The Bank of Canada is warning of severe economic turmoil, including the risk of many Canadians losing their homes, if the financial-market crisis worsens.
It’s different here, no?
But don’t worry…
Banks are somewhat insulated by mortgage insurance
Thank goodness for that, or we’d all be in real trouble.
How come Paul B doesn't have any listings?
Perhaps he's one of these types who hasn't really been in the business very long?
John
hairwolf, don't you worry. Those sushi trash will get a big fine hopefully in 6 to 7 digits, and a jail sentence.
It must be those Sushi selling guys who were fidling the taxes in surrey and Richmond, and thus had tons of cash to buy those expensive houses and drive prices up. I knew those sushi sellers smelt abit fishy !!!
I know the Nokia scene personally and can confirm that the 200 guys and girls laid of were highly paid highly SKILLED engineers and global managers. It was shocking to say the least. Thet are all shocked to say the least. These were all 20 year plus employees, with comfortable lifestyles and what you would persume to ne ALLLLL the bills to pay.
I know the Nokia scene personally and can confirm that the 200 guys and girls laid of were highly paid highly engineers and global managers. It was shocking to say the least. Thet are all shocked to say the least. These were all 20 year plus employees, with comfortable lifestyles and what you would persume to ne ALLLLL the bills to pay.
I heard that Google and Yahoo Vancouver had laid off workers; Nokia Burnaby will layoff 200; Telus 500 this year followed by 700 or 1000+ next. But I can't find any media reports to support these info.
Oh, boy….
All I can say is THANK GOD I DIDN"T BUY. I thought I was f**ked but in comparison I am a fortunate lad indeed.
Paul, thanks for the analysis. I knew in my gut when I moved here that the priced were ridiculous and people's rationalizations made no sense at all but it's nice to see that bourne out in the numbers and financial modeling.
Bcubbins: You're right about the total debt staying the same, plus financing cost (which the borrower has presumably been paying). The reason the $70K second LOC is needed is to offset the "new" first mortgage, which is now $70K lower.
As for the question of whether the bank will refinance an underwater borrower, it will depend on the borrower's payment history, the bank's need for cash, whether the bank expects the asset to continue dropping in value, what the bank thinks of your stability, whether it has any bonds rolling soon that it may have to finance, etc…
Paul, presumably the $70k from the second mortgage would be used to pay down the first mortgage. So the total debt stays at $450k plus financing fees.
And I think Rennie #25 and alexcanuck #34 are right. If the borrower has been keeping up with the payments, the original lender will likely refinance. However the borrower will be in a very weak bargaining position — not likely to get a loan anywhere else — and so might have to take whatever terms the lender offers.
Maybe now instead of Condos maybe we will get City Squares or Soccer Stadiums (how about the 300 million donated Whitecaps Stadium), pubs or other architecture structure other than a CONDO.
Nothing wrong with Condos but maybe all of this will be part of the City of Vancouver's progression.
alexcanuck, no it doesn't make common sense at all that a couple would have bought themselves a condo or house they simply couldn't afford. In my scenario that I pointed out the couple would have signed for for a $382,500 first mortgage, taken out a line of credit for a 15% down payment of $67,500 and now owes an additional $70,000 on a second mortgage. This is compound intrest we're talking about. There was a story on CNBC news tonight about how a new trend was emerging with people who had been refinanced once were in default a second time because the home equity continues to go down and every time they have to refinance they need to borrow more money and the payments keep going up pushing them into default again, it's a classic death spiral. That's three loans… Read more »
Chilled,
Take a deep breath watch comment number one in friday free for all before no lympics he is at 2.
These blogs just arn't the same since the Realturds have gone into hiding!!! LOL
Detroit City aka " Motown": Is this a view of what the future holds for RE? ? http://www.bloomberg.com/apps/news?pid=20601087&a… QUOTE: Tough Choices The city hasn't made similar choices yet. Detroit's Recreation Department is the only agency that acknowledged the need to shrink, Thomas said. Its 2006 master plan called for “fewer but better sites and facilities.'' “It's a sign of what's to come for other departments,'' Thomas said. On Nov. 25, the City Council passed a Neighborhood Stabilization Plan that seeks $47 million from the federal government to address the city's problem of vacant buildings and empty land. An estimated 55,000 lots are considered unproductive because they bring in no taxes and cost money to maintain. The grant would pay for knocking down 2,350 of Detroit's tens of thousands of abandoned homes and clear the sites for development. If no buyers… Read more »
Dam…
This does NOT look good.
Time to either park or sabotage the Land Making Machine. Maybe that will help just in time for 2010.
"READ THAT AGAin, YOU NOW OWE $520,000 on a condo worth $385,000. Whatcha’ gonna do ??????????"
there was an item posted on this blog a couple of weeks back. there was a couple who had a subprime mortgage with xceed. they never had a late payment for 5 years. then xceed said they couldn't renew the mortgage. bzzzt. game over. they went bankrupt. 5 years of, as it turns out, renting, and bankrupt to boot.
Excellent point re: mortgage renewals. Any true pro's around to give a more definitive answer? Strikes me, just from a common sense perspective, it is greatly in the banks best interest to renew, even if you're underwater, as long as you can demonstrate both ability and willingness to continue making the payments. CMHC insurance is still valid, I think there is a deductible the bank must pay, foreclosure is costly, and the property won't sell for what is owed. Who wins if the bank won't renew? I simply can't see the bank having a problem with this if the payments continue. Why would the bank object to having a mortgage slave to give them every spare penny, trying to dig themselves out of the hole. No vacations, no dinners out, nothing but working for the bank. sounds awful, but try… Read more »
More from the USA…..
“The decline in prices and its devastating consequences” will continue next year with no indication of when they will stabilize, Hall said.
Regarding condos vs houses- this depends on the area. In parts of fraser valley they overbuilt houses much more so than condos. And many of these houses are unreasonably oversized just as the yaletown shoeboxes were unreasonaly downsized. So basically we have massive excess of inefficient real estate that does not fit a normal 3-4 person family.
Anon, Eren, RennieWhereRU, When your home equity is upside down ie: you owe more than your house is worth the BANK WILL NOT – CAN NOT RENEW YOUR MORTGAGE. It is contrary to the Federal Bank Act to finance at zero equity . This is why the banks and brokers were fixing people up with a ' LINE OF CREDIT' which acted as the downpayment on most 5% down purchases. It got them around the law. What will have to happen to those in that situation ( and there are plenty) is that they will have to find a loan ( a second mortgage/unsecured or otherwise but registrable against title) from a finance company or their parents etc., at possibly aggregious rates in order to finance the shortfall between your home equity ( according to the bank appraisal) and the… Read more »
Depreciation of city condos expected to exceed that of suburban houses
By Brian MortonNovember 12, 2008
Condo owners in downtown Vancouver are at greater risk for price depreciation than single-family homeowners in the suburbs, a BMO Capital Markets economic analyst said Tuesday.
"Condo prices could drop faster because of overbuilding," Robert Kavcic said in an interview. "When you have excess in the market, that pushes prices down."
http://www.vancouversun.com/Depreciation+city+con…
What? Too much supply pushes prices down? Now that's a new one on me!
RE: #15 – Anon
http://www.msnbc.msn.com/id/28035238/
It looks like the worst is yet to come in the States. The graph at the bottom of the first page tells a horrifying story of upcomming forclosures due to gimmicky loans. They are nowhere near the peak of forclosures down there. Combined with the job losses talked about in the Bloomberg piece you posted the next two years are going to be a complete sh*t storm.
Ok, here's a better rendering of #10. Bailout anyone?
Why isn't anybody laughing about #10 that I posted? 🙂
Post #23
Love the matching pea soup green appliance( aka the Landlord is cheap).
Mouse problem solved ? = Vigilant cat 24/7 …or poison all over the houses ( What a turn off…. why mention it?)
Area has/had gang wars doesn't/didn't it?
Hint: Knock on doors of two OTHER tenants…(2 other suites? ) see if they look like "good" intimate neighbours, and also ask them about the place.
Overall it is a hilarious ad…too much details aka too much honesty?
PS A Lawyer may advise against that.