Socialist Canadian Housing Market Surges Safely Ahead

[Aetius Romulous]

Tavia Grant


Globe and Mail Update Published on Monday, Feb. 08, 2010 8:35AM EST Last updated on Monday, Feb. 08, 2010 6:37PM EST



"Canadian house prices will hit a record $337,500, on average, this year and sales activity should also burst through an all-time high, a real-estate report predicted Monday.



National average home prices are expected to rise 5.4 per cent, with gains in all provinces, the Canadian Real Estate Association said. A rebound in activity in Canada's priciest markets, particularly British Columbia and Ontario, will juice gains.



Sales are booming too. National sales activity will reach a record 527,300 units this year – up a sizable 13.3 per cent from last year and 1.2 per cent higher than the previous peak in 2007.



“Low interest rates are expected to boost housing demand in the first half of the year, resulting in strong annual sales growth in nearly all provinces in 2010, led by British Columbia and Ontario,” the association said."


http://www.theglobeandmail.com/repor...rticle1459822/

[LargoWinch]

Re: Socialist Canadian Housing Market Surges Safely Ahead

Tavia Grant


Globe and Mail Update Published on Monday, Feb. 08, 2010 8:35AM EST Last updated on Monday, Feb. 08, 2010 6:37PM EST



"Canadian house prices will hit a record $337,500, on average, this year and sales activity should also burst through an all-time high, a real-estate report predicted Monday.



National average home prices are expected to rise 5.4 per cent, with gains in all provinces, the Canadian Real Estate Association said. A rebound in activity in Canada's priciest markets, particularly British Columbia and Ontario, will juice gains.



Sales are booming too. National sales activity will reach a record 527,300 units this year – up a sizable 13.3 per cent from last year and 1.2 per cent higher than the previous peak in 2007.



“Low interest rates are expected to boost housing demand in the first half of the year, resulting in strong annual sales growth in nearly all provinces in 2010, led by British Columbia and Ontario,” the association said."


http://www.theglobeandmail.com/repor...rticle1459822/

Aetius Romulous, don't forget that banks have little to no exposure: the cake is already baked-in. Oh...moohoo Canada.

[blazespinnaker]

Re: Socialist Canadian Housing Market Surges Safely Ahead

in CMHC we trust!!

Sadly, all this subsidization of housing by the CMHC/Federal government is just leading to higher prices.

Good for the economy, but not exactly for the core mission of the CMHC which is to make housing more affordable.

[Aetius Romulous]

Re: Socialist Canadian Housing Market Surges Safely Ahead

CMHC insures mortgages...they don't hold them. CMHC will only insure a mortgage if it meets the rigid criteria set in the qualification process, and then only that portion of the mortgage which exceeds 25% equity, to a maximum of 10%. CMHC traditionally limits its exposure to principle residences only and not investment or speculation projects.

To receive insurance protection in case of a default, the lender must prove it's own due diligence was sound, and must be the originator of the mortgage.

Of course, interest rates play an important role in the mortgage game, and with US rates depressing the entire market CMHC will do what they have traditionally done and reign in its own policies to compensate as much as it can.

In Canada, increasing housing sales are dependent on the the borrowers ability to qualify, which appears to be underlying the strength of the market. No gloom and doom, and solid assets and job prospects.

If you have ever tried to get even a simple mortgage in Canada, you will know the pain and suffering of the qualification routine. Which I used to bitch about but do no longer. Bring on the forms, lawyers, and over particular mortgage agents !!!

[Fiat Currency]

Re: Socialist Canadian Housing Market Surges Safely Ahead

CMHC insures mortgages...they don't hold them.

You're kidding right? Remember this ?

Flaherty announces $25B plan to buy mortgages


The federal government will pump $25-billion into Canada's banking system, a move Finance Minister Jim Flaherty said was not a "bailout" but which he said will help improve credit conditions for everyday Canadians who need a loan to buy a car or a home.

OTTAWA - The federal government will pump $25-billion into Canada’s banking system, a move Finance Minister Jim Flaherty said was not a “bailout” but which he said will help improve credit conditions for everyday Canadians who need a loan to buy a car or a home.

The Canada Mortgage and Housing Corp., a Crown corporation, will spend up to $25 billion to buy up mortgages held by Canada’s big banks. This will have the effect, officials said, of freeing up more capital for the banks’ lending operations.
...

The CMHC is an arm of Mark Carney - err - I meant the Goverment. Last time I checked, they held over $150B in MBS on their balance sheet.

Try some of these ...

Bankers get the bonus, and government takes the risk

Banks urge Ottawa to tighten mortgage rules

CMHC's growth fuels worries over new risks

This quote is from Fall 2008 ... since then things have gotten worse ...

The two main programs it uses to achieve that goal - insurance and securitization - have ballooned in the past year. CMHC planned to insure 578,539 housing units last year for $86-billion in 2008. Instead it insured 919,790 units for $148-billion.

It guaranteed 2.5 times more mortgage securities than planned, an extra $64-billion, which is nearly double the 2007 level. Part of the reason for that is the emergency mortgage purchase program that Mr. Flaherty unveiled at the height of the credit crisis in October, 2008, to help ease the banks' funding costs. But even prior to that program's launch, CMHC's securitization activities were on a steep upward trajectory.

[phirang]

Re: Socialist Canadian Housing Market Surges Safely Ahead

It's high time Mr. Market harvests some souls up North... a little sovereign crisis in the EU may do the trick?

[Aetius Romulous]

Re: Socialist Canadian Housing Market Surges Safely Ahead

I was completely unaware that CMHC had moved so far in that direction. Thanks for all the links and setting me straight on this.

I don't believe it impacts the substance of my main point however, that the mortgage market is a completely different animal in Canada. Down on the ground where it counts, Canada has an extreme regulation/documentation/qualification regime that is tightly controlled by government policy.

The crap that CMHC is buying is on a vastly different crap scale than in the US.

Again, thanks for the fix and all the links.

[Starving Steve]

Re: Socialist Canadian Housing Market Surges Safely Ahead

A 0.25% lending rate to banks by the Bank of Canada means a housing bubble, no matter what they tell you in the real estate industry, and no matter what Canada Mortgage and Housing Corporation (CMHC) says in Ottawa. Part of the damage ahead when the real estate bubble pops will be a very hard landing in home prices. People's equity in their homes will be lost. This is what happens when you let Bernanke pick Marc Carney to head the Bank of Canada.

This Great Recession is going to teach us how little our central bankers really know about economics.:rolleyes:

[phirang]

Re: Socialist Canadian Housing Market Surges Safely Ahead

An imploding loonie will sort out this bubble tout de suite!

A lot of capital is sloshing from china to oz and canada - if that is impinged because of a euro crisis, then you can definitely expect the mtg market in canada to get wacked - very very hard.

[WildspitzE]

Re: Socialist Canadian Housing Market Surges Safely Ahead

did someone say imploding loonie? look at these recent correlations.... :rolleyes:

http://stockcharts.com/charts/perfor...$USD,$SPX,$cdw

[Glenn Black]

Re: Socialist Canadian Housing Market Surges Safely Ahead

The problem is that more and more people are racing to buy homes with the cheap money. The small dip in prices due to market & economy collapse increased the stampede even more.

Unfortunately, last ones in, first ones out.

Lose a job, and you're instantly toast. If not, then when interest rates start to rise, their 5% equity (as required by CMHC) will be burned off in the first few minutes. After that, they are under water.

It seems that Canadian government is taking this liberal policy with CMHC so as to artifically prop up the economy. If Canadian economy seems better than the US, then voters will be happy to let the government continue in power.

Unfortunately, this is very risky for taxpayers & the Canadian economy. It's like betting on Russian Roulette like in the movie "The Deer Hunter". If you are lucky, you can quickly become a millionaire, but when your luck runs out, its all over very quickly with no second chances.

[LargoWinch]

Re: Socialist Canadian Housing Market Surges Safely Ahead

The problem is that more and more people are racing to buy homes with the cheap money. The small dip in prices due to market & economy collapse increased the stampede even more.

Unfortunately, last ones in, first ones out.

Lose a job, and you're instantly toast. If not, then when interest rates start to rise, their 5% equity (as required by CMHC) will be burned off in the first few minutes. After that, they are under water.

It seems that Canadian government is taking this liberal policy with CMHC so as to artifically prop up the economy. If Canadian economy seems better than the US, then voters will be happy to let the government continue in power.

Unfortunately, this is very risky for taxpayers & the Canadian economy. It's like betting on Russian Roulette like in the movie "The Deer Hunter". If you are lucky, you can quickly become a millionaire, but when your luck runs out, its all over very quickly with no second chances.

The over-valuation of the Canadian Real Estate market vs. the US RE market, is possibly one of the greatest arbitrage opportunity I have witnessed in years.

[lsa420]

Re: Socialist Canadian Housing Market Surges Safely Ahead

We've had this Canadian housing bubble discussion a few times on the threads. I'm not sure what to think with all the various commentary. I was up in Vancouver in September and the housing market seemed pricey to me at best. In any case, here are the latest stats.

Average weekly income in BC: $812 - assuming this is earned every week, that's $42,224 for the year.

http://www.bcstats.gov.bc.ca/pubs/ee...ata.pdf#page=3

As for the housing market, if my eyes are working correctly, the average price of a home in BC (4Q09) is about $500,000.

http://www.bcrea.bc.ca/economics/trends/Province_lg.gif

Does this seem problematic, or is just me?

[GRG55]

Re: Socialist Canadian Housing Market Surges Safely Ahead

An imploding loonie will sort out this bubble tout de suite!

A lot of capital is sloshing from china to oz and canada - if that is impinged because of a euro crisis, then you can definitely expect the mtg market in canada to get wacked - very very hard.

A mortgage market whack...certainly.

An imploding Loonie? Not bloody likely...unless the derivative wizards decide to do a Greece on Canada...and I suspect that move is just a bit too much of a sphincter pucker even for those a**h*les. It'll take oil going below the 2009 low...and staying there...to push the Loonie to implode in the absence of the Goldman glowboys.

[GRG55]

Re: Socialist Canadian Housing Market Surges Safely Ahead

You're kidding right? Remember this ?

The CMHC is an arm of Mark Carney - err - I meant the Goverment. Last time I checked, they held over $150B in MBS on their balance sheet.

Try some of these ...
This quote is from Fall 2008 ... since then things have gotten worse ...

Thanks for digging that out and reminding everybody. Maybe we should tag you "The metalman of the North"? [Or is metalman the Fiat Currency of the South...;)].

Regardless, our idiot government and that Goldman alumnus twit running the BOC have to share a large part of the coming blame for the consequences of the present day insanity that is the Canadian real estate market.

This bunch of dipsticks is wrecking a pretty decent country.