Here’s your open topic post for Friday August 17th, 2007.
Some of the stuff thats going on (I’ll add some links later)
-Liquidity crisis
-Interest rate increases
-Affordability limits
-Lots of construction
What are you seeing out there? post your news, links and anecdotes here!
casual observer,if I was running the mortgage dept. of a bank, I would prefer that all of the mortgages issued be high-ratio mortgages, and subsequently be insured for default risk.During one of my mortgage applications, my broker told me I got a 0.05% reduction in my rate because I was CMHC insured.I'm surprised these discounts aren't more common!
yeah one thing I can tell you that would be good to guess.residential sales volume on mls in bc up 44%residential unit sales up 25%no more question please you will find out next month.thanx alpha.I know source are very importent to present solid arguments ,but I am not arguing this is just a little info for us for here.
alpha bear,sorry thats one sided true numbers don't look for source.
Satv,According to the OMREB, the YTD residential sales in the Central Okanagan were 1855, while last years residential sales YTD were 1620, for a YTD increase of 14.51%For the North Okanagan, the residential sales YTD totalled 753, while last years figures YTD were 767, for a DECREASE of 1.83%I can't see how you manage to get a 13.7% increase from these figures.If you add the North Okanagan and Central Okanagan figures together, you'll wind up with 2608 residential sales YTD, and 2387 residential sales last YTD, for a percentage increase of 9.26%
Alpha_Bear.,Okanagan Mainline up 13.7%South Okanagan—-up 11.8%mls residential price up $446,386 thats 15.2% up yoy.
If this is truly the case, then if I was running the mortgage dept. of a bank, I would prefer that all of the mortgages issued be high-ratio mortgages, and subsequently be insured for default risk. As a lender, my butt would be about as completely covered as you can get.I say:That's the way banks operate in a deficit mode and loan structure are designed to do what?"To always protect the lender first".You see, banks only have about 5% of cash on hand for depositors. The rest goes to business loans and mortgages. We all know what happened to some of the shady business loans (Enron, Global Crossing and 360 net). They were failures, but still all banks recovered after since. Who suffered? Shareholders of those companies did.In this round of mortgage mess, banks will not suffer because as long… Read more »
"I think you are using the popular, but bogus, definition of "investment" as "an asset with a guaranteed capital gain". Not only does housing not provide this, no other asset can, either."I say:That means you never had an education? And that you're destined to become a low wage earner for the rest of your natural lives?Let's make one thing clear what is an asset. An asset is an entity for generating cash flow, which is the opposite of liability.We all possess some asset that make us unique. Our brain, for example, is a given asset. It contains knowledge, to allow you and myself to perform admirably in our vocation. Our vocation is what provides us with income, aka cash flow. How do we get that knowledge?!? By going to school right?Yeah, but apparently many of you seemed to have forgotten… Read more »
Here we go again…up and only upCanadian home sales forecast liftedROMA LUCIWGlobe and Mail UpdateAugust 20, 2007 at 10:26 AM EDTEven as the U.S. housing market continues to unravel, the Canadian Real Estate Association has hiked its 2007 year-over-year sales growth target from 6.5 per cent to 8.1 per cent.Canadian home sales are now expected to reach 523,100 units this year, up from a previous target of 514,450 units, and the highest level on record in most provinces, CREA said in a new residential forecast released Monday.“Activity is forecast to edge slightly lower in 2008, but will reach the second highest annual level on record in almost all provinces,†CREA said. “Prices are forecast to set new records in every province this year and in 2008, but price increases will be smaller next year.â€
Satv said,"Residential sales year to date change.Okanagan+13.7%"I don't know where you're getting your figures for the Okanagan, Satv, but they don't match the OMREB July release.
"I think you are using the popular, but bogus, definition of "investment" as "an asset with a guaranteed capital gain". Not only does housing not provide this, no other asset can, either."Thanks for the correction Patriotz. I could not seem to find the proper phrasing for the concept of "investment" as typically used in popular discussions on real estate. I seem to run into more and more people that have recently bought into the market. Invariably, every discussion I have with these people involves their belief that this is a great "investment" because RE always goes up. Valuation of this investment in terms of the income stream it generates or the rent expense it offsets, is simply not considered. Makes me wonder how these people would value shares of stock or bonds. Bear in mind I work in the financial… Read more »
"That is what I thought, but Mohican says that it is for the full mortgage. Check his blog, it was in one of the latest posts."Mohican may be right about the full mortgage being covered. I checked several info sites as well as CMHC's own website. They all seem to say pretty much the same thing.Basically, with a high-ratio mortgage that is insured, the lender is protected against losses arising from borrower default. There was nothing that I could find anywhere that put limits on those loss amounts – ie) being limited to the amount above the conventional mortgage ratio. Here's a quote from one of the sites."CMHC limits the risk to approved lenders by providing mortgage insurance against principal and interest losses arising from mortgage defaults. As a result, CMHC approved lenders feel positive with the availability of mortgage… Read more »
If I'm not mistaken, CMHC insures the part of the mortgage that is considered high ratio.That is what I thought, but Mohican says that it is for the full mortgage. Check his blog, it was in one of the latest posts.Um, you have just explained why housing is an investment. An investment is an asset with a cash or marketable yield.Well, it turns out that it doesn't matter if owners (70% of the market) doesn't consider it an investment. Prices are set at the margin, and only a small amount of rational actors (investors) are required to keep a market accurately priced.In the long run of course. In the short run it can be pretty mucked up. One reason is inexperienced and greedy speculators streaming in. The other is the traditional RE investors reluctance to take opportunity cost into account… Read more »
casual,High-ratio mortgage insurance will still be required for mortgages greater than 80 per cent of the home's value.Those borrowing 80 to 85 per cent of the purchase price pay a premium of 1.75 per cent of the amount borrowed, rising to 2.0 per cent on 85-90 per cent, 2.75 per cent on 90-95 per cent, 2.9 per cent if they are borrowing with a five-per-cent down payment, and 3.1 per cent if they have no down payment.While the insurance premium is a one-time charge, it is typically added to the mortgage amount and subject to compounding interest.
yes casual 100%correct.
"But what about Canada? Mohican says that 100% of a mortgage is covered by CMHC if their requirements are followed. That is nuts. What risks do banks/investors have?"If I'm not mistaken, CMHC insures the part of the mortgage that is considered high ratio. For example, as of right now a purchaser can take out a mortgage for up to 80% of the appraised value of a home without having to purchase high ratio mortgage insurance.If a person takes out a mortgage for say 90% of the appraised value of a home, they are required to buy the insurance. The insurance would cover only the amount that is above a conventional non-insured mortgage, ie) the extra 10%.In the event of a default, the bank would still be on the hook for the 80%, but CMHC insurance would pay the bank for… Read more »
lack of services in other cities driving people towards vancouver and that patren will be countinue for years to come.Residential sales year to date change.Okanagan+13.7%Victoria+11.4%Vancouver Island+9.9%kootenay+8.4%year to date,mls residential sales is up 16.6 per cent.home sales climbed 3.6 per cent to 65,103 units.average price increase 12.5 per cent $434,381.
Curiously, everybody talks about housing like an investment, and no body actually discusses the fact that it is just shelter, and its actual return is the rentUm, you have just explained why housing is an investment. An investment is an asset with a cash or marketable yield.As opposed to things like Beanie Babies or rare stamps.I think you are using the popular, but bogus, definition of "investment" as "an asset with a guaranteed capital gain". Not only does housing not provide this, no other asset can, either.
thanx tony, I am working on next post that will be ready in 10 min.
Don't mind satv, he's just a bitter renter trying to make the bears capitulate so he can have a shot of getting into the market after it turns…
satv: verbosity is the bane of keyboaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa
freako my life is @360 because of slackers.will be back @10pm.
satv, do you work night shift? I ask because it seems that you have watched your fair share of soap operas. Or perhaps dayshift with Tivo actino?
Entirely biased! As an objective pofessional, he should have advised "caution", "not all goes well". All the usual suspects are out in force reassuring their respective flocks, using everything from fuzzy logic to invoking Buffet wisdom. Ozzie doesn't spin much if at all, so I don't know what this was all about.
sorry 2005 remind him of buying something.
Ozzie's article is misleading. The consumer index tracked by the University of Michigan released on Friday (overshadowed by the Fed's decrease in discount rate) clearly showed a significant drop (from 90.4 to 83.3). The expectation was 88, but it came in at 83.3…That's significant. Further, the data is trailing, not forward looking. If the next release shows a further decline, it would strongly point to a new mindset!Entirely biased! As an objective pofessional, he should have advised "caution", "not all goes well".