Real Estate

Vancouver housing bubble?

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  • Jun 18th, 2019 8:36 pm
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Deal Fanatic
Feb 29, 2008
7698 posts
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choclover wrote:
Apr 19th, 2019 11:13 am
I don't know if the people that live in BC know it yet, but BC is turning into a Canadian version of California, politically that is. People that live here are losing their freedoms every day to governments that are led by those who believe in socialism and communism (I'm not making this up, you can research the people's backgrounds for more info). It appears to me that BC is now "breaking away" from the rest of the country in its views by becoming overrun by radicals on the left, many of whom know nothing about hard work or sacrifice but believe strongly in equal outcomes. If they don't have what you own, it's not fair and time for you to pay up. Meanwhile government is growing at a pace that can only be supported by the double-digit increases to our property tax experienced on almost an annual basis. This can't end well.
I agree, but let it burn. Let them keep drinking that NDP koolaid. When shit hits the fan, they won't know what to do with themselves. The day Ontario heads that way, I'm GTFO!
Sr. Member
Dec 30, 2012
801 posts
836 upvotes
Toronto
Foreclosures higher than at any time in 40 years, according to Vancouver realtor.

http://www.theglobeandmail.com/real-est ... ng-market/

Satnam Sidhu has been a realtor for almost 40 years and he’s been buying and selling foreclosed houses for the past couple of decades. ‘I have never seen more foreclosures on the market than I have in the last six or eight months, especially in areas like West Vancouver and the west side,’ Mr. Sidhu says.

And most of the properties are being sold off by private lenders – a rapidly emerging and largely ignored major player in the B.C. housing market. An obvious reason for the increase in foreclosures is the overall market downturn. But another is the distortion caused by private lending. Private lenders are individuals and mortgage investment corporations (MICs) that fund mortgages, and the number of private lenders in B.C. has exploded in the past few years.

Because they are taking a greater risk, a private lender is more likely to foreclose on a property as soon as the mortgage payments stop. Since the banks introduced ‘stress test’ rules on borrowing, property owners have turned to private lenders in droves.

They use them if they are self-employed and don’t have the necessary credit rating; to borrow first or second mortgages on their homes because they need to pay off Visa bills; to pay their kid’s university fees; for a new car, or any number of reasons.

“Mr. Sidhu says he sees a lot of borrowing to pay off income taxes and to consolidate debt. ‘In the past, the bank would say, ‘We will refinance and increase your mortgage from $500,000 to $600,000, and now banks won’t do that – because people were using their homes as ATMs and not always for a good reason, for maybe a car or a motorhome.'

‘And now, when I look at foreclosures on the market, a good 70 per cent of the properties being foreclosed upon are [backed by] private lenders,’ he said.

Another one of those listings is at 928 Groveland Rd., West Vancouver, which is a 7,767-square-foot mansion, built two years ago and listed at $6.998-million, reduced from $8.898-million. Listing agent Malcolm Hasman says that he knows nothing about the seller, other than it is a private lending company.

‘Of my active 20 listings, I only have two that are under Supreme Court order,’ Mr. Hasman says. ‘This house [on Groveland] was originally priced two years ago at $10.88-million. Some people might say it’s come down 35 per cent, but the truth is it was probably unrealistically priced when first listed.'

Private lending isn’t just a Vancouver phenomenon. John Pasalis of Toronto’s Realosophy released a report last fall with Teranet that showed a major spike in private lending. In the second quarter of 2018, refinancing mortgages from private lenders increased 67 per cent in two years in greater Toronto.

Due to requests from clients on the hunt for foreclosures, realtor Ian Watt has relaunched his website exclusively devoted to Vancouver homes that are court ordered sales. He has already collected about three dozen listings, including multimillion-dollar houses. Private lenders are behind more than half the listings, he says.

‘The stress test doesn’t mean anything. It just means it’s pushed people into private lending, and private lending is way riskier,’ Mr. Watt says. ‘It’s riskier because who knows if those guys can keep their boats afloat. What if people start withdrawing their financial support? There is so much money involved and nobody knows where it’s coming from.'
Deal Fanatic
Feb 29, 2008
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A direct result of the crippling policies introduced in the last couple years. This is what happens when you elect idiots and let the media run amuck.
Deal Addict
Aug 21, 2007
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JayLove06 wrote:
Apr 19th, 2019 4:47 pm
A direct result of the crippling policies introduced in the last couple years. This is what happens when you elect idiots and let the media run amuck.
Or good polices that prevented some from buying with money they do not have. It's amazing how many use the max you can borrow as what they should borrow. Yikes. How stupid are Canadians? Some must have shit for brains.
Deal Fanatic
Feb 29, 2008
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mkjr wrote:
Apr 19th, 2019 8:04 pm
Or good polices that prevented some from buying with money they do not have. It's amazing how many use the max you can borrow as what they should borrow. Yikes. How stupid are Canadians? Some must have shit for brains.
Kill everyone in an attempt punish a few? Stupid strategy.

When you look at salaries vs home prices, pretty easy to understand why people are going to their max. Obviously housing is important to people so they will do what they can to get a property.

But if you're want to stop foreigners coming in with dirty money then create policy to stop them. Don't come up with policy to kill those who make honest money and did everything they could to just be able to afford a home.

That's my problem. They come up with these policies that will do a lot more harm than good.

Why can't they just do nothing and if people can't buy, then they can't buy? To me it's the same line of thinking. Brash, simplistic solution to a complex problem.




With the stress test, qualifying at 2% higher automatically means I can afford a home? Picking an arbitrary number and having people sink or swim is just silly. What if I'm applying for a 10 year mortgage? I need to qualify at 2% higher? Stupid.
Sr. Member
Dec 30, 2012
801 posts
836 upvotes
Toronto
JayLove06 wrote:
Apr 19th, 2019 8:17 pm
Kill everyone in an attempt punish a few? Stupid strategy.

When you look at salaries vs home prices, pretty easy to understand why people are going to their max. Obviously housing is important to people so they will do what they can to get a property.

But if you're want to stop foreigners coming in with dirty money then create policy to stop them. Don't come up with policy to kill those who make honest money and did everything they could to just be able to afford a home.

That's my problem. They come up with these policies that will do a lot more harm than good.

Why can't they just do nothing and if people can't buy, then they can't buy? To me it's the same line of thinking. Brash, simplistic solution to a complex problem.




With the stress test, qualifying at 2% higher automatically means I can afford a home? Picking an arbitrary number and having people sink or swim is just silly. What if I'm applying for a 10 year mortgage? I need to qualify at 2% higher? Stupid.
Okay, so why don’t you tell us what you want to happen. How do you protect the taxpayers who will be on the hook if regulation-free banks act wrecklessly and approve mortgages to people who cannot afford them?
Deal Fanatic
Feb 29, 2008
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civiclease wrote:
Apr 19th, 2019 9:42 pm
Okay, so why don’t you tell us what you want to happen. How do you protect the taxpayers who will be on the hook if regulation-free banks act wrecklessly and approve mortgages to people who cannot afford them?
The new rules gave life to those regulation-free banks.
Sr. Member
Dec 30, 2012
801 posts
836 upvotes
Toronto
JayLove06 wrote:
Apr 19th, 2019 11:15 pm
The new rules gave life to those regulation-free banks.
How so? Are you referring to private lenders? Taxpayers do not backstop contracts between private lenders and mortgage holders. Taxpayers DO backstop the banks however. How do you propose to protect taxpayers’ interest if you give a green light to banks to distribute helicopter money to anyone with a pulse?
Deal Addict
Oct 7, 2007
4596 posts
1482 upvotes
civiclease wrote:
Apr 19th, 2019 9:42 pm
Okay, so why don’t you tell us what you want to happen. How do you protect the taxpayers who will be on the hook if regulation-free banks act wrecklessly and approve mortgages to people who cannot afford them?
Wasn't this behaviour one of the big factors that led to the financial crisis in the U.S. in 2008? I seem to remember anyone with a pulse could get a mortgage and the U.S. President at the time was saying that everyone should own a home.
Deal Fanatic
Feb 29, 2008
7698 posts
2883 upvotes
Doesn’t really mean much. What we need is how much below average r a bovenasking are thry selling? Is the asking price too high or too low? What’s interesting is there are still properties selling at or above ask. So either some sellers are asking low to drum up onterests or sellers are still expecting 2017 prices and asking for too much.

Regardless. The boom is over. Vancouver Is headed to shit until thry vote in new government.
Sr. Member
Dec 30, 2012
801 posts
836 upvotes
Toronto
choclover wrote:
Apr 20th, 2019 10:46 am
Wasn't this behaviour one of the big factors that led to the financial crisis in the U.S. in 2008? I seem to remember anyone with a pulse could get a mortgage and the U.S. President at the time was saying that everyone should own a home.
Yes indeed. Also, middle/upper class people took on too much leverage in attempt to invest or flip.

Since taxpayers will be left holding the bag in the event of a housing downturn (through the CMHC and any other emergency spending that might occur), I wonder how JayLove proposes to mitigate that risk to the taxpayer if not by tightening credit to marginal buyers.
Deal Fanatic
Feb 29, 2008
7698 posts
2883 upvotes
choclover wrote:
Apr 20th, 2019 10:46 am
Wasn't this behaviour one of the big factors that led to the financial crisis in the U.S. in 2008? I seem to remember anyone with a pulse could get a mortgage and the U.S. President at the time was saying that everyone should own a home.
Incorrect. NINJA loans read up on them. Canadian banks do nothing if the sort. We barely have any interest only loans. States had them and so did australia
Deal Expert
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Feb 9, 2003
17651 posts
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Langley
JayLove06 wrote:
Apr 20th, 2019 2:59 pm
Incorrect. NINJA loans read up on them. Canadian banks do nothing if the sort. We barely have any interest only loans. States had them and so did australia
Our banks don't, but not everyone gets their mortgage from a federally regulated lender.

The next question becomes "How bad is it now in Canada compared to the US?" And unfortunately, there's no hard data.


From what I understand, in Canada today 6% of new mortgages and 20% of refinancing mortgages are with unregulated lenders.

Pre-bubble, subprime lending was about 20% of total. However, not all subprime loans were NINA/NINJA loans.

We also have to bear in mind that Canadian banks to engage in subprime lending, depending on the definition. Subprime borrowers are sometimes defined as those with credit scores under 640, 620, or 600. Canadian banks will loan money to people above 600.

Are there NINJA loans in Canada? I'm pretty sure there are. I see people with 2nd mortgages paying 10%+... those are not people in a good financial situation. Here's a good example:



A teacher gets $3.5m in loans up to 12%, interest alone is going to be well over 20k/month. Not all that different from the infamous stripper that "The Big Short" referred to that had 5 properties financed against each other. It's not exactly a "no job" scenario but there's no way that the job is enough to pay that if property values fall. Whether someone clears 3k or 0k is not going to make a difference servicing those loans.
Deal Guru
Jan 27, 2006
10681 posts
4238 upvotes
Vancouver, BC
choclover wrote:
Apr 20th, 2019 10:46 am
Wasn't this behaviour one of the big factors that led to the financial crisis in the U.S. in 2008? I seem to remember anyone with a pulse could get a mortgage and the U.S. President at the time was saying that everyone should own a home.
You bolded a section of the comment out of context.

In the US, regulated banks IGNORED certain regulations and gave out mortgages as if those regulations didn't occur; hence, the massive mortgage approvals from some banks. The problem was compounded by the creation of mortgage products where the homeowner was never meant to pay off their mortgage via regular payments (ie none of the monthly payments went to the principal of the mortgage) and some mortgage products actually added some of the interest payment to the principal. None of those products exist in Canada from a regulated bank.
Jr. Member
Feb 15, 2018
155 posts
167 upvotes
Canada indeed has a sub-prime problem. Not necessarily identical to the US one, we have our fair share with just different names. A rose by any other name is still a rose. They say Canada could easily have 10% sub-prime mortgages. Might not sound like a big deal compared to the states. However, for a small economy like Canada, the shocks from defaults from just 10% of those sub-prime loans will reverberate across the housing market. Also, once you factor that those sub prime loans are more concentrated in Vancouver and Toronto, the rate of sub prime in those cities just escalates. Now also factor that those sub-prime loans are more concentrated in the condo sector (16%) you start to appreciate the magnitude of Canada's sub prime rate.

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