bull

Time to get rid of Carney,all he cares about are banks. The common joe doesn't have a chance. Let's raise the interest rate so the fat f…. banks can get fatter.They talk of all this bs but really it's about,WE,the banks are missing all this money.

Do we,the people, not own the BOC, listen to us, not the banks.

"I still think the CMHC is keeping prices above what is dictated by prudent supply and demand." Observer, CMHCs government guarantee is also keeping mortgage rates at least 1/2% lower than they otherwise would be. There are significant economic benefits to that. Supporting the housing market yields economic benefits as well (hundreds of thousands of jobs, equity for people's retirement, etc.). Housing accounts for $1 out of every $5 of our GDP. That some people can't afford as much house as they'd like, is an unfortunate but tolerable side effect. People can criticize CMHC and the government endlessly, but without them Canada could be a much grimmer place to live. If you want a housing market like the UK or US, then remove federal support for housing and you will quickly get there. Today's policies are inflating home prices. I… Read more »

Many of my friends and co-workers have either actually bought RE or thinking of buying this year because they are afraid of missing the train. Does that tell you something?

Story in the SUN http://tinyurl.com/ya64psx

Headline = "Don’t clamp down on home mortgage rules, federal government urged"

Take away = "low mortgage rates are merely coaxing buyers who would have bought in 2010 or later to make their purchases now"

Most “believers” knew that prices could not be sustained, but they had hoped the “one hundred year mortgage” would soon come to the rescue to support more price appreciation.

When that hope was dashed, sales dropped, prices followed.

The alt lenders quickly moved in with low, low, teaser rates, to recapture the market share which had been eliminated.

The major lenders matched the low rates, and lowered the standards once again.

Will Flaherty come to the rescue with more credit swaps, or will he finally realize the banks won’t comply?

This is not just a RE Bubble, it is also a Credit Bubble

The RCMP has lost all public support and confidence after the spate of citizen murders across Canada survey shows. Kick these incompentant loser cowards out and bring in people that don't want to kill when they get up in the morning. These RCM Psychopaths are the shame of this nation.

http://www.chtv.com/ch/cheknews/story.html?id=237…

@domus: Interesting article. It's worst than renting because you are locked in. Once prices correct here, it might take many years before people break even again. The CMHC is a joke. Without it, life would go on and the market would be the better for it because prices would correct to reasonable levels and there would be no need for it. Yes, there will always be some segment of the population who can't put down 20%-25% down payment, but that segment would diminish once prices drop to fundamental levels. The rest should really be renting. Trying to allow this remaining segment to buy creates systemic risk for the economy and taxpayers. It isn't necessarily because this segment itself poses default risk (it might or might not) but that the global support of prices above prudent supply and demand that poses… Read more »

Arit, I guess probably many people had this figured out long ago — and way before me. Not claiming any originality.

What I find interesting, though, is the mechanism: CMHC was introduced with the objective to make homes more affordable. What it achieves, however, is a subsidization of loans (some for investment properties) which pushes up bottom line transaction prices and makes ownership harder (rather than the opposite). I don't know about slavery: this seems to me the law of unintended consequences.

The problem is that, like most government programs, this will also be hard to get rid of. They tend to linger.

The national had a bit on mortgage concerns.
http://www.cbc.ca/thenational/watch/

at about 8:40

Hi Pope, I am posting the link to a VERY interesting article on Calculated Risk. It relates to something I have been thinking about quite a lot lately: the conversion of owenrs into effective renters, by means of subsidised loans which push up the effective price of buying. In practice, make the monthly payment feasible (at least temporarily) for enough people and prices will jump up, meaning that those payments will have to stretch for a 3 decades or more, effectively being equivalent to renting (what is an interest-only mortgage if not a rent of money/housing?)

Here is the article:

"Modifications: The Rentership Society"

http://tinyurl.com/y8h26ua

…modifications essentially turning homeowners into renters…

Read through, you will see the sheer craziness of the current setup.

Abolish the CMHC!!!

#24, if there was any justice in this world the housing bomb will blow up in Flaherty's face. What a clown this guy is.

yes, since about 2005.

@Homes2012

Lovely…the press calls it a "mess"!

Problem for Flaherty is that he's probably referring to Canadian averages when he uses the word "if", as he talks about "irrational" levels.

Problem is the Wet Coast has been irrational for quite some time.

@28

"realpaul -You are disgustingly profane and no one should be subjected to your comments. "

Heartily agreed, with the proviso that realpaul does occasionally say something funny. I'm not a prude, but does it always have tend with an insult to someone?

realpaul

You are disgustingly profane and no one should be subjected to your comments.

@Amazed: In one (perverse) sense, you are right, by funding specuvestors and flooding the market with condo rentals we have seen that rents have been pushed down. But in another sense, the people you mention who can't afford to buy, can't afford to buy because of the loose credit the CMHC has been backstopping, causing prices to go above true market price.

All things considered, I still think the CMHC is keeping prices above what is dictated by prudent supply and demand.

#24

Nowhere in Ian McGugans article does he mention the fact that the government give away of free money to unqualified buyers has been the crux of the problem. For a 'financial commentator he is a real dipshit!!!!!!

The entire article says "DUHHHHHHHHHHHHHHHHHHHHHHH". We have more intelligent commentary on this blog.

This guy is an asshole.

#23 The CMHC has absolutley skewed the values of real estate by removing prudent competition from the market place. There is no notion of value because the screwball government has reduced everything to a monthly payment structure instead of values gained through supply and demand.

This is why everyone should question the so called 'price' of real estate today, it is grossly inflated on any economic measure. The SHITHEADS in government have created a false economy.

When John Law found out that pyramid schemes with government paper can't work you'd think that the supposedly educated finance department would have learned something.

I would suggest the values may have to fall back to represent the values before the government fuckfaces intervened. Thats some 50% lower then where they are today.

Interesting story from the Vancouver Sun:

Flaherty bombs on housing bomb
http://www.vancouversun.com/business/Flaherty+bom…

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