There once was a central banker who was bored as he sat on the hillside watching the village sheep. To amuse himself he took a great breath and sang out that some property prices were “probably overvalued“.
The Canadians came running out of their homes to try to pay down their debt and get their finances in order. But when they arrived at the top of the hill, they found record low interest rates and rising property prices along with stagnating incomes. The central banker laughed at the sight of their angry faces.
“Don’t cry ‘high debt loads” said the Canadians, “when there’s no interest rate increases!” They went grumbling back down the hill and signed up for some more mortgages.
The banker was replaced with another, but he played the same naughty game, singing out “The elevated level of household debt and stretched valuations in some segments of the housing market remain an important downside risk to the Canadian economy”
By this time though the Canadians were wise to these pranks and they wisely held their place in the line up for the latest greatest condo pre-sales opportunity. The banker retired with a gigantic pension and everyone lived happily ever after.
MORAL: Load up on more consumer debt, invest in hot real estate. What could possibly go wrong?
Imagine that you own a nice apartment.
It’s cozy and comfortable with good neighbours.
Then these people move in upstairs.
With more than 1,100 complaints dating back to 2006, the strata council of the development in the 15200-block of Guildford Drive went to court to force Jordison to sell. While Jordison and her son Jordy obeyed a court injunction to move out, she appealed a B.C. Supreme Court decision forcing her to put her unit on the market — which would be the first such sale in B.C.
Residents alleged the Jordisons contravened the strata bylaws with excessive noise, abusive language, threats and harassment. Jordison also refused to pay $20,000 in fines.
Emmi brought up an interesting question on this bit:
She had been about $8,000 in arrears on her strata fees but her mortgage holder, TD Bank, paid those fees and added it to her bill. The bank halted its foreclosure hearings on the property pending the outcome of the case.
So . . . if the fee doesn’t push the total owed over the original mortgage amount, does CMHC cover this whole new amount for the bank?
You’ve probably heard over and over again that household debt in Canada is climbing to record levels.
And it’s probably not a surprise to you that mortgages due to the high cost of housing holds some blame there.
But did you know that the total amount of mortgage debt in Canada has nearly doubled in the last four years?
According to CAAMP the total national mortgage debt in 2008 was $664 billion. It now stands at a total of $1.2 trillion.
Over in the Vancouver Sun Barbara Yaffe sees this stat and seems to blame the little transaction fees for the high cost of housing.
But there’s a little four letter acronym conspicuously missing from her article: CMHC.
That would be the Canadian Mortgage and Housing Corporation, which has been flooding the market with insured mortgage money at a time of low interest rates.
So here’s the real question: Is Canadian mortgage debt so high because of our house prices, or are our house prices so high because of that mortgage debt?
It’s Friday and that’s important here!
Yes, even when we miss a whole week of updates it’s still friday-free-for-all time.
This is our regular end of the week news round up and open topic discussion thread for the weekend.
-links coming soon, hopefully!
In the meanwhile, what are you seeing out there? Post your news links, thoughts and comments here and have an excellent weekend!
It’s that time of the week again!
It’s time for 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!
-Warnings on household debt
-Most popular day for foreclosures?
-GM frets over credit for car sales
-Get rich in RE? be realistic.
-Developers leaving sunshine coast?
-An extended period of overbuilding.
-Flaherty: Fed should wind up stimulus
-PTT is a hardship for millionaires
-3 Gibsons developments in depth
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
Is anyone else getting tired of all the warnings?
Be careful how much debt you take on, be careful how much house you buy, make sure to save for retirement.
Well here’s another one: Stephen Harper has been told the entire countries economy is at risk due to record debt levels and the high cost of housing.
Municipalities are asking for the government to address high housing costs, but not everyone agrees.
… Finn Poschmann, vice-president of research at the think-tank C.D. Howe Institute, said Ottawa has “little jurisdiction and almost no practical capacity to deliver housing.”
“Past attempts to do so, through CMHC for example, have produced financial disasters for the people who participated and put CMHC in grave financial situation.” he said.
“We wouldn’t want to see that again, nor the federal mortgage agency deeply underwater and as similar U.S. agencies have been, through the course of much more recent financial disasters.”
Of course our current situation is that the CMHC has been pouring money into Mortgage Backed Securities to encourage buying, they recently had to cap this program because they couldn’t keep up with the growth.
It is likely that the government could reduce the cost of housing by simply pouring even less money into MBS.
Here’s one readers thoughts on the comparison between living in these two ‘world class’ cities.
Right now I’m renting an apartment in central Paris for two months. I agree completely with the previous comment that these ratings are usually aimed at the rich. I’m a member of the working class and the important question for me is whether a city works for those of us who do the work.
Some things I’ve noticed here in Paris. The cost of shelter is very high, particularly in central Paris, and living spaces are small. But the city itself functions as a kind of back yard and social space for those who live here.
If you buy an apartment you know it’s going to last because it’s usually been around for well over a hundred years already. These things are solid!
Despite the high cost of shelter I see a lot of families with children. The age of the parents are noticeably younger than in Vancouver. It’s not uncommon to see parents with two and three kids. Unlike Vancouver the parks and playgrounds are often full of children. This no doubt reflects the efforts by the French government to assist families with children. Daycare is free. Almost every school has after school care. Families receive significant subsidies for their children. Families with lower incomes receive financial assistance to pay for housing. The minimum wage is significantly higher. Working parents have a lot of vacation time.
These advantages are a product of a working class that has a strong history of fighting for measures that benefit everyone. As everywhere there are problems but nothing like the extreme challenges that face parents in Vancouver, particularly the toxic combination of high housing costs combined with unaffordable and often inaccessible daycare. Canadian governments feel no need to do anything about it given the lack of organized resistance to these hardships.
Read the full comment here.
Any other Vancouverites here who have lived / are living in another city? What are your thoughts on how the two compare?
Friday is here!
And that means it’s time for our regular end of the week news round up and open topic discussion thread. HOORAY!
Here are a few recent links to kick off the chat:
-Condos and casino together
-House prices rising, condos keep dropping
-Red hot or recovering?
-Time for more transparency?
-A petition if you think so
-So are these stats right or not?
-Foreclosure challenge leaderboard
-Vancouver Island stats
-The wealthy sleep just fine
-We love taxpayer insured mortgages
-Realtor Hunger Index at 62%
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have a fantastic weekend filled with sunshine, tropical beaches and good times!
How is this possible?
British Columbia, the province formerly known as the best place on earth is forecast to have a sluggish economy for the rest of the year, while Alberta is growing at a ridiculous rate with astronomical population growth.
Have you ever been to Alberta?
I haven’t, but I hear its just full of oil and cattle and cowboys.
Why are they growing while Beautiful British Columbia is mired with a sluggish economy?!
More than 10,500 moved here from outside Canada in the second quarter, making Alberta the third most popular choice for immigrants to Canada, behind Ontario and Quebec.
“It used to be that people came to Vancouver, Toronto and Montreal, and now they also come to Calgary and Edmonton,” White said. “So we are seeing a permanent change in that trend.”
Read the full article here.
In shocking news, it would appear that many Canadian boomer savings levels are below what it would take for a comfortable retirement.
Way back in 2006, about 20% of the boomers that responded to a BMO survey said they were not confident they had enough savings to retire on.
Now? That’s changed to 46% of boomers who say they don’t have enough to retire on.
Most boomers said they would like to retire at 59, but will need to work until 63.
The plan for many is to take a part time job or sell off belongings.
About 32 per cent expected to sell their home, while another 19 per cent said they will rent out part of their home for additional income.
To Buttigieg, boomers’ ability to save may have been affected by the challenges associated with paying off a mortgage, helping children through university and caring for elderly parents.
Inflation, low returns, living a long life and health issues call also spoil retirement plans, according to Mastracci, but he says one of the biggest problems continues to be debt loads.
“A lot of retirees still have debts (and) they have to clear the deck,” he said.
A recent report from Equifax says a growing number of seniors are taking on more debt to fund retirement lifestyles.
Hat-tip to Many Franks.