Friday Free-for-all!

It’s the end of another work week and that means its time for another free-for-all post.  This is our regular end of the week news round-up and open topic discussion thread for the weekend.  Here are a few recent links to kick off the chat:

Why falling house prices aren’t bad
What impact from the new rules?
OSFI Credit Union loop-hole
Absurd property of the week
‘Just under a million’ price drops
Expert rips Mayors housing report
Fellow realtors complain to Keith Roy
What does Cameron Muir think?
Canada house prices not sustainable
Affordable housing needs replacement
Will we always have leaky condos?
We ain’t Paris

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

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Dave
Member

First. Wake up you bums.

Eddie
Guest
Eddie
French_In_Exile
Guest
French_In_Exile

@Dave: Third. Get a life.

patriotz
Member

China’s growth has slowed to its lowest rate since the depths of the global financial crisis in 2009, though analysts voiced optimism on Friday that the economy may have bottomed out already.

http://www.guardian.co.uk/business/2012/jul/13/china-economic-growth-slows-gdp

PCinWA
Member
PCinWA

Here’s another compare and contrast. For $699,000, you can get this in Scottsdale:

http://www.realtor.com/realestateandhomes-detail/11923-E-Beryl-Ave_Scottsdale_AZ_85259_M24005-93040?source=web

Or you can get this in Vancouver:

http://www.realtor.ca/propertyDetails.aspx?propertyId=12198934&PidKey=-1527704608

And the kicker is that you can write off the interest on your mortgage in the States. But why would anyone want to live in a state where it is sunny, dry and warm all the time when you could live in a city that is damp, cold and miserable 80% of the time?

registered
Member
registered

@1 Dave: Hey Dave, re: ‘Expert rips Mayors housing report’, congrats on selling the concept of reduced development costs to the lululemon seat warmers on city council. Apparently not a one possessed the synapses to inquired how this one-time perk would halt a long term rise in prices, or whether that gift to developers would be immediately passed on to the public in the form of new units offered under market price. Questioning whether it would instead be pocketed by builders isn’t cricket I guess, or maybe they just lack the math.
Now they can go back to doing something useful, a chicken in every back yard and protecting the city from the wrong tint of teal glass.

Rob
Guest
Rob
Just so you know… I was curious what was the “disparaging” remark that Keith Roy made. I pulled up a Google Cache version and compared it to the latest version using the most excellent “Notepad++” with the compare plugin. All that was changed was one line which deleted a comment. The original: To ignore the truth doesn’t change the truth. And so it is in the Vancouver real estate lately. Far too often the real estate industry, of which I am obviously a part, makes excuses for slow sales periods, declining prices and difficult negotiations. These excuses are self serving. The facts are simple; real estate is easier to sell when prices are going up, realtors are happier when more houses are selling and open houses are more fun when buyers come to look. However, the good times pass like… Read more »
vanpire
Guest
vanpire
Re: Housing Affordability I have been looking at some co-ops in the area lately and have been consistently discovering that they are severely underfunded and basically all falling apart despite the efforts to keep them viable and livable made by dedicated people who run them. Now, the body that should be mainly involved in these efforts – CHMC (whose sole mandate is to make housing for Canadians affordable) would rather do something else obviously, because the funding for those co-ops is simply no longer available. The numbers that I discovered are simply astonishing – one of the local housing co-ops states in their latest newsletter that when they were first established (in 1985) there were receiving about $0.5 MIL in financial help a year from CHMC. Currently that number barely breaks $100K barrier… So my question is: Since 70% of… Read more »
Guy Smiley
Member
Guy Smiley

@Eddie – Take off your kilt and buy the Cedar Cottage property. When are you ever again going to have the opportunity to buy a property needing just a “full reno” in east Van for a meagre $1.1M? The Maui property comes with 2 acres that you have to care for and your view is ruined by the ocean.

Anonymous
Guest
Anonymous

Check this out…apparently real estate CAN wreck your retirement in Canada. Who woulda thunk it?!

http://business.financialpost.com/2012/07/13/when-real-estate-wrecks-your-retirement-plan/

patriotz
Member

@vanpire:
CMHC premiums are not supposed to assist those who aren’t homeowners, they are supposed to cover mortgage defaults by the homeowners who paid the premiums.

The general feeling in the bear community is that the premiums aren’t enough to cover the likely amount of defaults going forward and that CMHC may require “assistance” from the taxpayers.

Manson
Guest
Manson

Yeah no reason for Canadian Real Estate to be as healthy as it is..this site has to be the biggest collection of idiots on the internet.
http://www.cnn.com/2012/07/13/us/midwest-drought/index.html?hpt=hp_t1

patriotz
Member

@Anonymous:

Marjorie, 57, and Evan, 58, not their real names, own a rental house with an estimated price of $769,000…

At today’s price, it would have an $80,000 capital loss compared to the $849,000 the couple paid for it.

That’s Edmonton folks – you know the place with all that oil. The property is down almost 10% which means that they bought it near the peak.

The financial advisor wisely recommends that they sell and cut their losses. But how much do you bet that they will drain their other assets to hang on to it, because they’re not “giving it away”.

Jigs Up
Guest
Jigs Up

@vanpire: “Since 70% of Canadians are now homeowners and they pay hefty premiums to our CHMC so it can make housing affordable for the rest of us – WHERE THE FUCK IS THIS MONEY GOING???”

Huh? CMHC is there to provide banks with insurance against defaults on mortgages. The money is invested to pay out once the defaults come. CMHC was not intended to subsidize housing Coops although they may have done that in the past. If CMHC is cutting funding for this I say great. That is not part of their mandate IMO. All of the funds collected for CMHC insurance are going to be needed in the next 5 years to pay out defaults.

A simple answer to the Coop funding problem is to raise fees the members pay each month.

jesse
Member

@Jigs Up: “A simple answer to the Coop funding problem is to raise fees the members pay each month”

Cooperatives typically pay 400bps or more spread on their mortgage debt and CMHC has been mandated to refund some of this spread to cooperatives who adhere to good practices. This would put these cooperatives in line with private strata units in terms of operating costs. If a cooperative is seeing its funding reduced it was likely mismanaged and CMHC cut them loose to fend for themselves in the wild.

CMHC ends its operating agreement with cooperatives in 2020, after which point cooperatives are on their own. So yes they have decided they don’t want to subsidize housing in that way.

Joe_Blown_Away_By_High_Housing_Costs
Guest
Joe_Blown_Away_By_High_Housing_Costs
@Jigs Up “CMHC is there to provide banks with insurance against defaults on mortgages. The money is invested to pay out once the defaults come. CMHC was not intended to subsidize housing Coops although they may have done that in the past. If CMHC is cutting funding for this I say great. That is not part of their mandate IMO.” CMHC is Canada’s national housing agency. It’s role is far bigger than just providing mortgage insurance, although that certainly is one of its most important roles. CMHC should support/encourage a broad spectrum of housing that fulfills the various housing needs of a country as vast and diverse as Canada. Part of the reason why we have got into this bubble in the first place is because of our social obsession with just one form of housing: ownership housing. We are… Read more »
Joe_Blown_Away_By_High_Housing_Costs
Guest
Joe_Blown_Away_By_High_Housing_Costs
Essential reading for anyone interested in the formation of CMHC, its mandate, and the choices policy makers made in the 1940s and 50s that shaped the trajectory of housing development in this country for the rest of the 20th century and beyond is this book: John C. Bacher (1993). Keeping to the Marketplace: The Evolution of Canadian Housing Policy, Montreal & Kingston, ON: McGill-Queen’s University Press. When you read that book, you will see that it didn’t have to be this way. We didn’t have to have a housing system based on ownership/speculation/ponzi schemes. That could have been one component. But we could have had a system that promoted more rentals, more coops, more public housing, more private sector rentals developed through Limited Dividend Corps. We have had a little bit of that, but it’s now being dismantled. There’s all… Read more »
Manson
Guest
Manson
Jigs Up
Guest
Jigs Up

@Joe_Blown_Away_By_High_Housing_Costs:

Let me get this straight. You make housing more affordable by collecting a fee from one group of people (first time home buyers who need CMHC insurance) to give to another group of people (Coop members). How does that make sense? Anyone who needs CMHC insurance probably does not have a lot of money otherwise they would have a bigger down payment. Why tax them to give to someone else? This makes buying less affordable but living in coop more affordable. Is that what we really want?

Joe_Blown_Away_By_High_Housing_Costs
Guest
Joe_Blown_Away_By_High_Housing_Costs
@Jigs Up: I wasn’t talking about making housing more affordable. I was simply explaining that CMHC has a much broader mandate than simply providing mortgage insurance. I can’t provide you with an education on the development of Canadian housing policy in blog posts. That’s why I cited that book by Bacher. It’s a fascinating read that will teach you a lot. I learned a lot from that book. I’m not exactly sure how CMHC is funded, and how it has been funded in the past. Certainly in the early days, I wouldn’t expect mortgage insurance premiums to have been the biggest source of funding because Canada had far fewer owners back in the 1940s when CMHC was first created. Funding probably came directly from the federal govt. But yes, having more people live in rental housing (whether that be public… Read more »
Dave
Member

@fixie guy:

Nobody should care what a communist from the UN says about the Vancouver market.

In the short run, lower development costs don’t get passed onto the consumer because the first number of units don’t increase supply. However, over time, more supply does result in lower costs. Economics 101.

Vancouver has expensive housing for a number of reasons, a lot of which are related to municipal policies. Trust me when I say that we can build lower cost housing. These are choices we make. Until people start understanding that taxing doesn’t magically produce free money, we will be stuck in the present situation. The alternative is to elect the NDP, crash the economy and take housing with it.

jesse
Member

@Jigs Up: ” Why tax them to give to someone else?”

What makes you think CMHC is explicitly mandated to funnel MI premiums to subsidize other programs? Many cooperatives have operating agreements with subsidized housing agencies, it’s likely that cooperatives are seen as a form of subsidized housing that would get government monies in other ways.

The mortgage insurance clusterf*ck that CMHC has right now is decades younger than most of its other subsidy programs, so it’s strange how the latter should die due to the former. It sounds more like the government has been transferring hidden taxes onto its speculation-hungry citizens and pulling some accounting tricks to make it look like its debt is under control. And that trend did not start with the CPC.

patriotz
Member

@Jigs Up:
He didn’t say that CMHC should use (or has used) mortgage insurance premiums to fund forms of housing other then equity homeownership. I think you’re confusing his post with #8.

IMHO if there’s any place where CMHC’s government guarantee could be used to genuine benefit it’s in financing forms of housing such as co-ops where speculative gains by the residents are not possible.

Vote Down The Facts
Guest
Vote Down The Facts

@vanpire: “Since 70% of Canadians are now homeowners”

70% of households own their residence. There are about 12m households, and 8.5m of those own.

Patiently Waiting
Member
Patiently Waiting

@Anonymous: No mention of budgeting for losses on rent or repairs. Not even a set amount each month for maintenance. You can bet the rental house is slowly falling apart under their watch.

CMHC helped cause the housing crisis by basically encouraging any average middle-class idiot to become a landlord. Thus adding to demand for buying rental housing, pushing up the costs for serious landlords.

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