FFFA! Affordability, Overpriced, Comparisons

It’s that time of the week again!  This time, we’re going to use the assistance of commentor Snake who posted most of these links.

Thanks Snake and everyone else who contributed links.

But as a general reminder, if you post more than one or two links your comment will get held up in moderation. Inconvenient yes, but better than getting inundated with spam links.

Ok! On to the links:

Most Over And Undervalued Markets
Market overvalued, but crash worries ease
7 Remarkable Numbers From Canada’s Housing Market
Carney To Stop Mortgage Funding Scheme
Housing Bubble? Canada’s Top Banking Regulator Refuses To Say
Vancouver Real Estate Canada’s Least Affordable: Report
How much house can you handle?
Home affordability worsens, new report shows
The Chase: Toronto couple’s search for a $650,000 house
Goldman Sachs recommends shorting CAD$
Babies ‘R’ Expensive
Angry in Whistler

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

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Johnny-boy
Guest
Johnny-boy
What do I asee? I see a Government, bank and financial system, Bank of Canada who are determined to destroys savers and anyone who is trying to be sensible financially. They want the boat full before it sinks. Every last man, woman and child have to be loaded on board. I see an open door policy for anyone in the world to come and plough their money into real estate and then leave it empty, using it as a safety deposit box for money they may have stole, certainly have not reported or paid any tax on to the CRA. After all it is their right to leave it empty if they are from Timbucktoo or Toronto and who acres about families fighting to find somewhere to live. I see retirees from other Provinces coming and buying having paid their… Read more »
Johnny-boy
Guest
Johnny-boy

BTW- before someone jumps up and says ‘Why do I feel entitled to own a property’. I don’t. I have rented for the last five years with a family and would continue happy for the constant uncertainty that comes with our RE games.

I also don’t see how some wealthy business owner is Shanghai or Moscow or anywhere else is entitled to buy property here and leave it empty, or buy and sell for a flip without ever living in it and no doubt paying not a cent of tax.

I also don’t see how the ‘head of trading’ for one of our banks, or the CFO or the CEO are entitled to multiple millions a year, but they obviously do!

Confusions
Guest
Confusions

What we really need are small craft lanes in the water around the downtown area. What say you Gregor?

VMD
Member

“Breaking: Ottawa is imposing a new “risk fee” on mtg insurance, effective Jan 1. It will be 3.25% of premiums + 10bps on new bulk insurance

CMHC says the risk fee will amount to $50 million in fees based on 2014 projected insurance volumes

When asked “Why now?” with respect to the Dept. of Finance adding this new “risk fee” CMHC’s CFO Brian Naish told journalists he didn’t know”

@CdnMortgageNews

Boombust
Guest
Boombust

A “risk fee”…what does that mean, exactly?

Who pays? The consumer or the banks?

Newcomer
Member
Newcomer
Son of Ponzi
Guest
Son of Ponzi

# 1
Amen.

VMD
Member

@Boombust
Still waiting for official news report.
When the phrase “bulk insurance” is mentioned, I’d think it’s the banks who are paying, since they are the ones attempting to insure these low-ratio mortgages via CMHC.

(note: earlier this year there were new bulk insurance restrictions introduced)

space889
Member
space889
@Johnny-Boy – I don’t get it, why are you complaining if you don’t feel anyone is entitled to own a house?? All those things you say also provide income and jobs to locals that otherwise might not exists. If the foreigners aren’t buying an extra 1000, 2000, or 3000 houses/condo/TH a year then the construction industry won’t need to hire that many people and those people will be out of job, potentially collecting on social benefits which I guess you will also complain about. Basically foreigners coming in and buying houses are like a form of export for Canada/BC/Metro Vancouver that generates additional income to the economy and a larger property tax base while use virtually no service from the city. Yeah yeah, people will argue what about the empty neighborhoods? The destruction of social fabric, etc, etc…but then I… Read more »
VMD
Member

Canada to Impose ‘Risk Fee’ on Canada Housing Agency Insurance
The Canadian government will impose a “risk fee” starting Jan. 1 on mortgage insurance provided by the federal housing agency to compensate taxpayers for potential losses in the housing market.

“Canada Mortgage & Housing Corp. said the fee to the government will be “3.25 percent of premiums written and 10 basis points on new portfolio insurance written,” according to a financial report released today for the three months ended Sept. 30.

The fee is the latest attempt by Finance Minister Jim Flaherty to rein in the agency amid concerns the nation’s housing market may be overvalued. ”

– IMO any additional fee banks pay = increased borrowing/lending cost = upwards pressure on interest rates

patriotz
Member
Active Member

@10: “The fee is the latest attempt by Finance Minister Jim Flaherty to rein in the agency amid concerns the nation’s housing market may be overvalued.”

Correction: it is the latest attempt by Flaherty to appear to be “doing something” while in fact doing SFA. As noted above, these fees would amount to only $50 million a year. Laughable.

A true risk fee would involve doubling premiums, at the very least. Oh, and just maybe they could come up with a fee schedule which is something other than a flat % of principal, regardless of risk of default. And maybe property price caps, like south of the border. I think Seattle is about $600K, for example.

Softy
Guest
Softy

Like all the other tightening moves that have not stoped the red hot housing market, this one is also a non-event:

.

Canada Mortgage & Housing Corp. said the fee to the government will be “3.25 percent of premiums written and 10 basis points on new portfolio insurance written,” according to a financial report released today for the three months ended Sept. 30.

“We certainly don’t expect it to have any impact on the availability or cost of mortgage funding,” CMHC chief financial officer Brian Naish said on a conference call with reporters today. “We don’t see it as a material event.”

http://www.bloomberg.com/news/2013-11-29/canada-to-impose-risk-fee-on-canada-housing-agency-insurance.html

RealityCheck
Guest
RealityCheck

VMD:

Don’t get to excited by the new CMHC risk fee surcharge. It is a surcharge of 3.25% on existing premiums. So now a total CMHC premium of 2% would become 2.06%.

Do the Math and its hot air…. they are not serious about containing housing. This token is to make the uninformed bears happy… sad but true. And it’ll work. Watch the downvotes I get.

hmnhrmmm
Guest
hmnhrmmm

@ VMD

Good point, but if the banks are responsible for paying that fee, you can be almost certain they will find a way to pass the fee along to the consumer.

It almost goes without saying that any additional burden for anything doesn’t rest with the corporation, it flows like water off a duck’s back, straight to the consumer.

VMD
Member

Obviously this is an “adjustment” not significant enough to have Flaherty announcing it in a news conference. It was ‘hidden’ in the 9th page of the latest CMHC financial report.

As many nowadays are opting for 20% DP @ (uninsured) 30Y mortgages, what’s more interesting is the fee imposed on bulk insurance for these low-ratio (non-CMHC) mortgages.

I suppose there’s only so much CMHC can do to ‘rein in’ the un-insured borrowings.

The next (and bigger) step is for its overseer OSFI to stop/limit 30Y uninsured mortgages. Some see it as coming in 2014 (see recent news)

Turkey
Guest
Turkey
G&M: In high-cost Vancouver, the trick is getting strangers to pay the mortgage. Every sentence in the article follows naturally from this statistic: [T]he cost of home ownership for the average two-storey Vancouver house requires 87.4 per cent of a person’s monthly income, before taxes. That’s over 100% pre-tax income for the average two-story SFH. Rental income from a basement suite helps, but it’s not enough. People are “getting creative” (which I read as “getting desperate.”) The article focuses on short-term rental services like AirBNB. It’s a race to the bottom: early adopters of services like AirBNB do OK, but popularity brings competition, and competition drives prices down. I’ve used AirBNB in Montreal, and it’s very easy to find an excellently appointed room for a small fraction of hotel rates. As a buyer, it’s great: in the off season, AirBNB… Read more »
Turkey
Guest
Turkey

(typo: over 100% of post-tax income)

George
Guest
George
Huge attacks on free speech on the internet in the past few days. First Garth Turner said that those who complain about foreign investment in real estate on his blog will be reported to the RCMP. Now the federal government is looking to hire a company to monitor everything we write online. This is going to have a very chilling effect on internet discourse because people are going to be scared now to voice controversial opinions. From CBC: “The federal government is seeking a firm that “continuously monitors social media content on a daily basis in near real time and provide web-based, online media metrics and reporting capabilities.” A contract document specifies that the contractor must provide the service 24 hours a day, seven days a week, 365 days a year. Part of the job will be to gauge the… Read more »
Turkey
Guest
Turkey

First Garth Turner said that those who complain about foreign investment in real estate on his blog will be reported to the RCMP.

I’m not a big GT fan, but both you and RealityCheck have made this claim now.

I think it’s paranoid babble. Care to back up the claim for me?

jesse
Member

“this is an “adjustment” not significant enough to have Flaherty announcing it in a news conference”

Probably because it’s not a significant “adjustment”. It is more a whittling at the outsides of a giant steaming mess.

George
Guest
George

@Turkey #19

All you have to do is read Garth Turner’s blog–he is archiving posts that he deems xenophobic to be turned over to the RCMP. Xenophobic in Turner’s book could be anyone critical of foreign investment. From the horse’s mouth:

“But the volume of posts from xenophobes and whackjobs is growing. I archive the comments so the RCMP has something to do after a drone, or a Prius, takes me out. For 2011 the single-spaced Word document ran to 137 pages. Last year it was 208 pages. So far this year (and it’s still November), it’s 226.”

http://www.greaterfool.ca/2013/11/28/simple-lives/

Turkey
Guest
Turkey

Yeesh. He’s not reporting anyone to the RCMP. He’s keeping a list of a**holes in a Word document. It seems instructive that you can’t tell the difference.

George
Guest
George

I don’t know why people are downvoting my comment #18. Read that CBC article. 1984 is here baby. This is going to have a very chilling effect on internet discourse. Everyone on this blog should be up in arms over that CBC article–Federal govt hiring a firm to monitor our social media posts 24/7 and gauge their tone! It’s written on CBC in black text–this is not a conspiracy theory. Everyone on this blog should be concerned about this because we all make contentious posts that some disagree with from time to time–it doesn’t matter what side of the debate you are on. Doesn’t free speech mean anything to people anymore?!?!?!

George
Guest
George

Garth Turner is saying he is keeping a list of comments that he deems xenophobic to be reported to the RCMP. Even if he is bluffing (which it sounds like it is—if he is taken out–I don’t think Turner seriously fears for his life), the purpose of Turner writing something like that is to chill debate. He wants people to be scared to voice their opinions critical of foreign ownership for fear they may end up on that list he is keeping to one day potentially be turned over to RCMP.

George
Guest
George

It’s not just me interpreting it that way. This is what Buy? Curious? (#132) said on Turner’s blog:

“I’m glad to hear you’re forwarding those emails on to the RCMP. Very NSA-ish of you.”

http://www.greaterfool.ca/2013/11/28/simple-lives/#comment-273492

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