Canadian Bubble? Blame the CMHC

The Canadian Mortgage and Housing Corporation insures nearly $600 billion worth of mortgage insurance.  That’s almost one third of the national GDP.

Much of the discussion about what’s wrong with the housing market focuses on the CMHC, which now counts as one of the country’s largest financial companies, owing to its substantial portfolio of mortgage guarantees covering nearly $600-billion of outstanding home loans, roughly 30% of Canada’s GDP.

Critics say the CMHC is under-charging for its policies, which has opened the door for housing speculators and enabled banks to push the risk of default on hundreds of billions of dollars of mortgages onto the shoulders of government — bottom line, the CMHC is the primary cause of the bubbly market.

In each Annual Report from 1976 onwards, reference has been made to the diminishing viability of the corporation

Read the full article over at the Province for an interesting overview of the history and potential problems faced by the CMHC.


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[…] Chief: Not a bubble, just extremely overvalued -Remember how we got here -Trump expected to announce project -BOC warns of ‘abrupt correction’ in Toronto condos […]


Overpriced Toronto condo market a risk to economy, says Bank of Canada

A plunge in house prices bites into net household worth, shatters confidence and consumer spending, impacting income and job creation.

Now we’re talking!


I’ve been working on-site in Montreal for the past week or two. A quick feet-on-the-ground update, since I know the Montreal market has been mentioned several times (including a consistently hawkish glare from Ben Rabidoux.) I usually keep an eye on downtown and the Plateau area, but I’ve recently passed through St-Henri and Atwater. It’s shocking to compare these neighbourhoods to their state 5-10 years ago when I was last there. St-Henri and Atwater are both in “bad” (dangerous by reputation, and objectively down-and-out) parts of town, and they still offer little in terms of genuine draw: the things that make a neighbourhood really compelling, like amenities, shopping, parks, et cetera. It used to be a cheap haven for artists/bohemians, but most of their buildings have been repurposed along the road to gentrification. Other than that, there isn’t really much… Read more »


trick question Pdub.
– If the risk is a probability known beforehand then it’s false
– If the risk involves a probability that was incorrectly gauged on the “more risky” side beforehand then it is potentially true.
– BULLs are relying upon the bears’ risk probability being incorrect and too unfavourable. If so then the answer is true.

All’s I know is that I am earning way more with my capital elsewhere, even ignoring the risks.


Total days 20
Days elapsed so far 7
Weekends / holidays 4
Days missing 0
Days remaining 13
7 Calendar Day Moving Average: Sales 117
7 Calendar Day Moving Average: Listings 250
Sales so far 931
Projection for rest of month (using 7day MA) 1516
Projected month end total 2447
Listings so far 1838
Projection for rest of month (using 7day MA) 3250
Projected month end total 5088
Sell-list so far 50.7%
Projected month-end sell-list 48.1%
Inventory as of June 11, 2013 18244
Current MoI at this sales pace 7.46


True of False bulls? If there is a risk of something bad happening, the more time that passes without something bad happening the less the risk. True or False?


It turns out that Dave was correct, it is FLAT bears, suck it up.


Teranet data out:
Index Level
% change y/y
% change m/m
Year to date

Normally prices are up 4-8% on the year (ie spring bounce). Except for 2009 when May prices were -7% from January. This year it’s been flat. YOY changes look to be near bottom, unless the back half of 2013 falls apart I would not expect YOY changes to worsen from here.


“We do not want what the United States have, which is a government-guaranteed mortgage market, and they are desperately trying to find a way out of that position.”


A lot of ugly macro out there these days but one in particular is interesting. The plunge of the yen and the rise of the US dollar, followed by a plunge in overvalued emerging markets(both bonds and equities). Looks a lot like the Asian financial crisis of 97-98.
I remember that time well. We bought a 10 year old, unlived-in condo, from an HK owner, at a very attractive price. It was a motivated seller.


@ someone Says #51

You bet…

Here is the link to VancouverPeak:

Here is the link to my Sunshine Coast posts:

You will find the Watermark thread there.



“I have a feeling the biggest pressure has come from Pacific Spirit Properties of ‘Watermark on Sechelt’ – that post has now reached over 6,000 views.”

Can you kindly post a link, please? Some of us don’t know our way around all these blogs. I’d love to read it.


Major development, alert!!! Well everyone, it appears my posts in the VanPeak forum have PO’d developers on the Sunshine Coast, big time. I guess my spreadsheets indicating what has sold, when it has sold and for what price was just too much for them to bear – so, since they couldn’t come after me then went after my source of all the wonderful info – SC Realtor Gary LIttle’s interactive real estate map. The ‘sold’ data for homes/condos&townhouses/mobiles/vacant lots reaching back to 2010 has been removed from the map. Pity, I had so much fun with that old Sold info. I had a gut feeling this might happen and I was propbably foolish to admit in posts where the info was coming from, but I didn’t want anyone to think I was making the info up. Little may have been… Read more »


I had forgotten what it feels like for bonds to pay me to use my money instead of the other way round. Like the first smell of spring.


My prediction is that yields rise to the chagrin of all:$TNX

The effect that the economy has on bond prices has been wildly overstated. People should be thinking about the reverse.

Son of Ponzi

Earthquake in Oliver 2 years ago puts 40 homeowners out of their homes, probably forever
global news.
Imagine an Earthquake in Richmond and Vancouver.


#37 My numbers were Van detached (link above).

I lined up the yields and Van detached prices so you can see the +ve correlation easier.


For price, I was using the SFH average price. I don’t trust the HPI.
2009 to Apr 2011, 10y yields rise 2.5 to 3.5, prices rise
Apr ’11 to Jly ’12, 10y yields fall 3.5 to 1.5, price falls
Jly ’12 to early’13, 10y yields rise 1.5 to 2.0+, price rises

I’m as bearish as they come on Van RE, but my bearish prediction is yields fall for most of rest of ’13 and prices get spanked along with them.


2014 is a little over 180 days away.

I thought we were suppose to be at the bottom by now. You told me in 2009!

Are we missing something?? Probably.


“plus inflation and seasonally adjusted”

wow you’re two levels ahead of me. The only seasonal adjustment I do is when looking at housing sales.

Son of Ponzi

Rebalanced at current rates, plus inflation and seasonally adjusted.
Can’t argue with the numbers, buddy.


” you’re as full of sh*t ”

Are you rebalancing at current rates? Some genuine food for thought.

Son of Ponzi

#36 bubbles end when sellers panic.

Son of Ponzi

# only before hitting about 15%.


“Never fear though, another little bird told me they’re likely going to go back down again.”

With all those little birds crapping all over you is it fair to assume you’re as full of shit on the outside as you are on the inside?