Dipping into RSP to pay the mortgage.
There was a discussion here the other day about someone dipping into their RSP to pay the mortgage on the investment property they couldn’t sell.
It brought up comment anecdotes about others dipping into their retirement funds to pay the mortgage.
DON’T DO IT!
RSPs are protected in bankruptcy, but if you withdraw from them to pay for a losing asset and end up going bankrupt you lose not just the home, but your retirement savings as well.
And you want to retire don’t you?
You should exhaust all other options before touching your RSPs and that includes the option of bankruptcy. Losing your home isn’t nearly as bad as losing your home and all of your retirement savings.
Real estate is not always the direct path to riches, leverage is a beautiful thing on the way up, but it can really bite on the way down. Just ask anyone in who bought in the hot bubble markets of the US in 2005.
Don’t make the mistake of throwing away your retirement savings, especially if you don’t have a lot of time to start over with your savings.
October 23rd, 2012 at 1:00 am 1
How do you add affordable houses in Vancouver? Build them in the middle of the street
http://news.nationalpost.com/2012/10/22/how-do-you-add-affordable-houses-in-vancouver-build-them-in-the-middle-of-the-street/
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October 23rd, 2012 at 1:50 am 2
@Anonymous: re: Thin Streets
They could build a platform over every street and stack them there too. It doesn’t matter.
Idiots with CMHC Casino money will buy them up for top dollar and you will need still more!
Hot debate. What do you think?
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October 23rd, 2012 at 4:35 am 3
@Anonymous:
“Increasingly, only the wealthy — and the very poor, thanks to new social housing — can afford to live here.”
Living somewhere is not the same as buying somewhere, doofus.
Typical NP analysis – don’t even look at the option of renting. God knows the Globe has its shortcomings but it’s a giant compared to that rag.
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October 23rd, 2012 at 4:53 am 4
Five reasons why you might be a mortgage prisoner – and how to escape
What’s this? Lenders are getting tough at renewal time when mortgages are underwater and borrowers can’t switch to another lender? Good thing we have 25 year fixed rate terms in Canada, eh?
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October 23rd, 2012 at 8:01 am 5
Here’s Carney’s rate announcement. He didn’t emasculate the announcement as much as expected, and even added some specific language about housing debt.
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October 23rd, 2012 at 8:12 am 6
@Many Franks: …not that I actually expect him to do anything more than jawbone after so many years of frenzied inactivity…
Hot debate. What do you think?
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October 23rd, 2012 at 8:12 am 7
Here’s a link to an interesting Reuters video on the increase in rentership in the USofA:
http://www.reuters.com/video/2012/10/19/reuters-tv-renting-the-american-dream-decoder?videoId=238556511&videoChannel=117772
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October 23rd, 2012 at 9:49 am 8
Update on Philip Chan, the realtor who on the National said this about his Kitsilano duplex build:
“Unit like this, I think you can find no more than 10 on the market at this moment. How much can it drop?”
and who indicated it won’t drop more than 10 or 12% along with the gem
“Nobody can predict the future, so if you see that the market is healthy enough and you can afford to do it, do it. You can either sit by the ballpark and you watch the game or you can go down and play the game. You might get hurt or you might win.”
The unit is now down an additional $25K so running total is 25% off original price plus a 2012 FIAT 500. Someone’s getting hurt!
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October 23rd, 2012 at 10:03 am 9
This was the topic on this morning’s financial tips spot on CBC radio. A CA was advising people to reconsider if they are liquidating their RRSPs in order to fund a bad real estate investment (or something like that, was half-listening for part of it). One thing that caught my attention, the CA was advising people to retire without any debt. The radio host says in an incredulous tone “But is that REALLY possible???” WTF? I for one, don’t understand how someone who is in their 50 or 60s, bought their house in the 1970s or 80 for at least 50% less than what prices are today, can have an enormous amount of debt going into retirement. But I guess people have been taking money out of their houses in the form of HELOCs so it shouldn’t be so surprising. But it really shouldn’t be this way. People are counting on their houses being worth so much when they retire, but maybe they shouldn’t.
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October 23rd, 2012 at 10:51 am 10
@pricedoutfornow:
Benchmark price for a detached house in GV in the mid-1980′s was about $125K. Say 10K down, 25 year amort, 12% interest gives $1211 monthly payment at a time when incomes were about 1/2 today in nominal terms, decreasing every time it renewed since interest rates have gone down steadily. And it would be paid off right around now.
Hot debate. What do you think?
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October 23rd, 2012 at 10:54 am 11
@pricedoutfornow: File that under COC.
“But is that REALLY possible???” – CBC radio is the official station for COCs.
Hot debate. What do you think?
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October 23rd, 2012 at 11:09 am 12
@pricedoutfornow: “can have an enormous amount of debt going into retirement”
The gripe I have with Vancouver specifically is that houses are built so as to require investment. Think about a detached house of newer vintage. To make the numbers work for most people they will require tenants in basement suites (and laneways). Since rental income is a cash flow, the owners need to either buy this place in cash and live off the rental income, or take on a mortgage backed by the rental income. These properties are, by their design, built for investment and, often, concomitant financing. These are not properties for just living, they are businesses. And Vancouver is full of them.
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October 23rd, 2012 at 11:17 am 13
I have a feeling that many people will be “advised” into exactly this strategy by the nice lady at the bank come mortgage renewal time or LOC being called. Failing that, they will likely be guilt tripped, shamed, bullied, threatened into making this move. Let’s be honest, how many people really think bk as a viable first strategy? Not many. Many people are disgusted at the very idea of bk and also mortally afraid of the hit to their credit rating which would spell the end of life as they know it. So they will doing anything to prevent that, even if it means going all-in with RRSP withdraw and the associated 50%+ tax hit (10% penalty + taxed at your marginal tax rate). The lenders on the other hand will rub their hands in glee since they are getting money that they otherwise wouldn’t be able to get through foreclosure or bk.
Hot debate. What do you think?
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October 23rd, 2012 at 11:18 am 14
@jesse:
And therein lies the problem. Most of the purchases of these “businesses” are not assessed based on the numbers.
Hot debate. What do you think?
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October 23rd, 2012 at 11:27 am 15
BIV: Bones discovery threatens to sink couple’s life savings
So the Hackett’s put their “life savings” into a speculative land development scheme that turned sour. I blame “HAM”.
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October 23rd, 2012 at 11:33 am 16
@space889: Agree, space, I think the desire to avoid BK will preempt rational decisions on protecting what little is left. But should that be any surprise? This market appreciated for irrational reasons, we should expect no more rational decisions subsequent.
Hot debate. What do you think?
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October 23rd, 2012 at 11:46 am 17
@jesse: So the Hackett’s put their “life savings” into a speculative land development scheme that turned sour. I blame “HAM”.
Hot Aboriginal Mummies?
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October 23rd, 2012 at 12:07 pm 18
Is this townhouse flipped for $300,000 + gain in the summer?
MLS#:V675069
MLS#:V929365
Hot debate. What do you think?
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October 23rd, 2012 at 12:15 pm 19
@an observer: If anybody tries to sell you something with the line “You might get hurt or you might win.” I can pretty much guarantee the end result will be ‘hurt’.
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October 23rd, 2012 at 12:51 pm 20
I’d rather have speculators dip into their RRSP to pay for their gambling loss than have the taxpayers pay for it in a bankruptcy proceeding.
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October 23rd, 2012 at 1:47 pm 21
Off Topic.
I just switched my car insurance from ICBC to MPI (Manitoba). My premium is now 55% cheaper for the exact same coverage.
It’s not just housing that is an absolute rip off in Vancouver…
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October 23rd, 2012 at 1:52 pm 22
@RaggedyRenter:
At this point a bankruptcy is not paid for by the taxpayers, but the the creditors. Even the CMHC is currently quite solvent on their fund, which was paid for not by the government but by those that acquired mortgage insurance.
You are assuming insolvency of the CMHC reserve, triggering a bailout. I’m not sure that’s the case.
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October 23rd, 2012 at 1:52 pm 23
@Makaya
well that is discount for shoveling the snow 8 months in a year.
Hot debate. What do you think?
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October 23rd, 2012 at 1:53 pm 24
@Makaya: Gas in Toronto today is $1.13.9 and in Vancouver….$1.35.9!
Hot debate. What do you think?
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October 23rd, 2012 at 1:59 pm 25
@Anonymous: In Ontario my family MSP premiums would be zero, here they are $120/ month.
Hot debate. What do you think?
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October 23rd, 2012 at 2:02 pm 26
@Makaya:
Can you live in BC and get car insurance from an out of province provider?
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October 23rd, 2012 at 2:02 pm 27
@kinky: well that is discount for shoveling the snow 8 months in a year.
You’re missing the point. Ask yourself: why should car insurance in BC be twice as expensive as in Manitoba? We’re not talking about housing and the “premium” you pay to enjoy living in a beautiful city, we’re talking about public car insurance.
Cars get badly mistreated here during those long winter months you alluded to. Icy roads cause lots of accidents. How come premiums still cost half in MB what they cost in BC? what’s the rationale?
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October 23rd, 2012 at 2:04 pm 28
” Gas in Toronto today is $1.13.9 and in Vancouver….$1.35.9!”
well there is a reason for that and no it is not because Toronto is BPOE.
Hot debate. What do you think?
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October 23rd, 2012 at 2:08 pm 29
@X: Aren’t OHIP payments taken via provincial income tax? At least, that’s my recollection, having spent just over a year there recently with my family.
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October 23rd, 2012 at 2:09 pm 30
@Makaya
amount of traffic
Hot debate. What do you think?
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October 23rd, 2012 at 2:12 pm 31
@Makaya: I know this is off topic but I just have to vent. Ever wondered why there are so many Autoplan brokers scattered all over the place? It is because they make ridiculous amounts of money off every renewal. Think about it. Instead of making commission just off the initial sale, they are making the same commission year after year on the renewal. If they put the system online and cut out the broker, you could easily save $150 / car / year. And that is with the 40% discount. You would save more with a lesser discount. ICBC won’t reveal what comissions they pay on the optional portions of the insurance, but people I know in the industry say they are plump.
One more unaccountable “independent” government organization sucking our hard earned cash.
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October 23rd, 2012 at 2:13 pm 32
@900kCrackHouse: Just to make it clear, providers in other provinces such as Alberta do auto-renewals so you don’t have to finance commissions paid to sales agents every year you renew.
Hot debate. What do you think?
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October 23rd, 2012 at 2:15 pm 33
@kinky: so twice the amount of traffic in Van compared to Wpg means twice the insurance premium? Do people in TO pay twice as much in car insurance as in Vancouver?
Your argument makes no sense.
Hot debate. What do you think?
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October 23rd, 2012 at 2:34 pm 34
Looking at Scuba’s chart from yesterday which shows the daily sales. In October, in this particular week – the total sales on Monday/Tuesday combined are always the highest of the month . . . Just a quick note to say that today / yesterday will be no exception. Likely that today is the highest sales day we have seen for several months. (Anyone want to look up the last sales day over 150?- a number that we may hit today.
Hot debate. What do you think?
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October 23rd, 2012 at 2:39 pm 35
Hidden due to low comment rating. Click here to see.
Poorly-rated. Like or Dislike:
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October 23rd, 2012 at 2:42 pm 36
@Makaya:
It’s because people in BC are, on the whole, terrible drivers. People jump red lights, make turns while pedestrians are still crossing, change lanes without signaling, weave through heavy traffic under the illusion that it actually shaves a significant amount of time off their journey, follow too closely behind the car in front, talk/text on their phones, etc. Oh, and I’ve lost count of the number of people I’ve seen driving at night with their lights off.
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October 23rd, 2012 at 2:43 pm 37
@G: Why not just move to Manitoba?
Because I’ve already moved there maybe?
Hot debate. What do you think?
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October 23rd, 2012 at 2:46 pm 38
Houses in Victoria are coming on the market in a steady stream but I have noticed one thing. Many are “high high end”. One just came on, waterfront, $10,000,000. Daily almost one house 1.5 million plus is for sale. Many around 4 million, 3 million etc.
Okay …. why? I know there is divorce and death but I am curious. If these people are so wealthy then really they are not too concerned with prices going down or interest rates going up.
I am just wondering….
Hot debate. What do you think?
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October 23rd, 2012 at 2:52 pm 39
Not sure how it works in Manitoba, but experienced drivers in BC are subsidizing the inexperienced. If you have kids or are inexperienced, that’s a good thing.
In Ontario, a new driver was charged $4000 a month for driving a similar car to me when I was 18 some 10+ years ago. At that time, my premiums were $2400 for being new and in a sports car.
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October 23rd, 2012 at 2:59 pm 40
@Makaya:
Makaya – - You are now in the sticks. The risk you pose by being on the road is the same but the cost of hitting anything like a 1986 Cavalier in MB is much less than the cost of hitting a 2012 S-Class Mercedes. The rates in MB are pretty much the lowest anywhere. Not that I think that ICBC is fair but it definitely is much cheaper on the high end and much more on the low end.
I think there are many fewer accidents there on average too so the overall cost of running the system is less.
Hot debate. What do you think?
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October 23rd, 2012 at 3:32 pm 41
@Makaya:
ICBC rates 2X Manitoba’s
I’m pretty sure BC drivers are twice as bad as Manitoba drivers. The concept of “road courtesy” isn’t completely dead in MB.
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October 23rd, 2012 at 4:03 pm 42
@Someguy
CMIIW, CMHC has about 12B in equity and is currently insuring close to 600B mortgages on a market that is currently going down.
In the event of foreclosure, CMHC will pay the creditor the outstanding amount and go at the debtor to recover any loss. So you can say that we the taxpayer via CMHC has become the creditor. If the debtor goes bankrupt, wouldn’t we eat the losses via CMHC equity loss or bailout?
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October 23rd, 2012 at 4:15 pm 43
@Anonymous:
“Aren’t OHIP payments taken via provincial income tax?”
A surcharge to provincial income tax.
Definitely more than MSP for those with no or small families and medium to higher incomes.
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October 23rd, 2012 at 4:18 pm 44
Random notes on car insurance:
I love how, in both Manitoba and BC, an in-province car can be bought and sold ten times in thirty years with nary an inspection… OMG it looks like Manitoba now requires an inspection… but an out-of-province car must be inspected; for we know that those foreign devils do not maintain their cars to the same high standards as do residents of Surrey and surrounding areas.
It isn’t just how bad/good the average driver is, it’s also about what and how much insurance covers, which is government mandated even in godless Ontario. If a policy covers more, it’ll have higher premia even with the same mix of drivers and cars.
Most insurance (everywhere and all types) is built on low margins and high volume. If insurance in Winnipeg is 1/2 the price of Surrey’s, it is not because ICBC is making 51% margins on its business.
BC drivers are bad drivers. This is somewhat mitigated by ICBC being proactive and telling townships how to redesign traffic signage, signalling and flow for reduced claims, but face it, the guy in front of you and the guy he sees in his rearview both suck. I’ll make two exceptions: Zipper mergers Southbound onto the Lions Gate and that guy in the old Mercury pickup, Northbound on 99 in the winter of ’91 who I was trying to keep up with in my rental Pontiac 6000 with bad tires and a broken washer pump… Man, could he drive!
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October 23rd, 2012 at 4:19 pm 45
@space889:
” So they will doing anything to prevent that, even if it means going all-in with RRSP withdraw and the associated 50%+ tax hit (10% penalty + taxed at your marginal tax rate).”
There is no penalty for RRSP withdrawls. They are taxed as straight income. You might be thinking of penalties for cashing out mutual funds, but that has nothing to do with RRSP’s.
The biggest problem with lump sum RRSP withdrawls is that they may bump you into the next tax bracket.
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October 23rd, 2012 at 4:23 pm 46
@YVR2ZRH:
I expected car insurance to be cheaper in Ottawa but I was surprised to find that it’s not much cheaper. Low quote was about 20% below ICBC, and the accident, car theft, and car breakin rate is nowhere near Vancouver.
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October 23rd, 2012 at 4:39 pm 47
Teranet seems to be taking a long time to get their September numbers out. My guess they will be published tomorrow 24th of the month is at the late end of them publishing.
I am curious to see how their data will reflect the September slowdown –
YOY should be turning negative soon.
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October 23rd, 2012 at 4:44 pm 48
And just to chip in… losing the contribution room can kill your long term plans if you pull it out. Almost better to go all in (over a number of years, geared to your marginal tax rate) and pay the trustee ship and self mortage from your RRSP if you have enough to do it (down side.. no one will touch a second on your place and take the risk without paying some hefty interest rate).
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October 23rd, 2012 at 4:52 pm 49
Got a flyer in the mail today:
JUST SOLD – $1,200,000 – House-size Townhome in the Argyll House. Over 2,400 Sq Ft on 3 Levels!
Well, let’s see, assuming it’s actually 2400sqft to be generous to the bulls, that’s $500/sqft for an almost brand new unit in Point Grey. Or to put it another way, that puts the price of a proper 1 BR at somewhere around $375000.
Maybe prices aren’t quite as sticky as we all feared.
Hot debate. What do you think?
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October 23rd, 2012 at 4:55 pm 50
@Makaya: “I just switched my car insurance from ICBC to MPI (Manitoba). My premium is now 55% cheaper for the exact same coverage.”
Ya, but in Manitoba, you can see other cars coming two days ahead of time
Hot debate. What do you think?
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October 23rd, 2012 at 4:57 pm 51
Received this interesting factoid today…..sure, no bubble in Canada…
CDN Real Estate: Six Canadian cities are among the top 10 in North America for the number of high-rises and skyscrapers being built, a finding that illustrates just how far the construction markets in Canada and the United States have diverged. Toronto tops the list by a margin that has widened over the past year. Canada’s most populous city now has more than twice as many tall towers under construction as New York City, which takes the No. 2 spot, according to a study that will be released this week by German data-provider Emporis. http://www.theglobeandmail.com/report-on-business/economy/housing/toronto-leads-north-american-high-rise-construction/article4629888/
Hot debate. What do you think?
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October 23rd, 2012 at 4:58 pm 52
@Makaya: “How come premiums still cost half in MB what they cost in BC? what’s the rationale?”
HAM (Handful of Amateur Motorists)
Hot debate. What do you think?
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October 23rd, 2012 at 5:08 pm 53
BIV: Don Forsgren: Home makerIntracorp president Don Forsgren sees growing value in developing projects around transit hubs in Metro Vancouver
Hear that -40%ers? Don’s NOT HAVING ANY OF IT. Even if he has to buy them all himself.
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October 23rd, 2012 at 5:25 pm 54
Having been out of the country for some time I am surprised by the large number of For Sale signs I am seeing. Also surprised by the for lease signs of store fronts on West 10th. I don’t think this is as simple as internet shopping…
Hot debate. What do you think?
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October 23rd, 2012 at 5:28 pm 55
The crackdown by the Financial Services Authority is designed to prevent a repeat of the reckless lending which led to the financial crash.
New crackdown will make tough lending rules ‘a permanent feature’ for millions
Oh Harold….the bank just turned us down….pity!
Hot debate. What do you think?
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October 23rd, 2012 at 5:40 pm 56
New Listings 186
Price Changes 159
Sold Listings 136
TI:18925
http://www.paulboenisch.com
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October 23rd, 2012 at 6:37 pm 57
Re Don Fosgren MC2 president…… I bet he bought 2 at cost, at least 40% off no shit Sherlock he might actually have positive yield. I would buy 2 myself at developer cost, maybe 3 . Bottom line developers scared shirtless these days
Hot debate. What do you think?
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October 23rd, 2012 at 6:38 pm 58
@Vote Down The Facts:
You forgot to mention people who pull up at the rest stop, take a leak, smoke pot then hope back in their car and continue driving to the next rest stop. Seen that many times.
Hot debate. What do you think?
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October 23rd, 2012 at 6:51 pm 59
@Makaya:
@Makaya:
Hi Makaya:
Manitoba has a “no fault” insurance scheme. If you are injured you take what they give you. You cannot sue for “pain and suffering” and your compensation for a lost finger is the same for a construction labourer as for a concert pianist. It is what happens when you let an insurance company make its own rules. The fox is watching the hen house. The insurance company gets to collect premiums but has (comparatively) little to pay out.
I am a personal injury lawyer and sue ICBC all the time. My clients don’t always get what they deserve, but they get far more than any injured motorists in Manitoba. In Canada there are laws limiting the amount of compensation an injured person can receive for pain and suffering (currently approximately $340,000 for the worst injury imaginable) but in no fault jurisdictions all that pain and suffering for your brain injury that has altered your personality and alienated your family, your broken bones that have crippled you and your ensuing depression is just your tough luck.
Cheap insurance comes at a price.
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October 23rd, 2012 at 6:57 pm 60
Just attended Garth’s talk in Toronto.
You will be happy to know that he acknowledged Ben’s data this time.
Other than that, not much new. Vancouver will be 40% lower over the course of a few years…..
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October 23rd, 2012 at 7:50 pm 61
@MarKoz: Thanks a lot MarKoz, this makes a lot more sense to me now, I had no idea of this subtlety. Since you seem to be very knowledgable, do you know if it is possible to insure yourself for “pain and suffering” elsewhere? (Sorry guys for having taken over the thread today with the car insurance discussion).
Hot debate. What do you think?
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October 23rd, 2012 at 8:05 pm 62
@Name taken: I don’t know about today, but back in the 80s learning to drive stoned was a teenage rite of passage in Vancouver. Kids used to hotbox in a secluded spot – close all the window and pass around multiple joints until the air was saturated with smoke – then drive around all night. But, of course, nobody was drinking and driving after all those horrific MADD displays in front of the school.
Hot debate. What do you think?
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October 23rd, 2012 at 8:13 pm 63
Tsur Somerville, Cameron Muir, now bears;
“Vancouver home prices could drop by 10 per cent next year, says UBC expert”
http://www.theprovince.com/business/Vancouver+home+prices+could+drop+cent+next+year+says+expert/7435812/story.html#ixzz2ABNBdZT9
“As home sales continue to plummet in Vancouver, it wouldn’t be surprising to see 10-per-cent price declines next year. That’s the view of University of B.C. real-estate economist Tsur Somerville, who was asked to respond to new market forecasts released by the B.C. Real Estate Association”
“The plunge in sales will cause a six-per-cent price decline in Vancouver’s average home price, Muir said…”
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October 23rd, 2012 at 9:07 pm 64
@southseacompany: OK. Now even I’ll admit Tsur is being a twat. What happened to no trigger for prices to go down?
Hot debate. What do you think?
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October 23rd, 2012 at 9:10 pm 65
@southseacompany: Down 6 per cent? I thought I already staked that one! It’s almost as if… nah!
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October 23rd, 2012 at 9:14 pm 66
@southseacompany: Not 7.35% or 4.56% but 6% down on the nose! Yo Tsur, its already down by more than that, and I believe the collective, non-vested view is that it will go down a lot more than .05% per month next year.
Hot debate. What do you think?
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October 23rd, 2012 at 9:16 pm 67
@mac: Oops, make that .5% per month
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October 23rd, 2012 at 9:29 pm 68
Bottom Call!!!1!!
http://vancouverpeak.com/groups/general-chatter/forum/topic/bottom-call-thread/?#post-2639
He doesn’t “see anything out there right now” to bangkok prices, except for China slowing down.
Hot debate. What do you think?
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October 23rd, 2012 at 9:32 pm 69
@southseacompany:
They will correct their outlook next year for additional 6-10% and few years to follow. Morons. It’s been less than a month when they were saying that it’s not gonna happen. http://www.theprovince.com/business/House+sales+buyer+market+Greater+Vancouver/7333971/story.html
Now they are talking about decline which will take underwater anybody who bought this month with 5% downpayment. Economists my ass.
Hot debate. What do you think?
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October 23rd, 2012 at 9:33 pm 70
To change the subject completely to a potential slowdown in China and the effects on hard commodity prices, read Michael Pettis’s article, aptly titled By 2015 hard commodity prices will have collapsed
Hot debate. What do you think?
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October 23rd, 2012 at 10:11 pm 71
Hey, since we’re talking RRSP, a question for you lot.
AFAIK, one can use 20k (per person) of yr RRSP as part of a house deposit (this works as a loan against yr RRSP that has to be paid back over time, no?).
My question is this: when the time to buy is right (you know, in a few years time, maybe), is this an efficient way of using that financial flexibility to boost a deposit? (would add 40k to our 100ish k current deposit). Or are there drawbacks that I am not aware of?
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October 23rd, 2012 at 10:39 pm 72
@Makaya: re: Lower premiums from out of province autoplan insurer.
Please post your experience on making a claim. Also, if the out of province insurance beneficiary is being screwed over by local repair shop, please make some noise on monopoly abuse by ICBC. Those signs mentioning ICBC by name at the repair shop come to mind.
I like your post and thoughts about your wager. Are we overpaying the bureaucrats at ICBC? Possibly… The question is, does paying premiums to an out of province firm work in practice for the beneficiary, and if not why not?
The post on deductables relative to average automobile value is also interesting. ICBC’s minimum possible $300 comprehensive is the interesting one. Consider the broken side window on every car in a row of cars. An urban addict who is out of money for his next fix might weigh the odds on that one. The Manitoba insurer might have different tables on origins and outcome. Judging by news accounts it seems more likely that drug motivated incidents more frequently result in death rather than significant property damage in the urban centers of the prairies.
Hot debate. What do you think?
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October 23rd, 2012 at 11:22 pm 73
@jesse: re: China commodity growth model.
Jesse, thanks again for stirring the pot. Here are some demand side thoughts.
http://www.washingtonpost.com/world/chinese-glued-to-us-debate-with-envy-and-concern/2012/10/23/746362a6-1ce7-11e2-8817-41b9a7aaabc7_story.html
Forget “envy and concern”. What this says is that the people of China have a point of view while other parts of the world could care less about what we do over here in North America Land.
The trillion dollar question is will the China bite, consume more as “self adopted North Americans”, and validate a Chinese domestic growth model in the current sense?
We know they like to bid up real estate and buy cars over there but do they like the outcomes? Do they get enough American TV? What is the real deal? Do they like what’s happening or are they merely more concerned that things are more uncertain now?
All comments are welcome.
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October 24th, 2012 at 3:52 am 74
@logic:
The RRSP home buyers plan requires you to pay back the money you’ve taken out on a fixed schedule. If you don’t it becomes taxable income.
Bottom line is that if prices are really cheap it’s a good idea. If they’re not it’s not.
Also a TFSA is a much much better vehicle for saving for a down payment. Withdrawls are never taxable and never have to be paid back. Don’t even think about using money from an RRSP unless you’ve already maxed out your TFSA.
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October 24th, 2012 at 8:00 am 75
@Makaya:
Hi Makaya:
I don’t know the specifics of Manitoba no fault. Generally, no-fault systems work by providing the same coverage to anyone injured in a motor vehicle accident whether they are at fault for the accident or an innocent victim. Loss of income is compensated as a percentage of what you actually earn up to a certain maximum – higher income earners lose out. Medical expenses are covered – up to a point.
The system takes away the right to sue. A claim for pain and suffering is not part of any no fault system I am aware of. To my knowledge there is no way you can “buy in” to get coverage for pain and suffering. Consulting a Manitoba lawyer would be the best way to get that question answered.
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October 24th, 2012 at 8:11 am 76
@Makaya:
There is a blog called mpisucks.com that complains of the specific problems of no fault in Manitoba. I can’t vouch for its accuracy because I haven’t read the act that is the foundation of your auto insurance. Still, it’s a place to start.
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October 24th, 2012 at 10:10 am 77
@RaggedyRenter:
It comes out of CMHCs equity first. Equity paid for not by the taxpayer but by those that acquired the mortgage insurance. It only becomes a taxpayer issue if sufficient bankruptcies and losses to their equity force the CMHC itself into insolvency.
To calculate the probability look to what percentage of properties you believe will require the mortgage insurance to pay the loan issuer, and how much the payout will need to be.
Say prices correct nationally by 30% and that 600bln represents 670 billion in actual properties at today’s prices. I believe these examples are erroring far on the side of caution. That makes a 200 billion dollar shortfall if ALL of those properties owners become insolvent. I think that would be a grave error. I think you will be unlikely to see even 5% go into bankruptcy, leaving the losses adequately covered by the CMHCs own equity. People will be sad due to their own personal ‘losses’, or stretched to meet new payments, but I just don’t see that level of bankruptcies. Perhaps you do?
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