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unicas
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Here's What's Happening In North America's #1 Housing Bubble

Wed Nov 28, 2012 11:19 am

Someone made this comment on a frontpage article regarding Canadian RE , pretty cute.

I love how dumb ass Americans like to comment on the houseing market in Canada. Here are a few facts that might help put some light on your ignorant bubble statement.

1. In Canada interest on your home mortgage is not tax deductable as it is in the USA. Therefore there is no incentive for uneducated sheep to continue draw home equity out of their homes to buy boats and toys just to save on their tax bill.
2. Canadian banks do not lend to unqualified (subprime) buyers. Also Canadians do not accumulate unnecessary toys boats bikes etc.
3. The real estate prices in Toronto and Vancouver are mainly being driven by cash buyers. Therfore, there will not be a courthouse front step auction like you had all over the USA.
4. Canada's growth has been driven by a sound economy based on both resources and manufacturing, not a retail and consumption driven economy.
5. Vancouver, BC has one of the lowest corporate tax rates in the world. Driving further investment from Asia.
6. If Vancouver's market is a bubble, I guess its the biggest bubble in history because its been going on for over 100 years.
http://thedependent.ca/featured/land-de ... vancouver/
7. Is New York, London, Hong Kong, Sydney, Melbourne, Singapore, Auckland and Wellington all in the same bubble created by Carney?


Read more: http://www.businessinsider.com/canada-h ... z2DY1OQdrL
 
extirpated
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Re: Here's What's Happening In North America's #1 Housing Bu

Wed Nov 28, 2012 8:08 pm

um, wrt to your points #1 and #2 just because mortgages aren't tax deductible doesn't mean people don't blow HELOC's on toys and poor investments; my brother's family bought all kinds of random crap with the equity from our Richmond family home: 30k boat, cars, truck to pull said boat, waterfront cabin, $8k ATV for driving to the resort near said cabin to get ice. plenty of booze, cigarettes and vacations, oh and 200k to some random person to invest for them (which lost $$ surprise surprise). not all Canadians are smart and good with their money unfortunately.
 
HAM
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Re: Here's What's Happening In North America's #1 Housing Bu

Thu Nov 29, 2012 10:18 am

There is a way to make your mortgage tax deductible. I'm sure some of us already know how it's done.
So jimmy said I missed the dip in Richmond last year. And now prices have fallen even more with no balance in sight! The poor old man is just too old and grumpy!
 
timber2012
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Re: Here's What's Happening In North America's #1 Housing Bu

Thu Nov 29, 2012 10:21 am

Mike Stewart - financial planner can help if you don't know.
George Carlin once said "Think of how stupid the average person is, and realize half of them are stupider than that.”
 
HAM
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Re: Here's What's Happening In North America's #1 Housing Bu

Thu Nov 29, 2012 10:41 am

Mike Stewart - financial planner can help if you don't know.
But will he mastubate me?
So jimmy said I missed the dip in Richmond last year. And now prices have fallen even more with no balance in sight! The poor old man is just too old and grumpy!
 
timber2012
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Re: Here's What's Happening In North America's #1 Housing Bu

Thu Nov 29, 2012 1:57 pm

Mike Stewart - financial planner can help if you don't know.
But will he mastubate me?
Ask jimtan.
George Carlin once said "Think of how stupid the average person is, and realize half of them are stupider than that.”
 
Geyser
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Re: Here's What's Happening In North America's #1 Housing Bu

Thu Nov 29, 2012 2:56 pm

If you folks are talking about making mortgage interest tax deductable via "The Smith Maneuver" people should be warned that it is a high risk strategy, particularly during a period of "emergency" low interest rates in Canada where all mortgages reset, usually after a short number of years. It makes a lot more sense in the USA where mortgage rates can be locked in for multiple decades.

Anybody who is interested in that type of risky venture can find out all they need to know about it by using Google. No commission motivated mortgage brokers or financial advisors (AKA Mutual Fund Salesmen) are needed.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
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metalhead
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Re: Here's What's Happening In North America's #1 Housing Bu

Thu Nov 29, 2012 4:37 pm

Cute all right.
Look at some of the scathing replies to that idiots top ten list.
 
jimtan
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Re: Here's What's Happening In North America's #1 Housing Bu

Thu Nov 29, 2012 10:05 pm

Don't forget this!


TORONTO (Reuters) - Canada's government housing agency said on Thursday losses on its insured mortgage portfolio were stable and its arrears rate improving even as a cooling housing market has meant it is insuring fewer home purchases and refinancings.

In its third quarter financial report, CMHC said the overall arrears rate was 0.34 percent, while losses on claims were C$19 million ($19.1 million), or 12 percent, lower in the quarter compared with the same period in 2011. The number of claims received were down about 9 percent.

http://ca.finance.yahoo.com/news/cmhc-l ... 15870.html
 
unicas
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Re: Here's What's Happening In North America's #1 Housing Bu

Thu Nov 29, 2012 10:29 pm

metalhead, did u check out Panama? Is Panama for you? I was in the part of the world early this month. I did not go to Panama city becasue the tour I booked did not have enough people to make it. I did wander around in Colon near the canal. Not impressed at all. A bit scary walking on the street. Same with Limon in Costa Rica. I have people told me both countries are attractive retirement spots. There is a big Shell refinery on the island of Curacao, beautiful island, The water way resembles Venice. Ever been there?
 
Austin
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Re: Here's What's Happening In North America's #1 Housing Bu

Fri Nov 30, 2012 1:30 am

The thing about Canada is we have these well understood spigots we can turn on and off depending on our desire to control housing prices.

CMHC and Immigration are the two major faucets that will be used when prices get too cold too fast. CMHC is very effective because it's so finally wired into all our banks and we have so much data on what changes to down payments or mortgage lengths can do. Immigration is hugely effective because we have tight vacancies everywhere and a very small population relative to the demand for citizenship from quickly growing nations.

We also have the resources (natural ones) to back all this up with. Our debt is mostly under control and our dollar is pretty strong - and we have a small , manageable population.

Obviously, right now the Harper government is trying to run it cold for awhile to help cool things off. I'm sure if they see a crash coming down the pipe though, they'll turn the temp back up.

Two risks to this: if someone gets elected who doesn't understand how and when to do this. In particular, the NDP which probably has greater support amongst renters than the other parties, may be tempted to create anti-landlord / anti-immigration policies. They may not have a bench that can actually properly forsee when a crash might start getting out of hand.
Redistribute consumption, not income.
 
robert james
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Re: Here's What's Happening In North America's #1 Housing Bu

Fri Nov 30, 2012 5:53 am

The thing about Canada is we have these well understood spigots we can turn on and off depending on our desire to control housing prices.

CMHC and Immigration are the two major faucets that will be used when prices get too cold too fast. CMHC is very effective because it's so finally wired into all our banks and we have so much data on what changes to down payments or mortgage lengths can do. Immigration is hugely effective because we have tight vacancies everywhere and a very small population relative to the demand for citizenship from quickly growing nations.

We also have the resources (natural ones) to back all this up with. Our debt is mostly under control and our dollar is pretty strong - and we have a small , manageable population.

Obviously, right now the Harper government is trying to run it cold for awhile to help cool things off. I'm sure if they see a crash coming down the pipe though, they'll turn the temp back up.

Two risks to this: if someone gets elected who doesn't understand how and when to do this. In particular, the NDP which probably has greater support amongst renters than the other parties, may be tempted to create anti-landlord / anti-immigration policies. They may not have a bench that can actually properly forsee when a crash might start getting out of hand.
This Turkey is Done !!!.. The US,, the most powerful country in the world did not or could not stop the devastation of the real estate crash south of the 49 th..Harper is not going to do anything to slow or stop this "correction".. Nature will be allowed to take it`s course just like the in US ,Ireland ,Spain, etc. etc. Nature taking it`s course will mean that prices will retreat to the historic average or mean,, I would guess back to the 2004 levels ..The Canadian government could see what was happening in the US starting about 2006.. If they wanted to save Canada from the same real estate correction they would have done something then.. I believe this is commanally called,, "Wealth Distribution".. The money lenders are the people that make the money .. Recent RBC profits comes to mind..JMHO
 
eyesthebye
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Re: Here's What's Happening In North America's #1 Housing Bu

Fri Nov 30, 2012 8:49 am

metalhead, did u check out Panama? Is Panama for you? I was in the part of the world early this month. I did not go to Panama city becasue the tour I booked did not have enough people to make it. I did wander around in Colon near the canal. Not impressed at all. A bit scary walking on the street. Same with Limon in Costa Rica. I have people told me both countries are attractive retirement spots. There is a big Shell refinery on the island of Curacao, beautiful island, The water way resembles Venice. Ever been there?
unicast,
Costa Rica is fantastic. I could retire there in a heartbeat - and no crime like Mexico. Canada has big presence there - Banks, real estate, etc.
It's just as easy to fly there like Mexico
the cure for higher prices is moving to a destination with lower prices
 
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jesse1
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Re: Here's What's Happening In North America's #1 Housing Bu

Fri Nov 30, 2012 9:08 am

Obviously, right now the Harper government is trying to run it cold for awhile to help cool things off. I'm sure if they see a crash coming down the pipe though, they'll turn the temp back up.
Yes.

I agree Austin that there will be great pressure to increase credit availability if prices start dropping quickly. The Bank of Canada, in my view, is going to be very concerned with prices dropping more than a certain amount per year, and that can only be accomplished through additional credit availability. CMHC's 100% insurance guarantee -- or other similar government-backed hypothecary methods -- is the best means by which to transmit this.

That stated, I do not believe this is a sustainable effort. They can only do this for a finite period of time, which is why I am looking for the Bank of Canada and the government to do "price drop targeting" through fiscal policy and (as you say) immigration. However we are talking national controls I think, not regional ones. If cities like Vancouver are exceptionally high relative to what is sustainable with "normal" interest rates and have further to fall than the national average I do not expect much in the way of regionally-targeted clemency.

I think we better get our terms defined... what level of national price drops would be considered "orderly"? We can do some analysis of a few scenarios but let's for argument's sake say price-income needs to revert by 30% nationally in 7 years. Say income grows at 2% per year. That will mean national price drops will be targeted to be about -3%, average, annualized to drop price-income down. After 7 years, if rates start rising again, that will mean price-income will be firmly anchored and will be unlikely to rise for an extended period as rates revert. I would not hope to see price-income jump up again for a generation at least.

How about Vancouver? I think price drops will be worse. If price-income needs to drop 40% in 7 years that will mean annualized price drops of -5% with income gains of 2%. We are on track for -5% in the winter of 2013. And things may not go in a straight line. There may be years of more and less severe price drops in that time. If we follow a simple raised-cosine pattern we can figure out the likely trajectory, suffice it to say I think 2013 might be on the weaker side.

But on the whole I think you have it right, Austin, alas I don't know how to hedge it!!! ;)
There is no shame in overpaying
 
jimtan
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Re: Here's What's Happening In North America's #1 Housing Bu

Fri Nov 30, 2012 11:16 am

How about Vancouver? I think price drops will be worse. If price-income needs to drop 40% in 7 years that will mean annualized price drops of -5% with income gains of 2%. We are on track for -5% in the winter of 2013. And things may not go in a straight line. There may be years of more and less severe price drops in that time. If we follow a simple raised-cosine pattern we can figure out the likely trajectory, suffice it to say I think 2013 might be on the weaker side.

But on the whole I think you have it right, Austin, alas I don't know how to hedge it!!! ;)
But, they keep coming. Where to house them if developers don't build?

"Exclusive: Canada should boost immigration levels starting 2014, says internal report"

Read more: http://www.canada.com/Canada+should+boo ... z2DjiMMa13

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