The crash

“Here’s a question for you,” says young Caitlin asking, of course, on behalf of a friend. “If a millennial takes out a mortgage with 20% down thanks to the bank of mom and dad, and then 5 years later at renewal the studio apartment has dropped in value, does the mortgage get shoved over by the bank to the ‘insured category’ and become the taxpayer’s problem?”

Welcome to B-20 week here on GreaterFool, the only site in existence which can make OSFI seem vaguely sexy or stir loins over loan-to-value ratios. For days now we’ve stressed over stress testing, listened to the indebted deplorables moan & deny while enduring the cackling of the housing-crash morons who enjoy drowning kittens.

Without a doubt, we’re on the cusp of something big. The mainstream media, unlike this obsessed, pathetic blog, is so far just reporting the obvious: the bubble’s dead. Real estate now equals risk. For example, for the first time in a year, the price of a detached GTA house has fallen below a million, down from $1.205 million four months ago – a 20% decline in 120 days.

At this pace, within about a week, the average detached will be worth less in absolute dollar terms than it was a year ago. When you factor in the cost of buying (land transfer tax being the main item) and the expense of selling (commission), the annual loss on a GTA house is already 6%. Not tax-deductible, either. Already a lot of people are underwater, with homes worth less than the mortgages placed upon them. In the first seven months of this year, over 60,000 properties changed hands in the country’s biggest market, and anybody purchasing with less than 20% down has just learned about Mr. Market. He has a wicked sense of humour. Makes you buy stuff at the worst moment, when it’s extreme.

Combined with the mortgage rules about to be enacted, requiring everyone to qualify for loans at the current rate + 2%, plus dictating the banks adhere to strict LTV guidelines for new borrowings and renewals, there are big consequences.

Appraisals are routinely coming in for amounts less than folks paid for houses just weeks ago. That means many buyers discover the financing they expected won’t be offered. They must find the cash elsewhere or try to exit their deal. (Good luck with that.) Lenders have lost their stomach for risk as the market descends, and know they’ll soon be required by the regulator to bring all loans into line.

As bank financing withers, more people are being forced into the clutch of smaller, unregulated lenders in order to close deals, shouldering rates in the 8% range. Meanwhile it’s estimated 700 to a thousand property deals made in the last 60 days in the region won’t close. Wiping those numbers off the realtor stats and adding them back as new listings will make an already-ugly scorecard look even worse. In short, there are no reliable numbers right now to track the deterioration of this market.

But let’s get back to Caitlin.

What about renewals if market trends continue? If the resale value of a condo purchased for $600,000 with 20% and a $480,000 mortgage were to decline to $450,000, what then?

The maximum LTV on an uninsured home loan is 80%, which means Caitlin’s unit would qualify for financing of $360,000. In order to renew at that level and avoid paying the fat CMHC insurance premium, she’d have to find $120,000 somewhere and hand it over to the bank in order to reduce the principal outstanding. Now the poor lass has poured $240,000 cash (plus several years of condo fees and mortgage payments) into a property with a value of $450,000, on which she still owes $360,000. If she sold and netted $427,000 after commission, the loss would amount to over 140% of her down payment. Oops.

Poor Caitlin. And during every year of ownership, she paid more each month than did that twerp Ted, next door, who rents, reads this blog, and now has enough in his ETF-based portfolio to buy a lifetime supply of plaid shirts, bicycle tires and Axe.

When will the market bottom? Could be the spring. Could be 2019. You won’t know how bad until it’s over. Yes, like Trump.

170 comments ↓

#1 Mike on 08.25.17 at 5:14 pm

.
When is OSFI thing kicking in? Come’on OSFI, what taking so long.
They are already a decade late.

#2 marty mcfly on 08.25.17 at 5:15 pm

Really but the star says house prices soars in July lol gotta sell some papers somehow https://www.thestar.com/business/real_estate/2017/08/24/new-home-sales-in-gta-plunge-prices-soar-in-july.html

#3 crowdedelevatorfartz on 08.25.17 at 5:16 pm

When the last person that qualifies for a mortgage stops buying…….
Please turn out the lights.

#4 Randy on 08.25.17 at 5:18 pm

Forget Real Estate Garth, the Government is telling us to get ready for the Pandemic. We’re all gonna die…haha
http://globalnews.ca/news/3652652/canada-pandemic-public-health-agency-canada-funeral-home/

#5 jess on 08.25.17 at 5:41 pm

Canada/UK swoop on £30m carousel tax fraud

The Canadian tax authorities have revealed they are collaborating with the UK on an ongoing international investigation into an alleged so-called ‘carousel’ tax fraud scheme which put over $50m (£30m) of tax at risk
…”The Canadian tax authorities say the fraud involves an organised scheme where a business buys and sells goods or services, and charges the GST/HST from one company to another. The GST/HST input tax credit for taxes charged are claimed from the CRA for a refund; however the businesses throughout the chain that sell the goods or services and allegedly charge and collect the tax never remit the GST/HST funds to the government. The process can repeat many times resulting in the goods moving around in the same fashion as a ‘carousel’.
This type of fraud is unusual in Canada, although there have been some significant instances in the UK. The CRA’s statement suggests close collaboration between the two countries, referring to ‘using intelligence gathered through a variety of tools at its disposal, as well as through information sharing and collaboration with domestic and international partners.’
HMRC has confirmed that six addresses in the West Midlands and South East have been searched as part of the investigation led by the CRA.

Forty officers from HMRC searched the addresses in London, Redditch, Birmingham, Stratford Upon Avon and Kenley areas yesterday (13 June) with simultaneous searches in Ontario, Canada. Documents, computers and mobile phones were seized as part of the operation.
https://www.cchdaily.co.uk/canadauk-swoop-ps30m-carousel-tax-fraud

=======

https://www.cchdaily.co.uk/overseas-businesses-face-ebay-vat-charge-changes

#6 El presidente trump on 08.25.17 at 5:42 pm

I’ve got 7 1/2 more years of pure gold awesomeness dude.

#7 MortgageMark on 08.25.17 at 5:43 pm

I would agree with most things, but the renewal thingy, just can’t see it happening. But then again, this is Canada where we like to say ‘sorry’. Sorry, your mortgage is up for renewal, markets down so you will have to dump down another hundy thousand :-( #Happy150

#8 Ace Goodheart on 08.25.17 at 5:46 pm

Yes Caitlin everything will be fine. People on Facebook have been saying that if you have debt problems and you smile more and help animals all will work out.

There is a trendy coffee shop in the area anyway.

People have really cool dogs.

Someone just went to Kenya. Can you imagine?

And after all It’s trending.

All will be fine. When in doubt just make sure you work really hard. You got an education and a job so nothing can hurt you.

And your taste in music is amazing.

#9 Jimmy on 08.25.17 at 5:51 pm

I like Axe products.

I also liked “where, where, where would you be without Brut 33”

#10 Debtslavecreator on 08.25.17 at 5:52 pm

Another option if the mortgage is in good standing but ltv out of line is to increase the payment and possibly the rate offered to accelerate the mortgage pay down and compensate for risk
Either way it is not pretty for the large number of people who bought or refi ‘d in the last 4-5 years
For many a life ruined but due to their reckless choices
I have and continue to tell my applicants as I have for the last 3-4 years not to increase leverage on the home but the vast majority don’t listen Garth
I am not a saint but work on a non commission basis and there are no sales points system like at most of the big 6
It is hard to understand how irrational humans can be
Good luck to all

#11 nubbers on 08.25.17 at 5:53 pm

I am probably going to get nailed to a cross by the Grammar Nazis here, but I would interpret Caitlin’s “friend”‘s question as “Is an underwater mortgage that you can’t afford to renew covered by CMHC ‘insurance'”?

I don’t know for sure, but from previous experience elsewhere, I would guess that the insurance protects the lender, not the buyer (even though it is paid by the buyer). Caitlin’s ‘friend’ would still be liable, presumably?

#12 Canadian Dollar Rising to 95 cents on 08.25.17 at 5:55 pm

Real estate is RISING in USD$ terms.

The Loonie is at 80.4 cents today.

Real estate did not decline once you exchange it into USD$ terms.

According to Mark’s predictions, we will see a 95-cent Loonie by October once Poloz hikes rates and Trump shuts down his government with his Twitter rant.

#13 Hans on 08.25.17 at 5:57 pm

Hold on a sec…..up to this point, I haven’t heard of banks asking for an appraisal upon renewal – if you stick with your lender. Has that changed as well or is it a part of the B-20 changes? If not, then methinks you might be blowing a little smoke (wacky tobacco maybe?) into the blog. I’ve renewed a number of mortgages over the last 15 years and not once have I been asked for an appraisal, but I’m just a lowly blog poster so I may be wrong.

The past 15 years are irrelevant. New rules coming. — Garth

#14 LH on 08.25.17 at 5:59 pm

It’s okay, just shack up with Ted

#15 Peter on 08.25.17 at 6:02 pm

So how does Tess Kalinowski of the Star get away with stating “House prices rose 45% over last year and condos were up 40%”…who’s the fake?

Those are new units, not resales. But who cares? Sales down 85%. — Garth

#16 Paul on 08.25.17 at 6:02 pm

Lots of deals not closing, re-list 10 to 20 % lower and still no selling!

#17 Smoking Man on 08.25.17 at 6:02 pm

Bill Morneau‏ @Bill_Morneau Aug 24
Tweets this out.

Funny? We take middle class fairness seriously. There’s lots of good reasons to start a business, avoiding personal tax shouldn’t be one.
…………………………….

351 comments so far, all bitch slapping this idiot.

#18 young & foolish on 08.25.17 at 6:03 pm

Calm down Blog Dogs … not the end of the world. Some late buyers will get spanked. Investors in every market get humiliated by Mr. Market everyday.

#19 Sam the Sham on 08.25.17 at 6:05 pm

Well it looks like the German Bundesbank has just completed the transfer of gold worth 24 Billion Euros from France and the U.S. back to the safety of Germany. I wonder when Canada will repatriate its gold. Oh wait, I almost forgot, Canada doesn’t have any gold!! That’s right folks, the Canadian dollar is backed by nothing. And everyone is worried about mortgage rates and the OSFI. LOL!!

No major currencies are backed by rocks. — Garth

#20 Andrewski on 08.25.17 at 6:05 pm

Meanwhile, Texas awaits a ‘uge storm & gas prices will jump, which takes our minds off of what’s happening with the upcoming storm in real estate… not.

#21 paracho on 08.25.17 at 6:10 pm

These policies came a bit too late. if these policies were in place say 5 years ago, many would avoid a lot of stress and heartache now ..and prices would be tames .
We have interesting times ahead of us .

#22 Ian on 08.25.17 at 6:12 pm

Talked to all my property bull friends this week. Ian’s ‘anecdotal bull / bear sentiment close-circle-of-friends index’ (widely published in notable journals such as the Financial Times and The Economist) says…my bulls do not get it yet. At all. This decline since April is not registering with them at all.

#23 RudyGQ on 08.25.17 at 6:27 pm

For those expecting a ‘disorderly’ unwinding of real estate in Canada as per the U.S, that is a highly unlikely event. An apples to orange comparison. A slow deterioration is more in order as:
1. Canadians still have an unhealthy relationship/obsession with real estate in a manner that dwarfs the neighbours to the south……must be related to that inferior complex condition
2. The sentiment has not change enough for the masses to be turned off to housing reducing the number of buyers in the market (and as a result reduce prices)
3. There is still a large market of buyers waiting for prices to fall to ‘get in’ given the anecdotal conversations that transpire on commuter trains, city buses, cabs, restaurants, most work places, bedrooms and on this blog
4. Canadians have shown how creative and resilient they be (almost American like) in their determination to own property. The rush to shadow lenders to make up for their lack of prime loan qualifying with regulated lenders has caused the banks to become ‘uncomfortable’ enough to lobby governments into almost instant action. When was the last time you complained to your MP resulting in laws changing within weeks nationwide?

#24 maka on 08.25.17 at 6:30 pm

OMG….!!!!!!

“Happy Housing Crash!!” will have a field day here. :)

#25 maka on 08.25.17 at 6:38 pm

Interesting video by Ray Dalio. How credit cycles and economy work. When credit bubbles burst there is no place to hide.

https://www.youtube.com/watch?v=PHe0bXAIuk0

#26 Gasbag Boomer on 08.25.17 at 6:39 pm

Brut? I’m still learning Hai Karate self defence instruction…

#27 oopswediditagain on 08.25.17 at 6:44 pm

Hi Garth, just to clarify your example with Caitlin before the “bulls” jump in. After 5 yrs. of mortgage payments she would have likely paid down her original mortgage to $407,000.

As you stated she could pay the CMHC fee if she (mom/dad) couldn’t come up with the extra dollars for a conventional mortgage but she would still have to qualify.

The mortgage of $407,000 or so that she was (renewing) would have to be re-qualified within the guidelines of OSFI.

Now, seeing that she had to borrow from the bank of mom/dad, ostensibly to get around the previous OSFI legislation, she would not be qualifying for either mortgage and will be selling.

Unfortunately, this example will be played out thousands of times over the next little while.

Ouch!!!

#28 Stan Broock on 08.25.17 at 6:44 pm

No major currencies are backed by rocks. — Garth
———————–
This is factually incorrect.

Gold is monetary reserve according to everyone including central bankers.

https://en.wikipedia.org/wiki/Gold_reserve

“A gold reserve is the gold held by a national central bank, intended as a store of value and as a guarantee to redeem promises to pay depositors, note holders (e.g. paper money), or trading peers, or to secure a currency.”

—————————-

Interesting view on gold GT, for 99 % of the human history money where backed by gold and silver, they where actual gold and silver and now we call that rock?

Wondering why the FEDS in US have over 800 tons of that gold.

Let’s be a little less politically correct please and let’s not overdo it (some might look funny in the years to come), gold had, has and always will have it’s place as a store of value as does land.

“Although gold and silver are not by nature money, money is by nature gold and silver….” – Karl Marx

Let’s pay some respect to the great thinkers of the past, please.

No major country us on the gold standard. It backs no major currency. — Garth

#29 Dolce Vita on 08.25.17 at 6:44 pm

#23 RudyGQ

There never has been a slow deterioration, unless you call double digit drops that start with a 4, over 4 years, slow:

https://vreaa.wordpress.com/2012/05/06/15753/

#30 Danny on 08.25.17 at 6:47 pm

As the American CEOs, Committees made up by Trump previously and quietly caught by nearby microphones Republican Members of Congress abandon the Real not Actor Trump…so too will those financial partner’s that previously helped people like Caitlin…..run.
When reality hits and money gets tight…your personal financial backers run for the hills…your are on your own. ….there will be few to turn to…..except the Real Estate Cartel…they will be more than happy to charge you a 5% commission to dump your poorly thought out housing investment……You were poorer than you thought. ..I bet your real estate agent did not tell you that.

Investing in a place to live and own is really no different than investing money in any fund. If you bought at the high point earlier this year ….the Bank of Montreal finally today said on CBC….(much later than Garth ) that the housing bubble has burst and based on the cliff falling housing indicators it is unclear today how to forecast a recovery…they said……these real estate statistics and housing prices are unprecedented and even the Banks won’t speak too openly about any soon recovery…….just opening that can of worms.
Wow if a major Bank is now repeating Garth’s old reoccurring message…then the future has arrived.
Wait until Santa Claus arrives.

#31 prairie person on 08.25.17 at 6:50 pm

a sign of the times? A neighbour put his house up for sale for 899. Didn’t sell. Dropped the price to 845. Didn’t sell. Took it off the mkt. Now, it is back at 920. This is in Victoria. Yet, there are more sold signs in the neighbourhood. Some people have bought houses that need renos. Ain’t getting done. No money left over for fixing soffits, decks, etc. Their “investment” is showing serious wear and tear. I think, perhaps, this is where the stress is going to show. People might be able to manage the monthly payments but instead of eating their groceries, their groceries are eating them. Young couples combine the following explosive materials: pay too much for a house, have a baby, wife quits work. And it all starts to come apart. most of it is indoors, out of sight, but in the case of money for repairs, the lack of money is obvious.

#32 I wanna ride my bike on 08.25.17 at 6:50 pm

Re: RudyGQ

Sentiment changes quickly when the losses begin. No one wants to catch the ‘falling knife’.
As the rules and markets change, so does the buying power of those looking to vultch.

#33 Stan Broock on 08.25.17 at 6:53 pm

No major country us on the gold standard. It backs no major currency. — Garth
——————————
Respectfully disagree,

These are 2 different things

1. No major country us on the gold standard.
Not at the moment/since world war 2/Breton woods.
This is mostly due to constantly increased credit/i/e/ artificial demand for paper money to pay back loans. When the credit growth stops or reverts… We shell see about that/turning my Texan accent off.

2. It backs no major currency.
This is incorrect. All monetary reserves, including gold and foreign currencies or other assets are de-facto backing the currency.

All major countries (except Canada, surprise, surprise, we are the smarter of all as it seems… NOT!)

https://en.wikipedia.org/wiki/Gold_reserve

have significant gold reserves and somehow choose to pay to for gold storage for decades, despite any apparent use or utility for gold.

Lenin said that the washrooms in the society of the future (communism) would be made of gold as it would be useless. I guess he was wrong….

#34 Oakville stinks on 08.25.17 at 6:55 pm

CBC = CNN = Fake news!!

They think you’re all a bunch’a dummies.

#35 Chaddywack on 08.25.17 at 6:55 pm

Meanwhile in YVR

Check out this teardown in Surrey.

Bought for $692,000 in January, sold for $1,000,000 3 months ago.

Yes it’s official. Houses in the worst part of Surrey are now over $1,000,000.

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDA3NkJUNg==

#36 oopswediditagain on 08.25.17 at 6:56 pm

#23 RudyGQ
<<<<<<<<<<<<<<<<

Okay buds, let's go through your list.
1) American's obsession with real estate climaxed at 68% and we are so obsessed that we are at 69%. Uh huh. That is an astounding difference.
2) Nobody's sentiment changes until it does. Perhaps understand what kind of sentiment there was for housing during the crashes in the 80's and 90's.
3) Yes, everyone buys when prices drop. Just look at Florida, Arizona, Nevada and California. As soon as prices crashed everyone bought and the great housing crash was avoided. Seriously?
4) Uhm, the banks weren't lobbying OSFI, they are simply saying yes sir. That legislation, by the way, because you are new to the blog, is coming in this fall.

#37 Stan Broock on 08.25.17 at 6:58 pm

I personally pay some respect to rocks collected by the Swiss National Bank to the tune of over 1000 tons.

This is not brain frozen tundra/Canada but one of the financial capitals of the world for a veeery long time.
For a reason.

#38 Wet Toast on 08.25.17 at 7:01 pm

@#19
Funny why Mnuchin was just at Fort Knox to assure US and world gold is really there. US, China, EU, Russia all keep gold reserves, why is that? It’s part of trying to keep confidence in their fiat currencies and crazy central bank money printing experiments. If they didn’t need to keep gold, then why would they even have it? Gotta back all that fiat and keep the bubbles going, that’s why we have multi million dollar tear downs across Vancouver and Toronto. Canada is way smarter though, we have Trudeau lol!

#39 Ian on 08.25.17 at 7:04 pm

Love all the bearishness on gold.

Gold is so cheap, driven by an eight year general bull market in the US backed by fiction and fantasy. The money to be made on the upside in gold will literally scare people it will be so wonderful.

And when it sucks, I will exit it. Not permanently committed to it. I do things that rise.

Nixon was the best US president BY MILES. He should never have removed the US from the gold standard. Worst mistake he made.

Go gold!!! US is a house of cards!!

#40 funny moneys on 08.25.17 at 7:05 pm

You won’t know how bad until it’s over. Yes, like Trump.

====

Luckily we knew how good Hillary would have been before the beginning.

Mind you, we had no idea that your preferred candidate, Macron would spend $10000 per month on make up.

And nobody tries to estimate the final cost of Trudeau’s tweet: “Diversity is our strength. #WelcomeToCanada”.

$2.6 million per month now and grows by the day.

We have yet to see if Trump will ever have a tweet that bad, that costs that much to American tax payers.

#41 Stan Broock on 08.25.17 at 7:06 pm

BTW Swiss National banks also owns close to 100 billions of US and foreign stocks..

https://www.holdingschannel.com/13f/swiss-national-bank-top-holdings/

So I pay attention to that as well and I am not selling my US stock holdings.

#42 dumpster fire on 08.25.17 at 7:11 pm

Would it be possible to just take out a mortgage for another 25 year term at renewal time? Financially speaking, you’d be kicking yourself in the groin, but it would be a way to survive, no? Besides, debt junkies only look at the monthly anyway…

~ breathe deep

#43 Kilt on 08.25.17 at 7:12 pm

Hey Garth.

I was told by one of the big six banks that when my mortgage comes up for renewal, they would automatically renew it regardless of my economic condition (ie – no job) as long as I had made all of the payments up until that time.
Were they lying to me?

Kilt

#44 Dan.t on 08.25.17 at 7:14 pm

Crash and burn BC can’t happen soon enough. But going through brainwash detox takes time.

mass majority are solely invested in real estate and there is no point in arguing that it is now not a good move.

How do you argue or advise a home owner who bought 20 years ago that RE is no good investment. Thanks to gov intervention, you needed like 10 k to leverage a 250k house now worth 1 mil.

Those who bought last 5 years if they bought within their means, you can wait another 30 years for those returns…. it will be the stock markets turn in a few years…. but before that, there needs to be a major amount of pain. Bring it on and plan ahead.

Or then again maybe central bankers will just devalue money further and tax the sh;) out of everyone and everything- wait done and done- but who knows.

#45 young & foolish on 08.25.17 at 7:15 pm

“Interesting video by Ray Dalio. How credit cycles and economy work. When credit bubbles burst there is no place to hide.”

Indeed. Think about it … it’s all leverage, or the promise of future earnings. Oh, and let’s not forget about fear and greed.

#46 Ex-Cowtown on 08.25.17 at 7:18 pm

Caitlin and others like her need to consider bankruptcy. The stress and mental anguish of dragging a debt around for the next twenty five years ain’t worth it.

You made a mistake; deal with it and move on. It’s OK. The people that lent you the $$$? They screwed up too. The only revenge you’ll ever get is to make them face up to their greed and mistakes as well.

No point screwing up your entire life to keep The Big Five whole.

#47 david on 08.25.17 at 7:24 pm

Garth: please please stop with the absolute BS comments about banks seeking insurance premiums at renewal on a loan that was previously made with less than 80LTV. read the bank act for heavens sake. ask OSFI. section 418 applies at the time that the loan is made. it does not apply at renwal with the bank that originally made the loan. You are scaring people with complete rubbish. I have great respect for you but why are you spreading this BS for folks in GTA. If you have a conventional uninsured loan with a bank, the LTV at renewal cannot trigger the requirement for MI. If the bank doesn’t want to renew, then they face a potential default of their own doing. If your mortgage is in good standing, you are gold with a big bank.

OSFI: Residential Mortgage Underwriting Practices and Procedures: “Traditional Residential Mortgages — By law, residential mortgages underwritten for the purpose of purchasing, renovating or improving a property must be insured if their LTV ratios are greater than 80 percent.Also, OSFI expects FRFIs to impose a maximum LTV ratio less than or equal to 65 percent for nonconforming residential mortgages. OSFI expects that the average LTV ratios for all conforming and non-conforming residential mortgages to be less than the FRFI’s stated maximums, as articulated in its RMUP, and reflect a reasonable distribution of LTV ratios across the portfolio.

The LTV ratio should be re-calculated upon any refinancing, and whenever deemed prudent, given changes to a borrower’s risk profile or delinquency status, using an appropriate valuation/appraisal methodology.” — Garth

#48 the Jaguar on 08.25.17 at 7:28 pm

Garth:
re: “Meanwhile it’s estimated 700 to a thousand property deals made in the last 60 days in the region won’t close.”

Just curious ….where does that info come from?
Also:
” In order to renew at that level and avoid paying the fat CMHC insurance premium,”

I thought CMHC was out of the ‘refinance’ part of the biz? Can OSFI dictate rule changes at CMHC?

It’s going to be one bumpy ride, as Bette Davis once said.

#49 The Fat Lady on 08.25.17 at 7:31 pm

All this talk on HOUSING. Same old s..t everyday. We get the hint already.

Tell us where to put our money and how to get rich.

#50 TurnerNation on 08.25.17 at 7:33 pm

Oh Ontario. Stick a dork in it already.
I believe once we go BK, rural areas will get decimated.
Emerg services will be cut, home insurance coverage will get scarce due to the expectation of total losses.
Electric cars won’t reach you.


Peterborough General Electric plant to shut down next fall, 358 jobs to be lost
More than 350 workers at a General Electric plant in Peterborough, Ont., will be losing their jobs as the 125-year-old facility ceases manufacturing next year

M41ON

#51 Dolce Vita on 08.25.17 at 7:38 pm

#10 Debtslavecreator

Chilling what you say and good you tried to give sound advice.

I think the banks may well end up being the largest holders of resale residential real estate in Canada within the next 5 years, post B-20, and if rates continue to rise.

#52 Cowtown Deathwatch on 08.25.17 at 7:43 pm

Meanwhile in Calgary, a new home builder advised me I should get in now because their prices are set to jump September 1 due to softwood lumber and Trump.

Scores of layoffs continuing through this year, with more to come in the next few months, seem to have left Calgary detached home prices largely unscathed. Everyone I know that has lost their job is still in their house, albeit rationing food and renting out rooms to transients to do so.

Rents have collapsed almost in lockstep with oil, purpose-built rental buildings keep offering more and more desperate incentives, condo prices have eroded as new buildings continue to be constructed, downtown is empty, rush hour doesn’t exist, downtown businesses are folding… But the sky has not fallen.

This week the media reported consumer spending in Alberta is at its highest level since 2014, lead by new vehicles and auto parts…

If one of the worst oil downturns has had this little impact on Cowtown real estate, what are the chances we’ll see any real action in cities where the economy isn’t entirely dependent on one industry? Surely Calgary serves as a fascinating case study in the resilience to the downside of the housing market in the modern economy where an unemployed homeowner can instantly become a paid chauffeur (Uber) and hotelier (Airbnb) as soon as times get tough?

#53 -=jwk=- on 08.25.17 at 7:44 pm

@ #23

1) untrue
2) also untrue
3) uhm, nope
4) irrelevant

I heard, loudly, over and over all your excuses when I was living in Los Angeles from 2000-2005. Also ‘immigrants’ and ‘not enough development land’ and ‘prices only go up’. By 2007 they were bulldozing entire incomplete subdivisions…

#54 rainclouds on 08.25.17 at 7:44 pm

#29 dolce

The graph was3x overvalued in 2011.must be 4 or 5x now

Apparently still going gangbustersl somewhere near the Broadway skytrain. or maybe not……….

.

#55 Blacksheep on 08.25.17 at 7:44 pm

Stan # 28,

“Wondering why the FEDS in US have over 800 tons of that gold.”
———————————–
“No major country us on the gold standard. It backs no major currency. — Garth”
———————————–
Garth is of course correct, no sovereign in control will ever constrain its ability to create $’s by linking to any tangible asset again.

A lack of Sov. control is what got the PIGS in trouble.

Check out MMT, Stefine Kelton.

It will change your perspective on most things economic and you will never want to pay taxes (or by Gold) again.

https://www.youtube.com/watch?v=g_ikiJt9h6E

#56 Dolce Vita on 08.25.17 at 7:45 pm

About the 8% MICs, even they seem tapped out of cash or some what reluctant in a B-20 World:

https://www.ratespy.com/private-rates-still-elevated-amid-tight-funding-08154704

#57 Costco Nation on 08.25.17 at 7:47 pm

Caitlin is funny. She implies the CMHC insurance a kinda gift the average Canadian is expecting. From where all these gifts come from? Who cares, one shouldn’t ask. Bad omen asking. So she hopes that “insurance” premium of maybe 5k when she joined the club would be forgotten. Now she will slip into the insured category, which, also detected from her cunning Canadian verbal approach, would provide her the extra quality of an “insured”. The tense effort of the retarded would be so amusing if not the dominant fierce theme of this despicable populous.
And this is the average example, median, if you want, because it’s obvious everywhere. Now, realize half of them is even more stupid and despicable than that. (George Carlin)

#58 German gold on 08.25.17 at 7:50 pm

#19 Sam the Sham on 08.25.17 at 6:05 pm

Well it looks like the German Bundesbank has just completed the transfer of gold worth 24 Billion Euros from France and the U.S. back to the safety of Germany. I wonder when Canada will repatriate its gold. Oh wait, I almost forgot, Canada doesn’t have any gold!! That’s right folks, the Canadian dollar is backed by nothing. And everyone is worried about mortgage rates and the OSFI. LOL!!

—–

Maybe Poland wants the German reparation paid in gold.

#59 Dolce Vita on 08.25.17 at 7:51 pm

#47 The Fat Lady

Post B-20 Housing Tip, become a private lender:

-8.5% rates and 2% fees
-12% and +2% fees upon renewal, if mortgage not paid out

#60 rainclouds on 08.25.17 at 7:56 pm

#47 fat “All this talk on HOUSING. Same old s..t everyday. We get the hint already.”

Stop eating so much. Go for a waddle. Don’t buy any more moo moo’s.Try and control your urges. In the meantime Bank the savings in a well managed portfolio

Or blissfully enjoy that last piece of cake. Diabetes is merely a speedup. ……..really.

No I’m not a Dr of anything. unless stupid is a profession…..

#61 crowdedelevatorfartz on 08.25.17 at 7:57 pm

@#47 The “Rubinesque” Female
“All this talk on HOUSING. Same old s..t everyday. We get the hint already.
Tell us where to put our money and how to get rich.
+++++++

Apparently the virtue of “patience” cannot share the same body with the sins of “greed”, “gluttony” and “avarice”.

#62 Capt. Serious on 08.25.17 at 7:58 pm

“Honey, we’re broke.” Some poor dudes are going to get filleted in the fallout from the housing correction. Oh the irony of bowing to the nesting wife, only to have her kick you to the curb for messing up the household finances. Rich!

#63 FOUR FINGERS WATSON on 08.25.17 at 7:59 pm

No one will have to pay 120k upon mortgage renewal or sel the house. Just not gonna happen.

#64 Smoking Man on 08.25.17 at 8:01 pm

Hanging out at my sons apt till next week. Day after a minor surgery the big road trip. Might last a week or month or year or two.

Been talking to a lot of people my age and a bit older. All sold real estate in the last 6 months. No intention of ever buying again. One couple even has their loot with Turner Investments and are very pleased with results. I dont dar tell them I Smoking Man. But if they read this. I’ll be outed. The wife was looking at my trade mark tee shirt. Book cover. She knows.

Most intersing was a couple that could not get rid of there millenials 3 kids. So they let them stay in the house and they moved into the Apt. To funny.

Renting is pretty cool. Lots of interesting people to write about if so inclined.

But this market based on my conversations ain’t coming back for a long time.

#65 rock paper scissors on 08.25.17 at 8:02 pm

No major currencies are backed by rocks. — Garth

They are backed by paper. And scissors. To make more paper to keep on rocking. Most recently all virtualized.

They are backed by the state’s absolute power to tax. — Garth

#66 crowdedelevatorfartz on 08.25.17 at 8:02 pm

@#48 Turnernation

What killed the GE Plant?
Cheap motors from China?
Or Union wages/benefits/pensions?

#67 FOUR FINGERS WATSON on 08.25.17 at 8:08 pm

#37 Wet Toast on 08.25.17 at 7:01 pm
@#19
Funny why Mnuchin was just at Fort Knox to assure US and world gold is really there. US, China, EU, Russia all keep gold reserves, why is that? It’s part of trying to keep confidence in their fiat currencies and crazy central bank money printing experiments. If they didn’t need to keep gold, then why would they even have it? Gotta back all that fiat and keep the bubbles going, that’s why we have multi million dollar tear downs across Vancouver and Toronto. Canada is way smarter though, we have Trudeau lol!
…………………………
The USD is backed by confidence. It does not need to be backed by gold. U can use your USD to buy gold anywhere in the world.

#68 Mike in Toronto on 08.25.17 at 8:08 pm

#21 paracho

5 years ago we were under a Conservative government, who’s fiscal responsibility could be summed up with telling their supporters: “you’re richer than you think.”

…emergency rates for the credit crisis!! emergency rates for the oil crash! OMG!

What ever happened to paying off your debts and living within your means?

#69 Paul on 08.25.17 at 8:10 pm

#43 Kilt
What don’t you get? Garth is quoting from a press release saying the rules are changing in October!!

#70 Paul on 08.25.17 at 8:11 pm

Sorry #42

#71 For those about to flop... on 08.25.17 at 8:16 pm

#75 For those about to flop… on 08.24.17 at 9:47 pm
This house sold 20 days ago,how much did it go for?

All I can do is keep asking…

M43BC

9551 Palmer Road, Richmond . paid 1.36

Dec 22:$1,599,000
Jun 13: $1,288,888
Change: – 310112.00 -19%

https://www.zolo.ca/richmond-real-estate/9551-palmer-road

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDA1WFBHRw=

$$$$$$$$$$$$$$$$$$$$$$$$$$$

Broadway ,since your on here tell me what this house went for.

All information you give me I put an asterisk next to it.

The reason is when you are voted into the Housing Hall Of Fame just like Barry Bonds , Alex Rodriguez and such in baseball ,there will be a suspicion that drugs were used at some stage…

M43BC

#72 Disbelief on 08.25.17 at 8:17 pm

#35 Chaddywack on 08.25.17 at 6:55 pm
Meanwhile in YVR

Check out this teardown in Surrey.

Bought for $692,000 in January, sold for $1,000,000 3 months ago.

Yes it’s official. Houses in the worst part of Surrey are now over $1,000,000.

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDA3NkJUNg==

———

And they say there is no money laundering in RE in Vancouver….

#73 Van City Man on 08.25.17 at 8:18 pm

GTA may be crashing, but GVRD is something else. Because of land limitations, mild weather and foreign investment I don’t see that changing anytime soon. Van is a truly global city while Toronto is mainly a “Canadian” city if you know what I mean.

Absolutely. You’re parochial. — Garth

#74 Wrk.dover on 08.25.17 at 8:21 pm

#66 crowdedelevatorfartz on 08.25.17 at 8:02 pm
@#48 Turnernation

What killed the GE Plant?
Cheap motors from China?
Or Union wages/benefits/pension

————————

or power rates, even though GE makes wind turbines?

#75 reply to #68, Mike in T.O by paracho on 08.25.17 at 8:25 pm

A very good question Mike !
I was so dumbfounded in those times . I saw the hysteria and the easy money being dealt out..and no consequences or measures to curb any hysteria.
If prudent measures were in places then or even up to 8 or plus years back ..I feel the bubble would not have grown to such proportions.

#76 InvestorsFriend on 08.25.17 at 8:26 pm

How Should Investors Think about Cash Money, Gold and other possible stores of wealth such as stocks (equity ownership in corporations)?

Warren Buffett gave his views in detail in his 2011 annual letter.

http://www.berkshirehathaway.com/letters/2011ltr.pdf

See pages 17 to 19. This is must-read material.

#77 hamish42 on 08.25.17 at 8:28 pm

Great article in the National Post today asking if folk will buy into the GTA house market now that the average price is below $1M. This is amazing logic, a few weeks ago it was buy now because prices always go up (strong demand etc), now it is buy now because they have dropped 20% in a few weeks so are now a bargain. So basically “buy now” whatever the price has done recently, whatever the fundamentals are. Great journalism….

#78 InvestorsFriend on 08.25.17 at 8:38 pm

Money is Backed by Confidence

#67 FOUR FINGERS WATSON on 08.25.17 at 8:08 pm said:

The USD is backed by confidence. It does not need to be backed by gold. U can use your USD to buy gold anywhere in the world.

**********************************
I believe that is absolutely correct.

We all value dollars because we are confident that others will value them in the future. We are confident of that. We are confident that dollars can be exchanged for goods and services and used to pay taxes and we are confident that there will not by any hyper inflation causing the value of dollars to plummet.

Virtually everyone would be extremely confident that a dollar will buy tomorrow virtually the same as it does today.

Most of us are confident there will not be much inflation or loss of purchasing power even in a year.

For longer time periods we don’t hang onto to cash dollars but tend to spend or invest.

When we invest in houses or stocks or the like our wealth is measured in dollars but it is not invested in dollars. Fixed income is both measured in and invested in dollars.

A few people fear hyper inflation. So they may invest in gold. Stocks might be a better choice.

#79 Dissident on 08.25.17 at 8:39 pm

It looks like the appraisers are breathing some sanity into the market by evaluating properties 12 to 15 percent lower. And then they’re saying, hey, that’s not worth 1 mil, its worth less, so now you qualify for less mortgage and then the greater fool has to get a second mortgage fast. Its this patchwork mortgage environment that is not good for the financial sector.

So in a way, they are trying to reduce their risk, but they’re actually putting people at risk in a different way.

Financial Post:

http://business.financialpost.com/personal-finance/mortgages-real-estate/price-slump-tight-cash-wreak-havoc-in-canadas-top-housing-market

#80 InvestorsFriend on 08.25.17 at 8:52 pm

Buffett’s Wise Words

I just was reading again Buffett’s comments at pages 17 to 19 of the 2011 letter that I gave the link to just above.

Can anyone read those words and not be impressed by the logic and by his writing skills?

In a few short paragraphs he teaches about the erosion caused by inflation and by taxes.

He explains the greater fool theory of investing in tulips or (at times) houses and gold.

He explains how corporations have value that is independent of currency.

Just extraordinary.

#81 Danny on 08.25.17 at 8:53 pm

#64 Smoking Man
Nice to hear you when you talk about real estate trends and not Trump support.( I lost all respect for Trump when he publicly mocked the journalist with a physical disability.
Downhill from then on….point of no return. )
Very refreshing comments from Smoking Man today….. All the best with your health.
#43 Kilt
Also what’s with people forgetting the USA…..what happened to thousands of folks who ended up having to sell their homes because they were not able to get financing…..do you really have to question Garth about the fact that Canadian lenders are not fools and will not renew when your lack of payment ability crosses a red line.
Thought your heard from Bank Rep………no problem… no matter what happens in the future on renewal date…….did you get that in writing in some contractual form? ….good luck.

#82 I thinks I know something on 08.25.17 at 8:56 pm

This scaremongering is nonsense. Any new mortgage rules or regulations that negatively affect the RE market to any meaningful degree will eventually be repealed. That is for certain. In fact, if it gets really bad, new measures will be implemented to heat things up again.

#83 Smoking Man on 08.25.17 at 9:01 pm

Too funny, at new clients today quoting on, improving their PO/Invoicing system with some automation and vba to their accounting system and email.

So I threw out a ridiculous price, I can’t handle the work load, I have got so much business just by giving a way a kick ass free invoicing solution.

She accepted and signed the statement of work. Called me everything under the sun in a joking way.

So asked why the hostility? She’s pissed and frustrated at the Dr. Tax. and the 15 dollar min wage soon to take hold. She has 35 employees and aims to reduce staff by 25% She’s investing heavily in automation in the office and workshop.

That’s what Enturpenurs do, they find work around’s, lefties just get cardboard and protest.

I hooked up with an Indian based Corp a while ago specializing in the same stuff I do. Getting them to do the work at a fraction of the cost I would do it.

Go to love capitalism.

#84 Stone on 08.25.17 at 9:10 pm

All of this is irrelevant. I don’t own a house or require a mortgage or need to worry about renewing a mortgage. I rent. Portfolio continues to deliver lovely dividends. I have never felt more free than this year since I sold my house and got the money deposited to my brokerage account. The dividends pay my rent. I live for free. And if I need to, I can pick up and move anywhere. As a result, opportunities abound.

I can only pity the fools.

Well, time to go to bed now and sleep easy. Tomorrow is another miracle waiting to happen. Looking forward to it.

#85 Kilt on 08.25.17 at 9:13 pm

#69 Paul
I didn’t believe him when he told me. Not requiring income verification on renewal seemed too good to be true. But, that was the main reason I went with the bank instead of a mortgage broker that might not be around in 5 years. I’m not overly concerned, I’d just like to be flexible with my work schedule. I’m looking to retire early and that might be hard to do if the bank is stress testing me every few years.
Kilt.

#86 Blacksheep on 08.25.17 at 9:14 pm

“In order to renew at that level and avoid paying the fat CMHC insurance premium, she’d have to find $120,000 somewhere and hand it over to the bank in order to reduce the principal outstanding.”- Garth
—————————————
So our dear Caitlin has to buck up for CMHC “Re-Insurance”

No big deal, she doesn’t have to pay it up front cause it gets amortized. This very sich was my takeaway after reading through the OFSI docs, B-20 & B-21.

This may be the case where low-ratio mortgagors,(more than 20% equity) could be forced to ‘re-insure’ their mortgage to make the bank ‘comfortable’ according to OFSI regs.

No forced sale as long as she has been servicing her debts as per contract, so no RE doom here, sorry bears.

#87 David on 08.25.17 at 9:15 pm

http://yaleandpartners.ca/wp-content/uploads/2017/08/Letter-to-Finance-August-16-2017-1.pdf?x84892

#88 Stone on 08.25.17 at 9:16 pm

Just to add:

Thanks Garth. You make my day when I read your posts. It just tells me how as much I made some mistakes throughout my life, I made a lot more decisions that were spot on right. Two thumbs up!!!

#89 Pete from St. Cesaire on 08.25.17 at 9:21 pm

They are backed by the state’s absolute power to tax. — Garth
————————————————————–
But if the citizens Go Galt, the money is backed by the state’s absolute power to brutalize and enforce slavery, and therein lies the proof of the state’s illegitimacy.

#90 Smoking Man on 08.25.17 at 9:24 pm

Absolutely. You’re parochial. — Garth

I thought that was a made up word. “Parochial” apparintly it’s not.

Do you remember this shit form collage days. Or just google a simular word that gives you alternatives. This gifted writer wants to know how you find these.

Not that I would ever use them. Set expectation low and deliver average which makes you via persepttion bias a rock star.

#91 Tom on 08.25.17 at 9:25 pm

How come we don’t hear about appraisals in BC? Why is the credit tightened up only in Toronto? Thank you.

#92 yup on 08.25.17 at 9:26 pm

No one will have to pay 120k upon mortgage renewal or sel the house. Just not gonna happen.

………

the real estate bears are all happy, delusional, but happy none the less

#93 David on 08.25.17 at 9:31 pm

#47 Garth, with all due respect, you have this wrong. B20 does not trump the bank act and does not create any requirements for MI. Refinance is not renewal. A loan is made either at origination, or at refinance. renewal with the same lender is not the making of a loan. OSFI’s references to recalculating the LTV are for capital purposes and other reasons. they are not signalling that MI may be triggered if the current LTV rises above 80%. beow is the relevant section of the Bank Act. There is nothing in the bank act that triggers MI at renewal regardless of the current LTV. That is in recognition that LTV may fluctuate post origination. that has always been the case. and you can’t insure refinance anymore at any LTV, so you would never trigger MI with a refinance!!!!!

Restriction on residential mortgages Restrictions : hypothèques
418 (1) A bank shall not make a loan in Canada on the
security of residential property in Canada for the purpose
of purchasing, renovating or improving that property, or
refinance such a loan, if the amount of the loan, together
with the amount then outstanding of any mortgage having
an equal or prior claim against the property, would
exceed 80 per cent of the value of the property at the time
of the loan.

#94 oopswediditagain on 08.25.17 at 9:38 pm

David: “If your mortgage is in good standing, you are gold with a big bank.”

David, David, David, you are so cute. You will only be in good standing if your LTV remains within the OSFI legislated ratio, oh and if your super sized mortgage passes the new qualification rules.

Get it through your heads, people. OSFI supervises the banks. It is only OSFI’s viewpoint of your mortgage that counts, not the nice banker lady.

However, if you do have a heloc, OSFI is thinking about helping you out there, too. Hopefully, all of those banks of mom/dad don’t feel the repercussions of this part of the legislation.

“In addition, FRFIs should review the authorized amount of a HELOC where any material decline in the value of the underlying property has occurred or the borrower’s financial condition has changed materially. This expectation also applies where a HELOC is structured as part of a consolidated or linked mortgage loan product.”

#95 Mark on 08.25.17 at 9:40 pm

I’m not convinced the renewal scenario would play out like Garth describes, requiring a balloon payment into equity, or forcing someone with less than 20% equity (ie: >80% LTV) to take out CMHC subprime mortgage insurance.

However, what it does mean is that the bank will send a letter to a person in that situation, only offering a renewal at the ‘posted rate’. The posted rate being a few percent above the rate that most people actually pay on mortgages these days.

Given that the economy is practically in deflation, with CPI that is trending towards zero and even negative, paying the posted rate is like financial suicide, especially on an asset that is also suffering depreciation at the same time.

No mass foreclosures. No required balloon payments. Just a few decades of making payments into a mortgage, and not accumulating much of any equity. No retirement fund, no savings, no participating in what is likely to be at some point a rip-roaring stock market rally that might even surpass that of the 1990s given how severely the TSX has lagged over the past nearly 40 years on account of its exposure to the deeply out of favour gold sector.

#96 Smoking Man on 08.25.17 at 9:40 pm

Been going hard for a few hours. Jack is bad.

Where is James, and the other critic that claims to be a righty but types like a lefy.

Wana fight right now from the safety of my undisclosed location.

#97 BS on 08.25.17 at 9:41 pm

#86 Blacksheep on 08.25.17 at 9:14 pm
“In order to renew at that level and avoid paying the fat CMHC insurance premium, she’d have to find $120,000 somewhere and hand it over to the bank in order to reduce the principal outstanding.”- Garth
—————————————
So our dear Caitlin has to buck up for CMHC “Re-Insurance”

No big deal, she doesn’t have to pay it up front cause it gets amortized. This very sich was my takeaway after reading through the OFSI docs, B-20 & B-21.

This may be the case where low-ratio mortgagors,(more than 20% equity) could be forced to ‘re-insure’ their mortgage to make the bank ‘comfortable’ according to OFSI regs.

No forced sale as long as she has been servicing her debts as per contract, so no RE doom here, sorry bears.

There will be doom for those who own. Real estate busts are not due to forced sales, they are due to a lack of buyers.

Although in this scenario the person may be able to refinance they will be underwater and have a higher payment. That prevents them from becoming a move up buyer for at least 10 years, maybe more. It would kind of suck to be stuck in a place too small or in the wrong location because you can’t sell due to being underwater. These are the move up buyers of the future which are all taken out of the market. First time buyers sit on the sidelines as long as prices appear to be declining. Plus doom stories make RE look like a bad idea as an investment. In other words no buyers. Prices tank further as some people always must sell. Death spiral.

#98 Barbara on 08.25.17 at 9:42 pm

So this will be like effectively a 2% rate hike?

Ppl are going to be in a lot of trouble if so.

#99 oopswediditagain on 08.25.17 at 9:44 pm

Blacksheep: “No forced sale as long as she has been servicing her debts as per contract, so no RE doom here, sorry bears.”

This was my takeaway as well blacksheep, but you conveniently forgot about the prerequisite for qualification under the new legislation.

If dear Caitlin had to borrow from mommy and daddy to get a conventional mortgage, she did so to avoid the onerous qualification rules that OSFI introduced earlier.

She is the very reason for the new rules. If she couldn’t qualify previously she is hooped when she has to qualify again. Forced sale.

RE doom here, sorry bulls.

#100 Happy Housing Crash Everyone! on 08.25.17 at 9:46 pm

LOL. You mortgage brokers and realtor shills won’t give it up. If OSFI rules will not impact lending in a negative way then why all the convincing? Seems odd mortgage brokers and realtors continue complaining while kicking and screaming all day about the government. We all seen that shyster Sinclair and that mortgage “specialist” on CP24(Constant Propaganda 24) throwing a temper tantrum . Have to love those “specialists” that most likely didn’t even finish grade 8. It’s must burn those greedy drop outs when Garth simply tells the truth. Looks like prices in TO dropped another $2100 from yesterday.
Happy Housing Crash Everyone! :-)

#101 Wet Toast on 08.25.17 at 9:48 pm

@#67 Four Fingers Watson
Confidence in the USD? Backed by what(full faith and credit lol?) Mnuchin’s visit wasn’t by mistake, there’s a reason and that’s my point. When confidence is lost (how many trillions of reasons do you need?) it’s sending a signal to the world. Explain why the US, China, EU, etc hold it then?

#102 Happy Housing Crash Everyone! on 08.25.17 at 9:54 pm

david on 08.25.17 at 7:24 pm
Garth: please please stop with the absolute BS comments about banks seeking insurance premiums at renewal on a loan that was previously made with less than 80LTV. read the bank act for heavens sake. ask OSFI. section 418 applies at the time that the loan is made. it does not apply at renwal with the bank that originally made the loan. You are scaring people with complete rubbish. I have great respect for you but why are you spreading this BS for folks in GTA. If you have a conventional uninsured loan with a bank, the LTV at renewal cannot trigger the requirement for MI. If the bank doesn’t want to renew, then they face a potential default of their own doing. If your mortgage is in good standing, you are gold with a big bank.

OSFI: Residential Mortgage Underwriting Practices and Procedures: “Traditional Residential Mortgages — By law, residential mortgages underwritten for the purpose of purchasing, renovating or improving a property must be insured if their LTV ratios are greater than 80 percent.Also, OSFI expects FRFIs to impose a maximum LTV ratio less than or equal to 65 percent for nonconforming residential mortgages. OSFI expects that the average LTV ratios for all conforming and non-conforming residential mortgages to be less than the FRFI’s stated maximums, as articulated in its RMUP, and reflect a reasonable distribution of LTV ratios across the portfolio.

The LTV ratio should be re-calculated upon any refinancing, and whenever deemed prudent, given changes to a borrower’s risk profile or delinquency status, using an appropriate valuation/appraisal methodology.” — Garth
—————————————————————–

I love it when Garth makes shysters look stupid using FACTS! This is why I hate realtors and mortgage shysters who lie and lie while ruining people’s lives as they trick people into financially murdering themselves. It really should be a crime and the government needs to do something about these greedy evil uneducated shysters.

#103 Brandon on 08.25.17 at 10:02 pm

Ross Kay says the bank would just extend the amortization upon renewal. Any validity to this?

#104 Happy Housing Crash Everyone! on 08.25.17 at 10:05 pm

The housing market is so strong and everyone wants to live here and its best place on earth and and and https://www.thestar.com/business/2017/08/23/drop-in-gta-home-prices-prompts-new-warning-seller-beware.html SHUT UP SHYSTERS as the reality is when the ponzi scheme crashes as it is now people DON’T WANT TO CLOSE. You are evil liars who trick people to financially murder themselfs. You [email protected]

#105 Gravy Train on 08.25.17 at 10:19 pm

For days now we’ve … endur[ed] the cackling of the housing-crash morons who enjoy drowning kittens. — Garth

#100 Happy Housing Crash Everyone! on 08.25.17 at 9:46 pm

“It must burn those greedy dropouts when Garth simply tells the truth.”

Did you read Garth’s blog tonight, Happy?

#106 Dr. Talc on 08.25.17 at 10:19 pm

how can anyone read the b-20 draft and conclude that all renewing mortgages will be ‘stress tested’ ?
refinance and ports are not renewals: they are new apps.

missed and late payments =red flags
no red flags=auto renewal

#107 Smoking Man on 08.25.17 at 10:22 pm

DELETED

#108 Rargary on 08.25.17 at 10:29 pm

#100 I’m with “happy housing crash everyone”… your mouse is falling apart on the outside… your gas light is on again… your favourite brew isnt on sale so you reach for the cheap stuff and hide in your $1 million … no wait $800,000 … no wait $670,000 dump telling yourself housing prices have to go up again sometime…you pass your realtor in the beer store buying Lucky beer… Happy Housing Crash Everyone!

#109 Smoking Man on 08.25.17 at 10:30 pm

#100 Happy Housing Crash Everyone! on 08.25.17 at 9:46 pm
LOL. You mortgage brokers and realtor shills won’t give it up. If OSFI rules will not impact lending in a negative way then why all the convincing? Seems odd mortgage brokers and realtors continue complaining while kicking and screaming all day about the government. We all seen that shyster Sinclair and that mortgage “specialist” on CP24(Constant Propaganda 24) throwing a temper tantrum . Have to love those “specialists” that most likely didn’t even finish grade 8. It’s must burn those greedy drop outs when Garth simply tells the truth. Looks like prices in TO dropped another $2100 from yesterday.
Happy Housing Crash Everyone! :-)

Wishing for hurt. You are one mentail case.

#110 mouldyinYVR on 08.25.17 at 10:44 pm

Adding always seems easier than subtraction and percentages don’t get the respect they deserve!

“Most people, even ‘highly educated’ ones, are bad at percentages. Offer your average shopper a choice between 50 percent more product per dollar and a 35 percent price reduction, and almost everyone will pick 50 percent more volume, thinking that it’s a better deal. It’s not. The 35 percent cost reduction leads to a 54 percent [.35/(1-.35)=.54] improvement in price per unit of volume whereas the 50 percent benefit increases only leads to a 50 percent improvement in unit price.

“Most consumers incorrectly believe that a 50 percent cost discount is worth the same as a 50 percent benefit bonus, or that a 30 percent cost increase is as bad as a 30 percent benefit decrease.”

https://knowledge.insead.edu/marketing-advertising/so-you-think-your-customers-understand-percentages-3884

‘See how good you are at percentages
Rank the following printers by speed (pages per minute).
• Printer 1: Prints 50% more pages per minute than your previous printer
• Printer 2: Takes 45% less time to print each page than your previous printer.
• Printer 3: Prints 40% more pages per minute than your previous printer.
• Printer 4: Takes 35% less time to print each page than your previous printer

Answer: The correct order, from fastest to slowest, is: printer #2, printer #4, printer #1, printer #3.’

If your eyes are glazing over, best to take someone with mathematical skills with you when visiting the bank manager!

#111 SW on 08.25.17 at 11:21 pm

#134 Renter’s Revenge! on 08.25.17 at 9:52 am
‘…So, if someone was threatening to murder me, I should just “get over it”?’

It’s illegal to threaten someone with murder. Call the police and make a complaint.

#112 Vanrentor on 08.25.17 at 11:29 pm

It feels like the Vancouver market is starting to fold.

Go on Realtor.ca and use the map search to see all the new listings within the last week or two in the GVRD. There are thousands. Compare the ask price with the assessed value and the previous sale prices (https://evaluebc.bcassessment.ca) You will see people are asking delusional prices and many are trying to flip at a profit or break even. The sheeple haven’t got the memo that they aren’t getting 2016 peak prices anymore.

When the flurry of listings comes on board in September things are going to get interesting.

I am loading up on popcorn.

#113 Dave on 08.25.17 at 11:39 pm

In Whistler things are still selling at extreme levels. There’s very little listings and what is there is being bid up like crazy. In a small town close by called Pemberton there are bidding wars. On old unrenewed houses. I know the Ontario Market is correcting but why is BC still insane? What will it take for BC to become more like Ontario?

#114 Mark on 08.26.17 at 12:05 am

“Ross Kay says the bank would just extend the amortization upon renewal. Any validity to this?”

Sure, at a price, of course. See my earlier comments.

#115 willworkforpickles on 08.26.17 at 12:50 am

By 2019 the market will only be picking more steam heading towards the bottom in 2023

#116 the ryguy on 08.26.17 at 1:09 am

#66

Totally agree. Pension liabilities will bankrupt every state/country/municipality that has them. This never gets talked about. I have a better solution..there is x in the pie, there are y units contributed..(x/y) * however many y’s you’ve put in= what you get today and be done with it forever. Want to blow it on a new sports car? Be my guest. Want to put it into a balanced portfolio and live off..well you get the drift.

My grandpa was an Air Canada pilot back in the day. When I started working at 14 he always joked “go work hard and pay taxes so I can keep collecting my pension”. 20 years later he’s still telling the same joke and it is no longer funny.

Had this same argument with a firefighter buddy of mine recently. Oh its guaranteed is it? Sure $6k/month in 25 years sounds great..keep in mind though a cup of coffee will be $75. Plus RE always goes up so a house will be probably 7 million…ugh, come on crash.

Im reminded of something my mom told me. She said I was the kid that always touched the stove. Some kids only had to be warned, others like me had to learn the lesson the hard way. I feel like a large % of Canadian citizens have foregone common sense and need to be metaphorically burned.

#117 Blacksheep on 08.26.17 at 1:47 am

oops # 99,

“She is the very reason for the new rules. If she couldn’t qualify previously she is hooped when she has to qualify again. Forced sale.”
———————————-
Where does it say she couldn’t qualify when she purchased? Cause mom & dad gave her $’s for a down payment? It says nothing about them cosigning cause if it did, it becomes an non issue as the renewal would be automatic based on their, credit/equity.

Caitlin has made payments successfully for the past 5 years, reducing the original mortgage amount and you think a bank will deny her mortgage renewal?

Of course not, she will carry on making payments and living in her condo. Eventually equity will surpass the debt amount and the whole thing becomes a non event.

#118 Future Expatriate on 08.26.17 at 2:03 am

We know how bad it will be with Trump.

We’ve seen Hiroshima and Nagasaki.

#119 Blacksheep on 08.26.17 at 2:08 am

BS # 97,

“There will be doom for those who own. Real estate busts are not due to forced sales, they are due to a lack of buyers.”
———————————
Yes, cause all those itching to vultch, just luuuv renting (been there) at crazy high costs, if they can find something decent, always subject to the whims of the landlord, while the boomer owners home has gone ballistic in value, just enjoys his home and waits.

Who do you think is going win this standoff?

The group think on this blog is getting ridiculous.

#120 bdwy on 08.26.17 at 3:29 am

Flop I will get you that price.

But you will have to wait!
On island w no real computer or wifi till wed.
But….there happens to be a very interesting fight tomorrow night (sat) which I have got to see (29-0 w11ko vs 0-0) so I’m coming back to the city for a few hrs. Expect your number before the bell rings. You must really be expecting this one to be a stinker!

I report on most all sales in my neighborhood, winner or stinker. Not many stinkers yet though. The worst smelling one is an ugly special on corner of Vic and gravley. Been up for well over a year I’d say. The ask of 1.69 has not budged over that time. I expect it will sit for much longer.

Seeing a little more backhoe action the past few weeks. Someone still thinks there is money to be made building duplexes.

#121 Reality 1 on 08.26.17 at 3:51 am

” When will the market bottom ? ”

Maybe it keeps ‘melting’ for years as bullishness gives way to bearishness.

There are a lot of factors to consider in that equation – the most important one being “sentiment”.

Imagine if the same level of mania (or even 1/2 of that intensity) were to be applied on the downside ?

Yikes !

#122 Reality 1 on 08.26.17 at 4:20 am

Question to: The Right Honorable Garth Turner

OSFI refinance to CMHC insured mortgage possibility ?

Do you think it will be possible, say in Caitlin’s example that;

With the hypothetical new value at $ 450,000 that she could obtain a 5 % down CMHC mortgage, the costs would be;

1) the $ 30,000 difference needed to pay down the principal amount ($ 480,000 – 450,000), and ;

2) the $ 22,500 as 5% on $450,000 (now the new mortgage balance), and ;

3) the $ 17,100 premium amount at 4% premium rate (calculated using CMHC’s website calculator).

Her mortgage principal would now be $ 444,600 ( $ 450,000 – 22,500 + 17,100).

So, in this manner, she would have to come up with an additional $ 55,200 ($ 30,000 + 22,500) and shoulder an increase of her mortgage principal of $ 17,100.

So, much less ‘hard’ money than the $ 120,000 in your example and the $ 17,100 kick the can down the road money (which amortizes monthly).

Sub-optimal for sure in the long run, but wouldn’t that be the more likely “solution” path that would be followed, if available ?

Do you think that this option will be available?

Please comment Mr. Turner or informed blogdogs.

Thank you in advance.

#123 Reality 1 on 08.26.17 at 4:28 am

to # 9 Jimmy

AXE products act as a repellent to the women that I know.

But then again, they are more interested in the heady aroma of good cuisine and the bouquet of a fine wine once they get to the age where they get interesting to me. (i.e. the sweet spot – above 30 and below 45, LOL)

#124 Reality 1 on 08.26.17 at 4:44 am

at # 17 Smoking Man

Go get’em Smokey !
Heap abuse on that cretinous prick.

#125 Karma on 08.26.17 at 4:45 am

#103 Brandon on 08.25.17 at 10:02 pm
“Ross Kay says the bank would just extend the amortization upon renewal. Any validity to this?”

changing the amortization schedule is a refinancing. renewal is when only the term and rate changes, nothing else does.

#126 Karma on 08.26.17 at 4:54 am

#106 Dr. Talc on 08.25.17 at 10:19 pm
“how can anyone read the b-20 draft and conclude that all renewing mortgages will be ‘stress tested’ ?
refinance and ports are not renewals: they are new apps.

missed and late payments =red flags
no red flags=auto renewal”
——————————————————-
“Consequently, FRFIs should maintain complete documentation of the information that led to a mortgage approval. This should generally include:

A description of the purpose of the loan;
Employment status and verification of income (see Principle 3);
Debt service ratio calculations, including verification documentation for key inputs (e.g., heating, taxes, and other debt obligations);
LTV ratio, property valuation and appraisal documentation (see Principle 4);
Credit bureau reports and any other credit enquiries;
Documentation verifying the source of the down payment;
Purchase and sale agreements and other collateral supporting documents;
An explanation of any mitigating criteria or other elements (e.g., “soft” information) for higher credit risk factors;
Proof of property insurance;
A clearly stated rationale for the decision (including exceptions); and
A record from the mortgage insurer validating commitment to insure the mortgage, where applicable.

The above documentation should be obtained at the origination of the mortgage and for any subsequent refinancing of the mortgage. FRFIs should update the borrower and property analysis periodically (not necessarily at renewal) in order to effectively evaluate credit risk. In particular, FRFIs should review some of the aforementioned factors if the borrower’s condition or property risk changes materially.”

I reckon OSFI means price drops when they say “property risk changes materially”. And “not necessarily at renewal” leaves open the possibility of doing it at renewal.

#127 Dolce Vita on 08.26.17 at 7:40 am

#73 Van City Man… no it is not immune, read actual numbers below, stop reading Cult MSM dispatches from Realtors.

#54 rainclouds You caught that didn’t you (the over valuation), good. Tells you how big the drop may become.

#44 Dan.t “…going through brainwash detox takes time”, too funy yet, so true.

I just crunch the numbers. Here are the latest from Vancouver.

Zolo.ca Vancouver numbers
Jul 26 to Aug 26 vs. Mar 17 to May 17, 3 mo ago
Quarterly comparisons – you can verify unit sales at REBGV Listed vs. Sold; i.e., Zolo.ca numbers accurate and timely:

Total (Condo, Town & Det) Unit Sales…

Total units sold of 589 down from 1,005 (-70.6% drop)
Det sales down from 275 to 107 (-157% drop)
Condo sales down from 619 to 411 (-50.6% drop)
Town sales down from 111 to 71 (-56.3% drop)
____________________________________
And they freak out in Toronto about a 40% sales drop in a Quarter, here Vancouver the hands down winner…but shhhh, tell no one especially YVR RE Cult members.

Only slightly, or not, affecting price, again, Qtr/Qtr and 1 yr ago in brackets…

Condo -2.3% $832 K down to $813 K (up 18% from 1 yr ago)
Town 0% Same at $1.3 MM (up 9% from 1 yr ago)
Det -8% $2.7 MM down to $2.5 MM (0% from 1 yr ago)

Eye opening numbers to me are $ Total Sales (= Unit Sales x Avg. Selling Price):

Mar 17 to May 17 Qtr = $1.4 Billion

Jul 26 – Aug 26 Qtr = $694 Million, down -50%.

Poor Realtors, their commission base just HALVED in 1 Quarter.
____________________________________

The above never gets reported by YVR RE Cult members incl. the MSM that also have a vested interest in all things RE going up (incl. their advertising revenues from the Realty community).

What you see nowadays is minutiae articles about how somebody’s neighborhood prices went up. In 100 bad news instances they will cling to the 1, and only good news instance, not realizing their admonitions are statistically irrelevant.

“Detox takes time” says #44 Dan.t, so, so true.

Overall, it’s a down market in the last Qtr.

I believe OSFI B-20 is going to result in even more unit sales drops in Vancouver.

Ultimately, as many sell no matter what (e.g., move, divorce, inheritance), prices will come down…to where I do not know, but I will continue to crunch the numbers and post them here.

Personally, I think we may see an early 80s correction after B-20 where the Banks will become the largest resale Residential Real Estate Owners in Canada – over the next 5 years (like Calgary in the early 80s).

#128 Question asker on 08.26.17 at 8:00 am

How bad are things going to get under Trudeau?

At least he can entertain us with his socks!

#129 Cool story, Bro on 08.26.17 at 8:03 am

#84 Stone on 08.25.17 at 9:10 pm

Inspiring story, Stone. Just don’t forget you actually bought real estate and sold it in order to be living fancy free now with your sale money earning lovely dividends and paying your rent. So you can’t poo-pooh real estate entirely since you did take a sip of the kool aid.

#130 Dissident on 08.26.17 at 8:12 am

#90 Smoking Man on 08.25.17 at 9:24 pm

I’m curious. Do you purposely ignore the red underline when you’ve accidentally or purposely misspelled a word?? What an animal.

#131 DLee on 08.26.17 at 8:13 am

Reply to Hans #13:

Neighbour of mine just renewed his mortgage last week with TD bank, seeking about 40% of value of the home in mortgage. TD ordered and appraisal. I had never heard of this before and was surprised when he told me

Dave

#132 Dolce Vita on 08.26.17 at 8:15 am

Many here concluding evil OSFI and their B-20.

Here is why they are so evil using the early 80s Calgary RE crash as an example…

Sources: RE Lawyer (100s transactions/mo, well, until the crash) and his buddy Realtor, yet another one of those Top 1% Sales people, well and again, until the crash.

-AB Courts backed up 6 months with foreclosure litigation, Bank vs. Owner, the latter having usually skipped town or not to be found.

-$1 Down purchasers of your underwater home that never transferred title, you move out, they put Renters in your home (they get the rent) knowing that it will take the Courts 6 mo. to catch up with the Owner (obviously, lots of Renters during the crash).

-BMO alone had 2,500 properties that had been foreclosed on but withheld from the market, they did not want to crash the RE market prices any more than they were already crashing.

True, unemployment was high then, many job losses in the Oil Patch due to T1s Windfall Profits Tax (strip AB with oil revenue taxes and transfer to ON and PQ, where the votes were).

End result, 1 Big 6 Bank undoubtedly ended up as one of the largest resale Residential Real Estate owners in Calgary…there were of course, 5 other Big Banks in Calgary then.

$ billions tied up in non-performing assets (as in 0 cash flow), not easily liquidated and their asset value plummeting.

Sound familiar 416 Land?

One reason why OSFI freaking out about the total $ of uninsured mortgages that the Big 6 Banks possess nowadays…

#133 Morneau getting roasted on twitter on 08.26.17 at 8:16 am

Quite the ballsy post by him set off this firestorm of replies….Check the comments

https://twitter.com/Bill_Morneau/status/900831689928323072

#134 paulo on 08.26.17 at 8:23 am

Deal Saved:

interesting rule 48 settlement. 600K posa no condition
march 2017 closing originally scheduled for April 2017
purchasers excellent credit, solid employment.
2 weeks prior to closing original pre approval from bank expires. new pre approval is 80K lower than original
purchaser finds additl 60K but is still short 20k + closing costs . deal fails seller files a statement of claim
re lists @ 540k now current appraised value.
at settlement seller agrees to reduce sale price by 20K
withdraw statement of claim and provide closing cash bonus to purchaser to cover costs 15k
seller will realize 565k closing in 15 business days.
so if you are having issues with a posa use your head
and try to negotiate a revision to get the sale done.
in this case the seller essentially wasted 15k in addition to the 20k haircut on the deal. 20k was the original ask for revision back in April.
seller still has it sold at 565K 25 large better than current appraised value.

#135 Smoking Man on 08.26.17 at 8:24 am

#internationaldogday

Have a great day my dogs.

#136 Dolce Vita on 08.26.17 at 8:47 am

#49 The Fat Lady

$ Total Sales in Vancouver:

Mar 17 to May 17 Qtr = $1.4 Billion
Jul 26 – Aug 26 Qtr = $694 Million, down -50%.

Commission base HALVED in 1 Quarter.

Then, look at what is happening in 416 RE.
__________________________________

There are TSE listed companies that derive a large portion of their revenue from Residential RE sales in Canada.

#137 maxx on 08.26.17 at 8:53 am

Holy crap!!! 600K for a studio?! What’s that $1000 per square foot? Jayzus!!! What a fiscal train wreck.

Fast forward over the mortgage to:

Caitlin: Studio apartment and maybe a DB pension from a government job (good luck with that). Or marries into money (…even more luck with that). Or wins a lottery (….naaah)

Ted the twerp: If he’s wearing plaid shirts, he could be a card-carrying member of the egghead brigade. At any rate, if he loads up all available tax-advantaged savings vehicles, he’ll have 2 things Caitlin likely won’t: liquidity and mobility. Lots of it.

Of course, ma and pop can always pay off the mortgage for her.

Canuckleheads had a prime, pinnacle view of what created the GFC, the colossal misery that resulted and will still having knock-on effects for decades.
It was in our faces – in sloooooooo-mooooooo.

Canuckleheads chose instead to ignore what was unfolding, thanks in very large part to our erudite leaders and MSM, who spouted ” our banks are safe and solid, lending policies are prudent, yada, yada, yada……”

Canuckleheads smugly settled back with smirky, self-satisfied smiles, regurgitating “it’s different here” – in the mirror and to everyone within earshot. Especially at cocktail parties and dinner soirées at the trophy house.

It really is different here in sweet, malleable Canaduh.
I wonder how many cases like Caitlin (and worse) are out there. The full effects of ma and pop helping junior and juniorette walk the debt plank are still to come.

Meantime, Ted the twerp sleeps like a baby, his finances squarely in the black.

#138 NoName on 08.26.17 at 9:36 am

I some posts cognitive dissonance, i sense.

#139 MF on 08.26.17 at 9:41 am

I agree with Blacksheep:

The OSFI thing will come and go and amount to zero.

Houses will eventually continue going up. No one likes renting. After years of price appreciation for owners, most renters are just waiting to “vulch”…..but they won’t because house prices will never fall to what is an acceptable price.

Non event. All of it.

MF

#140 For those about to flop... on 08.26.17 at 9:43 am

Broadway at 3:29 am
Flop I will get you that price.

But you will have to wait!
On island w no real computer or wifi till wed.
But….there happens to be a very interesting fight tomorrow night (sat) which I have got to see (29-0 w11ko vs 0-0) so I’m coming back to the city for a few hrs. Expect your number before the bell rings. You must really be expecting this one to be a stinker!

I report on most all sales in my neighborhood, winner or stinker. Not many stinkers yet though. The worst smelling one is an ugly special on corner of Vic and gravley. Been up for well over a year I’d say. The ask of 1.69 has not budged over that time. I expect it will sit for much longer.

Seeing a little more backhoe action the past few weeks. Someone still thinks there is money to be made building duplexes.

///////////////////////////////////

Hey Broadway,yeah no rush ,I just asked about that one a couple of times as it was the only one of my cases that come up as sold.

Things seem to have slowed down on the houses in my folder ,a sale or two every couple of weeks and a handful each week that expired ,then come back on a few days later.

In my recap post the other day I stated that the highest speculation I have on my books was 15 million,well that is no longer the case as they simply removed it a couple of weeks ago as no one is chucking that sort of money around at the moment,especially on a house that needed a lot of work.

I think the top dog now is way below that,but still hefty in the 9/10 million range.

Speaking of stinkers in your hood ,you might as well tell me what is the status of these two houses that have been on the market for a long time and aren’t up at the moment.

1847 Venables st. Vancouver.

3399 Nanaimo st Vancouver.

A lot of the people trying to offload their properties that they were speculating on can’t seem to get their number to be made whole and so they wait.

I told the story of the elderly lady a fee doors down that took 100k off the asking price to get the deal done, despite being one of the cheapest options in Vancouver.

She had the luxury of being able to do that since it was and old purchase, but the people who are trying to unload at spring 2016 prices ,plus 10% are having a tough time of it.

You enjoy your fight ,and I will keep watching these guys duke it out with Mr Market.

Pretty sure he is undefeated too…

M43BC

#141 Smoking Man on 08.26.17 at 9:49 am

8 minutes of brilliance. creativity and running a business.

https://www.youtube.com/watch?v=GwH4cEOICGg

#142 Happy Housing Crash Everyone! on 08.26.17 at 10:02 am

” listened to the indebted deplorables moan & deny while enduring the cackling of the housing-crash morons who enjoy drowning kittens.”

No Garth I do not enjoy watching people lose their money since I am doing what those dirty realtor shyster shills should be doing and that is telling their clients to STOP BUYING RE. Everyone knows we have been in a monster of a housing bubble this past year and realtors have not once said Hey, buying now wouldn’t be I your best interest. Instead these dirty shysters make statements which would put you in jail Garth. What would happen to you if you were to do the same thing by claiming prices will just keep going higher or using past gains as an indication of future gains? I like to point out the losses to those dirty greedy shysters not because I want to rub salt in the wounds but I enjoy making realtors blood boil because lets face it, those shysters don’t care about clients losing money and only see their inflated commission checks deflate. Look how realtors trick people into over paying

https://www.thestar.com/business/2017/08/23/drop-in-gta-home-prices-prompts-new-warning-seller-beware.html

“They listed for $499,900 at the end of March. At the beginning of April there was an offer for $460,000. Sheba thought they could do better. But as the spring market fell, even a vastly reduced price of $399,000 failed to elicit any offers.

Finally, about three weeks ago — long after Toronto’s slumping housing market was news — there were two offers. They took the higher bid, an unconditional offer of $420,000 with an Aug. 25 closing.”

This has happened to a lot of people where another buyer shows up out of no where. Best part is when they don’t fall for this shyster trick the realtor calls back to say that the other buyer is no longer interested.

There is a lot of fraud in the RE industry which has resulted in these inflated RE prices causing people to commit financial murder. These shysters are ruining people lives by lying and using their clients emotions to get people to over pay. I have no impact on people lives and I am not the cause of people losing hundreds of thousand of dollars. These dirty evil realtors and mortgage brokers have helped and encourage people to destroy their own financial lives are the bad guys, not me who doesn’t want to see people hurt by buying inflated RE.

#143 Reality 1 on 08.26.17 at 10:07 am

to # 59 Dolce Vita

Not sure about being a private lender just yet – water still too muddy concealing too many perils. Not enough desperation, too many overly optimistic risk assumptions by those still in the game.

However, I would revisit the HCG (Home Capital) investment thesis if one can quantify any real pick up in their business volumes. (margins will remain / grow and quality will improve – believe it or not)

The big caveat being the shareholder approval of the dillutive share issue to uncle Warren. The outcome will have to be contemplated – too risky to move before IMHO. Should the shareholders balk and uncle Warren retreat or play hardball, then a different lending ballgame will emerge for ALL non-bank lenders.

I do believe that the “smart money” has turned off the tap (myself included) having been taken aback by the speed of the crumble in prices, appraisals, collateral ratios, failure to close and government regulation in a heretofore “wild west” marketplace.

Could be a long way down, maybe not, but either way, the waters have to settle somewhat before prudent assumptions can be inferred.

#144 TurnerNation on 08.26.17 at 10:08 am

Rotflol on a public computer I’ve never used I type into google:
greaterfool…it suggests autocomplete:

greaterfool portfolio
greaterfool smoking man
greaterfool preferred shares
greaterfool tfsa

#145 Renter's Revenge! on 08.26.17 at 10:13 am

#111 SW on 08.25.17 at 11:21 pm
“It’s illegal to threaten someone with murder. Call the police and make a complaint.”

Thank you. That is comforting advice. You sound like a wise person.

#146 Reality 1 on 08.26.17 at 10:19 am

to # 74 Wrkdover

Total . F’ING . IRONY

excellent analysis.
seriously.

#147 Happy Housing Crash Everyone! on 08.26.17 at 10:52 am

I forgot to mention how the dirty Shysters complain and scream about OSFI new rules while telling buyers it will have no impact on prices. How irresponsible and reckless to the buyers financial well being. I’M the bad guy who points this out and taunts the very same people who set out to trick people to financially murder themselves? All those shysters in the RE industry are evil greedy CON men and women , many of whom either don’t have a high school education and / or haven’t even completed grade 8 . These are the same people advising buyers.

You have valid points to make. But be careful about tarring every person in an entire industry with the same brush. Such generalization makes it easier to write you off. — Garth

#148 millmech on 08.26.17 at 10:59 am

Caitlins friend will be fine, all that is needed is a loan from a secondary lender to keep the LTV ratio inline with the OSFI rules. They can get a loan from these lenders for an upfront fee of 9% of the loans value, ie $18,000 on a $200,000 second mortgage at an interest rate of up to 15% which would add another $2500 to the monthly bills.

#149 For those about to flop... on 08.26.17 at 11:00 am

You know what Broadway,after writing my last post to you and flipping through the folder ,the case below is probably the one I am most curious to see the results.

It sold close to three months ago ,and they are one of the few sellers in this price range able to get a deal done.

The last asking had a little bit of wiggle room left but another case over that way on Pilot Rd surprised me by taking that 600k plus expenses hit and so these guys might have been lucky just to get a Pink Draw.

I mean ,what could go wrong?

We are talking about Camelot,baby…

M43BC

1470 Camelot rd, West Vancouver paid 4.6 sold by June 2

Jan 25:$5,188,000
Mar 22: $4,998,000
Change: – 190,000 -4%

https://www.zolo.ca/west-vancouver-real-estate/1470-camelot-road

https://evaluebc.bcassessment.ca/property.aspx?_oa=QTAwMDAyOUNHWA=

#150 Fed-up on 08.26.17 at 11:25 am

#147 Happy Housing Crash Everyone! on 08.26.17 at 10:52 am
I forgot to mention how the dirty Shysters complain and scream about OSFI new rules while telling buyers it will have no impact on prices. How irresponsible and reckless to the buyers financial well being. I’M the bad guy who points this out and taunts the very same people who set out to trick people to financially murder themselves? All those shysters in the RE industry are evil greedy CON men and women , many of whom either don’t have a high school education and / or haven’t even completed grade 8 . These are the same people advising buyers.

You have valid points to make. But be careful about tarring every person in an entire industry with the same brush. Such generalization makes it easier to write you off. — Garth

———————————————————————-

You are technically correct Garth but his statements are entertaining and generally accurate. I’m sure not every tiger shark is dangerous to swim with but generally labeling them as not very safe to be around as a group, is fairly acceptable ;)

#151 lol on 08.26.17 at 11:39 am

Poor Caitlin. And during every year of ownership, she paid more each month than did that twerp Ted, next door, who rents, reads this blog, and now has enough in his ETF-based portfolio to buy a lifetime supply of plaid shirts, bicycle tires and Axe.
……………..

selectively picking?

own my house. RAISED our family in said house. Purchased for $265,000- its worth $1,200,000– has dropped and may drop another 20%, but who’s counting.

purchased 4 properties within the last 13 yrs. Low rates and govt policy was writing on the wall -real estate to explode. sold two for massive profit (while the globally diversified portfolio was earnign 6%..). Still hold two, both cash flow positives. Planning on leaving those two for our boys

and , yeah…do have an investment portfolio..

#152 oopswediditagain on 08.26.17 at 11:42 am

Blacksheep: “Where does it say she couldn’t qualify when she purchased?”

You used to be fairly reasoned, my friend. Are you being deliberately obtuse now?

Her parents didn’t lend her 5% to get a CMHC mortgage to which she would have to qualify at the BOC qualifying rate!

She was obviously lent 20% because she and her parents knew that she wouldn’t qualify otherwise.

You are seeming to be a little anxious, my friend.

#153 BS on 08.26.17 at 11:45 am

119 Blacksheep on 08.26.17 at 2:08 am
BS # 97,

“There will be doom for those who own. Real estate busts are not due to forced sales, they are due to a lack of buyers.”
———————————
Yes, cause all those itching to vultch, just luuuv renting (been there) at crazy high costs, if they can find something decent, always subject to the whims of the landlord, while the boomer owners home has gone ballistic in value, just enjoys his home and waits.

Who do you think is going win this standoff?

The group think on this blog is getting ridiculous.

Home ownership rates are at record highs. That is why prices are high. If you look at what has happened over the past 15 years the reverse will be taking place over the next 15 years.

#154 re., Happy Housing Crash Everyone on 08.26.17 at 11:48 am

All those shysters in the RE industry are evil greedy CON men and women , many of whom either don’t have a high school education and / or haven’t even completed grade 8 . These are the same people advising buyers.

……….

lol. This guy is so angry the mind is no longer clear.

MANY have made a small fortune in real estate over the last 15 years . Don’t be angry with them. Be angry with policy makers and have the courage to become ONE

#155 Gravy Train on 08.26.17 at 11:55 am

#90 Smoking Man on 08.25.17 at 9:24 pm

Absolutely. You’re parochial. — Garth

“I thought that was a made-up word…. Do you remember this [expletive] f[ro]m coll[e]ge days[?] Or just google a sim[i]lar word that gives you alternatives[ ?] This gifted [sic] writer wants to know how you find these [words].”

Answer: Garth has what’s called a vocabulary! :)

#156 For those about to flop... on 08.26.17 at 11:55 am

To help out the people at Pilot Rd that took the big 850k hit Joan Armatrading has agreed to re- release her 1983 hit Drop The Pilot as a charity single to help these unfortunate people out.

Please give generously.

Animal,mineral, physical, spiritual
I’m the one you need, I’m the one you need…

M43BC

https://vimeo.com/25551015

*NoName I want you to watch this and tell me if you ever heard this song before ,as I heard it once was number 86 on the Croatian pop charts…

#157 NoName on 08.26.17 at 12:01 pm

W: what did you buy?
Me: remy and that chech brany.
W: everyone who comes out from store have smile on it’s face.
Me: I rest my case.

#158 Dolce Vita on 08.26.17 at 12:20 pm

#143 Reality 1

Reads you know much and thanks for the thoughtful comments based on actual experience.

Irks me some Commenters think this Housing talk is all for naught; rather, quite important I think whether personal finances, more risky option plays…you name it.

A debt of gratitude to Garth and thoughtful Commenters such as yourself.

We are all better for it.

#159 MF on 08.26.17 at 12:26 pm

#154 re., Happy Housing Crash Everyone on 08.26.17 at 11:48 am

Bingo.

Blame the worthless BoC, CMHC and yes, OFSI.

They are all incompetent.

Troll wise, the mayor of the Milton is the only one who I read. The others I skip through.

MF

#160 Darryl on 08.26.17 at 12:35 pm

You have valid points to make. But be careful about tarring every person in an entire industry with the same brush. Such generalization makes it easier to write you off. — Garth
—————————————————————-
Maybe not all Garth but a very high percentage.

I’ve bought 4 houses in the last 30 years and on the last three I was told that a competing bid came in hours after mine and I would have to raise my price .
All three times I told the agent that I didn’t do business that way and they could give the house to the other bid .
All three times I got the house .

What’s that show?

Besides . HHC guy is a hoot . You can tell he’s just hamming it up for the cameras .

And he’s consistent unlike that Smoldering guy .

#161 Honest Realtor on 08.26.17 at 12:50 pm

The happy housing crash pyschopath must be wetting his pants with glee over the suffering and death being faced by human beings in Texas thanks to Hurricane Harvey.

What a sick piece of crap he is.

#162 oncebittwiceshy on 08.26.17 at 1:21 pm

151) Lol: “selectively picking? purchased 4 properties within the last 13 yrs. Low rates and govt policy was writing on the wall -real estate to explode. sold two for massive profit (while the globally diversified portfolio was earnign 6%..). Still hold two, both cash flow positives. Planning on leaving those two for our boys”
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

Nope, that would be you, my friend. You do realize that you are one of the great geniuses of this housing market. You had enough experience to see the bull run coming and leveraged your property to buy 4 other homes. All before the bottom fell out, almost clairvoyant.

The problem is you couldn't help but brag about it to your friends who decided they could do similar things but with a lot more leverage and they are about to get hammered.

Success can be lonely when you become a pariah with all of your friends because they followed or were lead by your success and they end up bankrupt.

#163 OttawaMike on 08.26.17 at 2:15 pm

Smokingman

China is where you offshore your IT work. As much as I respect India, the Chinese have them beat for quality work in that trade. Leave the call centres to India.

#164 Catalyst on 08.26.17 at 2:36 pm

The true sign will be when rents start to drop. Until then, no one is going to sell a house to rent. Rents are crazy expensive in most of the GTA at least at the 1-2 bed level

#165 For those about to flop... on 08.26.17 at 2:47 pm

Pink Lemonade stand in Vancouver.

I am not surprised these guys are struggling to offload this April 2016 purchase that they signed on the line for 1.5 million.

As I stated a lot recently the lower end of detached houses are not quite selling like they used to.

A comp just sold near my place and not that far from this place for 1.2 and that one seemed in better condition and definitely is in a better area.

The assessment,bloated as it is only comes in at 1.35 and so they are going to have to get lucky to get out without a shark taking a bite out of their backside.

The realtor also seems to be being creative with the age of the house as there is an eight year discrepancy between the two documents,trying ,I presume to at least make the house appear from within the last century.

I’m sure they don’t make as many mistakes when they are filing official paperwork as they do in their listings…

M43BC

2111 E 29th Avenue, Vancouver

May 19:$1,650,000
Aug 25: $1,599,000
Change: – 51000.00 -3%

https://www.zolo.ca/index.php?sarea=2111%20E%2029th%20Avenue,%20Vancouver&filter=1

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAwMzREVw==

#166 DON on 08.26.17 at 3:04 pm

#121 Reality 1 on 08.26.17 at 3:51 am

” When will the market bottom ? ”

Maybe it keeps ‘melting’ for years as bullishness gives way to bearishness.

There are a lot of factors to consider in that equation – the most important one being “sentiment”.

Imagine if the same level of mania (or even 1/2 of that intensity) were to be applied on the downside ?

Yikes !
**********
Do we have to ‘imagine’ or just wait patiently. The variables are all in play just a waiting game at this point. Like boozing all night long outside your comfort zone (no food, no water) and not expecting a severe hang over.

YIKES! may be an under statement soon.

#167 For those about to flop... on 08.26.17 at 3:29 pm

CONFIRMED PINK SNOW.

These guys were perhaps lucky to take such a small loss with such a low assessment,the guys out in Richmond in the same price bracket aren’t faring so well.

The details…

Paid 728k May 2016

Sold 750k July 2017

Not the biggest loss ,but a recent sale and they got more than they paid but it wasn’t enough and so up she goes…

M43BC

106 388 W 1st Avenue, Vancouver paid 728 ass622 sold June 26th

Jun 10:$808,000
Jun 24: $759,000
Change: – 49000.00 -6%

https://www.zolo.ca/vancouver-real-estate/388-w-1st-avenue/106

https://evaluebc.bcassessment.ca/Property.aspx?_oa=RDAwMDBCQkZRSw==

#168 DON on 08.26.17 at 4:53 pm

#147 Happy Housing Crash Everyone! on 08.26.17 at 10:52 am

You have valid points to make. But be careful about tarring every person in an entire industry with the same brush. Such generalization makes it easier to write you off. — Garth
&&&&&&&&&&&&&&&&

Agreed…your opponents will use your tactics to discount your information. Sad…but that’s really that only angle they have.

But I do enjoy the rants, just change it to “some” realtors and some are shysters. OH RRIGHTY THEN>>>

#169 Re.162 on 08.26.17 at 5:58 pm

Lol

There are financial winners and losers in life . You voted Trudeau, am sure of it

Thanks for the 1st paragraph compliment. Trust me, wasn’t hard ….a bit of hard work and common sense . And yes this market correction will see plenty of collateral damage

Stay strong …:)

#170 Rargary on 08.26.17 at 8:35 pm

Happy Housing Crash Everyone is hilarious… But yes Garth, you made a great point… who wants to be painted with same brush as a con ? Only another con! However TREB and their misleading articles of bliss if you buy now speaks volumes for that industry in toronto. They themselves are most guilty for giving themselves a tarnished name