple of years, will now, after the retroactive rule changes, think trice about selling= less supply
the supply was already too low
#20 Big English on 10.05.16 at 6:47 pm
I’m surprised there has not been more of a shudder/out cry amougst the consumers of mortgages.
Are they unaware?
—————————
I think they might be! Never a comment like “oh man I’m pooched!”. Well, when the tide goes out…
The news just gets better and better every day.
Canada’s mortgage meltdown?
I’m not sure which is more amusing.
Trump or Canadian real estate.
Poor millennials, the hate they feel toward boomers will now be Directed @ The T2 regime.
Boomers 2%
Millenials 4%
Millennials hate banks, Bank profit will soar now that competition has been crushed.
Let’s not forget that Carbon tax and payroll tax that they are getting ready to stick where the sun doesn’t shine.
Isn’t Ideology wonderfull?
But keep pumping the liberal talking points grasshoppers look what it gets you.
Dr. Smoking Man
Phd Herdonomics
#25 April. on 10.05.16 at 6:55 pm
Joint ownership – what happens at sale time? Example: parents put child’s name on house because child will inherit house anyway. One parent passes away, and the remaining parent continues to live in the house. Second parent passes away and child is sole owner and sells house. Does the value of the house get split three ways, two of which are principle residence and one of which is not?
————————————-
April, you must be the ‘child’? Never bank an inheritance before it transpires. Just gross.
Traders know, markets bounce along technicals in the short-term. But fundamental changes cause long term movement. We got one.
Flipping turns to fretting.
“While historical data suggest that, nationwide, up to 8 per cent of new home purchases could be affected during the first year of implementation, the precise impact will vary depending on specific homebuyer circumstances and behaviours.”
Even at 8% the figure will be disproportionately higher in Vancouver and Toronto where these stress tests are going to be meaningful.
Now did Morneau do this so we are better prepared for higher rates in the future (paving the way), or did he do it so BOC can cut rates further so he can stimulate the general economy without blowing the housing bubble even bigger?
Because the banks make their profit on the difference between the interest rates that they borrow money for, and the interest rates that they loan money for, I see a bright future for the banks keeping mortgage holders on the hook – for as long (and as profitably) as possible.
Organizations that were previously LENDING prospective buyers the minimum required down payments, just so that they could then sell them fat mortgages, I don’t think the banks will be to quick to show these dupes the door.
Sure, some mortgage holders who are real basket cases and that can’t get CMHC insurance might be asked to go find new lenders; and of course, those whose applications contained fraudulent statements, where a mortgage insurer would not be obliged to pay, they’ll be hard pressed to find financing, too.
But good clients (timely payers, those that ace the stress tests), they’ll still get favourable rates from the bankers, maybe with a couple of points added across the board to cover others’ shaky loans, or any forthcoming deductible.
Something that I haven’t been able to figure in all this hubbub, is what effect will these announcements have on reverse-mortgage companies? Reductions on amounts that can be lent, based on falling home values? Higher interest rates? It seems I’ve seen an uptick in advertising for the reverse mortgage markets recently.
Houses are real nice to live in, just buy one you can afford. They’re homes, not investments. If we sell in the next few years I’m sure we’ll take a bath (just built a new house in Alberta), but I sure like living in my own place. It’s way nicer than what could rent around here. We don’t care if rates go up, because we got what we can afford; that’s the trick. And we like our jobs, so this whole get rich and retire thing isn’t on the radar. Relax, live within your means, and learn to enjoy and be grateful for what you have.
#28 bdy sktn on 10.05.16 at 6:58 pm
Why so few homes for sale?
———–
Because people need a place to live.
TO and van people will sell when they are ready.
We live here for now. People will just to wait.
Record high prices still rising round here. No listing. Way over ask for all recent sales.
Everyone who mentioned the word popcorn better try some of the stale stuff from 2012 you guys were getting all giddy about then. No big drops in van or gta coming sorry.
————————————–
6 consecutive months of MSM using big Red downward pointing arrows to describe the RE market, is all it might take. We’ve already had two of them.
Lots of buyers on the sidelines. Those selling are finishing “trading up”. Good for them. But what about when the masses decide to trade down to take the capital gain? Like an elephant scared of a mouse (aka supply vs. demand).
You’re partly right, this popcorn might be getting cold, but I’ll make a new bag January 1st.
Big Deal. Moisters will just get their parents to co-sign their mortgages, just like they get their parents to help with the downpayment. Nothing changes.
Why so few homes for sale? It’s a hallmark of ballooning, unhealthy markets in which people don’t sell because they relish more gains or could never afford to buy back in. But once markets turn and prices retreat, listings swell as homeowners stampede to exit at the best price.-Garth
………
That’s if we were dealing with normal people. The house is a status symbol, a spot light of success. Especially True in the 416.
Culture has changed , people got lazy, they let their things talk for them, personally void of any creativity, charm, good typing or speaking skills.
The burbs were the jobs don’t justify the high cost of housing that’s an hour commute from the downtown core will get bitch slapped.
416 is solid man.
Now that I met you and understand what kind of good person you are, it almost pains me to disagree with you.
Lucky for free speach my wine wrack and the back yard is well stocked.
Let us all not forget the draconian carbon taxes that we are being or going to be subjected to. Think your gas and electric bills are high now!! Welcome back $7 cauliflower. Gas jumped in my city from 85.9 to 103.9 overnight????
Meanwhile Asian countries are building hundreds of coal powered electricity plants per year, the hypocrisy of it all is mind blowing!
Call it what for what it is, a new TAX…
Same Same : The more things change the more they stay the same.
Meh – ponzi scheme on…
Your cheerleading isn’t too much different then the bears when they were trying to talk down the market through this blog over the last 7 years. This blog provides such an ideal vehicle for venting.
Unfortunately, your opinion or for that matter anyone’s opinion in the comment section means absolutely dick to the real world.
The buyers over the last several years have been spurred on by the media and their hyperbole surrounding Chinese buyers and the infinite gains in the housing market. Buy now or be left out forever. The real estate agents had the perfect marketing game until they didn’t.
I guess they never actually considered the consequences of telling the world the Chinese were buying up Vancouver. Great for pushing sales until the Chinese left and now nobody sees the urgency to run out and buy.
Perhaps you don’t have a T.V. or you don’t read the paper but guess what, the media is now focussed on dropping prices and crashing sales.
The makers of the market are now going to be the breakers of the market and Vancouver is the perfect poster boy for them.
If you are old enough to remember the 1980’s crash then you will have some insight into the future….except they dropped interest rates considerably back then to save the market. Oops.
Good luck to all.
So…Garth Turner was Right all along.
And soooo much more to come.
Thank You Garth .
So the wife & I just signed another 6 mo lease on our rented hovel; might as well sit out the market this winter & see how this shakes out short-term.
I’m too damned lazy to move anyway (especially after cleaning out our rented garage last week) and am looking fwd to a winter of sitting on my butt, when I’m not paintin a few Harleys. (which is all anyone seems to be paintin out here anymore, anyway)
Well, that and watching Ancient Aliens…can’t be missin any of that.
Plus, I can always amuse myself by counting the “for rent” and “for sale” signs that keep sprouting up in this town with a rapidity that would make a gopher colony proud; they’re actually becoming a bit of a sidewalk hazard…and an aesthetic one…
Can anyone explain to me why someone who is trying to rent a quarter-million dollar duplex is too cheap to go to Dollarama and buy a decent sign? For like, what, a dollar? Nope, they be gettin’ arthritic Grandma to make one on cardboard…with a marker that’s on its last legs…that isn’t waterproof, so when it rains trying to read the phone number is akin to translating Swahili…
And thats before it’s mounted on a short pole (unafixed to anything) that of course catches the wind, allowing it to always be turned 180 degrees the wrong way, so that the empty house can see that it is, in fact, for rent to interested parties…if any of them had x-ray vision (and were dyslexic) or cared to trespass and turn the sign around.
True story…there’s like, three of these within a block of me…WTF?
And I have noticed the courtyard of our apartment complex (actually, it’s a dirty, greasy, upheaveled, uncared-for parking lot with a tree in the middle…that gets backed into a lot…but the landlord pretends its a courtyard) is starting to resemble a neighborhood garage sale at months’ end, what with all the skips and midnite moves this summer.
(actually saw a guy moving out by way of his bedroom window last month; thats gotta a new low)
Two years ago this complex had a waiting list, and I had great neighbours…now it’s a 25% vacant, and I don’t wanna know my neighbours.
(On the plus side, wifey & I have scored some pretty cool end tables & knick-knacks from the recently departed; haha)
New tenants all seem to be pretty young, and unemployed…or unemployable? Come to think of it, smoking dope, screaming at your GF, getting drunk on weekdays, and tearing around in the parking lot (oops, courtyard) in mom’s SUV probably makes for a pretty thin resume anyway; although part of me thinks a person with those talents would be just what the DMV or several govt departments would be looking for.
Wouldn’t bother me so much if any of ’em had a decent car…or bike…or even skateboard, fer chrisakes! Or a taste for decent music…just because the “courtyard” resembles east LA, doesn’t mean the tunes have to, y’know?
The only positive “interaction” (other than the previously mentioned sometimes great pickin’) I’ve had recently has been when I wandered out wearing a vintage Priest shirt from the “Screaming for Vengeance” tour in 82 (a rather pricey item these days, btw) and the dude next door quit inhaling long enuff to choke out “hack …rad band, man…hack hack…my dad really liked them…cough”
The only person I wanna talk to around here anymore is the bloody mailman…
Judging by her picture and track record, Alison Carnwath is about as level-headed and pragmatic as they come. She is the chairman of one of the UK’s biggest construction firms.
She says thousands of UK builders are going to lose their jobs as machines take over the building of skyscrapers.
“Speaking at the Institute of Directors’ annual convention, the veteran businesswoman said the pace of technological change has taken her by surprise.
“Businesses are focusing on [productivity], they want to reengineer how their people can work, they recognise that technology is upon us and is going to destroy thousands of jobs,” said Ms Carnwath, who has been on Land Securities’ board since 2004 and has been chairman since 2008.”
http://www.telegraph.co.uk/business/2016/09/27/the-era-of-robots-thousands-of-builders-to-lose-jobs-as-machines/
If you stay with the same lenders and re-amortize upon renewal you would have to pass the stress test at the posted rate?
“Mark you nearly gave me a heart attack. I’ve never laughed so hard this early in the morning. Keep them coming pal. Are you parody of some kind?”
As that advertisement on TV says, chew 2 81mg Aspirin and call the ambulance immediately if you think you’re having a heart attack.
The logic of a currency going up due to deflation is well known. It happened when the US housing market fell apart circa 2008. No reason to believe the same won’t replace itself with respect to the CAD$.
#15 maths are hard
Right, because the only kind of lending happening is mortgages. The economy is much more interested in business investment, rather than seeing banks racing to find out what ludicrous heights people will reach to buy a necessity.
Why some home buyers are ditching the real estate agent and turning to start-ups –
“To help buyers go it alone, or close to it, several real estate start-ups have emerged that promise an easier solution to a notoriously stressful and expensive purchase. By eliminating or limiting an agent’s role, customers save money and streamline the process.
It’s also leading to tensions with the hundreds of thousands of real estate agents around the country, who say the companies are shortsighted and overlook the skills that a professional agent can offer.”
http://www.latimes.com/business/la-fi-ditch-the-real-estate-agent-20161001-snap-story.html
One of my first reactions when an issue arises is to consider the welfare of my fellow Canadians and in particular vulnerable groups.
In this case with the changes announced by Morneau, I was particularly concerned about the dogs here. Boomers were high on my list. I went to the University of Google to see where popcorn ranks on the list of risks of choking hazards of various foods.
Popcorn ranks surprisingly high. Moderation dogs, moderation.
“Avoiding Choking Hazards in the Elderly
What not to serve at dinner to elderly from foods that can prove dangerous.
By Deborah Quilter”
http://www.cdss.ca.gov/agedblinddisabled/res/VPTC2/9%20Food%20Nutrition%20and%20Preparation/Avoiding_Choking_Hazards_in_the_Elderly.pdf
Please my friends, switch to applesauce as we follow the developments to come in Canadian real estate.
You know I’m getting a buzz when I posted this on the wrong day. Let’s try again
The bet of the decade.
Nov 8….MSM will tell you it’s to close to call between Trump and Hillary be alot of cheating in the polls favoring Hillary won’t do Jack.
Bernie supporters not voting or going with green party.
Now the big hedge funds, banks, establishment enterprise will belive the Bull Shit that MSM sells and there schooled economist putting a spring into you bet.
Look at the size of Trump Rallys vs Hillary.
Tweets.
Understand culture. Who in their right mind at the office water cooler will openly say they support a
Homophobe
Masyginist
Phob Phob Phob. Deplorable.
Now in the little election booth with the curtains drawn. It’s going to be the wild west of Trump
LONG USDMEX
You don’t need to bet the farm for this one for a hit out of the ball park my dogs.
Don’t go crazy. The machine always finds a away but I’m thinking they don’t know what to do.
Bet Accordingly.
You have no idea guys, this is not good for the banks at all. Banks and CMHC are now divorced, less people will qualify unless you have 20% down. More people are gonna bail on their payments and properties it will sell for less that they own. When those properties hit the market who’s is going to buy????? This might turn from a breeze to tsunami. Last 3 years lala moved all the money overseas, lucky ones are the ones who have a back up country.
About a year before the next election watch Wild Bills regulations be thrown out as T2 proclaims he fixed the housing market!
I’m a trader, shorted gold at last Friday’s close with in the money uncovered calls based on a technical breakdown at September monthend with was also the end of Q3. These sell offs don’t come out of nowhere. Presently waiting for a sell off in the Dow to around 17500 the next 6 weeks. Also will pick up bond funds at same time (DSL and LQD, in USD to enjoy the coming 50 cent Loonie. I did convert all proceeds of the house sale to USD.)
I have also been Chief Compliance Officer and UDP (top person running a brokerage as required by the Canadian regulations ) for about 20yrs.
Based on technical analysis I see a 50-60% drop in real estate in YVR. The real Estate market is severely overbought and real estate isn’t like stocks. Not as many shorts to cover
Hi Garth, sorry to be off topic but yesterday I was talking to a lady from World Financial Group. Have you heard o them? If so I would really love your opinion on investing with them.
Run. — Garth
lining tower of san francisco, only 7yrs and by the looks of it unreperable…
The tilt has reached 2 inches. Majestic finger-pointing has ensued. Lawyers have been unleashed. Investigations, studies, and counter-studies have commenced. No one is certain how to repair it, or if it is repairable at all.
http://www.businessinsider.com/owners-in-the-leaning-tower-of-san-francisco-say-condos-worthless-2016-10
Keep up the good work Garth. You have been the first out and best out on explaining the effects of the recent government policy changes concerning mortgages. Is everyone else sleeping or just conflicted?
Alternatively, and with reliance upon the article I linked above, a millennial couple underwater on the mortgage and in line for an inheritance could invite you know who over for movies in the home theatre and serve up large servings of Orville….
My home sale closes next Friday. Subjects were removed two weeks ago. Had a small sense of doubt at the time that maybe I could have sold for more if I waited until the spring. ..Of course, that hint of doubt disappeared on Monday.
Like Garth said, nobody gets crushed by bailing too early!
Garth, any update to that blog post earlier this week about that house in the GTA that was only accepting offers if they came with $100k+ deposits ?
What I’m still unclear on is for those with a 20% down payment, will the bank now lend them less than before these recent changes from Bill Morneau? If so why?
#65 Mark on 10.05.16 at 8:56 pm
“Mark you nearly gave me a heart attack. I’ve never laughed so hard this early in the morning. Keep them coming pal. Are you parody of some kind?”
As that advertisement on TV says, chew 2 81mg Aspirin and call the ambulance immediately if you think you’re having a heart attack.
The logic of a currency going up due to deflation is well known. It happened when the US housing market fell apart circa 2008. No reason to believe the same won’t replace itself with respect to the CAD$.
….
You’re a beautifully packaged mind, don’t change. Starting to like you. How can I dis you. I walk the earth thinking I’m from another plant.
Ret on 10.05.16 at 7:45 pm
I’m thinking that the owners of student rental properties are going to have a tough time getting renewals or CHMC insurance as easily as they have in the past as they don’t even live in these homes.
Many landlords can’t verify the income to even justify a mortgage or renewal as rental income often was not reported to the CRA. There is no CHMC insurance for rental properties in any event under the new rules.
——-
You don’t appear to understand mortgage lending for non-owner occupied rentals. CMHC insurance has not been available for these mortgages, nor required, since rental properties are required to have 20% down or equity in at the time of attaining the mortgage.
Verifying income means you provide the lender with the leases on your other properties. In Ontario, if they are beyond the initial lease term, the tenant supplies a letter stating they are still tenants at the property.
As for Ontario landlords not reporting income, it’s not hard to get caught. Ontario tax credit schedule in the oersonal income tax package offers tenants a tax credit for rent paid, requiring address, amount of rent paid for the tax year, and landlord’s name. It’s the same spot that homeowners complete when claiming the credit for property taxes paid. Students ALWAYS claim that credit, looking for as much tax money returned as possible. I know because my tenants usually contact me in June or July looking for copies of receipts, stating CRA wants them to submit rent receipts (which I send the students monthly, but they don’t seem to hang on to them).
I forgot to address rental property renewals. Unless a landlord has purchased in the last two years or so in Van or TO (Canada’s a big country), what’s the problem with renewing? Minimum 20% down at purchase, plus all the equity built up over time since purchase from mortgage payments…
Quality rental properties in my area have been between $75,000 and $150,000 for the last 5 years. Not every town or city has outrageous house prices.
Great news Garth. A crappy Q4 GDP number can be blamed on Hurricane Matthew!
Mouldy Millenial on 10.05.16 at 8:26 pm
Big Deal. Moisters will just get their parents to co-sign their mortgages, just like they get their parents to help with the downpayment. Nothing changes.
————
You’re right, nothing changes. My parents bought their first house in 1967. My grandfather co-signed for their two bedroom house on 10 acres. $6,700 if I remember correctly.
“Because the banks make their profit on the difference between the interest rates that they borrow money for, and the interest rates that they loan money for, I see a bright future for the banks keeping mortgage holders on the hook – for as long (and as profitably) as possible.”
Very true. The economy is likely to go into a moderate amount of deflation as the sector which has been contributing heavily to economic activity over the past 15 years continues to wind down. At an increasing pace more recently. Spreads against existing mortgages are likely to rise as credit-worthiness increasingly becomes an issue, with many borrowers kept captive. Meanwhile, the BoC will likely reduce policy rates, effectively reducing the funding costs for bank portfolios. The CMHC is contractually and legally obligated to take care of the defaults on most at-risk mortgages.
Basically put, there’s no reason to believe that the situation of the 1990s, with the banks more than tripling on average, can’t repeat itself. Throw in some outperformance of a deeply countercyclical sector and a general asset rotation towards stocks, and you could see a TSX composite in the 50,000-60,000 range in the mid 2020s and a much stronger CAD$.
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Freaked face scotch chics rule
Kids the day I met your mom
https://youtu.be/gNKZATZHWZI
A good article in McLeans
http://www.macleans.ca/economy/realestateeconomy/hands-off-my-housing-bubble/
maths are hard on 10.05.16 at 6:39 pm
“Seems like it would have been a whole lot less convoluted to just raise interest rates. Oh wait then the economy might tank even further. So what the government is saying, is we want low rates so people will borrow and stimulate the economy but we want lots of lending restrictions so people don’t borrow and stimulate the economy. Got it? It seems to me we have reached the point, perhaps some time ago, where nothing sensible can come out of Ottawa”
– Nope. They want low rates so the CAD stays low and exports/manufacturing/movie industry/ tourism xcetera keeps rolling… They just raised rates for housing without actually raising rates so that all of these other Industries can benefit.
These mortgage renewals are going to be a shit storm for the over leveraged. The more dollar milkability that your file exudes, the more likely that you will be Tony Soprano’d by the banksters.
I believe the banks are going to feast on these until they hurt the market and then themselves.
#72 Section8 on 10.05.16 at 9:13 pm
Hi Garth, sorry to be off topic but yesterday I was talking to a lady from World Financial Group. Have you heard o them? If so I would really love your opinion on investing with them.
Run. — Garth
Half of their Wikipedia page is regulatory issues
https://en.wikipedia.org/wiki/World_Financial_Group
“Section8 on 10.05.16 at 9:13 pm
Hi Garth, sorry to be off topic but yesterday I was talking to a lady from World Financial Group. Have you heard o them? If so I would really love your opinion on investing with them.”
-Well… Why not Call Garth? He runs a joint called Turner Investments…. He doesn’t seem to be very good at advertising it though…
If you recently sold your house then you should be happy.
https://www.youtube.com/watch?v=OQgftmOeK_c
#53 Kelsey on 10.05.16 at 8:09 pm
“…did Morneau do this so we are better prepared for higher rates, […]or so BOC can cut rates further…”
—
Maybe both? This gives the BOC short-term flexibility to lower rates while still preparing the economy for higher rates in the medium term.
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Would you agree it’s time to reduce exposure to Canada sector etfs?
1. This tax grab is more. They are going after all those people who keep renters in the home and don’t claim the income and claim the property as PR.
2. Once the tax system incorporates address, homeownership status (ie. renter, owner), the Vancouver prices will collapse as keeping mortgage now turns your home into a biz (yes, pay tax) and you lost the capital gain windfall.
3. This will remove rental housing off the market and drive up prices of rentals (legal ones) even more till landlords can make fair profits in homes vs possible loss on capital gains.
Think about the impact, taking rental supply of the market. Look at vacancy rates.
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#16 WalMark of Sadkatoon on 10.05.16 at 6:43 pm
…look no further than the Kingdom of 416. Last month sales were up 20% year/year and prices inflated along with them. The average detached is now $1.3 million, and that buys a beater. Values continue to rise because supply is so limited and competition intense
agree
Toronto is messed up. I don’t know what home buyers are thinking. Or maybe they’re not…
———————————-
Completely unlivable dump.
1. Horrific traffic getting worse by the month. In 2007 GTA was the worst commute to work in North America (except Mexico City). Now is much, much worse. Bumper to bumper for miles in rush hours.
Where is T2 infrastructure?
2. Nothing to do, nowhere to go, can drive 2 hours to go out of the city (to go where, blue mountain?/sarcasm off), malls full with ‘sophisticated’ zombies buying discounted Kate Spade bags for 300 $ on credit and drinking lattes for $ 5.
3. Higher hydro bills, condo maintenance bills (by the month), parking spaces going for $ 50 k in the city.
4. Canada wide – carbon tax, CPP increase.
5. 1.3 mil SFH in Toronto, 2 mil in decent neighbourhood to ‘enjoy’ the sweaty humid s..tty weather year around.
6,…..
Sure. Where do I sign?
You are very naive. The bank is under no obligation to offer the same ‘discounted’ rate to everyone. Look at phone and cable companies. Those who are an existing customers get a higher rate than new customers. It is done all the time in every type of business including banking.
Until now those with high ratio insured mortgages were the best customers due to government guarantees. All banks were fighting for them. They could go where they wanted and always get the best rate. Not now. Now these people are stuck with the existing bank or they must qualify at double the rate. The bank is holding all the cards. All high ratio renewals will pay a higher rate. There is no question. A bank CEO would get punted by the board if they didn’t do it. Shareholders want to get paid.
#62 stage1dave on 10.05.16 at 8:49 pm
————
Wow! Quite the story! In the past, a neighbourhood like that would be referred to as a “ghetto”!
The definition of ghetto is “a part of a city, esp. a slum area, occupied by a minority group or groups.”
Does this mean that Millennials are now the new ghetto group?
#73 NoName on 10.05.16 at 9:14 pm
lining tower of san francisco, only 7yrs and by the looks of it unreperable…
The tilt has reached 2 inches. Majestic finger-pointing has ensued. Lawyers have been unleashed. Investigations, studies, and counter-studies have commenced. No one is certain how to repair it, or if it is repairable at all.
http://www.businessinsider.com/owners-in-the-leaning-tower-of-san-francisco-say-condos-worthless-2016-10
———————————–
I have seen not a single one of the newer condo buildings in North York, along the Yonge corridor being build on a bedrock.
In downtown some are.
After the first few years condo maintenance starts crippling up, on a 10 year old building you are guaranteed to pay around 800-1000 a month in utilities and property taxes for a 2 bedroom condo, maybe more. If you have repairs in relatively old buildings you are pretty much paying rent.
I can’t imagine what will be the maintenance of these (small, noisy, cold) new glass condos (in the big white North with the new carbon taxes) but it won’t be pretty
A friend of mine spent 50 k to replace windows, doors with energy efficient only to find significantly higher hydro bill just months after that.
It bugs my mind big time how apartment buildings in Europe’s much more dense populated big cities have relatively low property taxes and almost no maintenance at all with people living in relatively low rise concrete and brick buildings that last centuries and how better infrastructure and public transport is there.
Where you get nuked
https://youtu.be/oqjoHKISCVU
It’s in the book
It is actually not about risk because the mortgage is still insured. It is about having a captive customer. The same reason you pay $8 for a hot dog at a sports arena but pay $1.50 for the same dog at 7-11. They charge $8 because they can. If you want to eat at a hockey game you pay the price they charge. 7-11 is not an option.
That was hilarious. I hope that was sarcasm.
Nictonites : well me the other 3 not so much.
Enjoy https://youtu.be/x7bIbVlIqEc
I doubt T2 was even consulted on this change.
#1 Victoria Real Estate Update on 10.05.16 at 6:16 pm
HIGH-RISK, HIGH-RATIO MORTGAGES – DEFINITELY A VICTORIA THING
——————
Last numbers I saw said only 17% of buyers in Victoria are high ratio.
Have any numbers that state differently? Nope. Just false-consensus bias.
Your continual insistence that dropping sales numbers MUST mean a correction is around the corner is an example of confirmation bias. As are you anecdotes of places selling under. Any market is going to have places sell under ask (especially in a greedy seller’s market). Want an example of a place that has sat for over 100 days and sat for 170 prior to that? Is it the market that caused that? Nope, crap house, greedy ask.
Here are examples of recent places that have sold over ask:
4399 Torrington Pl – ask 749K, sold 850K
3625 Doncaster – ask 829K, Sold 871K
4351 Columbia Dr – ask 649K, sold 688K (and omg it’s bad… )
3523 Richmond Rd – ask 700K, sold 766K
None of the examples are particularly nice. They all need updates.
Your continual insistence anyone who disagrees with you is a realtor is belief bias (somehow by your logic, disagreeing with your false statements makes someone a realtor pumping RE.. yeah, strong logic).
The funniest thing is we don’t disagree on the important point: right now is a horrid time to buy in Victoria. Wait it out, things will get better.
We definitely disagree on timing and I think you’ll be disappointed by the depth of any correction.
#12 Same Same on 10.05.16 at 6:35 pm
VREU, could you please let us now how Victoria sales and prices are doing, especially since Teranet says everything is up 12% this year. Its not a realtor number so do you trust it? :)
—————–
Funny how he/she quits quoting Teranet (the only reliable source as far as VREU is concerned) when it no longer supports his/her confirmation bias.
Interesting thing is how much the sales pair numbers have increase this year. Current numbers should be a lot more accurate thanks to that.
http://www.bbc.com/news/technology-35746648
following up on #63 – robotics in construction:
http://www.theverge.com/2015/10/13/9521453/skycatch-komatsu-drones-construction-autonomous-vehicles
…the wave of the future…..is here…..at least in some places………….
“#97 BS on 10.06.16 at 12:05 am “
Very good post and well put. I once read that the most profitable clients for the banks are middle class clients who border on being subprime. They work hard, pay their bills, but at the end of the day, have very little left over. Far more profitable than the deep subprime customers (who end up defaulting), or the super-prime customers who manage their affairs in such a way that they actively seek to minimize spreads.
These mortgage changes are going to tighten the noose on these families. They will survive. However, for the next decade, on account of the increases to spreads and reductions in house prices, they’re not likely to accumulate any equity.
The practical result? No college funds for the kids. Empty retirement funds while people who didn’t go all-in on housing will be enjoying a vibrant stock market. Slavery to jobs (and yes, they generally will have jobs) instead of being able to take a break or a holiday. And dramatically diminished financial potential.
I know a lot of people have complained about ‘immigrants’ pac-manning properties in the GTA/GVR. Most of the ‘demand’ over the past number of years. But as housing prices collapse and spreads expand in response to the increased risk, those racists and xenophobics, unfortunately, will have the last laugh. That is, if they themselves didn’t get caught up in the bubble.
#89 Madcat
Well… Why not Call Garth? He runs a joint called Turner Investments…. He doesn’t seem to be very good at advertising it though…
————————————-
Unnecessary. People find him.
#206 Damifino on 10.05.16 at 5:11 pm
“198 Neil Armstrong
…because the new global economy is a tech economy, rather than what it used to be: a commodity-driven manufacturing one.
—————————————–
So… we’ll no longer be needing bricks, lumber, windows, furniture, electric motors, headphones, TV’s, saws, wrenches, curtains, shirts, pants, underwear, doorknobs, mops, brooms, dishes, shingles, lights, fridges, microwave ovens, structural steel, kitchen sinks, musical instruments, boats, carpets, toilets…
In my first job out of technical school (circa 1984) an engineer told me this: “Son, one day there will only be software”. In time, I became a firmware engineer. I never wrote any code that didn’t need some hardware upon which to run.
I still await the great singularity…”
——————————————
I think you’re taking his one line too seriously. You’re correct that the world will still need all of that stuff, but what he means (I’m presuming) is that the growth will come from the tech side of the economy. The best case in point I can think of is Finning International. Finning is planning to become a “Technology” company and move its HQ out of downtown Vancouver and into the tech node of Mount Pleasant (also in Vancouver). Why? Because they want to attract younger employees and drastically change how they do business. Funnily enough, rent is not (much) cheaper in Mount Pleasant than in DT Van office towers. That said, if Finning International, the dealers of Caterpillar equipment for mining companies and other commodity producers, can make that change towards becoming a technology company then what hope is there for other companies not following suit?
Back to #81 Larry1 on 04.29.15 at 11:36 pm on http://www.greaterfool.ca/2015/04/29/crushed/
Damn, I’d be up ~30% if I’d have done it. One for the shoulda, coulda, woulda files.
#70 lala on 10.05.16 at 9:08 pm
“You have no idea guys, this is not good for the banks at all. Banks and CMHC are now divorced, less people will qualify unless you have 20% down. More people are gonna bail on their payments and properties it will sell for less that they own. When those properties hit the market who’s is going to buy????? This might turn from a breeze to tsunami.”
No, most people do understand this. It’s called “Schadenfreude”:
http://www.merriam-webster.com/dictionary/schadenfreude
Cannot believe with all the data out there that YVR RE deniers still think prices will go/are up. Tracking average price for all YVR MLS properties using YVR realtor MLS data (incl. Detached, Townhouse, Condo) since early July and here is what you get:
-about $250,000 average price drop
-not one day where List Price > Sell Price
Lay off the 420 and stop believing RE Board lies that feed MSM or stop posting realtor BS, it doesn’t work.
Now with Morneau’s edict, it will no longer be a Sellers market in YVR, if it even was that since July, with 1/3 of new buyers taken out of the market or having to buy much lower priced properties. Yup, that says it all to me, prices will go up now even more.
_________________________
Some here think [email protected] will stick to the rules on renewal. Peruse these stock losses after Morneau Frankenmeasures + 2 Days:
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2016
Still think the banks will play by the existing rules?
Especially with the smaller low rate lenders suffering large capital losses…they will have to make that money up somehow.
Even [email protected] will want to make up her losses as well.
Yup, the banks are ALTRUISTIC and will be very nice to you the next time you renew a mortgage, because that’s what you do when you have just lost a WHACK of CAPITALIZATION only after 2 days of the Morneau Frankenmeasures.
When did Mr. Supply/Demand Herdonomics turn into a:
Mushy social re-engineering, Id, higher self, I’m OK/You’re OK, believer in norms, morays and status sets?
Probably after Morneau’s Frankenmeasures I suppose.
It’s a biatch when they hit your 416 RE wealth ‘hood too huh?
bsant54
Thinking of cashing in? Don’t mull too long. -Garth
I think the mulling time is over with unless someone can get a Hail Mary mortgage/purchase done in the next 11 days.
The Seller’s market after Oct. 17 will turn into a No Buyer/Cheap Property market. Low end properties will sell out quick then.
1/3 of new buyer’s either out of the market or having to buy much lower priced properties ought to destroy that Seller’s mid to uppper RE market overnight. How many cheap properties are their in Urban Canada?
Add to that the low rate mortgage lenders having suffered large stock capital losses in just 2 days in effect destroying them as the competition to the Big 6 banks – mortgage lending will be tighter than an an Italian tenor’s trousers (I live Italy, I am allowed)…and more expensive. That capitalization loss will be made up somehow and guess how will pay…new mortgage or renegotiated mortgage holders.
Where this will end is probably a dismal 4 Qtr GDP performance, job losses perhaps even worse if oil tanks again…recent glee over OPEC supply cuts will suffer the same fate as all the other attempts, someone like Saudi Arabia breaks ranks [as they have done before] and prices come down again especially with the current world oil supply glut.
It does not look good for Canada nearing the end of the year.
Yea T2 et al.
-bsant54
They call it now climate change, not global warming.
Just another form of tax grab. Cheers condo owners!
https://ca.news.yahoo.com/paris-climate-agreement-set-to-take-effect-with-183153793.html
While it is still not illegal to disagree with ‘climate change’ as a hoax: F.U.
——————————————-
http://www.macleans.ca/economy/realestateeconomy/hands-off-my-housing-bubble/
So it appears now with manufacturing gone and oil and commodities in decline the only ‘pillar’ of our economy remaining is real estate + services associated with it + some other services possible due to that.
And nothing else. There goes the myth of our ‘knowledge’ economy. No jobs for the kids with open trades and idiots at the offices.
“Either way, all his predictions on this blog read like a what-NOT-to-do book (i.e. deflation, barrick, gold, Canadian dollar, u.s. dollar, Vancouver real estate prices, Toronto real estate prices, etc.)”
Toronto/Vancouver RE prices haven’t moved forward since 2013 and are now declining. The Canadian dollar has an incredible runway of appreciation ahead of it as Canadians stop borrowing and start saving in response to falling RE prices. Barrick has done incredibly well this year and will likely continue to do so in the future along with the rest of the sector on account of deflation.
BTW, my “bank account” (brokerage account actually) has done extremely well this year. Best year ever. So, as usual, you don’t know what you’re talking about. Everyone knows you’re nothing more than a two-bit troll, and a pretty pathetic one at that. Tsk, tsk, what a sad pathetic excuse for a human being you are.
An overzealous government applying too much break… Now THAT was the Black Swan on the horizon we should have seen coming.
I think this one will reverberate throughout the economy having a far greater effect than even they at the controls anticipated as it knocks out that foundational segment of the market from under it.
Good one Garth. Well explained.
The banks will figure it out to their benefit soon enough, but not as saviour of that foundational market
Unfortunately this is not localized to those parts of the market at issue. This is a shotgun approach that WILL be coming to a bank near you, where ever in Canada you are.
<blockquote#57 Mouldy Millenial on 10.05.16 at 8:26 pm
Big Deal. Moisters will just get their parents to co-sign their mortgages, just like they get their parents to help with the downpayment. Nothing changes.
Another consequence that only exacerbates the matter dragging they who otherwise might be unscathed into the deluge.
<blockquote#57 Mouldy Millenial on 10.05.16 at 8:26 pm
Big Deal. Moisters will just get their parents to co-sign their mortgages, just like they get their parents to help with the downpayment. Nothing changes.
Another consequence that only exacerbates the matter dragging they who otherwise might be unscathed into the deluge.
#60 oncebittwiceshy on 10.05.16 at 8:28 pm
Well put.
BINGO
Sheane Wallace #96 Toronto is such an overvalued gasbag of a city it’s not even funny. The traffic alone is beyond stupid. Spent 2 hours in traffic with the working slaves of Toronto . People must not value their time. Btw I live in toronto but try to avoid the working slaves at all costs ie yorkdale on weekends and rush hour.
#28 bdy sktn
“No big drops in van or gta coming sorry.”
——————————————————————-
Naive.
Naive | Define Naive at Dictionary.com
http://www.dictionary.com/browse/naive
1. Having or showing unaffected simplicity of nature or absence of artificiality; unsophisticated; ingenuous.
2. Having or showing a lack of experience, judgment, or information; credulous: She’s so naive she believes everything she reads. He has a very naive attitude toward politics.
“Under popular culture’s obsession with a naive inclusion, everything is O.K.”
– Stanley Crouch
Lala#70 it’s called a housing bubble but I think Toronto and gta are beyond a bubble. Price should correct 50% and still be overvalued. CMHC should be taken away and only the banks should take the risk. Then let’s see how strong of a market we have. Everyone wants a house but not everyone can afford it.
#72 Section8
World Financial Group
——————————————————————–
http://financialuproar.com/2011/07/20/my-experience-with-world-financial-group/
Where is T2 infrastructure? #96 Sheane Wallace
Be careful what you wish for
Montreal has roadworks absolutely everywhere, mainly to repair crumbling infrastructures and bridges that had been neglected for years. The city is a sea of orange cones, a situation I believe is unique in the world. As a result the city is more often than not a paralysed mess, from one day to the next you never know if the path you take for your commute is going to be blocked, it’s totally crazy. Of course public transit is deficient, there isn’t even quick transit to the airport .
I surely hope GTA is going to take notice of what is going on here and not repeat the same mistakes.
I don’t want to be a frog in a warming pot of water.
2 out of 3 is a good day for me so I am going with a 70% chance the US Fed raises interest rates a ¼ point in December ( I don’t like liver or crows). Bank of Canada will not follow (100%). Yellen will watch to see what the fallout is for a June 2017 decision (I am presuming Hillary wins because Trump is proving himself to be a self-centred buffoon). So with Hillary in charge, I expect the Americans to keep their present course – easy money and cronyism. Swim with the tide or drown.
http://www.ftportfolios.com/Commentary/EconomicResearch/2016/10/5/the-ism-non-manufacturing-index-rose-to-57.1-in-september
I expect North American bond prices will hold because a ¼ point is tiny and there is a capital flow to safety. I say equity prices fall slightly given the threat of deflation and rising interest rates. I would rather have preferred shares over bonds but the happy hunting days for preferred shares are gone for now. I see risk and reward getting into balance but it was a fun ride. I only hold a small amount of a bond ETF’s so, live by the sword, die by the sword.
The focus on status is amazing. At work I put on a fake persona.
But really I just work so I can enjoy myself in the private life. Grab a beer catch up with friends… buy more parts for my car. Don’t really care my car is impractical. It’s about the enjoyment factor
I could never enjoy myself knowing I owed a lender more money than I could have.
‘The bank can alter the terms any time cut the limit in half and interest rate can change too
Outstanding balances on lines of credit soared to $266-billion in March, 2015, from $100-billion in 2005 and just $35-billion in 2000, according to Statistics Canada.
He said many people don’t understand that if they’re paying only interest on their lines of credit – with no principal repayments – their payments would climb by 50 per cent if interest rates move from just 2 per cent to 3 per cent. (globe and mail )
=======
usa
HELOCs 10-year grace periods ended 2015
Home-Equity Lines of Credit See Jump in Delinquencies
Banks face another post-crisis hangover as bills come due on lines of credit extended during property boom
http://www.wsj.com/articles/home-equity-lines-of-credit-see-jump-in-delinquencies-1433777432
==================
Economists predict new rules will affect Toronto condo market, push more people to rent
By Trevor Dunn, CBC News Posted: Oct 05, 2016 8:34 PM ET
push and pull … if neither becomes affordable since high rents /low rate drove buyers.
liberal policy – rent subsidy directly to low income renters rather than landlords …wouldn’t this just help to keep rents from dropping?
El Paso Texas solution
http://www.hacep.org/
Devils Advocate 117-124. You are right…foundations have been pulled. Ugly times ahead. Just found out my date for lot severing not until dec 5….not good. I had turned down what seemed like lowball builder offers the other week. I have adjusted my expectations and am seeing lawyer today…builder is thrilled cuz he thinks he is getting a great deal. Only time will tell which one of us is the greater fool.
Great analysis Garth….
Onf51
@#117, 118,119,120,121,122,123,124
Devil’s Advertising
Markets slow?
Phone stopped ringing?
Have a little more time on your hands?
No sage advice on why its always a good time to buy?
Has your daughter completed her house purchase?
Did you pocket a juicy commission?
Will you help her with the negative mortgage?
# 41 SimplyPut7
“As a former bank employee, I have been trying to tell anyone who will listen to me that banks are not your friends.”
People forget, or don’t want to hear, that banks are businesses selling a product. Buyer beware. How often I have heard: I can buy a house worth “this much” because the bank told me I could. But when it goes badly it will be the bank’s fault.
#97 BS
With the new CMHC rules in place, I assume the impact will also be on risk adjusted capital requirements for mortgages, increasing cost of capital and justify higher pricing on higher risk mortgages?
Didn’t think the government would actually do something to curb RE in this country (mind you government created this mess in the first place, the least they can do is to try to fix it). Either they are a responsible bunch or risk has just become too obvious for too many. Either way the Feds made the right call, but it’s VERY late in the game, most likely much too late to avoid major pain…
The announced measures should have some impact on speculation (both by locals and foreigners) but most of all it will affect first time buyers. Fewer buyers and less money will enter the RE pipeline. Eventually this will trickle down to the whole market, second and third time buyers will receive less capital as well as those who use their house as an ATM.
What will be interesting is to follows which markets will be affected most, the most bubbly ones or those that are already slowing down? The government might find out that inflating a bubble is easy but deflating it in an orderly fashion («soft landing») is very difficult if not impossible.
Thank you Garth for all you do. We’re pulling the ripcord and listing next week. We’re in a desirable pocket near Hamilton. Brutal commute. Whoops. Anyways realtor says market is being weird- some people going crazy over and bully offers and other listings crickets. Not sure if it’s Thanksgiving, nosebleed prices in crummy spots, or the herd getting a whiff of concern and pausing. We’ll keep the dogs posted. Wish us luck- door may hit us as we leave.
http://www.cnbc.com/2016/10/05/pound-sterling-falls-under-july-post-brexit-referendum-low.html
-Article states the pound has fallen to 1980’s low as if it’s a negative. Gotta keep the idea that Brexit = bad going, of course. Hey haven’t these moron “experts” and CB’s been telling us a lower currency is good for exports???? Nice try.
http://www.cnbc.com/2016/10/06/deutsche-bank-announces-additions-to-restructing-plan-says-extra-1000-jobs-will-go-in-germany.html
-Deutsche Bank lays off 1000. Another victory for globalism folks. I suspect it’s stock should rally like crazy after this news (before it then collapses).
MF
#69 Smoking Man on 10.05.16 at 9:07 pm
You know I’m getting a buzz when I posted this on the wrong day. Let’s try again
The bet of the decade.
Nov 8….MSM will tell you it’s to close to call between Trump and Hillary be alot of cheating in the polls favoring Hillary won’t do Jack.
Bernie supporters not voting or going with green party.
Now the big hedge funds, banks, establishment enterprise will belive the Bull Shit that MSM sells and there schooled economist putting a spring into you bet.
Look at the size of Trump Rallys vs Hillary.
Tweets.
Understand culture. Who in their right mind at the office water cooler will openly say they support a
Homophobe
Masyginist
Phob Phob Phob. Deplorable.
Now in the little election booth with the curtains drawn. It’s going to be the wild west of Trump
LONG USDMEX
You don’t need to bet the farm for this one for a hit out of the ball park my dogs.
Don’t go crazy. The machine always finds a away but I’m thinking they don’t know what to do.
Bet Accordingly.
……………………………………………………………………
You are wrong on Trump he will not get elected, just back in from meetings with corporate boys in LA and Trump is not what they want at all. He is in the eyes of well educated, very wealthy Americans to put it bluntly “The biggest idiot they have ever seen and an embarrassment.” Don’t get me wrong now they do not like Hillery either but they know that the Trump path leads to a highly volatile world and therefore a highly volatile market where you will not be able to predict anything other than your own imminent demise. They will vote with their wallets. One guy told me better to stay with the Devil you know rather than Dumpity Trump.
I wonder what the impact will be to landlords? More demand and tenants as it will presumably take first time buyers longer to raise capital to enter the market? That will obviously only last as long as the latency period for house prices to come down and balance out higher interest rates. Thoughts?
Ace Goodheart #210 oct 5
Geothermal retrofit in urban setting? Isn’t that prohibitively expensive 50k plus? I knew people who did it rurally, larger property so didn’t have to go down as deep or worry about disturbing preexisting services. I have a 45 year old boiler system, still going strong and surprisingly efficient.
onf51
I predict these changes will have minimal to zero effect. Not one person I know here in the GTA is talking about them. Interest rates should have risen. That would have done the trick + give the feeling that the economy is improving + give people more interest income to spend into the economy. How hard is that to understand for these “experts”? Fail like usual.
#38 Love My KIA on 10.05.16 at 7:27 pm
“How can you not love T2 after this?”
-not sure if srs?
What we should forget that he just gave away billions of our dollars to worthless causes and he is planning on increasing our taxes? The rest of the world is waking up to the failure of globalism and this guy is foolishly running towards it.
MF
#140 james on 10.06.16 at 9:40 am
” just back in from meetings with corporate boys in LA”
” Don’t get me wrong now they do not like Hillery either ”
If the corporate folks, who have been the only real beneficiaries of globalism, do not like Hillary either then what do you think the average Joe on the street thinks?
MF
#101 BS on 10.06.16 at 12:19 am
#28 bdy sktn on 10.05.16 at 6:58 pm
……………………………
No big drops in van or gta coming sorry.
…
“That was hilarious. I hope that was sarcasm.”
————————————
recent sale (last week) here was 2m for a 25’lot. about 30% higher than spring 2016 levels. WAY WAY uppa.
nothing but junk available, every decent place still selling fast. last sale (few days ago) was on 1st ave raceway/truck route still went 150k over ask.
this part of east van is non-ham and still has a mile long lineup of buyers with nothing for sale.
——————————–
ps – oil chugging along nicely. over 50 bux now. not quite up a million like the smoker, but it sure feels nice.
i have more gains in oil in 6 months than 6 years of a balanced port.
buy low.
recent sale (last week) here was 2m for a 25’lot. about 30% higher than spring 2016 levels. WAY WAY uppa.
————————
forgot to add that i walked by this place yesterday and was checking out the exterior.
it was painted prior to listing. a closer look at the side nearest the neighbouring house (just a couple feet) showed that that side never got painted!!!
so – 2M today gets a tiny lot, tiny house with only 3 sides painted.
…
1.5 years ago a few houses up the same street, a huge place sold for 2m.
it was a corner lot. it was 66′ vs recent one at 25′.
2015 – 30k/foot of lot
today- 80k/foot of lot
supply and demand.
First National, Genworth plunge as investors eye ‘blood in the water’ amid new mortgage rules
http://www.bnn.ca/first-national-genworth-plunge-as-investors-eye-blood-in-the-water-amid-new-mortgage-rules-1.580564
Ottawa ‘disingenuous’ to tout affordability in mortgage overhaul: Joe Oliver
http://www.bnn.ca/ottawa-disingenuous-to-tout-affordability-in-mortgage-overhaul-joe-oliver-1.580138?hootPostID=61ba817e8ea55a7a5082ba8a0dfc14cb
“I think they perhaps have marketed it in a somewhat disingenuous way by saying this is all about affordability and people who can’t now get mortgages that they could have before wonder how it’s become more affordable for them,” he said. “The real issue is financial stability, and of course we want to protect financial stability or we’re going to see a major crack in the market and a ripple effect to other areas of the economy.”
Oliver said the new rules could in fact erode the ability for younger, first-time buyers to get into the housing market.
“The end result will not necessarily be immediate increase in affordability: quite to the contrary, it’s going to mean that a lot of millennials who want to get mortgages will either have to get smaller mortgages with the down payments they have, or not get in to the market at all,” he said.
#14 WalMark of Sadkatoon on 10.05.16 at 6:38 pm
Either way, all his predictions on this blog read like a what-NOT-to-do book
_____________
He is our very own George Costanza. Do the opposite:
https://www.youtube.com/watch?v=RerJWv5vwxc
Not sure what the BoC expects to gain by cutting besides destroying the CAD.
I guess that’s it. The race to the bottom.
Watch the export sector explode. NOT.
@#14 Walmark
“Either way, all his predictions on this blog read like a what-NOT-to-do book (i.e. deflation, barrick, gold, Canadian dollar, u.s. dollar, Vancouver real estate prices, Toronto real estate prices, etc.)”
That’s exactly why we’re working on listing our Inverse Mark 9000 ETF ASAP. Our algorithms and weightings are all based on Mark’s counter-intuitive predictions and deranged theories, yielding thus far simulated gains of 12% in my Excel spreadsheet based on the S&P/TSX composite index.
All I need is a lawyer to help register this thing. I found another $12 in my sofa cushion last evening, so we’re getting close. Maybe I should start a Kick-starter funding drive?
https://ca.finance.yahoo.com/news/first-time-home-buyers-turned-222342111.html
Real testate agents worrying about first time buyers being heartbroken by the new rules, I almost cried when I read it. so much for the renter’s dreams of a new home.
Apparently having SFH ‘worth’ 1.3 mil in Toronto on average income of 76 k (before tax) with ratio of price to income of 17 before taxes and 22 after taxes is ‘affordable’.
And remind me here: Why do we need mortgage insurance at all if houses are affordable and banks prudent? What can go wrong?
Let’s disband immediately CMHC and transfer the risk to the lenders, put our money where our mouth is, Eh?
« You are wrong on Trump he will not get elected»
I agree and I hope so, I can’t stand that idiot, I’m not looking forward to the instability he would bring and can’t imagine having to put up with him in the media for four years.
Hillary is awful too, but the lesser of the two, especially if republicans keep control of congress, she should be easily replaceable by a decent republican candidate in four years.
#99 Sheane Wallace on 10.06.16 at 12:08 am
A friend of mine spent 50 k to replace windows, doors with energy efficient only to find significantly higher hydro bill just months after that.
__________________________________________
Brother in Law had similar, replaced decades old air-air heat pump in favour of propane heat, hydro bill stayed more or less the same and now has to pay for propane on top.
Similarly, we had the A/C blasting all summer – never before in 15 years living there has it run so long and so often – Hydro bill hardly moved.
Starting to wonder just exactly what those “smart meters” are programmed to do – guarantee the same income every month for Wynne no matter what anyone does?
New real estate measures getting press in foreign media.
http://www.scmp.com/news/world/united-states-canada/article/2024844/canada-announces-new-measures-cool-housing-market
Rick Fast
I sold my place in 2011 in Richmond, BC and was planning to buy back at %20 discount. 2016 and I still waiting to buy back , Only challenge with that now is that the local RE market needs %70 discount to get to my expectation of %20! I hear every day from almost everyone I talk to that this is impossible in given circumstances. My greed for %20 discount delivered the result – change in life style “I rent and rent I shell” hard lesson!
#138 AJ on 10.06.16 at 9:26 am
Thank you Garth for all you do. We’re pulling the ripcord and listing next week. We’re in a desirable pocket near Hamilton. Brutal commute. Whoops. Anyways realtor says market is being weird- some people going crazy over and bully offers and other listings crickets. Not sure if it’s Thanksgiving, nosebleed prices in crummy spots, or the herd getting a whiff of concern and pausing. We’ll keep the dogs posted. Wish us luck- door may hit us as we leave.
____________________________________________
Good luck, I know a guy who just did what you are about to do. Sold out of the GTA at 1.1 Million – that was a capital gain of almost 600K over 10 years of ownership. Now he’s out of the city and mortgage free in a nicer place all around.
http://www.scmp.com/news/world/united-states-canada/article/2005794/canada-tax-chiefs-knew-foreign-moneys-big-role
Don’t worry, they will come after OUR taxes.
@pBrasseur
“Hillary is awful too, but the lesser of the two, especially if republicans keep control of congress, she should be easily replaceable by a decent republican candidate in four years.”
You must not have been paying any attention to developments outside of US borders. We are now closer to the vaporization of millions of souls via nuclear exchange than ever before in the Cold War, thanks to the policies of Hillary Clinton and the Neo-Con warhawks she has surrounded herself with.
I think a little bit of market volatility (a healthy thing after years of Fed-inflated markets) and some inartful but harmless statements from Trump are FAVOURABLE to escalation of hostilities against a nuclear armed power, which is what the State Department and Pentagon hawks are now counting on with a Clinton victory.
I will happily sacrifice 20% of my portfolio to avoid nuclear confrontation with Russia.
I find it unfathomable, that anyone with even a dim awareness of how US conducts its foreign policy, could possibly desire anything but a Trump defeat of the Neo-Con apparatus.
lala on 10.05.16 at 9:08 pm said:
“This might turn from a breeze to tsunami. Last 3 years lala moved all the money overseas, lucky ones are the ones who have a back up country.”
I’m one of the lucky ones..
After the ‘adjustment’ in 2008, I started paying attention.
– Sold off business, commercial and lakeshore properties.
– Sitting in cash
– In the (3rd year of a 5 year) process of getting alternate Visa… just in case the SHTF.
Paraphrasing Hemmingway’s famous quote…
“How did you go bankrupt?” Two ways… Gradually, then suddenly….
“How did we lose our civil liberties?” Two ways… Gradually, then suddenly.
Government interventions are never good. The sooner we understand, the better off we’ll be.
When I got my HELoC I needed to signup for a new mortgage with the same term, same rate etc…. Would the new rules apply to people looking for a new or changed HELoC too?
Garth, please clarify what is the position of a Second Home buyer.
Would they be eligible for CMHC Insurance ?
If not would they have to come up with atleast 20 % down.
How does CRA ensure that the Capital Gains Tax on sale of a Second home is paid for?
I spelled out the criteria. — Garth
#146 bdwy sktrn on 10.06.16 at 10:29 am
Supply and demand LOL yeah right.
Take away the artificially held down interest rates and watch the thousands of speculators with 2 or 3 “investment” properties evaporate in a poof.
Supply and demand died pre 2008…..but it will return big time during the next inevitable downturn where it will destroy these bubbles since we are already at peak stimulus.
Supply and demand lol yeah right.
MF
Yes the market appears to be slowing a tad.
I have an established loyal client base. My phone never stops ringing.
This is the kind of market I do best in. One in which people need my help most. Experience.
It’s always a good time to make prudent purchases. There will be some good deals to be had relative to a couple months ago. But for those already “in” the market, unless they are planning an exit, it’s six of one, a half dozen of the other.
My daughter has not bought yet.
I plan on gifting the commission back to her when she does buy.
We have no reason to believe she will end up with a negative mortgage.
Any other questions?
In my circle, significant # of Boomer parents are seriously considering gifting majority of their wealth to the kids ASAP (ie 20-30 years ahead of average death).
We are not talking just a few thousand, rather significant 6-figure chunks of capital will be paid forward as a gift to beat what we all know is coming. Keep in mind, the early inheritance trend is above and beyond any capital already gifted out for RE down payments in cities like Van & TO over last few years.
It appears Boomers would rather see their offspring potentially piss the $$$ away than the gov’t.
http://www.macleans.ca/economy/realestateeconomy/hands-off-my-housing-bubble/
“”Hands off my housing bubble!
Canada’s housing bubble is the economy’s biggest risk—and its biggest driver. Now governments want to cool it down.””
Chris Sorensen
October 5, 2016
by macleans….it is a pretty balanced assessment imo, garth: while acknoweldging ‘house horny’ cdn, it also takes into account the lax tax/financial oversights that were implemented too little too late, too….the perfect storm.
Bank of Canada backs Ottawa’s bid to cool housing market
http://www.theglobeandmail.com/report-on-business/economy/bank-of-canada-backs-ottawas-bid-to-cool-housing-market/article32271246/
The Bank of Canada is endorsing the Trudeau government’s efforts to cool the country’s debt-fuelled housing market.
“Over time, the measures announced by the federal government … will help mitigate risks to the financial system posed by household imbalances,” senior deputy-governor Carolyn Wilkins said in remarks prepared for a speech Thursday in Trois-Rivières.
Even with the economy still struggling to gain traction, the central bank has set a high bar for cutting its key interest rate at its next scheduled rate-setting announcement Oct. 19.
“We are mindful that low interest rates can lead to a buildup in financial vulnerabilities,” Ms. Wilkins pointed out.
She added that the bank is continuing to monitor high household-debt levels and the housing market “very closely.”
if you repeat a lie often enough …
‘The government will also close a tax loophole that allowed non-residents to sell their principal homes tax-free.’
http://www.chicagotribune.com/news/sns-wp-blm-canada-housing-38b49e62-8bd0-11e6-8cdc-4fbb1973b506-20161006-story.html
friends , their is no loophole
Tax expert Tim Cesnick provides advice worth reading on the new CRA rules.
http://www.theglobeandmail.com/globe-investor/personal-finance/taxes/how-new-tax-changes-will-impact-every-canadian-homeowner/article32271116/
#134 crowdedelevatorfartz on 10.06.16 at 8:26 am
@#117, 118,119,120,121,122,123,124
Devil’s Advertising
Markets slow?
Phone stopped ringing?
Have a little more time on your hands?
No sage advice on why its always a good time to buy?
Has your daughter completed her house purchase?
Did you pocket a juicy commission?
Will you help her with the negative mortgage?
—————————–
Hey, desperate times call for desperate measures.
Maybe if the whole “sell your daughter for a commission” thing doesn’t work out, he could try his luck with World Financial Group!
C-squared. Cottages and Condos, those are the only segments that will be impacted by the new regulations. SFH Toronto nothing but a buying op if you see a 10-15% dip. HIGHLY unlikely IMO.
this part of east van is non-ham and still has a mile long lineup of buyers with nothing for sale.
——————————–
ps – oil chugging along nicely. over 50 bux now. not quite up a million like the smoker, but it sure feels nice.
i have more gains in oil in 6 months than 6 years of a balanced port.
=================================
Well you are quite the comedian.
You sure you aren’t drinking a “balanced port”?
I look forward to more of your funnies as the market continues to tank.
Homes in Long Branch must be dropping and is that not where the Smoking Man lives. A beauty was just listed for $514,000 by the park all updated with three levels and even a parking garage.
every Canadian who sells a house signs a residency declaration in their lawyer’s office
every Canadian is supposed to file tax returns
within existing law their is ample provision to prosecute frauds, the sellers have names, passport #s, addresses etc..
there is no loophole
I wonder what the impact will be to landlords? More demand and tenants as it will presumably take first time buyers longer to raise capital to enter the market? That will obviously only last as long as the latency period for house prices to come down and balance out higher interest rates. Thoughts?
—————–
Traditionally, as sales slow, vacancies increase. Units that were on the market are pulled off and rented, units that were left empty because the appreciation was good enough return are rented, fewer final sellers need places to rent after they sell, and the economy softens so that fewer new households are formed and the unemployed leave urban centers.
ask yourself-
if their really was a ‘loophole’ that cost cra millions
do you think they’d be announcing and repeating it in all media ?
#171 Bond Junkie
You are a SFH junkie, you must own a SFH, guess what, the folks who buy a SFH are upgrading from a condo, with their purchasing power declining as prices decline, their offer for your SFH will decline too.
Don’t you understand, very few people have REAL money, it is all in their house.
What is highly unlikely is that you will still feel rich, it used to be “house rich cash poor”, how you will be “house not so rich and cash poor”.
Enjoy your last few months of feeling like you are wealthy, it certainly will not feel great when you realize you really don’t have much wealth at all.
@#164 Devil’s Advil
“any other questions”
*******************************************
Well.
Yes.
Since you asked…….
Boxers or briefs?
Hawaii or Palm Springs?
1st marriage or…?
Semi retired or working til you have a jammer?
BMW or Mercedes?
Since tougher standards will be coming into effect for CMHC qualifications shouldn’t the rates for the coverage be dropping?
Quantity of EFT’s set to explode. It should make it easier to make a balance portfolio in coming years.
http://www.marketwatch.com/story/fiduciary-rule-may-create-a-10-trillion-exchange-traded-behemoth-by-2020-2016-10-05?
#144 MF on 10.06.16 at 9:51 am
#140 james on 10.06.16 at 9:40 am
” just back in from meetings with corporate boys in LA”
” Don’t get me wrong now they do not like Hillery either ”
If the corporate folks, who have been the only real beneficiaries of globalism, do not like Hillary either then what do you think the average Joe on the street thinks?
MF
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It is too bad that the average Joe on the streets in the good old U S of A doesn’t vote with their brains. They vote based on bias, miss-truths, direct lies and a NIMBY attitude re immigrants. Trumps has captured the hearts of the ones who have lost their jobs to the workers in China and the nether regions where cheap labor is rampant. Even Donald Trump manufactured his goods offshore. So the direct lies that he spews telling these poor souls that “He is going to bring jobs back to America” is disgraceful. He knows that those heavy industry and factory jobs are gone forever. The average Joe on the streets that used to make a great wage in a union shop is hedging that this idiot will make it all better and bring those jobs back onshore. He tells the average Joe on the streets what they want to hear, fills them with hate towards immigrants and blames Asia and Mexico for taking their jobs. These people if told enough of this crap long enough will jump into a lake of fire if they would believe it will restore a 1960’s USA manufacturing power world domination again. So yes the average Joe on the streets will vote Trump. If for some instance he did get to be POTUS “NOTHING WOULD CHANGE IN THE AVERAGE JOES FAVOR, NOTHING!”
#163 MF on 10.06.16 at 12:17 pm
#146 bdwy sktrn on 10.06.16 at 10:29 am
Supply and demand LOL yeah right.
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yeah, like 10-20 young prof couples looking for every decent place that comes up around here.
if you want to live in a house in van you rent and get renovicted every few years or bite the bullet. living on the doorstep of DT van in a sfh on a quiet leafy street will never be cheap again. never.
demand. in 20 yrs here i’ve met locals who have come to live here from every province , every us state, every us major city, most every european country and city. Iraq? egypt? afghani? we got them all. dammed russians and poles everywhere (do NOT tell a Pole she sounds like russian accent!). the rental house next door has brits, ukranians and interior BC’ers.
not that anyone from asia is coming too.
ever had pho?
demand. HUGE demand. unstoppable.
Now let’s look at supply of sfh. It is eroding month by month and can never , ever go the other way in vancouver. Of the last 3000 sfh teardowns , how many were for a new SFH? maybe 15-20%? the rest duplex or condo. zero new backyards created. thousands lost.
pop will keep growing fast.
van will stay popular and expensive. period.
VREU – just for you !
http://www.cbc.ca/news/canada/british-columbia/victoria-fort-street-1.3793559
Victoria’s Fort Street is in the midst of a property boom, according to a commercial realtor.
The street has long been known for its many antique stores, but thanks to new condo developments and the presence of high-tech employment that’s changing, according to Anne Tanner with Cushman and Wakefield.
“VIATEC … bought their building right on Fort Street, Fort and Blanshard, and that really put Fort Street on the map for the tech sector,”
trump the genius?
DAVID CAY JOHNSTON: I covered Trump when he went through these difficulties back then, and—which began in 1990. There’s no evidence that Donald Trump is a billionaire, and these three pages provide very strong evidence that he’s not a billionaire or anything close to it. He’s a wealthy man. He had about $7 million of interest income, which suggests he owned corporate bonds worth somewhere between $100 and $150 million.
But the—there are a number of things he did here that he’s not telling people about. First of all, those losses represented real damage suffered by other people.
Secondly, the state of New Jersey Casino Control Commission, after two commissioners complained of official favoritism to Donald Trump by the New York State Attorney General’s Office, took his side against his bankers. And his bankers then had to give him huge discounts on his loans. Well, if you borrow money from a bank and pay back less than you owe, that’s income, and you have to pay taxes on it. Donald escaped that, I’m sure, and that’s what my column in The Daily Beast explains, by instead of paying the taxes, agreeing in the future not to take tax benefits out of other buildings that he owned, his casinos. He then took these buildings, put them into a company sold to the public in the market—the first time he had done this. The stock opened up at $35. It quickly went, over a couple of years, to 17 cents. It never made money. It lost $1.1 billion more. But Trump got $82 million of pay from that company.
So, throughout this system, what Donald Trump did was he mismanaged his properties, he overpaid, he got the banks—and therefore the investors in the banks—to suffer the losses. He then took his own given-away tax benefits to avoid tax, put them into the publicly traded company and stiffed the investors in that company. And this is how Donald Trump has done business his entire life.”
http://www.democracynow.org/2016/10/4/does_donald_trump_pay_taxes_records
If higher interest rates are not coming any time soon can the majority of house horny moisters just use short term variable rates?
You’re careful in avoiding how you actually feel about all this.. you’re not thinking of getting back into politics are you? As an owner I’m nervous and I agree low rates are the primary cause. But what’s our hapless government and/or central bank supposed to do? Frankly, I don’t see why the federal government should be on the hook for insuring increasingly risky, bloated mortgages. I’m not a T2 fan generally but heck yeah shift the risk to lenders! They should have stepped up and done something like this long ago rather than let the market be monkey hammered by desperate politicians at every level.
#182 bdwy sktrn on 10.06.16 at 4:25 pm
When you wake up from your skytrain ride don’t forget to post here LOL
lol, as below, sorry but you guys have no idea what ‘messed up’ truly is until you come out here to the sh*t show called Vancouver….we’ll truly see what happens in a yr or so.
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re: ”…look no further than the Kingdom of 416. Last month sales were up 20% year/year and prices inflated along with them. The average detached is now $1.3 million, and that buys a beater. Values continue to rise because supply is so limited and competition intense
agree
Toronto is messed up. I don’t know what home buyers are thinking. Or maybe they’re not…
#69 Smoking Man on 10.05.16 at 9:07 pm
You know I’m getting a buzz when I posted this on the wrong day. Let’s try again
The bet of the decade.
Nov 8….MSM will tell you it’s to close to call between Trump and Hillary be alot of cheating in the polls favoring Hillary won’t do Jack.
Bernie supporters not voting or going with green party.
Now the big hedge funds, banks, establishment enterprise will belive the Bull Shit that MSM sells and there schooled economist putting a spring into you bet.
Look at the size of Trump Rallys vs Hillary.
Tweets.
Understand culture. Who in their right mind at the office water cooler will openly say they support a
Homophobe
Masyginist
Phob Phob Phob. Deplorable.
Now in the little election booth with the curtains drawn. It’s going to be the wild west of Trump
LONG USDMEX
You don’t need to bet the farm for this one for a hit out of the ball park my dogs.
Don’t go crazy. The machine always finds a away but I’m thinking they don’t know what to do.
Bet Accordingly.
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disagree fully
just recently, as of today, 30 GOP leaders published a letter condemning Trump…on election day americans will come to their senses (well, most of them…)
http://www.latimes.com/nation/politics/trailguide/la-na-live-updates-trailguide-largest-group-ever-of-former-gop-1475767313-htmlstory.html
excerpt:
“Also on the list are former Iowa Rep. Jim Leach, former Wisconsin Rep. Tom Petri and former Virginia Rep. G. William Whitehurst, all from battleground states.
Three former California Republican lawmakers, Reps. Tom Campbell, Steve Kuykendall, and Pete McCloskey also signed.
“In nominating Donald Trump, the Republican Party has asked the people of the United States to entrust their future to a man who insults women, mocks the handicapped, urges that dissent be met with violence, seeks to impose religious tests for entry into the United States, and applies a de facto ethnicity test to judges,” they wrote.
“He offends our allies and praises dictators. His public statements are peppered with lies. He belittles our heroes and insults the parents of men who have died serving our country. Every day brings a fresh revelation that highlights the unacceptable danger in electing him to lead our nation.”
The group went on: “It is in that spirit that, as Donald Trump’s unfitness for public office has become ever more apparent, we urge our fellow Republicans not to vote for this man whose disgraceful candidacy is indefensible.”
bdwy sktrn until you post some actual house addresses I assume you make all these claims up … you probably don’t even take skytrain and just live near (or under) the skytrain tracks!
#146 bdwy sktrn on 10.06.16 at 10:29 am
recent sale (last week) here was 2m for a 25’lot. about 30% higher than spring 2016 levels. WAY WAY uppa.
Did you just take the proceeds and put it under your mattress? Properly invested you would be laughing now having doubled your money.
#156 JD on 10.06.16 at 11:08 am
Rick Fast
I sold my place in 2011 in Richmond, BC and was planning to buy back at %20 discount. 2016 and I still waiting to buy back , Only challenge with that now is that the local RE market needs %70 discount to get to my expectation of %20! I hear every day from almost everyone I talk to that this is impossible in given circumstances. My greed for %20 discount delivered the result – change in life style “I rent and rent I shell” hard lesson!
One thing missing from the list are illegal rentals. There are so many illegal, unzoned, unsafe, and untaxed “suites” around. Even landlords pretending a place is their principle residence to help hide rental income.
Quebec has this right – landlords give tenants a receipt for tax deductions. That money is in the open, claimed, recorded, and taxed.
MSM falling all over themselves reporting that in Sept 2016 jobs went up by 67,000 and this “blows past forecasts” (of course those forecasts are from Economists, so consider the source; i.e., “if I had a can opener”). Here is the breakdown:
Employees: 17,000
Self-Employed: 50,100
That’s a lot of entrepreneurs and/or contractors [50,100] having been freshly minted in 1 month.
To look at the numbers another way:
Full-Time: 23,000
Part-Time: 44,100
My take: 44,100 doing part time contract work for their former employer, 6,000 new entrepreneurs/contractors (about right if you look at historical numbers) and the rest actually got a full-time job.
Definitely blowing past forecasts.
Well, better than negative job creation. Still, nothing to get all excited about like the MSM would have you believe.
BTW, Public Sector job creation shrunk by 800 jobs. So much for the T2 and Rachel effect.
-bsant54
Would you like me to post a whack of MLS property listings showing price reductions like I did for buddy yesterday in Coquitlam?
Ah, what the heck, I feel like typing – all from early Sept and Pre-Morneau Frankenmeasures (Spot the Trend):
$1,200,000 Sep 2 (Aug 26 reduction $124,000). 6959 Joffre Avenue, Burnaby, Suncrest. 4 Bed, 3 Bath, 39 days.
$1,298,000 Sep 2 (Aug 20 $100,000 reduction). 2147 Sperling Avenue, Burnaby, Parkcrest. 4 Bed, 2 Bath, 36 days.
$1,380,000 Sep 2 (Augn 20 $100,000 reduction). 1350 Springer Avenue, Burnaby, Parkcrest. 7 Bed, 2 Bath, 47 days.
$1,350,000 Sep 2 (Aug 28 $200,000 reduction). 7622 – 17th Avenue, Burnaby, Edmonds. 5 Bed, 3 Bath, 47 days.
$1,488,800 Sep 8 (Sep 6 reduction $200,000). 6707 Burford Street, Burnaby, Upper Deer Lake. 5 Bed, ? Bath, 31 days.
$1,588,000 Sep 2 (Aug 22 reduction $100,000). 5136 Portland Street, Burnaby, South Slope. 4 Bed, 4 Bath, 31 days.
$1,698,000 Sep 8 (Sep 7 reduction $100,000). 6606 Parkdale Drive, Burnaby, Parkcrest. 8 Bed, 4 Bath, 44 days.
$1,698,000 Sep 2 (Sep 2 reduction $200,000). 6080 Marine Drive, Burnaby, Big Bend. 9 Bed, 8 Bath, 53 days.
$1,788,000 Sep 8 (Sep 7 reduction $100,888). 7401 Kraft Crescent, Burnaby, Government Road. 5 Bed, 3 Bath, 64 days.
$1,850,000 Sep 8 (Sep 7 reduction $138,888). 7625 Mcgregor Avenue, Burnaby, South Slope. 6 Bed, 5 Bath, 70 days.
$1,899,000 Sep 2 (Aug 17 reduction $101,000). 5429 Chaffey Avenue, Burnaby, Central Park. 5 Bed, 2 Bath, 47 days.
$1,999,000 (Sep 7 reduction $189,000). 4564 Venables Street, Burnaby, Brentwood Park. 4 Bed, 5 Bath, 33 days.
Yup, Burnaby RE just a burnin’ up.
bsant54
Considering your ‘hood is just blazing, I would go to Victoria too if I were you.
bsant54