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:
–The bank will pay your mortgage
–The illusion of equity
–More cutting by Poloz?
–Bubbles and crying wolf
–The kids are all right
–HSBC stops some china US mortgages
–Prices up beyond wages
So what are you seeing out there? Post your news links, thoughts and anecdotes in the comments section below and have an excellent weekend!
CTV looked at how much rising real estate prices added to the personal wealth of the BC Cabinet – $2.3 million this year alone.
Surging real estate values added $2.3 million to B.C. cabinet ministers’ personal wealth this year alone, as the government says coming measures to ease housing affordability won’t include any that lower prices.
One minister saw her four properties jump $765,000, more than five times a minister’s salary. Another saw gains on a portfolio of eight homes. On average, ministers made $103,000 – more than an MLA’s salary, according to a review of public records by CTV News.
It’s natural for those ministers to welcome their own wealth boost, but they have to realize how their eye-popping gains translate into tremendous hardship for young people trying to get into the notorious Vancouver property market, said UBC professor Paul Kershaw.
Read the full article here.
As YVR points out, maybe it’s not just wealthy foreigners who are to blame for rising prices:
Funny thing is HAM is supposed to be buying all the property. Susan Anton owns 4 houses in Vancouver and DeJong owns 8 properties in Abbotsford.
Could that be the problem? Locals owning multiple properties? That is 12 properties between 2 people. Both are white and locals.
According to this article over at the CBC, Canadians love a good home equity line of credit – they’re practically addicted to that sweet sweet HELOC money at rock bottom rates.
“We are addicted for sure. Who wouldn’t be addicted to something so easy [to get]?” says 35-year-old Ali about the free-flowing lines of credit that have enabled him to splurge on the finer things in life.
“It’s easy, accessible cash at a very cheap price. The banks make it so easy for you to obtain it,” says the software engineer.
Some people say the national reliance on debt is a risk to our economy and to the lifestyles of the indebted. But the Canadian Bankers Association isn’t worried and spenders say they are aware of the risks:
While Ali and Haji like to spend, they believe they’re behaving responsibly and say they’re aware of potential pitfalls. That’s why they’re still undecided about another loan.
“If you get a line on this [house] and God forbid something happens to me or [my wife] and we are unable to sustain our lifestyle or stream of income that we have, then we would be in trouble and that may lead to us losing this house,” says Ali.
And that’s why some rooms in the family’s home remain empty. Ali shows CBC News his large, mostly barren master bedroom and talks about his grand plans to furnish it — sometime in the future.
“Without the credit line, it’s slow,” he laments.
But things could always change. The couple says just last week the bank called, inquiring if the family was interested in another loan.
Read the full article here.
A recent petition seems to have gotten enough attention to get the Premier to comment on the issue of limits to foreign buyers of BC real estate. This article say’s she’s sitting on the fence, but her quote seems to pretty clearly have a message for struggling first time buyers in BC:
“By trying to move foreign buyers out of the market, housing prices overall will drop. That’s good for first time home buyers, but not for anybody who’s depending on the equity in their home to maybe get a loan or use that to finance some other projects.”
Which category do you think holds about 70% of the voting population?
Some of you are under the impression that Bank of Canada Governor Stephen Poloz does nothing but sit around all day eating Doritos and watching The West Wing on Netflix, but you are sadly mistaken.
He also issues reports that freak out Realtors.
Consumer debt loads and house prices that could be as much as 30 per cent overvalued are the two biggest risks to Canada’s economy, the Bank of Canada warned in its semi-annual Financial System Review on Wednesday.
Yeah, but “up to 30 percent” includes zero percent over-valued too you know? Surely not everyone is overpaying for Canadian real estate.
The bank says it’s about 95 per cent sure that house prices have been overvalued by an average of about 10 per cent since 2007. That’s based on a new forecasting model the bank says it created, which incorporates existing data from private banks and other government institutions.
Huh. 95% Sure? really? I bet it’s all a’cause of those wealthy foreigners right?
And a lot of those inflated house prices are coming at a cost of rising debt loads. About 12 per cent of Canadian households are considered to be extremely indebted — which means they have a debt-to-income ratio of at least 250 per cent. That ratio has doubled since 2000, the report notes.
But that’s ok because younger buyers are building equity right?
Young homeowners, the bank added, have become even more vulnerable to negative shocks to income and to higher interest rates.
Wow. What a buzzkill.
*For those who followed the foreigner link we would like to offer our sincerest apologies. If you are a glutton for punishment, here’s a video of our prime minister singing Guns n’ Roses “Sweet Child o’ Mine“. If you watch the whole thing you earn a cookie! If you cut it off at 3:33 you have to go to work at a Tim Hortons in Fort Mac. You have been warned.