Comments on: CMHC really wants you to buy something.

By: Anonymous

Anonymous — Thu, 22 Oct 2009 13:32:01 +0000

Denial-Dave is back. Ts ts ts, you are something else man... You just refuse to get it.

Current score: 2 (to vote for this comment, please visit the site)

By: Drachen

Drachen — Thu, 22 Oct 2009 11:39:11 +0000

No, I think the Conservatives knew perfectly well the market was becoming unstable and if it collapsed they'd be in trouble so they encouraged the CMHC to loosen things up a bit to try to keep the market going several years before the correction. Is it so hard to believe that people knew years in advance what was going to happen? People were talking about that on VHB before then and we are all just a bunch of self-educated amateurs, you think the government doesn't have access to better analysis than we can put up? I can never tell, are you being disingenuous again or do you really not understand?

Current score: 1 (to vote for this comment, please visit the site)

By: crabman

crabman — Thu, 22 Oct 2009 09:49:33 +0000

@Dave: I gave you a link that spells out in great detail exactly what CMHC is doing. As I expected, you seem to have completely ignored it in favor of continuing to argue with everyone who doesn't agree with you. It's too bad. You could learn a lot from the people on this blog, many of whom have decades of experience in RE investing. Your stubbornness could wind up costing you a lot of $$$.

Current score: 2 (to vote for this comment, please visit the site)

By: Dave

Dave — Thu, 22 Oct 2009 09:25:47 +0000

@Drachen: So you think the CMHC saw and reacted to the Fall 2008 market correction two years before it happened?

Current score: -9 (to vote for this comment, please visit the site)

By: Drachen

Drachen — Thu, 22 Oct 2009 09:16:17 +0000

Dave, you spend half the time trying to show everyone how smart you are and the other part 'playing' dumb (playing is in quotes because I sometimes wonder...). There have been reams of info on here about how the CMHC has helped prop up the market, it's pretty obvious what they're doing when they extend the periods they'll insure from 25 to 35 years or drop the minimum down payment, they're trying to lower the bar and by doing that they're helping more people enter the market which keeps the whole thing going. So tell me now, are you too dumb to figure that out or were you being (my favourite word to describe you coming up here) disingenuous again?

Current score: 5 (to vote for this comment, please visit the site)

By: observer

observer — Thu, 22 Oct 2009 09:15:14 +0000

@Disbelief: Water beats rock in the long run. We rent this world from landlords who borrow from us.

Current score: 1 (to vote for this comment, please visit the site)

By: Disbelief

Disbelief — Thu, 22 Oct 2009 09:10:03 +0000

In Dave's mind he will always be right. It is impossible to convince a rock is not a rock. After all this is Dave's world we just rent it.

Current score: 4 (to vote for this comment, please visit the site)

By: observer

observer — Thu, 22 Oct 2009 08:55:12 +0000

@Dave: If that's the only point you are trying to make, it isn't very interesting. It's like saying drug dealers don't have anything to do with drug addiction because ultimately it is the drug user who makes the action to take the drug. The dealers only provide the drugs.

Current score: 4 (to vote for this comment, please visit the site)

By: domus

domus — Thu, 22 Oct 2009 08:27:35 +0000

Dave, see the posts by Patriotzed and others, which explain more eloquently than me. My simle answer to you: most recent loans, and therefore most recent transactions, would not exist without the CMHC. In a working market there would be price (interest rate) discrimination: people with low downpayment would have to pay a higher interest, which would mean a lower loan size. This would immediately reflect in lower number of transactions and lower prices. This is a market on drugs, where the drug is subsidized credit. It cannot, and will not, last much longer. The crash had started eagerly in 2007 and by now it would have erased 1/3 of nominal valuations. Concerted government intervention, in Canada and abroad, has backstopped the market and temporarily halted the slide. Governments were scared of the huge negative 'wealth' effect that a drop in house prices would have on consumption and the economy in general.

Current score: 12 (to vote for this comment, please visit the site)

By: observer

observer — Thu, 22 Oct 2009 08:13:58 +0000

@patriotzed: Yes, you are correct. So what has changed is that the banks off loaded their riskier mortgages to the crown but as you say the crown was backstopping everything in either case regardless of who owned the mortgages. The other thing that has changed is that the banks have more leg room to underwrite more mortgages as a result. In hindsight, this may turn out to be an action which in the long run produces more risk of a collapse and hence more risk for the crown/taxpayer. Ultimately, it is a policy decision by our government.

Current score: 4 (to vote for this comment, please visit the site)