Interest Rates, Price Plunge & CMHC Losses

Southseacompany linked to this article in the Globe and Mail that talks about the CMHCs vulnerability to rising interest rates:

The most dramatic scenario involved a severe and prolonged global economic depression that sent unemployment soaring to 13.5 per cent and triggered a 25-per-cent drop in national home prices.

In that case CMHC said its mortgage insurance business could lose more than $3.1-billion over five years. However CMHC said it would have more than 200 per cent of its required minimum capital, even after accounting for stricter capital requirements that OSFI is expected to introduce in January. Insurance companies are required to stop writing new insurance business if their capital ratio falls below 100 per cent of its required minimum level and are insolvent when their capital levels hit zero.

CMHC’s stress testing comes amid heightened concerns over the health of the Canadian housing market. Last month, the housing agency issued its first “red” warning for Canada’s housing market as a whole, saying it now sees “strong evidence of problematic conditions” in six of the country’s largest housing markets.

In yet another scenario the Crown corporation said its insurance business would lose more than $2-billion if Canada experienced a “U.S.-style” housing correction, where home prices drop by 30 per cent and the unemployment rate rises to 12 per cent.

Read the full article here.

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tedeastside
Member
tedeastside
tedeastside
Member
tedeastside
trackback

[…] –10% of homes never lived in […]

Donald T
Guest
Donald T

hey, think it is a repeat of 2008/9? Still, get out your napkins and starting counting.
1. Interest rates is, not could have, going up.
2. A come back of Zero down, 40 year mortgage, you can keep thinking.
3. A drop of 30% is a just small change, it represents prices at 12 months ago.
4. Empty home tax, 15% racist tax and PLUS the regular land transfer tax, transaction costs over 30%, Foreign money has moved on. If these money are heading to TOronto, You bet Ottawa will give more action.

Sell Sell sell……………
Or use the Napkins for wet dream.

history
Guest
history

India bans 500 and 1000 rupee notes
No longer has value. Must go to bank with tax records, etc to prove valid income paid taxes in order to exchange to valid notes.

https://www.youtube.com/watch?v=CIUpZXklikk

southseacompany
Member
southseacompany

“10% Of Homes Being Resold In Vancouver Have Never Been Lived In”, Better Dweling

https://betterdwelling.com/city/vancouver/10-of-homes-being-resold-in-vancouver-have-never-been-lived-in/

“There are currently 4,799 homes listed for sale according to the Real Estate Board of Greater Vancouver (REBGV), and 463 have never been occupied.”

“People purchase pre-construction and sell once the building is released. That’s pretty normal and not all that surprising. What was surprising is that some of these places have been left empty for years.”

patriotz
Member

“There are currently 4,799 homes listed for sale”

That number doesn’t make any sense as anyone following Paulb’s numbers can see. Clearly the article deals with all dwelling types not just SFH. Also I take issue with their choice of words since a dwelling that’s never been occupied isn’t anyone’s “home”.

southseacompany
Member
southseacompany

“CMHC boss warns high household debt could jeopardize economy” BNN Video

http://www.bnn.ca/cmhc-boss-warns-high-household-debt-could-jeopardize-economy-1.611164

southseacompany
Member
southseacompany

“Five things that are upending Canadians’ understanding of housing”, BNN

http://www.bnn.ca/five-things-that-are-upending-canadians-understanding-of-housing-1.611212

“Just six months ago, many Canadians were confident in their understanding of the housing market. Historically-low borrowing costs were showing no signs of moving higher, Calgary continued to suffer under the weight of low oil, and price gains in Vancouver and Toronto looked unstoppable. A lot has changed since then. Here are five things changing our understanding of the Canadian real estate market.”

MarKoz
Member

Canadian regulators should explore raising minimum down payments and imposing additional mortgage-qualifying restrictions in order to ease housing affordability and curb the risks of exceptionally low interest rates, the head of Canada Mortgage and Housing Corp. said Friday.

http://www.theglobeandmail.com/real-estate/the-market/cmhc-chief-says-higher-down-payments-needed-to-battle-housing-risks/article32923702/

No Money Down
Member
No Money Down

“I have yet to be convinced that people in our country “need” access to 19:1 leverage to buy homes,” Mr. Siddall said. “In fact, it may be a fool’s bargain with the extra demand simply feeding higher house prices: the benefits of the policy accruing to wealthier home sellers rather than to the young first-time homebuyers it purports to help.”

patriotz
Member

https://www.theguardian.com/world/2016/nov/17/vancouver-empty-homes-tax

Nothing you don’t know but interesting to see it featured here. And the best possible comeback to the crybabies opposing the tax: “The fact is these are second or third homes so it’s difficult to see how hardship applies if you own multiple homes in Vancouver,” said the mayor.

Shut It Down Already
Guest
Shut It Down Already

It’s not a matter of hardship, it’s the governemnt extending their reach too far. They have no business telling anybody what to do with their property.

Bear Vancouverite
Member
Bear Vancouverite
I’m not one of those posters who automatically disagrees with your posts, but this particular statement has 2 problems with it: “They” (the city) is acting upon the collective public’s belief that homes should be for living, not being left empty as investments, and “they” are acting on that majority public opinion. This is how government is supposed to work, not for self interest or for the benefit of a minority of wealthier individuals. “They” (the city and other levels of gov) already have plenty of restrictions telling you people what to do with their property. They tell you how to use it (residential vs farmland vs commercial vs industrial), they control how much of it you can use (floor space ratio), they tell you how it must look (height restrictions, how far to set back the building on the… Read more »
Bear Vancouverite
Member
Bear Vancouverite

Sorry, I did not mean to say “you people”, which is necessarily antogonizing. I had typed ” restrictions telling you what to do ” and then meant to change it to ” restrictions telling people what to do”

Oracle
Guest
Oracle

8K Party coming in 2 weeks.

Combat roach
Guest
Combat roach

Great reason to revisit overall migration with China, strengthen up visa regime and border security.

http://m.huffpost.com/ca/entry/13058628

UBC in Crisis Mode
Guest
UBC in Crisis Mode

Someone bought this lot, over paying for $1 million when the market is cooling. Go figure!
19/Aug/2016 $3,800,000
4583 W. 15th Ave, Vancouver
https://www.youtube.com/watch?v=4lpvodCjUZQ

No Money Down
Member
No Money Down

I presume the buyer was already locked into a contract when the FBT was announced. Recent detached sales to list prices are 89%, with houses on average selling at 11% below list price.

https://www.zolo.ca/vancouver-real-estate/point-grey/trends

Here’s a recent 15% ($452k) price reduction. Go Figure!
https://www.zolo.ca/vancouver-real-estate/3980-w-10th-avenue

space889
Member
space889

BC Premier Christy Clark to receive award at Buckingham Palace on Tuesday

http://dailyhive.com/vancouver/christy-clark-award-buckingham-palace-great-bear-rainforest-november-2016

Sellnoworbepricedin4evah
Guest
Sellnoworbepricedin4evah

She will work to save the bear forest but not to save the homeless, many of whom are homeless due to her greedy policies over the years to jack home prices up
Sad.

Shut It Down Already
Guest
Shut It Down Already

Remember the mayors pledge?

Sellnoworbepricedin4evah
Guest
Sellnoworbepricedin4evah

I despise the sordid outcomes of real estate bubbles….

http://vancouver.craigslist.ca/rds/roo/5881620821.html

vangrl
Member
vangrl

“The detached market continues to be sluggish. October marked the third consecutive buyers market, it appears that won’t change in November. As of the first half of the month new listings are 5.2% below the 10 year average (Nov. 1-15) while sales are 36% below the 10 year average”

http://vancitycondoguide.com/mid-november-market-update/

Boombust
Guest
Boombust

TEN years ago? Think of all the new construction over the years since then.

paulb
Member

New
127
Price Change
49
Sold
159

TI:9394

http://www.paulboenisch.com

Just me
Guest
Just me

Paul: who is buying and where? Full list price or discount? If discount, how much? Sales seem off the chart! Is it starting all over again?

Tamara
Guest
Tamara

see Oracles post.

Combat roach
Guest
Combat roach

Lower tier foreign locust buying through local homies while “deals” are available;)

vangrl
Member
vangrl

delayed sales data from the new mortgage rules?

Oh oh
Guest
Oh oh

Lotsa pre trump sales too…

Shut It Down Already
Guest
Shut It Down Already

Lol

vangrl
Member
vangrl

well what then? you think Nov 15th marked a day to jump back in?

Shut It Down Already
Guest
Shut It Down Already

Delayed sales data from the Olympics.

Boombust
Guest
Boombust

Chumps catching a falling knife; they think we’ve hit bottom before a big Spring run up.

Best place on meth
Guest
Best place on meth

Shut up, you racist.

Bag it and tag it
Member
Bag it and tag it

Another high sales day…looks like panic selling is kicking in,. Sellers jumping on lowball bids.

Foo Man
Guest
Foo Man

Idiot

vangrl
Member
vangrl
Is Space still pretending that he owns real estate? That us Bears lost out on the run of all runs that he foresaw years ago? Don’t buy it. Space – “As Farmer said, rent is not cheap in this city. I make a very good salary here but I can’t afford to rent a newer 2 bedroom condo that’s bigger than 800 sq ft or a 2 bedroom townhouse. Well technically I can but then I would have no money left for emergency fund, RRSP, RESP, etc after rent, utilities, daycare, and day to day expenses and we aren’t even big spenders with big restaurant and clothing budget. $1000 in rent generally gets you either pretty bad rentals and/or really old rentals with that nice moldy smell which makes you think “hmmm….this must really help my toddler’s brain and respiratory… Read more »
vangrl
Member
vangrl

test…..this site is bad for commenring

vangrl
Member
vangrl

“commenting”
Oh it worked! imagine that

Oracle
Guest
Oracle
What if all the measures introduced the last few years don’t significantly impact house prices and rents keep going up (both I expect to continue. The measures so far: 1) Airbnb ban- no effect. 2) 1% Vacancy tax – Self reporting + population increasing faster than units come up for rent. 3) CMHC upper limit 25 years amortization , <$1 million – no effect. 4) 15% foreign tax – Trudeau just increased rate of immigration for foreign students. 5) CRA enforcing capital gains tax – no effect as people only have to report a sale. No need to declare your primary residence each year. "Game of chairs". 6) CRA going after undeclared rental income – not even talked about. Then you can say: A) Rates going to rise – really? maybe a max of 1% before the business cycle goes… Read more »
Burnaby Bear
Guest
Burnaby Bear

5) CRA enforcing capital gains tax – no effect as people only have to report a sale. No need to declare your primary residence each year. “Game of chairs”.
6) CRA going after undeclared rental income – not even talked about.

Watch for an announcement about a change at CRA in regards to enforcement. Surrey Tax Centre will no longer process tax tax returns, it will become a centre for collections and verification activity.

patriotz
Member

“CRA enforcing capital gains tax – no effect as people only have to report a sale.”

Capitals gains only apply at time of sale of any asset. Don’t see your point really.

bullwhip29
Guest
bullwhip29

actually you will be req’d to declare principal residence on your return

Oracle\'s sawdust house
Guest
Oracle\'s sawdust house

You said it all right there.
“Aging population” the boomers already have half a foot in the retirement homes. Come spring they will flock to sell before they lose more equity as THEY cannot wait for another boom be it 5 or 10 years from now. That’s a lot of homes, mostly tear downs . Less developers purchasing houses for lots = market gone for those homes. Spring will be a nice wake up. Don’t get your hopes up on immigration. Long term it will have a small impact but short term ~3-5years will have no effect on home prices. Rent will also be slowing as you watch herds of young construction workers and tradesmen flee as fast as they can with the collapse in building.

patriotz
Member

“Come spring (boomers) will flock to sell before they lose more equity”

Like in all bubbles, a few smart ones will get out near the top but many won’t even be aware that prices are falling and most of those who are aware will think there will be a recovery like after 2008-9.

Busts are never caused by owner-occupiers selling in anticipation of falling prices. They are caused by a drop in demand and by investors, who watch the market much more closely, selling.

space889
Member
space889

There are like 145 plus countries in the world, so that’s a cap of 1.5M+ immigrants. Nice one Oracle.

Best place on meth
Guest
Best place on meth

145 countries?

Jesus fucking Christ…..

Newcomer
Member
Newcomer

Wait a minute. You can’t afford to move out from home because rents are too high, right?

No Money Down
Member
No Money Down

Additional information on 1611 W61st Ave Vancouver

Sold for $2.68M in June 2015 🙂
Flipped for $3.5M in March 2016 🙂
Listed $3.89M on Sep 24 🙂
Reduced to $3.0M on Nov 14 🙁

https://www.zolo.ca/vancouver-real-estate/1611-w-61st-avenue

oh la la
Guest
oh la la

I would recommend everyone on this board to go 7-9 years back and pick any topic and go through the comments. It is like deja vu all over again. You will see complaints on Van house being sold for $700K and TH for $450K.
People packing bags, crystal balling the upcoming -50% crash…

Whoever hoping for a big crash, think again.

Shut It Down Already
Guest
Shut It Down Already

7-9 years ago the comments were on-topic. Then the racists arrived.

Best place on meth
Guest
Best place on meth

I don’t recall you being here that long ago.

Shut It Down Already
Guest
Shut It Down Already

The archives are there for all to see.

Best place on meth
Guest
Best place on meth

Can you provide a sample of your sorry, racist, traitorous ass commenting here 7 years ago?

Shut It Down Already
Guest
Shut It Down Already

What on earth are you gibbering about this time? I said that in the past the posts were on-topic.

Read before typing?

Boombust
Guest
Boombust

You’re forgetting something…that’s about the time Harper and Ffaherty began inflating this bubble with 0% down and 40 year mortgages along with help from both the CMHC and lower interest rates.

That’s is all behind us now; the can was kicked down the road. Guess what? THIS is now the end of the road.

Get it now?

oncebittwiceshy
Guest
oncebittwiceshy
I’ll bite, only because you actually sound serious. If you go back to 2009, you are sitting in the midst of a big correction, up until the Bank of Canada moved to emergency rates. Voila, 8 more years of price appreciation. The sad thing now is that we are currently starting to go through the same thing and there is no where to hide. The Bank of Canada will not raise rates anytime too soon because they can’t afford to with our slumping economy. However, when the U.S.A. raises rates next month and our dollar drops, as a result, then we will be importing inflation. Bank of Canada meet rock and a hard place. As Canada slips into recession because the FIRE industries start laying off people due to the housing correction then expect to see bond yields soar. The… Read more »
space889
Member
space889

Like being totally wrong in 2008/09 cuz oh, gov’t bailed out the market, it’s so unfair!!! wahhh…it’s so unfair!? If only the gov’t didn’t interfere!

Maybe, you should realize that most elected gov’t do everything in their power to avoid a hard crash that screw a lot of people – ie. voters!

Who knows what will happen now, but I bet things will not work out exactly like how bears on this blog expect them to go. Maybe we will get a crash, but end result being no locals have ability to buy and all housing end up going to REITs / foreigners instead. So the only relative winners still end up being the recent seller and existing owner, rather than renters / bears who kept waiting.

Newcomer
Member
Newcomer

That may be true, but why do you care? What makes you come here and act up like this?

In your mind, I guess you must see yourself as making people sad, or angry. Why would you want to do that?

Best place on meth
Guest
Best place on meth

No wonder women want nothing to do with you.

bullwhip29
Guest
bullwhip29

Canadian anti-money laundering agency releases guide on suspicious real-estate transactions
http://www.straight.com/news/830886/canadian-anti-money-laundering-agency-releases-guide-suspicious-real-estate-transactions

No Money Down
Member
No Money Down

That’s a relief. Rest easy everyone FINTRAC are on it!

space889
Member
space889

How about this simple rule. If the person is a gov’t official in China, chances are that person should NOT have a few millions+ lying around.

Hyper-mega-Bull
Member
Hyper-mega-Bull
HAMster
Guest
HAMster

“Many people called Richmond RCMP’s non-emergency line.”

Well what’s the matter with them? They are not indignant enough to call 911?

Best place on meth
Guest
Best place on meth

“Many people called Richmond RCMP’s non-emergency line.”

Hello? Police?

Someone in our neighborhood is telling everyone that chinese are taking over Richmond!

Please send someone over to look into this crime!

Tester
Guest
Tester

Disinfo operation done by the alt-left as they are scared…….

Confucius
Guest
Confucius

Go back to Canada!

bullwhip29
Guest
bullwhip29

what good is this going to do in richmond of all places?

oh la la
Guest
oh la la

Remember the days… below is 5 year 4 months ago.
In 2008 Inventory reached 20,000???

PaulB:

New Listings 238

Price Changes 126

Sold Listings 132

Total Inventory: 16074

Thanks very much for the blog post Pope! And thanks to all the readers that support me. I have always enjoyed being a part of this community and look forward to being able to provide more detailed analysis once I have completed my fire recruit training (July).

Please feel free to contact me with any real estate related questions, big or small, and check out my website: http://www.laurenandpaul.ca/ where I have all the extra stats posted. And thanks to all who “liked” my Facebook page:) http://www.facebook.com/pages/Metro-Vancouver-Rea…

space889
Member
space889
Yes, but according to bear logic, now everything is different is a 9000 inventory is totally going to be the reason a housing crash is just around the corner! Another 1% increase in mortgage rate and this market going down baby!! Seriously! Then I can laugh in the face of all those smug family & friends who ignored my prescient warnings and bought. They flaunted their undeserved wealth in front me, their Europe vacations, fancy dinners, etc. Now I am going to enjoy their agony as they go through bankruptcy, financial hardship, forced selling of their homes. Pass the popcorn, the show is just starting and I’m going to love it! 2017 is the year bears going to remember and live for! Skip the hibernation, can’t miss the action. Oh and I’m going to flash my big investment portfolio and… Read more »
oh la la
Guest
oh la la

This correction or bubble burst whatever they call it – won’t be at 2008 levels. That makes this winter roughly bottomish prices you will see at least in the coming years. People know it and willing to hold on to their properties to ride this winter out. One thing most people on this board not getting is the locals will be hurt by these falling prices more than anyone else. All the finger pointing at Chinese on this board is getting out of hand. Guess what, they are already rich. Money is just number to them. They will easily pack and go. If that happens, oh man…. But that will only happen if some kind of major black swan event occurs. For example, >8 magnitude earthquake, North Korea rocket hits Van by mistake – something like that.