HawthorneVillager.com

I was referencing more the U.S. situation in terms of losing everything.
You can pretend that didn't happen but I have a relative in the states who has been affected.
Imagine buying a house and finding out two months later it's worth 100K less and plummeting even more.
It's not fun for them.
If you're a half full kind of person then all those empty houses in the states just have owners who went on long vacations.
Those bank foreclosure/for sale signs are just lawn ornaments.

...I just posted an update thinking it would be helpful...
Better to be prepared than not. That's all.
I hope there's no bubble but even a correction will affect the more vulnerable.

If I posted a link on prices going up, I would get haters too.

It's naive to think our economy is not connected to the U.S.
If our number one trading partner is not buying from Canada what do you think will happen?
We'll have more job growth and our economy will be flying high? We had lots of job losses here when things tanked in the U.S.
Remember why Mattamy released Spirit homes in 2008?

And yes in Canada we have products called 5% cashback mortgage and Self Employed Recognition Mortgages.
They're probably not as high risk as the American NINJA loans but when 'you don't need to prove your income' is highlighted for the self employed mortgage then that's a red flag to me.

http://www.tdcanadatrust.com/mortgages/5_cashback.jsp

https://www.cibc.com/ca/mortgages/self- ... mortg.html

Just take it for what it is. Don't get so upset.
If all our house values go up then we can all keep celebrating.

DTC,
Now is this something from a lender during the U.S housing bubble?

Answer

No

Right here is Canada right now as we speak.

http://www.yourmortgagesource.org/produ ... erOccupied

How about this from a major bank.

Yup. In Canada. CIBC. They actually bolded what I bolded.

https://www.cibc.com/ca/mortgages/self- ... mortg.html

Yes. There was outright fraud on such a high level in the U.S. the full ramifications of it haven't come to surface, but will eventually. But don't think for a minute that we haven't been reckless here even though outright fraud isn't in play.

I was referencing more the U.S. situation in terms of losing everything.
You can pretend that didn't happen but I have a relative in the states who has been affected.
Imagine buying a house and finding out two months later it's worth 100K less and plummeting even more.
It's not fun for them.
If you're a half full kind of person then all those empty houses in the states just have owners who went on long vacations.
Those bank foreclosure/for sale signs are just lawn ornaments.

Even for people here who have put 10% down on a 400K house would not a 10% to 15% loss in a year be significant?
First time home buyers that use up to 25K in RRSP for downpayment because they didn't have enough cash...is that a significant amount to lose?
In terms of refinancing a mortgage, how does one gain back that value if the bank will only finance for less than what is actually owed on the house?
These are not hypothetical situations. It's happened in the states and it can happen here.

You're fortunate if you can endure a 50K to 100K loss.
It's not doom and gloom if people are prepared.

Just for you 'f'...there's nothing wrong with Canadian real estate.
I hear Vancouver has a bunch of condos for sale. Snatch them up while you can since they'll only go up in price.

KPR,

I have a simple question for you. Everyone is aware of what the BOC and government did late 2009 with respect to eliminating 0 down 40 yr and putting 20% down on an investment property and banning Sub-Prime lending which they allowed to enter Canada in 2007. But one thing they did that wasn't talked about was changing the Bankruptcy laws. Now if there has never been a foreclosure/bankruptcy problem leading up to 2009 and they don't foresee one going forward in Canada. Why would they in September 2009 make it more difficult to declare bankruptcy. Taking up to 2-3 times longer. Make it much more punitive with respect to income garnished and other burdens. I found it interesting because that is exactly what the U.S. did in 2005. They changed their bankruptcy laws a couple years before their bubble started deflating. The foreclosures in the U.S are obscene, but they would be WAY higher had they not. What exactly did they know was coming. What exactly does Flaherty and Carney know. Or maybe it is all one big coincedence. They closed all the irresponsible loop holes they created to foster this bubble and then trap people in that bad debt they will have difficulty getting out from under without declaring bankruptcy.

Let's see:

Quote:

That’s not what happens here. “It’s illegal to have a zero down payment in Canada,” Lee explains. According to the CMHC, monthly housing costs can’t exceed 32 per cent of gross household income, while the entire monthly debt load shouldn’t be more than 40%.

WRONG. Went over that already 12 pages ago.

Quote:

In Canada, there’s still plenty of demand. Lee says that 350,000 immigrants come to this country each year, so creating demand for housing. Lee says the Maritime provinces are losing more residents than gaining — but major cities, especially Toronto where most immigrants come, will only see its population rise.

WRONG. Yes. The build it and they will come philosophy, immigrants that is. Immigration over the past 60 years hasn't stopped a housing correction every 15 years. Also, the root of the housing crash in the U.S. had little to do with job losses. That was a bi-product of the collapse. It was an unsustainable credit bubble fueled by cheap credit. And that is what we have here in Canada.

Quote:

Lee says housing prices are probably overvalued based on Canadians’ level of debt, but it’s not unmanageable. RBC echoes his comments. In a September report, the bank wrote that housing affordability, which, it says, is the best measure of underlying stress, “does not flag any major misalignment with respect to prices.”

WRONG. Re-max said the same thing in 2006 about the U.S. affordabilities.
If the historical norm is 3-3.5:1 income to home price and it cost 5.5:1 in Toronto and 7-10:1 in Vancouver. That isn't affordable.

Quote:

When Lee was working at the Bank of Montreal, he saw time and time again that financially strapped Canadians would miss car and credit card payments before skipping out on the mortgage.

That I agree with. There is full recourse in Canada whereas the States people just walk away from the responsibliity. Canadians are much more dutiful about paying their mortgage.

Quote:

“The normalization of interest rates could take several years,” say the economists, “with Canadian interest rates rising a moderate 2 to 3 percentage points. By then, incomes should catch up to prices."


We have been waiting for incomes to rise along with home prices for a decade. That hasn't happened. We would need incomes to go up 35% just to get back to historical metrics at current pricing levels. And again, all it took was a 2% rise in Japan and the U.S. to crash ther housing market. So when the posted rate 5 yr rate gets to 7.5% in Canada. Let's see what the market looks like 3 years after that when mortages reset.

KPR,

I have a simple question for you. Everyone is aware of what the BOC and government did late 2009 with respect to eliminating 0 down 40 yr and putting 20% down on an investment property and banning Sub-Prime lending which they allowed to enter Canada in 2007. But one thing they did that wasn't talked about was changing the Bankruptcy laws. Now if there has never been a foreclosure/bankruptcy problem leading up to 2009 and they don't foresee one going forward in Canada. Why would they in September 2009 make it more difficult to declare bankruptcy. Taking up to 2-3 times longer. Make it much more punitive with respect to income garnished and other burdens. I found it interesting because that is exactly what the U.S. did in 2005. They changed their bankruptcy laws a couple years before their bubble started deflating. The foreclosures in the U.S are obscene, but they would be WAY higher had they not. What exactly did they know was coming. What exactly does Flaherty and Carney know. Or maybe it is all one big coincedence. They closed all the irresponsible loop holes they created to foster this bubble and then trap people in that bad debt they will have difficulty getting out from under without declaring bankruptcy.

my bigger concern would be the costs to carry a house, hydro has been in the news and looks like rates rising big time, natural gas is the lowest price commodity right now, many think its undervalued. add rising taxes and other expenses. id be more worried for these bills than houses dropping 10% or slight interest rate hikes..

We have been waiting for incomes to rise along with home prices for a decade. That hasn't happened. We would need incomes to go up 35% just to get back to historical metrics at current pricing levels. And again, all it took was a 2% rise in Japan and the U.S. to crash ther housing market. So when the posted rate 5 yr rate gets to 7.5% in Canada. Let's see what the market looks like 3 years after that when mortages reset.

Facts are pretty clear guys. We are at the peak of the housing market and it simply has nowhere to go but down. most people will be fine, they just will have to get used to not borrowing against their house and live a simpler life. The HELOC generation will come to an end and simple values will return once again.

DTC Wrote:

My salary is probably double if not tripple what theirs was in the 1980s but almost everything I buy costs much much MUCH less... except housing, food and energy.

That is the single most important thing you wrote. Because everything else you talked about is just stuff we clutter our homes with. They are WANTS. Housing, food and energy is what we NEED to survive. I don't care if my wants are going down in price when my needs are getting out of control. Yet, people get distracted by wants and take needs for granted. We will not be taking housing, food and energy costs for granted going further. And that ultimately will be a good thing.

dtc, give us a ball park on your income? that way we can tell if you are making sense or not, lol.

dont forget the average family income is 94,000. are you killing that? if so this thread is irrelevant to you as long as you are smart.