Housing Collapse: banks ok, consumers vulnerable

The head of the OSFI is warning about the dangers of a Canadian housing market correction.

Speaking on Monday Julie Dickson said that the OSFI would be preparing new guidelines for the mortgage industry.

“Consumers must be considered here because, while banks may be able to withstand shocks, consumers may not,” said Julie Dickson, the head of the Office of the Superintendent of Financial Institutions. “Banks have to set aside reserves for unexpected losses and are typically far better situated to deal with shocks than consumers — who may be highly indebted and therefore particularly vulnerable to significant increases in interest rates or unemployment.”

For more details read the full article over at the Financial Post.

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crabman
crabman
6 years ago

Can we please stop using the idiotic term “HAM denier”? We all understand that HAM is coming into the area. Most of us also understand that the majority of purchasers are local, and most of them are using credit. The only real question is how big is the HAM effect? Is it high enough to keep the bubble from popping, or just a drop in the bucket? Unfortunately, since this city is run by and for the RE industry, data on HAM is not available, because: A. There is no bubble, so stop complaining and join the party. B. Don’t offend our newest bestest customer, you racist. But the thing that seems fairly obvious, is that the sales and inventory numbers don’t make sense when you look at the high number of housing starts, weak population growth and low vacancy… Read more »

mac
mac
6 years ago

Good points George. I’m no HAM denier but like Diane Francis and that CBC documentary said it’s global hot money, laundered or not looking for a place to land. Canadians are being scared into paying more for housing because prices HAVE gone up and up, whether it’s hot money or local borrowed money. Heck! A lot of foreign money is borrowed too. Chinese central bank printed and then ordered banks to lend. And that’s when this madness really started here. The doc mentioned condo-estate is more about money markets than anything else. The funny thing is how the RE cartels have managed to present the current decline in condo prices as flat or slight decreases. I heard one agent say “3 points, no biggie”. It’s not hard to find a condo in Vancouver that has declined more than 20% from… Read more »

George
George
6 years ago

Something else to ponder about that BIV article: Garth Turner argues that HAM is largely a myth that was invented by the real estate cartel in order to scare Canadians into going into massive debt to buy overinflated real estate in order to avoid being “priced out forever”. Okay, so if that is the case, why is the real estate cartel coming out with a story that says foreign investment is switching from residential to commercial? Is the real estate cartel trying to scare Canadians into buying commercial real estate now before being priced out forever? What would be the motive for the real estate cartel to falsely claim that foreign investment is switching from residential to commercial? It’s almost an admission of weakness in the residential sector. Garth Turner needs to come up with a new conspiracy theory that… Read more »

George
George
6 years ago

That BIV article that Son of Ponzi linked to is interesting. Yes, the article is citing stats collected by a real estate firm so we have to keep in mind the potential for bias/manipulation. But still, it is interesting to ponder some of the statements made in that article, such as: “foreign investors are switching from residential to commercial” …So maybe foreign investors sense trouble with residential real estate in Vancouver and that is why they are switching to commercial (if they are indeed switching) “they outbid local buyers by quite a margin.” …Sounds right to me. “an unnamed “foreign buyer” paid $1,803 per square foot for a 13,200-square-foot retail building on Robson Street; another paid nearly $500 per square foot for an older eight-storey office building on West Pender.” …I wonder which buildings? “Foreign buyers are also snapping up… Read more »

YVR
YVR
6 years ago

Talked with my carpenter today. Has been working in Van for 35 years. He worked on a building site 10 years ago. 2 years ago, same lot, house had been teared now to build twice the size (monster house). He was sick to know all his work had gone to garbage. Said he would never buy new in Vancouver because nothing is built to last those days. Way too much speculation. Also said many monster houses in Vancouver exceed allowed max square footage. He suspects corruption, or lose standards, for building permits.

I heard Chinese communist party officials are actually running Vancouver City hall now. My carpenter has confirmed this.

jesse
6 years ago

“Talked with my carpenter today”

New Yorker: talked to my broker today
Los Angelean: talked to my shrink today
Miamian: talked to my doctor today
Londoner: talked to my tailor today
Seattleite: talked to my barista today
Calgarian: talked to my truck mechanic today
Vancouverite: …

C.Junta
C.Junta
6 years ago

Off-topic. That’s what I call agressive pricing:

May 2013 $2500000
July 2013 $1888000
MLS V1006283
http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13234154

Next step would be changing the realtor to the German one and start asking $2888000.

“…A DREAM LOT for A DREAM MANSION.” They forgot to mention it’s just 80 metres from the railroad – close to transportation! Did I say I just love this city?

mls watch
mls watch
6 years ago

Talked with my carpenter today. Has been working in Van for 35 years. He worked on a building site 10 years ago. 2 years ago, same lot, house had been teared now to build twice the size (monster house). He was sick to know all his work had gone to garbage. Said he would never buy new in Vancouver because nothing is built to last those days. Way too much speculation. Also said many monster houses in Vancouver exceed allowed max square footage. He suspects corruption, or lose standards, for building permits.

jesse
6 years ago

“who’s guy 1”

So is the money sloshing around before or after guy 1 buys the house? I really want to know, mostly because I want to imagine “sloshing” money in my mind.

Son of Ponzi
Son of Ponzi
6 years ago

Good to see that posters are finally acknowledging the realty of the Vancouver RE market.
Houses have become a commodity, subject to the whims of overseas investors.

RealityCheck
RealityCheck
6 years ago

Funny,

The war on this blog is between HAM believers and HAM deniers.

Son of Ponzi: don’t bother. The masses here seem to be brainwashed beyond help.

YVR
YVR
6 years ago

@21 “HAM Deniers, The defense rests it’s case.”

LOL, the source is a real estate company. So if you are going to take a realtors word for it then why not take their advice and buy real estate now because prices will only go up from here.

Aggregator
Aggregator
6 years ago

I said it before and I'll say it again.. If you're not looking at prices in Hot Global Money terms, you'll never understand this market.

REBGV Detached in Select Currencies

Returns Since January 2008

+38.1%  REBGV Detached
+15.1%  China
+44.1%  Philippines
+68.1% Brazil
+111.5%  India
+267.0%  Iran

It's the exchange rate stupid!

YVR
YVR
6 years ago

RealityCheck: “Anyone without physical assets should be worried about this: Dollar approaching 93 cents USD.”

Those with Canadian houses should also be worried. You do understand your Surrey house is going down the same in USD terms as CAD cash don’t you? With leverage (a mortgage) that effect is magnified. A person who bought a house a few months ago with 5% down is wiped out in USD terms already. People with cash, stocks, bonds, etc can be diversified in multiple currencies and have made money.

Guy Smiley
Guy Smiley
6 years ago

@RealityCheck

Check reality you crackhead:

Rupee vs CAD 10 yr

The indian rupee has a pretty obvious and consistent trend direction. But i understand that many bears suffer myopia when looking backwards.

oneangryslav2
oneangryslav2
6 years ago

“I bet that most of the people here will die poor.”

What’s the difference–die poor or die rich–you’re still dead. Unless, of course, you’re a bible believing Christian. Then, it’s much better to die poor, no? Matthew 19:24.

Son of Ponzi
Son of Ponzi
6 years ago

Cancelled/expired listings : 60

paulb
6 years ago

New Listings 128
Price Changes 61
Sold Listings 98
TI:15222

http://www.paulboenisch.com

RealityCheck
RealityCheck
6 years ago

Nice…. downvotes….

I know exactly how people on this blog think. Its very predictable.

I bet that most of the people here will die poor. Its not the things that go on around you…its the stuff in your head.

Son of Ponzi
Son of Ponzi
6 years ago

Remember Chemical Ali or Baghdad Bob.
“there are no American infidels if Baghdad”.
While the Amercans were already helping the iraquis taking down Sadam’s statue.
Fast forward to 2013 Vancouver.
“There are no offshore investors buying RE in Vancouver” say the Data slaves.
Open your eyes, people.

Son of Ponzi
Son of Ponzi
6 years ago

#13 who’s guy 1.
That’s the question.

jesse
6 years ago

“All this hot money swirling around the world looking for a place to land”

So we have:
1) guy 1 has $1,000,000 in the bank, guy 2 has a house
2) guy 1 buys house from guy 2 for $1,000,000
3) buy 1 has a house, guy 2 has $1,000,000 in the bank

That swirling blob of money, a giant bowl of gazpacho soup. I don’t think it ever lands, and never did.

Yunak
Yunak
6 years ago
mac
mac
6 years ago

CBC’s Condo Game asks it all:

Is the average condo owner now a mere by-product of a fast-moving international money market? I say yes.

Diane Francis, “All this hot money swirling around the world looking for a place to land.”

It’s a high speed collision of consumer and corporate interests.

Everybody makes money, all the way up the line… poor Jonny Consumer in the end, gets what he’s given.

Why would anyone be surprised that the banks will be preserved and the taxpayer will each carry a bag of shit because of the CMHC and two bags of shit, if they also bought a condo.