FFFA!

It’s that time of the week again…

Friday Free-for-all time!

This is our regular end of the week news round up and open topic discussion thread for the weekend. Here are a few recent links to kick off the chat:

Canadian debt at unsustainable level
Realtors optimistic about 2015
Overly fat debt loads
Not expecting unexpected economic shocks
Oil to affect Calgary prices
Vancouver Island Stats

So what are you seeing out there?

Post your news links, thoughts and anecdotes here and have an excellent weekend!

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West Coast Woman
Guest
West Coast Woman

Realtors and speculators apparently think that mainland Chinese buyers will continue to buy homes here in Vancouver. However it seems that the Canadian government is doing whatever it can to close the avenues which provided easy access into Canada, such as cancelling the IIP and replacing it with the IVCP, and now making more difficult for astronaut fathers to come here:

http://www.scmp.com/comment/blogs/article/1659290/trouble-paradise-chinese-astronaut-dads-caught-st-kitts-passport

Maybe one reason the BOC is warning of overvaluation problems in the housing market is because they know the government’s changes to these immigration programs will likely cut off or reduce the amount of foreign money invested in our housing market, which in turn will affect the market for presale condos as well as “luxury” single family houses.

Interstellar
Guest
Interstellar

West coast women:

The new immigration rules are going to make it easier for the wealthy to get in.

Way easier.

Read Express Entry Immigration and Foreign students.

patriotz
Member

@prev: “The Mayor of Vancouver is proposing a half percent PST hike to pay for improvements to Translink.”

The provincial government runs Translink. It decides what will or won’t be built. The role of local governments is simply as tax collectors.

The provincial government knows that local voters will reject taxes to pay for transit inprovements, which means they will be off the hook for their share of the cost.

Metro Vancouver would be better off simply going back to BC Transit, where people knew who was in charge and who to blame.

It would be a lot better off if local government were entirely in charge like in Calgary or Ottawa, but that’s dreaming.

patriotz
Member

@1:

It’s not about Vancouver and it’s not about immigration. Yes I know that’s hard for the BPOE mindset. BoC was talking about the whole Canadian housing market, and only in Vancouver and Toronto is there even an argument that immigration is supporting RE prices.

It’s simply about prices. Prices are high because buyers are willing and able to pay high prices. That’s the only objective cause.

Johnson
Guest
Johnson

Patriotz:

$500,000 is not high for a detached house at todays rates…but

$2 Million is!!! … and its immigration thats causing this.

Now what federal department do you work for in Ottawa? 🙂

Many Franks
Member
Active Member

Also this week: CMHC quietly made a significant fee increase on mortgage securitization.

Westside Realtor
Guest
Westside Realtor

The immigration rule changes have already had an impact.

HAM is in short supply, if you are a seller of any $3mm+ property.

I suggest to you that the situation will continue to darken as we go forward.

WSR

patriotz
Member

@6:

In essence, Ottawa is making lenders pay more to have the government backstop their securitized mortgages…

Industry execs that we’ve talked to expect aggregators to instantly pass along these fees to their small lender customers.

One more message for the “low interest rates are here to stay” crowd. Low borrowing rates for government does not necessarily mean low borrowing rates for mortgages.

Doomcouver
Guest
Doomcouver

“CMHC cutting 215 jobs in restructuring”

http://www.ctvnews.ca/business/cmhc-cutting-215-jobs-in-restructuring-1.2144919

This is about 10% of their employees. I think over the next year these people might be glad they got laid off after CMHC implodes.

Westside Realtor
Guest
Westside Realtor

Every realtor in my office that deals extensively with HAM are getting a lot of calls/emails/texts from China now. Way more than usual.

Lining up to be a busy market in the new year, with many new new year listings.

Could end up seeing an avalanche of new listings coming to market.

Everyone with half a brain knows what the BoC is messaging and everyone with a quarter of a brain or more knows we are way over valued.

Our Chinese clients used, who generally have much of their wealth jn china real estate, used to tell us that prices in China would only go higher as tens of millions move from rural to city each year.

We know that turned out.

All fairy tales are eventually disproven. That’s just life.

WSR

Westside Realtor
Guest
Westside Realtor

While the slide in oil prices will eventually stop and recover somewhat, the job losses in Alberta will ratchet higher.

I expect housing prices in Alberta to hit the skids quickly. Could get ugly there in a hurry.

Dave
Member
Trusted Member

I think momentum will carry Alberta through the short-run just fine. The real question is what is the new range for oil prices over the next couple years. Once that is established, it will affect decision making on new projects. Obviously, they will take a hit no matter what because oil is going to be cheaper in the next 4 years than it was in the last 4.

Mortgageslave
Guest
Mortgageslave

“$500,000 is not high for a detached house at todays rates”

Thanks! I’m going to rush out and buy a house, great tip!

Mortgageslave
Guest
Mortgageslave

In Greater Vancouver the average price is around $630,000 or so I believe. $500,000 would only be a only a 20% decline, I think it will be like 30% before it’s back to historical averages of avg Income, rental prices etc. The issue is, when the price finishes correcting, the rates will most likely be higher. So what do you think would be high average price with the rates a few % higher? Are you suggesting a 40% decline when it’s all said and done?

Mortgageslave
Guest
Mortgageslave

Holy Shit! has the Cartel given up? Manipulated HPI numbers are out just now and they aren’t good. HPI prices are down Oct to Nov in 8 of 11 cities. This is also before decline in Oil. Look to the 6 o’clock news for lots of housing marketing, raving about the yearly HPI up 5%., Strong sales etc. Unfortunately Once the prices start to decline, there aren’t many situations where they will revert to positive without some sort of stimulus. I’d say this is Game over…

Brian Ripley
Guest
Brian Ripley

Re: “Canadian debt at unsustainable level”

I was interested in looking at this as well and I mashed up some charts on private sector lending since 2008 in Canada compared to the U.S., U.K and the Eurozone:

http://www.chpc.biz/history-readings/private-sector-loans

It does look like the top is in for Canada. Unless the hyper-inflationist crowd can make their move, it looks like the old fashioned way of turning debt into equity will unfold via the long road of repayment or the short road of default.

Teranet
Guest
Teranet

Edmonton teranet leads the country in November at 1.1% m-o-m.

Too funny! Go oilers go!

You have to remember Edmonton is still the most affordable city in Canada and oilberta did just dandy a decade ago when oil was only $11 per barrel.

Teranet
Guest
Teranet

Ag, petro-chems, coal, tax haven, manufacturing, cattle, aero/defense, timber, engineering, finance, info tech…

..that province is no one-trick pony!

bullwhip29
Guest
bullwhip29

@ #9
and cmhc is beefing up its risk mgmt dept

in other news, the cra is whipping out the rug from under all those day trading geniuses and accounting wizards that thought they had a source of tax free income for life.
http://business.financialpost.com/2014/12/02/canadians-with-too-many-wins-in-their-tfsa-being-targetted-by-cra/?__lsa=48c2-9993

wouldnt be surprised if there is a big push to clamp down on windfall cap gains realized from RE sales too; i guess when the powers that be cant find a legit source of cash, they just dream up some new way to confiscate it from those that have some

cbm999
Guest
cbm999

Let’s just say for the sake of argument that HAM is driving the market…..

All they have to do is just NOT SELL for any price below what they paid. No one really has to sell, especially if you are a rich Chinese immigrant. You just hang onto your property and you’ll never lose in Vancouver. Why sell?

In fact, the west side of Vancouver prices have NEVER dropped. Even in the early 80s when interest rates were around 18% prices just leveled off and stayed flat for a year or two before going up again. East Van is a different story, but who likes anything east of Main anyway.

kelx
Guest
kelx

Long time lurker – first time poster.

Couldn’t resist posting this article:
http://www.ctvnews.ca/canada/windsor-ont-takes-title-of-most-affordable-city-in-which-to-purchase-dream-home-1.1057187

My favourite is the video where they mention ‘aspirational houses’ are houses with multiple bedrooms and bathrooms. (also I’m originally from Windsor, Ontario so I appreciate the shout out in the article).

Dave
Member
Trusted Member

kelx, thanks for that. I have been using my TFSA for trading. I’ve made dozens and dozens of trades. Why wouldn’t you use such an account to be aggressive when there are no tax implications?

I hate Revenue Canada.

Marco
Guest
Marco

Check this article out:

http://ftalphaville.ft.com/2014/12/10/2067681/the-bank-of-canada-on-the-risks-of-high-household-debt-and-overpriced-housing/?

You have to sign in for free. I’m in no way affiliated with this paper. Telling read.
What stuck out for me is the debt to income ratio Pie chart. Only 15.8 % of Canadians are between 0-100%
40.2 %. are heavily indebted. Average is 160+% debt to income ratio.

Any sort of interest rate hike is going to effect people and house prices. Realtors better hope the gravy train foreign investor interest keeps up. Doubt that’s going to help for long when the ship starts listing. I will repeat myself if I may. I believe we will revert to being on par with our big brother to the South, as we have been historically. To get there we would have to take a 30-50% haircut on average.

Great weekend, cheers.

VanRant
Member
VanRant

“We are in the midst of the popping of the energy bubble. “It’s the outcome of a zero interest rate policy from the Federal Reserve. CNBC

I guess The great Canadian Housing Bubble is next to burst in Canada. Heaven help us.

patriotz
Member

@20: “In fact, the west side of Vancouver prices have NEVER dropped. Even in the early 80s when interest rates were around 18% prices just leveled off and stayed flat for a year or two before going up again”

That is complete BS. Prices dropped substantially (~30%) and many properties were foreclosed and sold for less than the previous purchase. And they didn’t recover in a year either – not until the late 1980’s. Ask anyone familiar with the market at the time – I was.

Also according to REBGV’s own index Van West showed the greatest declines during the 2008/9 mini-bust. The threads discussing this are still on line.

As for your remark about certain owners not selling – those not buying or selling don’t set prices. Those buying and selling do.

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