New CMHC rules: How much impact?

At first glance the new CMHC rules sounds like a minor tweak rather than a major change, and it might be just that.

When the CMHC announced the change they specified that the products being eliminated made up less than 3% of their insured mortgage products by number of mortgages.  What we haven’t seen anywhere are numbers in mortgage value, and BOM pointed this out yesterday:

Read this:

“The Crown corporation has been offering insurance on second homes since 2005. It has been offering insurance to self-employed people without strong income validation since 2007.”

And then read this:

“CMHC says its second home program and its self-employed-without-third-party-income-validation programs combined account for less than 3 per cent of its insurance business volumes in term of the numbers of mortgages insured.”

CHMC has a pool of mortgages insured accumulated over the last 25 years. They have only offered the products they are cancelling for 7 to 9 years but they make up 3% of that pool. Simple math indicates over the last 7 years about 10% of mortgages would have been part of the program they are cancelling otherwise it could never reach 3% of the total pool which was already significant prior to the program starting.

So how much demand was there for insured mortgages on second homes and mortgages for the self employed without income verification?  The numbers may be higher than we first thought.

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wcth
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wcth

re: #158 The question is not why they are un-tenanted. The question is why they are putting their money into an under-preforming asset and how long they will continue to do that.

Cici
Guest
Cici

@mac
I just read a Chinese source news, it said a Chinese buyer bought a 7M house this week, he is from Sichuan China. Now you believe? It also said west side realtors are super busy now to help their rich oversea clients due to Chinese stat holiday – May 1st is international Labor Day. I thought government had stopped the iip, but looks they are keeping coming.

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Cici
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Cici

@mac
I just read a Chinese source news, it said a Chinese buyer bought a 7M house this week, he is from Sichuan China. Now you believe? It also said west side realtors are super busy now to help their rich oversea clients due to Chinese stat holiday – May 1 is international Labor Day. I thought government had stopped the iip, but looks they are keeping coming.

mac
Member
mac

Johnny boy, the money is global. London/New York/Paris/French wineries/Saskatchewan farmland/Italian high end goods/Sydney/gold mines/African resources keep going till you run out of cyberspace. it’s an “unforeseen” (haha) reordering of everything on the planet where the uber rich get the best , the middle get squeezed down, and the poor work as servants.

Oh well, it’s not like humanity hasn’t been through this before. Dig up the Czar and his family and ask them how things turned out for them? Mind you, they had many centuries of good times before only 7 of them paid the price for it. Not a bad deal if you add up all the good times vs. the one bad time.

mac
Member
mac

How does Johnny Boy know who is buying houses? How do you know whether they are local or foreign money? I don’t get it. Is this fantasy like UBC’s sales data?

Aggregator
Guest
Aggregator

#159

It's not going to stop I'll you that much. The government has an annual quota and they'll hit it at all costs.

If anything will change this regime, it must be done from the very top, and that person is the Governor General, who just finished a world tour promoting Canada like Disneyland and promising global citizens everything is free here.

Ya, you don't see that stuff in western media, nor do you see the angry mobs from abroad demanding for Kenny to let them in. Link

Joe Mainlander
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Joe Mainlander

Last year there were 1,609 homes over $2 million sold in Greater Van;

http://www.newswire.ca/en/story/1295803/canada-s-luxury-home-market-on-a-clear-upward-trajectory-marked-by-record-sales-in-most-major-centres-in-2013-says-re-max

Last year there were 28,524 total sales in Greater Van RE board area;

http://www.rebgv.org/monthly-reports?month=December&year=2013

High end home sales made up about 6% of total sales. Stop believing the RE industry hype. It’s not a factor. 90% of sales are below $1 mil. The 90% drive the market.

Son of Ponzi
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Son of Ponzi
Johnny-boy
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Johnny-boy

@154

If someone has just paid $7 Million for a house, they probably got tax free, do you really think they care about the few thousand a month rent they are missing out on, not to mention all the hassles.

And they are supposed to declare it as income (or their agent is) …

There are empty , shuttered up homes on every street in West Van. Probably half the condos in Coalharbour are empty, another 10% of the owner buildings condos downtown and the same on the Westside.

The same thing has happened in London .

paulb
Member

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Son of Ponzi
Guest
Son of Ponzi

#148
“store of wealth”
—————–
I prefer the term “store of laundered money”.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

Its a lot cheaper for Microsoft to open an office here and hire Canadians because salaries are much lower here than Seattle, and its the same timezone.

If you want real money learn Mandarin.

wcth
Guest
wcth

re #148: “…Just thought I’d throw this out there. Increasingly, our higher-end properties are being used by the world’s elite as a store of wealth…”

But how long will they continue to do that? For un-tenanted condos they would have been better off putting their money in a savings account for the past 4-6 years. Are the world’s elite that really that stupid when it comes to managing their wealth?

Heard Herd selling
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Heard Herd selling

Vancouver has world class fools, & wanna bee’s & debt

tedeastside
Member
tedeastside

dont worry T……you and vancouver will always have 1-800 got junk

vancouver’s proud hometown company

tedeastside
Member
tedeastside

Microsoft’s tiny satellite office will pack up and leave after 2 years just like Pixar did…..

btw is there a pro sports team in vancouver yet