Canada’s coming housing bust

Many people have pointed out this link: Fortune Magazine on the likelihood of a major Canadian housing market crash:

Canadians easily obtained mortgages with only 5% down and payments running out 35 years. More than 65% of Canadian mortgages are fixed for five years (and now face more stringent renewal terms and likely higher interest payments). But variable rate mortgages offered in Canada were at least as creative as those doled out in the US, with banks allowing terms as short as six months. Unlike in the US, people who default on mortgages in Canada don’t just lose their houses, they risk other assets as well.

A fast or unexpected rise in interest rates (Canada was the first G7 country to begin moving them higher following the recession) could leave Canadians with little cushion. Last year the IMF noted that, by some measures, Canadians were paying a larger percentage of their income for housing than Americans did prior to the housing bust.

That level hasn’t improved. Recent government data shows that the average Canadian with a two-story home spends almost 50% of his household income on mortgage servicing, with the average is closer to 70% in red-hot markets like Vancouver. “By and large the affordability situation remains within a safe range in Canada; however there are local markets where the share of household income taken up by homeownership costs is at worrisome levels,” the Royal Bank of Canada wrote in September, adding that the situation in Vancouver raises “a red flag.”

Timely warning or sour grapes because our housing market is strong while the US market sags?  You can read the full article here an make up your own mind..

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Anonymous
Anonymous
9 years ago

@patriotz: Damn Right man;you hid the balls of those uneducated Van bears. Most they paid fr 280000 to 500000, ten to 15 yrs ago. My Chinese friend's annual combined income is only 50000 but they save enough to buy a house at the corner of Kingsway and tyne in 2004 at 420000 but now it is assessed at 860000.There monthly mortgage is only 2300 minus 1300 rental subsidy,so they only pay 1000 in mortgage payment.Those stupid Van bears are only bunch of liar and day dreamers who are living in a fantasy world,and wondering why the collapse hasn't come yet in the past 8 yrs.I can surely, tell that Van is different and its Real Estate will thrive for at least another century because of its close proximity of the rising Sun,China.Chinese and their government will support Van RE by… Read more »

Anonymous
Anonymous
9 years ago

@patriotzed:

pending collapse,oh man take a hike and wait for another thousand yrs.Prudent. thrifty and wealthy Chinese are house rich and cash abundant ,so int hike won't affect them.Only,house non and cash empty white Canadians will feel the burden and crushed to the bone.

Even MLS listing are spiral down but average price still creeping upward.Once the cloud has been cleared,Van RE will shoot up sky hike fueled by trillion and trillion of Chinese money.China number one.

fixie guy
fixie guy
9 years ago

@# 93 patriotz: That statistical group is irrelevant to the current real estate market, both the recent stratospheric rise (since they didn't buy) and its pending collapse (since they're probably not selling.) That is what we're talking about here, right?

patriotz
9 years ago

@fixie guy:

Let’s say the median property is, for ease of calculation, $600K. Wages are in the $60K range, 1/5 goes to housing.

Your basic mistake, and that of other posters, is not realizing that the great majority of current property owners paid far less than the current market price.

I thought somebody was going to figure that out, but I guess not.

Anonymous
Anonymous
9 years ago

@NO-LYMPICS:

Fuck what you care!

weeny, whiny, bleati
weeny, whiny, bleati
9 years ago

Pity not the civil servant…this is a laugh AND a half

http://www.edmontonjournal.com/business/Pity+poor

Now as whinybleatingscullboy would say waaaaaaaaaaaaaaaaaaaaaaahhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh. I hate real paul…he's not my friend….snurfle…blubber…wahhhhhhhhhhhhhhhhhh. Isn't anyone going to be nice to me??????? Sniff !!

I keep using realpauls words so that I can be better than him…but he keeps kicking my little bummy…wahhhhhhhhhhhhhhhhhh!!!

Newcomer
Newcomer
9 years ago

Why are the comments disappearing?

SquareNinja
SquareNinja
9 years ago

Chinese Investors Coming to Canada? I was reading an article about the measures the Hong Kong government is using to try and stop their bubble (20.6% YoY gain for Aug, 2010)… "Property prices rose by 28.5% y-o-y in 2009, after a 10.6% drop in 2008" – Sounds exactly like Vancouver or Toronto, doesn't it? Anyway… a big reason that Hong Kong (and probably Vancouver) has so many Chinese buyers is that the Chinese government has also been doing their part to curb speculation. In a different article, it was stated that investors in Shenzhen could only buy two apartments… and those whose needs weren't satisfied by only two apartments were flooding across the border to snap up HK properties. It probably also follows that they were rolling on over to Vancouver to do the same. But… why the hell don't… Read more »

Patrick
Patrick
9 years ago

Scullboy

Do you have any idea how psychotic you appear? You are arguing with someone who may not even exist. Their theories may be designed to solicit responses from posters like you as a means to study the reactions of the VERY average male.

On the bright side though you have managed to entertain at least one person on this blog.

Tiananmen Square
Tiananmen Square
9 years ago

@Wealthy Vancouver house owner.:

You must be one of those Chinese, escaped, corrupted assholes getting a bit home sick and missing an iron fist. Shame on you cunt.

ulsterman
9 years ago

@fixie guy:

I presume that when you include all the people with no / very low mortgages then the average gets dragged way down.

Is the number calculated using gross income or net? As a house renter my figure (using gross incomes) comes in as 15%, so 20 would appear reasonable as an average across BC for all citizens, old and young.

Now if i bought my house today on a 5 year fixed + tax + maintenance then that would be another story.

rp
rp
9 years ago

#48 @Best place on meth: "Bill Gates lives in a house with 8 bedrooms and 25 bathrooms."

When I'm going to the bathroom, I think "my bathroom should have a bathroom, and maybe another one after that." like russian dolls. Or maybe he needs to shit in a different room every day of the month. In the end it doesn't matter why, he's rich!

Wealthy Vancouver ho
Wealthy Vancouver ho
9 years ago

@NO – LYMPICS:

So, clever Canadian should know which side they should be on, a rising sun,China or a corrupted and declining pig USA.

Wealthy Vancouver ho
Wealthy Vancouver ho
9 years ago

@Lilypad:

Seattle and US is quite different man,Van Real Estate has solid support from local and wealthy Chinese from People's Republic of China which in two years will surpass US in GDP and become the only economic power.China is number one.

Lilypad
Lilypad
9 years ago

I was just talking to a couple of women from Seattle and they were laughing when I told them most Vancouverites think real estate prices will not go down.

They also laughed when I told them about the plethora of basement suites in this city. They could not get over the idea of having someone living in their basement! They asked really? People live in the basement? (Repeated several times).

ReadyToPop
ReadyToPop
9 years ago

The shelter share of total household expenditures[47] reflects the cost of living. In 2008, shelter accounted for 20.8% of total household expenditures in BC.

Has anyone mentioned that this statistic is for all of BC, which when averaged out really doesn't describe the debt of the Vancouver homeowner? Where red flags have been raised by some pretty reputable economists.

…..or am I missing something here…..

NO - LYMPICS
NO - LYMPICS
9 years ago

It must be fudgepacker /realtor nite on VCI

…such negativity

fixie guy
fixie guy
9 years ago

The numbers in that BCCheckup release don't make any sense to me, though I may be misinterpreting. Let's say the median property is, for ease of calculation, $600K. Wages are in the $60K range, 1/5 goes to housing. That implies 50 years to pay off properties on interest-free loans. Whether the real median property is $400k (ha!) or $1000K makes little difference in rationalizing this timeline.

NO - LYMPICS
NO - LYMPICS
9 years ago

THE ROLE OF SECONDARY SUITES:

RENTAL HOUSING STRATEGY

aka ILLEGAL SUITES

http://vancouver.ca/commsvcs/housing/pdf/RentalHo

NO - LYMPICS
NO - LYMPICS
9 years ago

For you data wankers

Re Mortgages etc. in Vancouver

http://www.google.ca/search?hl=en&source=hp&a

NO - LYMPICS
NO - LYMPICS
9 years ago

THE ROLE OF SECONDARY SUITES:

RENTAL HOUSING STRATEGY

aka ILLEGAL SUITES

vancouver.ca/commsvcs/housing/pdf/…/Secondary%20Suites%20Study.pdf

paulb.
paulb.
9 years ago

New Listings 169

Price Changes 113

Sold Listings 125

chip
chip
9 years ago

@oneangryslav2:

"Up until the election of the SDP-Green coalition government in 1998, the German citizenship law made it impossible for non-ethnic Germans to ever get citizenship. "

No. Not only does a quick Google of Wikipedia show that about a quarter million non-Germans gained naturalized citizenship between 1995 and 1997, but I personally know otherwise.

My uncle is Syrian and moved to Germany when he was 18 (fled the Syrian army). He studied hard, learned the language, became a doctor and eventually head of a major hospital. And he'd be the first to tell you that a large minority makes no effort to integrate.

A healthy debate over immigration is necessary, if only because so many people have no idea what they're talking about.

Keeping An Eye On Th
Keeping An Eye On Th
9 years ago

http://www.vancouversun.com/business/Fears+Canadi

No Bubble according to Jay Bryan a media RE pumper, what is noteworthy is that it's written from a pumper's perspective from Montreal, and republished in the local Vancouver sun rag….interesting.

Just keeping an eye on the pimps.

logic
logic
9 years ago

Why do some posters not get a cool ip piccie?