“In China, CMHC is quite important”

Yes, the Canadian Mortgage and Housing Corporation is helping to get homes built in China. If you’re frustrated with house prices here, maybe you should pick up a brand new high end 3000 – 5000 square foot home in Northern Beijing for around $300k.

As part of a little-known mandate to promote Canadian construction companies internationally, the federal housing agency helped local companies including Kryton International, a Vancouver-based concrete waterproofing provider, and local architectural firm Ekistics Architecture secure contracts in a $300-million residential development designed as a high-end, mini-Vancouver neighbourhood — with hundreds of planted trees — in northern Beijing.

Vancouver Forest, located 30 minutes from Beijing’s international airport, is being built in phases by China’s Beijing Capital Group.

The ongoing project, which was designed by B.C. architects and uses B.C. building materials including wood construction, will feature 900 Vancouver-style single detached homes ranging in size from 3,000 to 5,000 square feet on a 549,000-square-metre site that includes many natural landscape features.

It’s just one of many Chinese construction projects that CMHC has helped local companies get involved in.

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fixie guy

39 patriotz: Well said & no kidding. Some people here really believe banks will throw away money for sake of avoiding putting it up for market price? No wonder this market is bonkers.

frank

@DEFAULT NAME:

Is it raining incessantly in Ottawa or is there an occasional glimpse of that light source in the sky?

Anonymous

is it warm in ottawa?

patriotz

@Yalie:

Banks have a legal obligation to both CMHC and the borrower to sell a foreclosed property for the best possible price, i.e. the market price.

If there is evidence that the bank sold the property for under market, CMHC can refuse to cover the full balance and/or the borrower can sue the bank (because the borrower is on the hook to CMHC for any deficiency).

N

@Ouch, that hurts:

Do you know how much he was renting for?

Anonymouse

@Yalie:

Not every property is covered by CMHC insurance. And the banks won't "flood the market when prices turn", they'll "flood the market" when foreclosures rise.

Jim

@DEFAULT NAME

I didn't mean to imply that this program (in China) is risky. Rather, the CMHC's overall operations create risk for taxpayers.

My criticism of this program is that it is a clear example of creep. I'm pretty sure the people who chartered the CMHC didn't have this in mind.

Yalie

@DEFAULT NAMEe: At a guess, I’d say one that is trying to minimize a potential loss. Collectively they’ll obviously want to maximize return across all investments, but for the sake of fixing the sale price for the foreclosure process they’re not going to hold out to get the original purchase price. There is no loss to minimize, because the CMHC will pay the difference between the foreclosure price and the outstanding loan balance. The bank's singular goal is therefore to sell each and every foreclosed property as quickly as possible so they recover their loan in full. Which means that there will likely be no "shadow inventory" from banks holding foreclosures off the market, as there was in the US. Instead they are going to flood the market when prices finally turn, causing a further price drops and a chorus… Read more »

Anonymouse

@fixie guy:

"What bank “doesn’t care” about maximizing return on investment?"

At a guess, I'd say one that is trying to minimize a potential loss.

Collectively they'll obviously want to maximize return across all investments, but for the sake of fixing the sale price for the foreclosure process they're not going to hold out to get the original purchase price.

Anonymouse

@Uz:

"Also they confirmed that it’s the banks that set the sale price, so pretty much whatever they want the price to be is what it sells for"

Did I not say that it'll sell for market price regardless? Good grief.

Uz

@fixie guy: No he's right, I just checked with the bank and they said they didn't care about profit, they just want to get their 80% back. Apparently it's all they ever hope for when they make loans for real estate, just to break even.

Also they confirmed that it's the banks that set the sale price, so pretty much whatever they want the price to be is what it sells for. This will come as a mighty surprise to anyone who thinks there's something to that whole 'supply and demand' argument.

🙄

fixie guy

29 DEFAULT NAMEe Says:"… because they’re only concerned about the 80% they loaned…"

What bank "doesn't care" about maximizing return on investment?

Anonymouse

@DEFAULT NAMEe:

But either way it will sell for market price, as the foreclosure process allows multiple buyers to place bids during the court proceedings.

Anonymouse

@Ouch, that hurts:

"Unit originally sold for $910. Currently listed by the bank for $699."

The bank just wants to make their money back on the mortgage. Assume for the sake of argument the owner put 20% down – the bank obviously doesn't care about that when setting the sale price, because they're only concerned about the 80% they loaned.

Ouch, that hurts

Brother in Law lives (rents) with his wife in the Olympic Village. Owner went bankrupt; guess they couldn't afford to subsidize his rent.

Unit originally sold for $910. Currently listed by the bank for $699. I see another on MLS for $571 (his is a 2BR tho).

Quite the haircut. Gotta feel like a bit of a tool for buying into that hype.

trash crash alert

All CMHC did was provide hundreds of millions in profits to developers operating out of numbered companies. CMHC artificially inflated land prices and all we are going to be left with in Canada is a bunch of crap built card box houses with cheap doors and plastic siding. In Ontario, cheap brick glued to gyp rock. We would have been better off with no CMHC, 90% lower land prices and well built houses out of stone, concrete that would have last 200 plus years like they do in Europe. In 25 years in Canada, this is a complete joke as all we will be left with will be card box houses that will be drooping and falling down and concrete condo towers with fogged steam windows from water leaks and Canadians still trying to pay off their 40 years amortization… Read more »

jesse

@DEFAULT NAME: Once those pesky sellers asking "below market" prices get cleared, things will rebound. Tell your buddy to keep his chin up.

Anonymous

I was out for a couple post Xmas beers with a buddy last night. He's devastated about his condo. He's been telling me for years that he could easily get $750k for it (while my inner eyes rolled) but a few weeks ago an identical unit in the same building just closed for $450. I told him it must have been a boxing day sale. There really is a Santa!

fixie guy

22 Way Too Long Says: "Keep dreaming about CMHC changes boys and girls.." It's damn sweet to see people who still believe in magic-think. You keep right on 'dogmatically' believing the Canadian government can sustain market manipulation permanently exactly like no other nation in history could if that's what makes you feel superior. Damn shame about the cost when it inevitably gets repaid though. Let's work together now on figuring out who to blame when it happens so you can still feel good about yourself. The #1 lesson from this story is it clearly illustrates the CMHC's internal, private mandate long ago was hijacked from social assistance to stimulating industry. It's shines a searchlight into the current state of Canada's residential housing market and why the CMHC floods the market with liquidity. It's about developers, not the disadvantaged. SOP from… Read more »

Anonymouse

@Way Too Long:

Don't forget about HST and the Olympics.

Way Too Long

Please….

You dogmatic bears have been wishing for a tightening of rules for years, much like you have been wishing for a rise in interest rates.

Well, three years later we continue to have "emergency" low interest rates and after several changes to the mortage rules, all purported to deliver the final blow to the Vancouver market, the prices are even higher.

Keep dreaming about CMHC changes boys and girls….because that is all you will have…is dreams…lol

Free

Hey guys, I wonder if you have any advice. I moved away from Vancouver last year to a smaller town and started working independently. I'm able to consult and work remotely so that's worked out nicely, but everything here is so much cheaper than Vancouver, it's crazy.

I save hundreds on auto insurance and gas, thousands on rent for a much nicer place. There aren't parking meters everywhere to nickel and dime me and all the local businesses seem to be cheaper for food and everything else. My question is what should I do with all my extra time and money?

jesse

@RippedtoShit: The IMF has fingered a lot of things over the years, few turn out to have happy endings. 🙁

RippedtoShit

jesse

the imf is now fingering the cmhc, watch for tighter rules in about 90 days.

hold onto your panties Mate!

jesse

This program is right on the CMHC website, I'm enraged, I guess, but it sounds like some BC companies are getting some benefit. Maybe this is what CMHC should be concentrating on, not mortgage insurance. What they used to do — housing and sh!t!