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When do you think the Vancouver housing bubble will explode and come crashing down ?


When do you think the Vancouver housing bubble will explode and come crashing down ?  

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1 hour ago, SaintPatrick33 said:

Everything is a cycle, but since the 70's, Vancouver has been one of the most costly cities to live in. Costs have continued to go up, while income failed to keep up. 

Thats right.  The divergence between disposable income and real estate prices is one of the big indicators screaming bubble.

 

Some snippets from reports over the last couple years. This was before the huge candle stick rise in the last few months. The reason it caught my attention again and why I feel comfortable with a top call here was the candle stick blowoff top that can be seen on the chart.

 

Observers outside Canada are ringing (loud) alarm bells (again) over inflated house prices.

Both Moody’s Analytics and The Economist issued fresh warnings within days of each other, each citing swollen household debt.

“Increasingly, it seems this is being felt in Canada, which has seen some of the fastest house price growth in the world over the past year in cities such as Toronto and Vancouver.”

As for The Economist, its big fear is that the uncertain economy “makes inflated debt and housing values more dangerous.”

Indeed, homes are overvalued to the tune of 34 per cent against disposable income, as measured by the magazine’s indicators, it said, saying Canadian housing now appears “scarily overpriced.”.

 

Deutsche Bank’s chief international economist Torsten Sløk has circulated a chart deck looking at global housing markets, and Canada stands out as having quite a few problems.

According to the report, homes in Canada are 63 per cent overvalued, greater than the 50 per cent levels in Australia and Norway, Deutsche Bank AG said in a report Thursday.

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5 minutes ago, CanadianLoonie said:

Technically, it is not the value of the house that is going up, but the purchasing power of the currency that value is denominated in that is going down.

That is partially true but this is still a stand alone asset price bubble. Even if we adjust out central bank dilution of the money supply, we still have this pyramid bubble.

 

The theft of purchasing power via inflation by the Keynesian Bank of Canada is an even more important issue than this bubble so I'm not trivializing what you are saying.

 

 

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16 minutes ago, LolClarkson said:

That is partially true but this is still a stand alone asset price bubble. Even if we adjust out central bank dilution of the money supply, we still have this pyramid bubble.

Because people think that housing is an "investment"...except investments are suppose to create new wealth, which residential housing clearly doesn't.

 

19 minutes ago, LolClarkson said:

The theft of purchasing power via inflation by the Keynesian Bank of Canada is an even more important issue than this bubble so I'm not trivializing what you are saying.

Are you an Austrian?

 

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6 hours ago, LolClarkson said:

So a plateau type formation  ?

 

Sept. 3, 1929: The market reaches its highest point before the Great Depression

At this time 85 years ago, Yale economist Irving Fisher was jubilant. “Stock prices have reached what looks like a permanently high plateau,” he rejoiced in the pages of the New York Times.

 

Apologies if I sound condescending but that is always what people say in bubbles. Show me a chart where this has ever happened.

 

I don't think you sound condescending so no need for apologies. I wonder whether your knowledge is coming from books/schooling or many years of actual experience and how many market cycles you've been through. Just curious, I do apologize if that sounds condescending.

 

You're not really comparing Vancouver real estate with the 1920's US stock market and subsequent crash are you? There are major differences between the two markets. The biggest difference being leverage. Like I said most of these speculative purchases of Vancouver RE (the top 15%) are being conducted in cash with not even a mortgage.

 

In the 1920's brokerage accounts allowed retail leverage of 10:1 to anyone. By contrast, today's retail leverage is only 2:1.

That's why the popping of that bubble was so severe. Not to mention the Federal Reserve at the time rather than easing rates, inexplicably tightened them which just added to the misery.

 

The popping of a bubble is almost always exacerbated and truly made into a painful crash by the unwinding of leverage (forced sales). If you're levered 4:1, a 10% market move is actually a 40% move in your bottom line. If your purchase was made in cash a 10% move is just that, a 10% move.

 

I don't think a 10% drop is going to shake out the foreign speculators. And any more of a drop will invite other foreign speculators to scoop up houses on sale. Especially since the battered loonie is offering them such an incentive.

 

 

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The market is clearly a bubble and it will crash. It has to.

This is a very financially dangerous mindset. The market does not have to do anything and will do whatever it wants for as long as it wants.

 

Any seasoned market participant (in any market, including RE) will tell you that. Listen to what the market is telling you rather than telling the market what it's going to do. Or you will learn a very expensive lesson. Been there, done that, got the shirt.

 

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That is simply not true. There are lots of borrowers in the market. So to say there won't be ANY mortgage trouble is disingenuous. 

What I meant by there not being mortgage trouble brewing was a comparison to the states circa 2007, not Japan circa the 90's.

There are no sub prime loans here. There are no NINJa loans. There are no ARMS (adjustable rate) mortgages here. That's what blew up housing in the states. People could not meet their new higher payments and were foreclosed on. Thus adding to the supply. Those conditions do not exist here.

 

You may see some people see the value of their RE drop and get out but I don't see that becoming an avalanche. Those people are not "hot money" or "speculators", they live and work in Vancouver, have family there etc. They are in for the long haul.

 

 

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And as we can see here, interest rates continued to fall all through Japan's real estate bubble/crash. Low rates did not prevent anything.

20050613b.gif

japanese-home-prices.png
 

Anytime an asset divorces itself from any fundamental metrics by a factor of 5 or 10, it can only mean speculation.
 

That proves that there is way more local speculators in the market than people want to admit. And again, lots of bubbles are built on cash money.

 

Japan was a unique situation in that they were dealing with deflation. The Japanese are a nation of savers as opposed to North Americans who are rabid consumers of everything. The low rates weren't about attempting to put a floor under housing. They had to drop rates aggressively to get their economy growing and spur inflation. Get the savers to spend. It didn't work and still hasn't and they are a zombie economy with embarrassing growth.

 

Can you give an example of a bubble built on cash alone in the last 100 years? One where serious money is involved? Only thing that comes to my mind would be fads like Cabbage Patch Kids dolls or morons paying $1000 for a Beanie Baby in the late 90's. Where no serious amount of money is ever invested.

 

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A lot of people have been duped by the local speculative community, in typical Vancouver fashion.  Its unfortunate because the resentment that's building against the scapegoated "Chinese" community in Vancouver is really getting nasty. There is very little actual evidence that the bubble is being fueled by cash. Lots of Chinese were buying in Vancouver in 1997 when Hong Kong was turned back over to the Chinese. There are some Chinese who are cashing out of that real estate.

 

Either way, most bubbles comprise of cash and borrowed funds. Cash sales do not change anything after the speculative bubble gets this separated from fundamental valuation metrics. The delusion will end and market fundamentals with rear their head.

I think when a home is listed on a Monday and sold on Wednesday for $300,000 over listing that it's a pretty good clue it's a cash sale. That's happening in a decent chunk of Vancouver RE sales. The foreign buyers of Vancouver RE aren't getting mortgages. Would you give a mortgage to a guy moving from Guangzhou? I didn't think so. It's a cash sale.

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11 hours ago, CanadianLoonie said:

Because people think that housing is an "investment"...except investments are suppose to create new wealth, which residential housing clearly doesn't.

 

Are you an Austrian?

 

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Because people think that housing is an "investment"...except investments are suppose to create new wealth, which residential housing clearly doesn't.

Yep. At these prices, rental income as a % of the price does not cover the property taxes or insurance. So not only are they not an investment, they are a liability at these prices.

 

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Are you an Austrian?

I sure am. I was going to ask you the same. I am very well versed in the concepts.

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11 hours ago, nuckin_futz said:

I don't think you sound condescending so no need for apologies. I wonder whether your knowledge is coming from books/schooling or many years of actual experience and how many market cycles you've been through. Just curious, I do apologize if that sounds condescending.

 

You're not really comparing Vancouver real estate with the 1920's US stock market and subsequent crash are you? There are major differences between the two markets. The biggest difference being leverage. Like I said most of these speculative purchases of Vancouver RE (the top 15%) are being conducted in cash with not even a mortgage.

 

In the 1920's brokerage accounts allowed retail leverage of 10:1 to anyone. By contrast, today's retail leverage is only 2:1.

That's why the popping of that bubble was so severe. Not to mention the Federal Reserve at the time rather than easing rates, inexplicably tightened them which just added to the misery.

 

The popping of a bubble is almost always exacerbated and truly made into a painful crash by the unwinding of leverage (forced sales). If you're levered 4:1, a 10% market move is actually a 40% move in your bottom line. If your purchase was made in cash a 10% move is just that, a 10% move.

 

I don't think a 10% drop is going to shake out the foreign speculators. And any more of a drop will invite other foreign speculators to scoop up houses on sale. Especially since the battered loonie is offering them such an incentive.

 

 

This is a very financially dangerous mindset. The market does not have to do anything and will do whatever it wants for as long as it wants.

 

Any seasoned market participant (in any market, including RE) will tell you that. Listen to what the market is telling you rather than telling the market what it's going to do. Or you will learn a very expensive lesson. Been there, done that, got the shirt.

 

What I meant by there not being mortgage trouble brewing was a comparison to the states circa 2007, not Japan circa the 90's.

There are no sub prime loans here. There are no NINJa loans. There are no ARMS (adjustable rate) mortgages here. That's what blew up housing in the states. People could not meet their new higher payments and were foreclosed on. Thus adding to the supply. Those conditions do not exist here.

 

You may see some people see the value of their RE drop and get out but I don't see that becoming an avalanche. Those people are not "hot money" or "speculators", they live and work in Vancouver, have family there etc. They are in for the long haul.

 

 

 

Japan was a unique situation in that they were dealing with deflation. The Japanese are a nation of savers as opposed to North Americans who are rabid consumers of everything. The low rates weren't about attempting to put a floor under housing. They had to drop rates aggressively to get their economy growing and spur inflation. Get the savers to spend. It didn't work and still hasn't and they are a zombie economy with embarrassing growth.

 

Can you give an example of a bubble built on cash alone in the last 100 years? One where serious money is involved? Only thing that comes to my mind would be fads like Cabbage Patch Kids dolls or morons paying $1000 for a Beanie Baby in the late 90's. Where no serious amount of money is ever invested.

 

I think when a home is listed on a Monday and sold on Wednesday for $300,000 over listing that it's a pretty good clue it's a cash sale. That's happening in a decent chunk of Vancouver RE sales. The foreign buyers of Vancouver RE aren't getting mortgages. Would you give a mortgage to a guy moving from Guangzhou? I didn't think so. It's a cash sale.

Quote

 


My Dad is an investor and business person. I've grown up in it. My Dads net worth is around 22 million dollars or more. Most of it has been built on this Vancouver real estate bubble. This is why I started studying Austrian econ. Because this whole thing didn't make a lot of sense to me. After studying economics, I've been trying to talk some sense into my Dad to diversify out of this market.

 

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You're not really comparing Vancouver real estate with the 1920's US stock market and subsequent crash are you? There are major differences between the two markets. The biggest difference being leverage. Like I said most of these speculative purchases of Vancouver RE (the top 15%) are being conducted in cash with not even a mortgage.

I am making a very simplified comparison yes. And of course there are major differences between the markets.  The similarity is the huge divergence between price and fundamentals and the reasoning people give for it. And I was just pointing out that people predicted 10% falls and leveling off in that bubble too. You have no idea who is in the RE market in Vancouver. There could easily be some levered up hedge funds in there who own a half dozen properties. But it doesn't even matter. Bubbles burst when there is a bank run on the asset.

 

Quote

In the 1920's brokerage accounts allowed retail leverage of 10:1 to anyone. By contrast, today's retail leverage is only 2:1.

Prices keep rising because people think they will keep rising. Leverage or not. And when there is a dash for the exits, the price will fall.  The hot money/greater fools will find another place to play.

 

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The popping of a bubble is almost always exacerbated and truly made into a painful crash by the unwinding of leverage (forced sales). If you're levered 4:1, a 10% market move is actually a 40% move in your bottom line. If your purchase was made in cash a 10% move is just that, a 10% move.

Canadian personal debt remains at record levels. The average Canadian household owes $1.64 for every dollar in disposable income. This is higher than the peak in the same ratio from the United States back before its housing market collapsed. Beneath this 15% froth is still a retail housing market and by any  metric, Canadians will just as hard pressed to meet their obligations as the Americans were when their market collapsed.

 

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I don't think a 10% drop is going to shake out the foreign speculators. And any more of a drop will invite other foreign speculators to scoop up houses on sale. Especially since the battered loonie is offering them such an incentive.

A 30% drop would still make Van real estate more expensive than most US cities. They are in it for the momentum now. Once the momentum is gone, they will find cheaper places to sit. The loonie is battered but buying now would mean going long the Loonie for the long term.

 

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This is a very financially dangerous mindset. The market does not have to do anything and will do whatever it wants for as long as it wants.

The financially dangerous mideset is the belief that a trend will continue forever. Regardless of mountains of evidence to the contrary. Only 2 real estate markets in the world have not had a 20% correction since the end of WW2. Australia and Canada. So yes, they could go up forever. It is just not likely.

 

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There are no sub prime loans here. There are no NINJa loans. There are no ARMS (adjustable rate) mortgages here. That's what blew up housing in the states. People could not meet their new higher payments and were foreclosed on. Thus adding to the supply. Those conditions do not exist here.

That is incorrect. Canada has its version of Fanny and Freddie. Its the CMHC

 

The CMHC issues mortgage-backed securities, which are basically pools of mortgage debt, and sells them to large financial institutions and pension funds. CMHC underwrites the risk, so that if borrowers default on their mortgages, the lender is not on the hook for the losses. CMHC is. Since the government backs the CMHC, that means taxpayers are on the hook for those losses. So far, none of this has come to pass. There’s been no housing crash in Canada and no mass mortgage defaults.

 

Like Fannie Mae and Freddie Mac, the CMHC was originally formed to help first-time homebuyers enter the market. Over the years, it has morphed into a mortgage slush fund which distorts the market. It allows banks to lend recklessly without consequences and pushes up the price of housing for everyone. It rewards those willing to speculate with leverage and discriminates against those who are prudent.

 

I'll respond to more later.

 

One more thing. The reason you are seeing so much "cash" in the market is because rising prices begets cash. A guy with a 300k mortgage balance who sold his house for 900k now has 600k cash to walk around with. Times this by all the market participants and yeah, pretty soon you have a lot of "cash" sloshing around. But the extension of debt on the retail side is pushing up the prices. Which creates cash when there is a sale. And cash is more liquid than debt. So this will make prices fall even faster when the momentum disappears.

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13 hours ago, nuckin_futz said:

I don't think you sound condescending so no need for apologies. I wonder whether your knowledge is coming from books/schooling or many years of actual experience and how many market cycles you've been through. Just curious, I do apologize if that sounds condescending.

 

I forgot to mention that I was one of the only ppl in the world to accurately call the oil bear market which I did on the FOFOA economics forum. I was studying the oil market at the time and came to some basic conclusions that too many ppl were having it too good for too long. I shorted it by being long gold in Canadian dollars.

 

This was a comment I made on the FOFOA blog on June 6 2014 when oil was $102 a barrel:
 

I cant help but notice that everyone from Brazil to Russia to Canada to the US thinks that the oil market is immune to over supply. If you watch "The Prize", you will see that there was always an obvious business cycle in the oil market. When prices were up, oil companies would bring more supply to market and new oil companies would sprout up. Then, the market would become over-supplied and prices would would fall.
Everywhere you look, there is countries and companies discovering new oil and using capital intensive means to get at it. Everyone is becoming oil rich. Russia turned itself back into an empire overnight because of oil.
Everyone seems oblivious to the fact that oil is a commodity market like anything else and if it gets over-supplied, the price will have to come down. It always does. But ever since 2000, there hasn't been a state of over-supply in the market. I think we are way overdue for one. Who knows what form this oil bear market will take, with all the inflation in the world....Who knows how badly the inflation is screwing up the oil market.
June 6, 2014 at 10:16 AM 
 

wti1yr.png

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No, the only time I see the market adjusting a little is when the markets start to rebound in Asia and investors sell their real estate in Vancouver to pour back into the markets.  Unfortunately as long as Vancouver remains a stable city and a desirable place to live, people will continue to pay to live and invest there.

 

I don't see it ever really coming down unless something crazy happens, like an earthquake that destroys the entire city and it sinks into the Georgia strait

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20 hours ago, Warhippy said:

I like this thread.

 

I'm guessing 2 maybe 3 years tops.

 

There has to be movement made first.  US rate increase coupled with China finally firmly clamping down  on the exodus of private cash is a serious indicator.  Without factoring in the complete shut down of their industrial presence due to low purchasing overseas 

 

But more locally we will see the government intervention and low rates finally curb things via  legislation at provincial and federal levels plus a 1%-2% increase over a year will be the catalyst 

 

Can't wait 

Canada and Australia are the only housing markets on the planet that haven't had a meaningful fall since the end of WW2 yet there are lots of no's and never votes.  Typical of financial bubbles like this.  If there were more agreement, I'd be less certain...

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19 hours ago, LolClarkson said:

Demand from population growth ?

 

vancouver-house-chart.jpg

It appears you've got a lot more knowledge on the subject than most (or I) have.

 

I can't help but notice your chart uses "Vancouver" prices but "BC" population to make it's argument. People do that here in Toronto as well.

I guess my uneducated viewpoint is that even if there is a harsh turnaround on a provincial or even country-wide level, there's still all the pressure on the actual centres.

No?

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All I know is we're in a country where the prices of 3 urban centers are pushing up the price across the country.  There's no reason the price of a condo in vancouver should dictate the price of a home in Salmon Arm.

 

Yet it does to some extent.

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34 minutes ago, Warhippy said:

All I know is we're in a country where the prices of 3 urban centers are pushing up the price across the country.  There's no reason the price of a condo in vancouver should dictate the price of a home in Salmon Arm.

 

Yet it does to some extent.

Yeah. The pyramids are emanating from Vancouver and Toronto. But when people sell at higher and higher prices and move away,  they are taking that money and bidding on property all over the country.  Which simply pushes prices up wherever they go. Then when prices go up in those areas, local banks start extending mortgages  in those areas at the inflated prices. Which pushes them up even more.

 

This can be seen in ALR land in the Fraser Valley too. ALR stands for agriculture land reserve. Lots of East Indian people are selling houses in Surrey for 600 to 700k and then they go into the valley to buy ALR land with the money to grow berries and stuff. This has pushed the price of ALR land in the valley to $75,000 per acre. Even for 100 acre pieces.  I did a search to see what the most expensive farm land in the world is. I came to this result:

 

Irish farm land most expensive in the world - Independent.ie

www.independent.ie/.../farming/irish-farm-land-most-expensive-in-the-world-308840...

Jan 7, 2015 - Ireland is the dearest place in the world to buy farming land according to a survey published earlier this year by the Financial Times in London.

 

After doing the currency exchange, it adds up to about $13,500 per acre in Canadian. So ALR land in the Fraser Valley is 6 times more expensive than the most expensive farm land in the world. This can all be traced back to the bubble in Vancouver.

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4 hours ago, LolClarkson said:

My Dad is an investor and business person. I've grown up in it. My Dads net worth is around 22 million dollars or more. Most of it has been built on this Vancouver real estate bubble. This is why I started studying Austrian econ. Because this whole thing didn't make a lot of sense to me. After studying economics, I've been trying to talk some sense into my Dad to diversify out of this market.

So it sounds like your dad might have a bit of sense...what does he say when you try to talk some sense into him?

And what timeline would you predict for this bubble?

I'm not being facetious, I'm actually interested in knowing. I've got a home in Toronto that's appreciated nicely, but I'm considering some changes over the next 3-12 months.

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2 hours ago, LolClarkson said:

My Dad is an investor and business person. I've grown up in it. My Dads net worth is around 22 million dollars or more. Most of it has been built on this Vancouver real estate bubble. This is why I started studying Austrian econ. Because this whole thing didn't make a lot of sense to me. After studying economics, I've been trying to talk some sense into my Dad to diversify out of this market.

 

I am making a very simplified comparison yes. And of course there are major differences between the markets.  The similarity is the huge divergence between price and fundamentals and the reasoning people give for it. And I was just pointing out that people predicted 10% falls and leveling off in that bubble too. You have no idea who is in the RE market in Vancouver. There could easily be some levered up hedge funds in there who own a half dozen properties. But it doesn't even matter. Bubbles burst when there is a bank run on the asset.

Firstly, thank you for the well thought out responses.

 

Speaking of divergence between price and fundamentals. You may appreciate this story if you haven't heard it before. http://www.thebubblebubble.com/souk-al-manakh/

This bubble didn't involve leverage of 4:1 or 10:1. It was based on leverage of infinity to zero.

 

What brokerage is offering them leverage to buy houses?

 

 

2 hours ago, LolClarkson said:

 

Prices keep rising because people think they will keep rising. Leverage or not. And when there is a dash for the exits, the price will fall.  The hot money/greater fools will find another place to play.

 

Canadian personal debt remains at record levels. The average Canadian household owes $1.64 for every dollar in disposable income. This is higher than the peak in the same ratio from the United States back before its housing market collapsed. Beneath this 15% froth is still a retail housing market and by any  metric, Canadians will just as hard pressed to meet their obligations as the Americans were when their market collapsed.

I think this is where we disagree. You are saying the prices are due to hot money and greater fools looking to flip to a bigger fool. I see the froth coming from foreigners looking to park money in an asset and they are willing to pay a high price to do that.

 

The difference is "flippers" would have their hand forced and pound bids on the way out. The "parkers" will ride it out or exit in an orderly fashion because their hand is never forced. The money being plowed in is likely dirty money. In laundering dirty money you're willing to pay a high % to wash it. They don't care if they take a 25% hair cut on the Canadian assets they've washed it into.

 

I don't see them running for the exits. Do you see any evidence of foreign buyers flipping houses frequently?

 

 

2 hours ago, LolClarkson said:

 

A 30% drop would still make Van real estate more expensive than most US cities. They are in it for the momentum now. Once the momentum is gone, they will find cheaper places to sit. The loonie is battered but buying now would mean going long the Loonie for the long term.

Once again we disagree on this point.

 

 

2 hours ago, LolClarkson said:

That is incorrect. Canada has its version of Fanny and Freddie. Its the CMHC

 

The CMHC issues mortgage-backed securities, which are basically pools of mortgage debt, and sells them to large financial institutions and pension funds. CMHC underwrites the risk, so that if borrowers default on their mortgages, the lender is not on the hook for the losses. CMHC is. Since the government backs the CMHC, that means taxpayers are on the hook for those losses. So far, none of this has come to pass. There’s been no housing crash in Canada and no mass mortgage defaults.

 

Like Fannie Mae and Freddie Mac, the CMHC was originally formed to help first-time homebuyers enter the market. Over the years, it has morphed into a mortgage slush fund which distorts the market. It allows banks to lend recklessly without consequences and pushes up the price of housing for everyone. It rewards those willing to speculate with leverage and discriminates against those who are prudent.

 

I'll respond to more later.

Yes CMHC underwrites the risk. They also control the whole process so there is no fraud along the way. No adjustable rate mortgages etc. The doomsday scenario you're painting is one where CMHC has been totally incompetent and reckless.

 

Can I take it from this you're predicting mass mortgage defaults? If so do you also see unemployment spiking, perhaps even doubling? A full on sh*t show?

 

 

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3 hours ago, nzan said:

So it sounds like your dad might have a bit of sense...what does he say when you try to talk some sense into him?

And what timeline would you predict for this bubble?

I'm not being facetious, I'm actually interested in knowing. I've got a home in Toronto that's appreciated nicely, but I'm considering some changes over the next 3-12 months.

My dad is part of a class of boomers who've done pretty well for themselves over the last 30 years. But they don't realize how over kill things are in this area in relation to the rest of the world.

 

He doesn't think that much about it. Just chalks it up to currency devaluation. Says stuff like "a half ton truck costs $60,000 these days. So is X real estate  for X really that much ?"

 

Ideally, all I recommend to anyone right now is to hold 15% of their net worth in forign currency and physical gold. Swiss Francs, Euros and gold bullion.

 

There are a lot of ppl who have a certain amount of money to reinvest every month. Which really hits home the fact that it is not just govt printing that your savings is getting diluted against. Its the growing amount of return on investment that is diluting you too.

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Thought I'd throw this out here but there a ton of local speculators out there too. Take my parents for example. They are retired but never made much of an income. They currently owe a substantial mortgage on their speculative property (ie. Second) but have no intention to rent it out. Most of these local speculators fall under the camp of " the market will never have any meaningful drop in price" and thus are lulled into a false sense of security. I guarantee you though that if prices started taking a tumble they'd be out of that after it maybe hit 10-15% correction territory and I bet many would do the same. Once again these are not necessarily rich immigrants but old retired folk who feel justified now but when push comes to shove they have zero tolerance for risk. 

 

On another note I do think that any correction will only be a short year or two long...increasing with time as this bubble keeps going. Furthermore the more eastern suburbs will be hit a lot harder than the western areas of the lower mainland proportionally speaking. After all if there was a crash, i would like to move back out west as do many of us who currently own in delta/Surrey/Langley etc. There would thus be a glut of homes in those areas and conversely the Vancouver/Burnaby/Richmond houses should be scooped up sooner.  

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I don't know the rules in Canada but part of the reason there is a bubble in Europe right now, at least in Sweden is no one is building. Any sort of housing development has to be approved by government officials at the municipal level. I own my home and if I want to increase my home's footprint I have to apply for permission to the government. Same applies if you want to build a house or apartment complex on undeveloped property.

 

There are two reason's this is happening in Sweden, one, is the Green movement which wants to limit the urban footprint as much as possible. And two, because there is so much money tied up, the housing development is limited, because like anything else, if the market became saturated with housing developments then the price would drop dramatically everywhere.

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