Friday Free-for-all
It’s the end of the week! That means it’s time for another weekend news roundup and open topic economic discussion thread! Here are a few recent stories to kick off the chat:
-Pop goes the bubble
-Rosenberg: Good signs for Canada
-Delightfully expensive 1 bedroom condos
-Caring for terminally ill lowers property values?
-Whistler prices down
-Thousands flock to homes on untaxed native land
-Home construction soars in Metro Vancouver
-Building permits plummet in Vancouver
-Home-building stats send mixed messages
-These people will party for anything
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
January 17th, 2011 at 5:27 am
@Best place on meth: My wife suggests we hire Vincent D'Inofrio to reprise his performance in Men In Black, complete with Edgar suit: "Where do you keep your dead?"
January 16th, 2011 at 4:47 pm
@Devore:
You don't have to convince me that the CMHC is an abomination. I will go one futher, in fact: Their own data (from the link) show that if prices drop by just 20% nationally, then 30% of their insured mortgages will be under water. In the US, 30% of mortgages are currently under water, and we all know how well that turned out.
My point about Troll's post remains though: for once a bull presented actual facts and figures rather than the usual pablum. And since facts are so rarely presented by the bulls around here, I figure we should be encouraging that kind of behavior from them.
But maybe I'm just getting soft in my old age…
January 16th, 2011 at 3:47 pm
@Yalie:
Hasn't dug up anything. These numbers have been known for a long time, and no one was saying CMHC would run out of money in a week, rather that it would take something more similar to what happened in US to give it issues.
The topic at hand, do try to keep up, instead of diverting to territory covered months ago, is that the very existence and activity of CMHC is distorting the market. If CMHC is indeed taking enough fees to be well capitalized against losses, then why is there no private insurer stepping up to the same, at equally low rates and equally high risk profiles?
It is because government guarantee for CMHC is artificially lowering the risk for lenders who are simply sucking up the interest payments, and offloading all risk, including risk of deep housing price collapse, to taxpayers. As CMHC went from insuring relatively traditional mortgages, to covering 5/35 and even 0/40 for a while, to basically anyone with a pulse and a job, amidst rates destined to only go up, did they raise fees? Do you agree they are significantly more exposed with so many 5/35 mortgages going out at generational price highs and interest lows?
January 16th, 2011 at 3:01 pm
Another condo put up for sale in the Angry Asian building.
That’s 2 in 2 days making 5 in total.
http://www.mls.ca/propertyDeta…..1451619357
FYI its not a All Asian building Gordan Campbell lives there!
January 16th, 2011 at 1:46 pm
" If you’re in Vancouver or the north GTA, hire some Asians to queue up on your lawn."
http://www.greaterfool.ca/
Sorry, too late curse has begun
January 16th, 2011 at 1:21 pm
Regardimng mortgage changes: Perhaps this is the 'tap on the brakes' that causes our vehicle to come to a screeching halt; a 'tipping point' effect.
January 16th, 2011 at 12:55 pm
Anyone expecting more than a little political window dressing, and a little insignificant tweaking would have set themselves for disappointment.
Flaherty cannot be associated with the pricking of the bubble. He and his party would have to face the wrath as most Canadians have all of their net worth in the equity of their home.
Flaherty also knows the bubble will pop on its own. He just has to be” seen “as trying to prevent one from forming.
The average working stiff is now convinced he is a financial wizard, when they wake up from this wonderful dream, you don’t want to be beside they holding the stick that poked them to reality.
January 16th, 2011 at 12:49 pm
@Best place on meth:
And we all know exactly how the REALTORs are going to spin this news over the next couple of months: "Buy now before the new, tougher rules kick in!", which sounds a lot more convincing than "Buy now before prices go down by 7%!"
January 16th, 2011 at 12:41 pm
@Troll: I used $700BB assets, not $500BB. I think your calcs are correct given your inputs and I too believe CMHC will likely stay solvent. However, as you agreed, if defaults occur in a higher proportion (defaults are cumulative of course) CMHC goes insolvent and needs taxpayer money as a bridge or pier loan. It's not a remote possibility by a long shot.
The gov't is obviously taking some risk off the table because, as patriotz has pointed out, if they were private their reserves would be higher and they would be clearing MBSs at a higher spread to boot.
January 16th, 2011 at 12:37 pm
Another condo put up for sale in the Angry Asian building.
That's 2 in 2 days making 5 in total.
http://www.mls.ca/propertyDetails.aspx?propertyId…
January 16th, 2011 at 12:20 pm
Already the first of my 2011 predictions has come to fruition.
http://vancouvercondo.info/2011/01/2011-please-te…
I can't say I'm entirely unhappy with this though since it was what I expected and much better than doing nothing.
Looks like F. just shaved 7% off prices by lowering ams to 30 years.
January 16th, 2011 at 12:07 pm
http://www.telegraph.co.uk/finance/economics/8261…
January 16th, 2011 at 12:01 pm
I'm all for voting down bulls when they post moronic statements (which is about 99% of the time), but Troll seems to have dug up some relevant factual information. I for one have have been curious about CMHC actuarials for a while now.
Let's give credit where credit is due.
January 16th, 2011 at 11:53 am
"http://www.theglobeandmail.com…..le1872323/
No change to down payments?"
Yup, just the Am and heloc. Bears will flip tomorrow
As many have said here the tightening will be gentle and slow until everything (debt/income) comes to the equilibrium. well, bears will scream crash the next 10 years. but they will be educated by that time.
January 16th, 2011 at 11:42 am
Mortgage Rules, interest rates, immigration, etc, cannot change the curse, it is done.
Even St. Joseph cannot stop the curse.
January 16th, 2011 at 11:40 am
Best place on meth Says: " Here’s mine: Fuck off and die, cheerleaders"
Mom did not teach you how to communicate in civilized manner?
what a shame.
January 16th, 2011 at 11:36 am
http://www.theglobeandmail.com/news/national/otta…
No change to down payments?
January 16th, 2011 at 11:34 am
Best place on meth Says:" The damage is done to the image of the Chinese immigrant though, whichever way this goes."
The damage is only done to your head. 99% of people DOES NOT CARE about stupid quarrel between UBC and homeowners. there will not be any uprising tomorrow morning.
January 16th, 2011 at 11:34 am
The curse has been set.
The real estate crash will start soon and last 44 years in China and Canada.
Be warned
January 16th, 2011 at 11:27 am
@Best place on meth:
How is this dipshit not banned from this blog? No substance, just mindless cursing. Bringing facts just enrages him more.
January 16th, 2011 at 11:22 am
How ironic, the Troll appears to be getting irritated by what other people are posting.
January 16th, 2011 at 11:22 am
@Junius:
No, it doesn't, what don't you understand about that? The reserved funds and invested money CMHC comes directly from insurance premiums paid by borrowers, not taxpayers.
January 16th, 2011 at 11:12 am
@fixie guy:
Wow, we had avoided Godwin for so long…
(http://en.wikipedia.org/wiki/Godwin's_law)
January 16th, 2011 at 10:55 am
#205 Troll,
You said,"To consume the whole $8 billion would require a 35% nationwide drop with 10% default. This scenario would be markedly worse than the US today at 25% and 10% defaults. Even then, CMHC still has the $16 billion in investments to cover any further shortfalls."
US isn't done in declines or defaults. It could easily exceed 35% and more than 10% defaults by the time the market drops are done. So could we.
Even if the 8-16 Billion the CMHC ends up paying comes out of their fund it still indirectly comes via the tax payer.
January 16th, 2011 at 10:48 am
@Troll:
How cute, our idiot cheerleaders have little catchphrases, like cartoon characters.
Dave: Trust me on this.
Troll: Deal with it.
Here's mine: Fuck off and die, cheerleaders.
January 16th, 2011 at 10:41 am
CMHC has $8 billion set aside to cover losses as well as $16 billion in investments. It's well capitalized. Check the numbers here:
http://www.cmhc-schl.gc.ca/en/corp/about/anrecopl…
Pg. 91. $473B of insurance in force of which less than 4.5% is greater than 95% loan to value. More than 71% have less than 80% loan to value. 25% price drop and 10% default rate will result in about $4B in payouts even assuming worst case that all loans are at the high end of each bracket. To consume the whole $8 million would require a 35% nationwide drop with 10% default. This scenario would be markedly worse than the US today at 25% and 10% defaults. Even then, CMHC still has the $16 billion in investments to cover any further shortfalls.
I know you don't like to let facts get in the way of a good story bears, so keep on with your doom and gloom dogmatic scare tactics. But the truth is not on your side. DEAL WITH IT.
January 16th, 2011 at 10:35 am
#196 VERYand extremely WEALTHY Vancouver home owner Says:"china will prosper for 1000 years."
Nice. You know who else said his country would prosper for 1000 years?
January 16th, 2011 at 10:22 am
@Girlbear:
On hold but not canceled.
The damage is done to the image of the Chinese immigrant though, whichever way this goes.
January 16th, 2011 at 10:15 am
But sadly UBC caved…hospice put on hold.
http://www.theglobeandmail.com/news/national/brit…
January 16th, 2011 at 10:14 am
Vancouver is making it to the satire websites…
http://www.thespoof.com/news/spoof.cfm?headline=s…