Should you walk away from your Alberta mortgage?

southseacompany pointed out this article in the Financial Post:

You can walk away from your mortgage (if you live in Alberta) but should you?

“Francis, a 34-year-old welder from the mining town of Grande Cache, Alberta, says he wishes he could get out of the townhouse he bought four years ago.”

“He bought the home for $175,000 with a five per cent downpayment but still owes $150,000 on his mortgage. He says the market for his home has collapsed in his town and a realtor just told him the best price he could expect is $75,000.”

“Since the loan is “under water,” his bank would be left with a shortfall that CMHC would have to cover. The Crown corporation would likely sue him for any losses it has to cover, so if he has any assets, CMHC will go after him.”

“Handing over the keys to the house and walking away from your mortgage, called “jingle mail,” was a defining act of the American housing crisis and helped send the market south of the border into a deeper tailspin.”

Interesting theory, but as we actually saw in the US states with recourse loans (i.e. Nevada, Florida) saw just as much of a collapse as non-recourse states.

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vangrl
Member
vangrl

“Premier Christy Clark had said in February that when the province balances its budget and starts “making a dent on our debt,” it will start knocking down the property transfer tax because “it’s a drain on our economy.”

“Its one thing we can do to try to increase affordability,” she said at the time. “We’re not quite in a position to be able to do that yet but it is absolutely part of our long-term plan to get rid of it because it’s not good for affordability in B.C.”

http://www.vancouversun.com/business/Vancouver+lacks+effective+control+over+rising+house+prices/11028564/story.html#ixzz3ZEfksFNX

ya Christy that should help…

Wearehere
Guest
Wearehere

Vangrl

What do you expect from such a stupid politician. the ONE way these off shore money launderers contribute is through the property transfer tax.Now she wants to cut it.

Hint hint Christy…how about reducing for anyone who shows they submitted a tax return the previous year???

southseacompany
Member
southseacompany

“Demand for Metro Vancouver housing outpaces supply”, CTV News

http://bc.ctvnews.ca/demand-for-metro-vancouver-housing-outpaces-supply-1.2358870

However;

“Despite soaring sales both Metro Vancouver and the Fraser Valley last month, excessive inventory in areas like the Township of Langley’s Willoughby community has actually seen some prices drop.”

“Solon Bucholtz of Royal Lepage said condos that would have cost around $300,000 before tax a couple years ago are now being offered at $275,000 – taxes included.”

““I’ve been licensed for eight years, I haven’t seen prices this low for condominiums in the Langley area,” Bucholtz said.”

piklishi
Guest
piklishi

The burst of the housing bubble, it has to start somewhere, well that place unfortunately for the people who leave there its Alberta. The rising prices make no sense, big spikes like in this article below have to come to an end.

On Vancouver’s west side, the detached HPI reached $2,490,600 last month, up 13 per cent from a year earlier. For Greater Vancouver – including suburbs such as Burnaby and Richmond – the detached HPI jumped 12.5 per cent year over year to a record-high mark of $1,078,900 last month.”

http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/vancouver-house-prices-spike-in-once-ignored-markets/article24249436/

vangrl
Member
vangrl

I have to transfer this from the previous post cuz it’s just that good!

“Muir says on a numbers level, data from Statistics Canada data doesn’t indicate a significantly higher level of foreign ownership in Vancouver compared with the rest of Canada.”

http://www.news1130.com/2015/05/04/adding-extra-fees-to-foreigners-buying-real-estate-likely-wouldnt-ease-interest-economist/

vangrl
Member
vangrl

Meanwhile over in Burnaby –

“I have 1,000 buyers looking for apartment sites,” said Goold, a specialist in multi-family sales. He said it is not uncommon to have 15 buyers lined up for an open house. “We are seeing multiple bids.”

Goold confirmed that nearly all his recent Burnaby land development sales are to investors from mainland China, which he visited last month on a successful sales trip. “One buyer from China flew over here and paid $40 million cash for a Metrotown site,” Goold said.

Bo Xilai
Member
Bo Xilai

Ever wonder how Chinese Mainland Nationals who are limited to transferring out 50K a year from the motherland can do “all cash” deals for 5 million dollar houses?

http://www.gfintegrity.org/wp-content/uploads/2014/12/Illicit-Financial-Flows-from-Developing-Countries-2003-2012.pdf

Global Finanancial Integrity has done an interesting study about illicit financial flows and guess who gets #1…

China has leaked an approximate $1.2 Trillion in laundered and illegally transferred money from 2003-2012.

patriotz
Member

@2: “What do you expect from such a stupid politician.”

As I’ve said before: Christy isn’t stupid. She just thinks you are.

And in the case of the impersonal “you” (i.e. excluding present company), she’s right.

patriotz
Member

@5:

Muir is wrong on many counts. First, there is nothing from Statscan. CMHC did do a survey on foreign ownership of rental condos (only), and in that survey Vancouver has higher foreign ownership than many other Canadian cities:

In the the 11 major markets tracked, there was a broad range, from a high of 2.4% in Toronto and 2.3% in Vancouver to a low of only one-tenth of a percentage point in several cities.

http://business.financialpost.com/personal-finance/mortgages-real-estate/cmhc-finally-releases-foreign-ownership-data-on-housing-too-bad-few-believe-it

Also keep in mind “foreign” means someone who is not a legal resident of Canada.

patriotz
Member

Canada’s trade deficit balloons to record $3-billion in March

Canada’s trade deficit swelled to a record $3-billion in March, as a big jump in imports overwhelmed modest gains in exports…

Economists had expected a deficit of about $800-million for the month.

Tiger
Guest
Tiger

On Dec 4, 2014 3603 – 938 Nelson Street, Vancouver $5,288,000
Today may 9,2015 3603 – 938 Nelson Street, Vancouver $4,588,000

IT IS $700,000 CHEAPER THAN 6 MONTHS AGO.I HEARD IT WAS ONCE OWNED BY Jean-Claude Van Damme.

Son of Ponzi
Guest
Son of Ponzi

#9
Pats,
Still trusting the Economists, don’t you?

Son of Ponzi
Guest
Son of Ponzi

#10
Van Damn.
Describes Vamcouver to a tee.

vangrl
Member
vangrl

“The housing sector is a key source of strength to Canada’s economy,” Phil Soper, CEO of Royal LePage, wrote in a LinkedIn post entitled Bank of Canada Should Stand Firm in wake of Canadian Economic Stagnation. “Now more than ever it is important to keep markets functioning by holding firm on low rates.”

http://www.mortgagebrokernews.ca/news/real-estate-exec-to-boc-keep-rates-low-191050.aspx

Joe Mainlander
Guest
Joe Mainlander

@Vangrl #13 Low rates have made Realtors like Soper very wealthy men.

But, at least he’s not totally disingenuous;

“Soper also weighed in on Toronto and Vancouver’s housing markets – oft-debated hot markets that resisted the kind of slowdown affecting many other major centres.

“The concern here is that strained affordability leaves these markets more susceptible to external shock,” Soper wrote.”

rksleung
Member
rksleung

I watched Martin Armstrong’s The Forecaster in the Vancouver Documentary festival. Highly recommended. It was supposed only to be one showing. Now, due to high demand, they will show it again in the DOXA summary around May23, 24.

2015 Sept is a the Sovereign Debt Big Bang according to him. People will lose confidence in the govt debts. Starting in the EU, then to Japan and finally rushing onshore to the US.

Nom Nom Nom
Guest
Nom Nom Nom

Tackling the problem of tackling corruption in China…

http://www.bbc.com/news/blogs-china-blog-32590433

Considering that we can’t even muster the political will to even address these issues here, what hope do we have. This is earily similiar to the futility of the “War on Drugs”

Apita
Member
Apita
First of all, I have to say I do not appreciate the way that some people behave. The way we use the word “Locust” today actually came from Hong Kong. But do I hate them so much that everyone of them who is buying properties in Vancouer is a criminal, fugitive, or corrupted government officer? No. Set your anger aside, there are intelligent, hard working, and money making elite amongst a population of 1.3 billion in China. Let’s forget about successful businessmen from China, although I truly believe they are the largest composition of Chinese wealthy immigrants in Canada. What about corrupted communist government offiers? Yes they definitely exist, but these people are so clever and cautious that you would not notice their existence at all. This is common sense. If someone has taken tens or hundreds of millions of… Read more »
space889
Guest
space889

@Fold – Don’t worry, team BPOM will always blame the Chinese, even if there is not a single mainland Chinese buyer left, they will still blame the Chinese. Cuz it’s always easier to blame the Chinese than face the ugly truth that they are just a pathetic self-entitled racist brats who think the world owe them everything cuz you know, they grew up in Van West!

space889
Guest
space889

@Bo Xilai – you mean like Cortes who basically committed genocide and destroyed an ancient civilization?

dandy
Guest
dandy

Space, stick to doing math problems because you clearly have no clue how to debate rationally.

ostritch
Member
ostritch

Hey Ted, add snow in May to your list of reasons why this is the Best Place on Earth.

ostritch
Member
ostritch

You guys are awfully silent about the rental shortage that’s on right now. Seeing as it impacts bears more than most maybe it’s too painful to discuss here. Have a friend looking to move and the competition is on big time for as little as 2 units that they are considering.

Yunak
Guest
Yunak

You guys are awfully silent about the rental shortage that’s on right now.

Possibly a massive cash-out is taking place across the city given the sales numbers lately, and former “owners” are becoming renters with some contingency to spare?

space889
Guest
space889

@ostritch – Well apparently every single bear on this blog never ever have problems securing great rental deals with the landlord subsidizing them to live in $2M+ houses.

And in the unlikely case that the rent is considered too high, while that’s not a big problem cuz it simply means someone else is willing to pay more rent than you. Yet, you can’t apply the same argument to purchase price.

I’ve been looking at renting on and off the last couple years and yeah, it is bad. There really isn’t anything decent for 2 bedrooms under $2K/month. I consider that to be a lot of $$, especially given the average income in this city.

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