It’s the end of the week! Time to do our weekend open topic discussion post. A brief round up this week, I’ll add more later if time permits. Here are a few stories I’ve noticed lately:
–Families are being priced out of Vancouver
–Back to boom
–TV networks tune into housings new reality
–TSX down for fifth time in six days
–US home resales decline 2.7%
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
@crabman:
In Canada the lenders are offloading risk to CMHC. Seems to me the effect is the same as US securitization.
Not it's not, because the buyer of the (CMHC-insured) securitized mortgages is not exposed to default, nor is the middleman (the bank). Thus there is no damage to the financial system upon default of the mortgage – only to the taxpayer. I'm not claiming there's no damage, only that it's manifested much differently.
Insanity has returned. I'm in a trade-up situation with mortage almost paid off. 50K-100K overbids with no subjects is the norm in my area of interest.
@patriotz:
This is completely different from the US where securitization was used to offload risk from the lender to marks around the world.
In Canada the lenders are offloading risk to CMHC. Seems to me the effect is the same as US securitization. Lenders are making risky loans then selling them to some sucker, and all these bad loans are inflating a huge housing bubble. The only difference is that our sucker is CMHC!
How's the highend condo market doing?
BB said: "In the “Nahanni” open house, Polygon reps were trying to flog ten unsold units priced in the low 500K range, while another group, represented by a realtor, sat forlornly in the lobby trying to unload their two “investments” in the 449K range."
Units appear to be designed to rent out and attract small time part time landlords who are more in the begging than choosing position when it comes to tenant selection. Look at the layouts. Do they say "Newlywed couple, young family" or "College roommate wanted"?
@crabman:
Since 2007, over 90% of Canadian mortgages have been securitized.
Virtually all the ones that matter (the risky ones) are CMHC insured. The securitization involves no transfer of risk since CMHC continues to guarantee the principal. The real issue is the assumption of risk by CMHC at the time of the mortgage loan, not the subsequent securitization. The taxpayer would have the same exposure in any case.
This is completely different from the US where securitization was used to offload risk from the lender to marks around the world.
"Because the guy who buys low and sells high gains wealth at the expense of the guy who buys high and sells low.
Isn’t that obvious?"
Duh.
So true. But guess what? Some people STILL don't get it.
In this situation, CMHC would likely have a claim against someone who walks away from his/her mortgage (I’d have to see the insurance contract to determine whether the insurer has this right). But CMHC is probably even less likely to come after you than a bank…”
If CMHC determines that you do not have the assets to make it worthwhile for them to come after you, they will sell the debt to a collection agency who will hound you to death until you either pay up (possibly by wage garnishee) or declare bankruptcy.
If you get foreclosed and you have any assets other than the usual personal possessions, rest assured you will lose them.
I was snooping through a brand new complex in the Newport area of Port Moody today.
In the "Nahanni" open house, Polygon reps were trying to flog ten unsold units priced in the low 500K range, while another group, represented by a realtor, sat forlornly in the lobby trying to unload their two "investments" in the 449K range.
If they had taken the time to look on "Realty Link", they would see identical units for sale in the 340-385K range.
A buyer really must do "due diligence" or else be a REAL chump!
By the way, there wasn't much action. I think most people know the jig is up.
@bums up2:
Why would you buy low and sell high when no wealth is being created by the transaction?
Because the guy who buys low and sells high gains wealth at the expense of the guy who buys high and sells low.
Isn't that obvious?
The ALR was created in 1972, ironically about the same time the world entered inflationary times that have run unabated since then.
When you limit supply, demand and hence prices rise.
IMHO, prices have not met fundamentals since 1980.
Then why aren't rents higher? And why have jurisdictions with no land use restrictions (like Phoenix and Florida) seen similar price increases to Vancouver?
The answer: there is no shortage of supply of housing. Prices (but not rents) are being inflated by easy credit and stupid buyers, just like in every other bubble market.
"The strata corporation must enforce the bylaws and has a duty to collect the funds."
And rightly so.
However, after reading this excellent post, is it any wonder that some people choose to rent?
Far less "complicated", in many respects. And, when the market corrects substantially, less expensive.
Strata must act if owner doesn't pay fees http://www.househunting.ca/homes-and-gardens/thep… Dear Condo Smarts: Three owners in our strata have not made payments on a special levy that was due at the end of February this year. They each owe roughly $9,000, and our suites currently sell for around $325,000. Our property-management company has placed a lien against the strata lots, but has advised us not to proceed with a court-ordered sale as we are told the judge would be very unlikely to force a sale. Part of the problem is our manager is afraid of one of the owners. If we can't go to court, how do we get money from these owners? — N.B., Surrey Dear N.B.: If a strata lot owner has not paid his strata fees or special levies, the Strata Property Act gives you substantial authority to… Read more »
59 !(EconomicsDegree) Re ALR: The ALR was created in 1972, ironically about the same time the world entered inflationary times that have run unabated since then. When you limit supply, demand and hence prices rise. IMHO, prices have not met fundamentals since 1980. However, in the last 10-25 years multi – family has dominated the scene and that's why Bob Rennie is rich, he foresaw this years ago. Urban "affordability" is now relegated to going vertical. However, even this has gone rather high end as developers and greedy local gov'ts act in collusion to squeeze every dime they can. People are now literally forced /shoehorned into strata living and that quasi socialist nightmare. The ALR has evolved into a land bank thats benefits a select few who profit from the artificial shortage. It's not much different than how DeBeer's does… Read more »
rp /ignore
@asp: #71, The diversity of culture and tax nuance though self evident does not explain away why Vancouver has so many homeless, crackheads, starving seniors, mentally ill without care, native peoples drained of spirit, and youth careening down the highway to hell known as Vanshitstains city streets. Why is this such a persistent issue that Vancouver explains away with bicycle paths and silly games? You would think that in such a small town there would be more concern not less than that of a major metroplois where myriad issues such as homelessness can get buried. It isn't an anomaly in Vancouver to have these huge numbers of disposessed, its Whalley, Aldergrove, Mission , Chilliwack, DTES, Kelowna etc etc etc., it is in evidence everywhere in the GVRD, it is not at all here? Why??????? Is it because VST-zone has no… Read more »
Well, I havent thrown myself into the fire sea of mortages, house ownership, or fancy lifestyle. I am so lucky that I don't have the consumer addiction or high demands/expectations, so I live modestly, very modestly, and no complaints. What I am now focusing more on, since I know the economy is not going to get better etc, how to avoid getting taken advantage of those that have had no restraints on themselves in the "i want iwant i need i must have" department. How to avoid getting sucked in by sob stories, how to gracefully say "no". I am all for helping other people, but not those that have been selfish in their spending. Those need to learn a lesson, not me. Any suggestions? One of my ideas would be to refer them to sites about how to be… Read more »
scullboy I can make the same observation in Calgary. 6 months ago it was unheard of eating out on Friday without reservations, unless you were willing to wait a couple of hours. I can walk into any restaurant and get a seat on almost any day. Sadly in Calgary there aren't any good restaurants where you really want to.
Just to clarify a couple of things: When I said the Poit Grey cafe owner said business is down, she was speaking about her regular customers, who all said the value of their investments like RRSPs were way down. Although technically they haven't lost money because they haven't sold anything there's a severe psychological drag when you look at your RRSP statement and there's a big drop. Since I've been working in the food and beverage industry I can also tell you that in almost every decent restaurant in town, business is down about 40%. That's also the opinion of the staff at the culinary school I attended, and they have a program to get people from school into the industry. So except for those Dim Sum places in Richmond (and trust me after working in kitchens I can tell… Read more »
Don't agree Asp taxes have nothing to do with it. Its all about culture. In fact homelessness was mostly a first world phenomenum. In the third world you have a lot of poverty but its different than here. A poor farmer may share his house with twenty others but he still has a home.
In many European countries crime and homelessness are on the rise but in more traditional countries they are still lagging us in those areas. Eastern Europe and southern europe as a whole was more traditional. Of course its the sign of the times and they are changing. Also with economic migrants flooding their shores there is a new class of homeless. People who are poor with no homebase.
"The RCMP murders of mass numbers of citizens"
—
PR, more groundless libel.
@realpaul:
The reason you don't see so many crack heads in European streets is because they pay higher taxes then we do here.
And their governments are actually smart about how they spend the money. Europeans get great value for their tax dollar.
"the condo he rents in the Bosa development at Granville and Seventh (a place he’s likely to be staying a while longer, since he says he can’t afford to buy here)"
Brent Toderian makes $178,000 a year as City of Vancouver planning director. And finds that paying rent is better then buying a condo.
@other ted: Many people are surprisingly naive when it comes to the cynical and largely destructive policies of our own government. Its as if peoples sense of right and wrong is offended by the idea that our own governments could be working a cross purposes to the benefit of the citizenry. The classic misdirection principles used by governments ( and corporations)to play on peoples nationalistic sympathies and sense of home safety cause such disonance that people are wholly disrupted by the horrible examples which are so often caught in the public forum. Examples of the rape of the enviornment are overcome by advertising 'the supernatural' enviornment. The RCMP murders of mass numbers of citizens are countered by the sensation of history and 'the musical ride'. Vote rigging in newly created ethnic constituencies is rammed through with very public fights over… Read more »
Barney Frank comments on US financial regulation:
What's the most important part of financial regulation?
Limiting securitization. I believe the single biggest issue here is that people invented ways to lend money without worrying if they got paid back or not by securitizing the loan.
Since 2007, over 90% of Canadian mortgages have been securitized. Good thing we aren't making the same mistakes as the US!