“More than one-in-three Canadians between the ages of 30 and 39 think today’s interest rates are about average or high. But in reality, they are sitting at historic lows. These younger homeowners may be taking on more debt than they will be able to afford if interest rates rise.”
- news1130.com, 12 Sep 2011, citing a survey from Manulife Bank of Canada
[hat-tip Patiently Waiting at vancouvercondo.info, and belated hat-tip to jack at VREAA]
Most Recent Comments:
- welschprincess on Business In Vancouver – “To take a job in Vancouver, Calgary-based senior information management consultant Joey Roa would have to give up living in a 3,000-square-foot house just outside the downtown core.”
- YVR Housing Analyst (@YVRHousing) on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- Alexcanuck on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- Alexcanuck on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- Real Estate Tsunami on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- YVR Housing Analyst (@YVRHousing) on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- YVR Housing Analyst (@YVRHousing) on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- bubbly on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- ling on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- Toby on “The bank encouraged her to take the equity in her home to purchase another home. She bought a 2nd home at the peak.”
- Nemesis on ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- Raspberry ketone on Commit Crime To Buy A House
Type of Anecdote
- 01. He Said, She Said (247)
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- 29. Bubblespeak (1)
- Uncategorized (176)
Blogroll
- 01 Vancouver Condo Info
- 02 AmericaCanada [retired, no archive]
- 03 Housing Analysis
- 04 RealEstateTalks BC
- 05 Vancouver RE and then some
- 06 Whispers from the Village on the Edge of the Rainforest
- 07 Greater Fool
- 08 Canada Bubble
- 09 Rob Chipman's blog
- 10 YatterMatters
- 11 condohype [retired; archives available]
- 12 vancouver (un)real estate
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- 14 Landlord Rescue
- 15 The Economic Analyst
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- 17 Hoodsurf [retired Jun 2011]
- 18 World Housing Bubble
- 19 Vancouver Price Drop
- 20 North American Economics
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Latest Anecdotes:
- ‘Doomed’? – “Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real home prices tend to be flat.”
- “The bank encouraged her to take the equity in her home to purchase another home. She bought a 2nd home at the peak.”
- “Let’s remember how we got here” – Looser and Looser CMHC Limits
- Don’t Worry, I’m Sure Somebody Will Sort This All Out – “Policymakers now know better and will be a lot more proactive in preventing a collapse.”
- “Things have changed, we are not doing that type of mortgage. We are not interested at all.”
- “We are noticing our target type of housing in price decline, albeit slow, as our money increases in value, slowly as well but outpacing housing.”
- Renter Buys In West Van – “For a few hundred more per month, you could own the place. Which is what I will be doing as my offer for a place down the street has been accepted. There is some value in staying in one place.”
- A Bed in the Bathroom, Why Not? [Let Us Count The Reasons...]
- “My husband and kids are pretty happy in our rental house within cycling distance of work that we could never have afforded otherwise. We’re doin’ pretty dang well, thank you, for median income earners in this expensive city.”
- “I Wish Them Bad Luck.” – Jim Flaherty, on those who wish to profit from Canadian RE price drops
- “We asked why he doesn’t just rent the whole house. He said he can’t, it wouldn’t cover his mortgage – he’ll get more to rent it out as two suites. These new landlords are hilarious, thinking that rent will cover their mortgage!”
- “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
- Chat Thread
- Taking A Break
- “My best guess: this property is now an ‘investment hold’ and will be built ‘when prices recover’. Good luck on that!”
- Man Loses $745,000 Vancouver Condo Deposit
- Graphic – Degrees of Housing Overvaluation in Canada
- The Rare Individual With A Negative Ownership Premium
- Advice Regarding Renting In Vancouver, Please – “Unfortunately, the Vancouver rental stock is absolutely atrocious. It just seems like every landlord is looking for someone to pay 100% of their mortgage on a crappy place through rental income.”
- “I just visited Manhattan for a week, and happened to snap some real estate ads on both the Upper West and Upper East sides of the island. Compare to Vancouver. It simply doesn’t compute.”
- Ben Rabidoux In Vancouver Next Week
- “The mortgage company told me they were calling in my 40-year, 0-down mortgage. I have paid nearly sixty thousand dollars towards it, but, nearly five years in, I have yet to touch the principal.”
- ‘Vancouver City Hall: Housing Report Card 2012′; Plus Revised Version
- “My folks find themselves at 65 still owing half the value of their home and recreation property to the bank. After almost 30 years of ownership in the BPOE and a number of boom markets, they have very little to show for it.”
- “Rent for $2,200 a month or buy and have a mortgage of $4,310 per month. Why would anyone buy?”
- “They were talking about two couples they knew who had recently bought a lot and planned to each build a house on it and live as neighbours.”
- Greater Vancouver Home Builders’ Association Annual First-Time Buyer Seminar Attendance Plummets
- Mom and Pop Get It Wrong In All Markets, Time And Again
- The average British Columbian homeowner is not going to pay off their mortgage by the time they retire.
- “He’s sold all his properties except his current one, which is now for sale. He explained that the market’s currently in crash mode, worst that he’s ever seen.”
- “One of my old high school buddies finally got her mother to sell the family home in Kitsilano – sold for over $1M, monies realized after debt paid off $185K.”
- “I know someone who just declared bankruptcy because her condo was assessed at $150k and she bought it presale north of $250k in 2005 or 2006.”
- Sturdy, With Views – “Calling Froogle Scott!… Is Dr. Scott ‘In The House’?” [Not In This One, Certainly]
- “She said the market was dead in Victoria and that it would remain so for a very long time. I asked how she knew. Her answer was fascinating and should scare the pants off the real estate crowd.”
- Kits Notes – “I’m pretty sure that this is the first 3+ bedroom property of any type that I’ve seen in the 5 years I’ve lived here that is priced below $700K.”
- “A beautiful Belfast home, in the equivalent of 1st Shaughnessy, bought at their RE peak in 2007 for £3.5 million, has now sold for £800K, almost 80%-off. The market didn’t suffer any significant economic shocks. Rates & unemployment didn’t skyrocket. They didn’t build more land. Sentiment just changed and the prices fell and fell.”
- “Two family members of hers are trapped, underwater, in condos on the East Side.”
- “Interprovincial migration is not saying good things about BC’s economy.”
- Vancouver RE: Not As Expensive Provided You Don’t Think – “It’s clear that our perception of affordability has been coloured by living on a continent where housing is unusually inexpensive.”
- More Undisclosed RE Industry Insiders Publicized As Clients – “In 1995, Allan and Karin Hoegg were mortgage-free. But no more. Today their Vancouver home is a valuable source of income as they plan for full retirement.”
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- 'Doomed'? - "Home prices in Canada are now double what they were in the 1970s in real terms. Historically, over the very long term, real… 14 hours ago
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Not possible. Banks consider the risk of higher rates when they originate loans. Which is why they qualify all buyers at the 5 year posted rate. Wait what, they don’t? Oh my.
Why bother differentiating credit risks when CMHC takes all the risks in underwriting the overleveraged credit crackheads?
I actually found that the banks weren’t completely moronic like the US. I was declined initially for a higher mortgage amount and had to settle for a higher downpayment. The banks insisted on the 20% downpayment amount or else I wasn’t getting a mortgage. Not sure if it’s me not finding the right bank or just that everyone was strict about it. Or maybe CMHC has finally grown a backbone and started to reject some loans.
” Or maybe CMHC has finally grown a backbone and started to reject some loans.”
So let’s for argument’s sake say that prices fall by some amount. A 20% downpayment suddenly droops into a 15% or 10% downpayment. What do you think CMHC is going to do?
One of the big problems is that banks are taking certain liberties with loan qualifications on non-insured loans. If prices drop the loan goes strait up CMHC’s pooper. Put that in a political comic.
Julian,
I can actually provide some insight on this.
When you have less than 20% down, the amount the bank can approve for your loan is tightly regulated by the CMHC (for insurance purposes). However, if you provide 20% or more it is up to the individual bank to determine your credit worthiness. In most cases, the banks are less stringent than the CMHC and clients often are able to borrow more.
Classic idiocy if you ask me.
“If prices drop the loan goes strait up CMHC’s pooper. Put that in a political comic.” – Jesse…
I’d love to Jesse, but I don’t think my DSCT900B is up to the ‘job’.
Accordingly, I’m waiting for a good deal on a ‘lightly used’ (and thoroughly autoclaved) endoscope… Now, let’s see… rigid rod-lens? or flexible fibre-optic? DecisionsDescisions…
“In most cases, the banks are less stringent than the CMHC and clients often are able to borrow more.”
I hope readers here can understand that this is a big freaking problem. If borrowers are being qualified at a “generous” rate, when it comes time for renewal and their equity is reduced such that they need to qualify for CMHC mortgage insurance, there will be a big disconnect. None of this shows up on any balance sheet, but the government will have to figure out how to handle the situation where overextended buyers face a harsh disconnect when the loan needs mortgage insurance.
CMHC will become the hospice for banks’ currently-uninsured loans. CMHC’s current balance sheet is only part of the problem. Coming soon to a neighbourhood near you.
One-in-three Canadians between the ages of 30 and 39 are morons…
ACP likes this. [Thumbs up]
yes….yes they are.
And of the two out of three who answered otherwise (and therefore more correctly), one in four did so purely by chance.
Therefore, about half of the population is absolutely clueless about interest rates, and, by extension, about the giant debt issues facing us.
They may be absolutely clueless about interest rates, but they *know* that banking standards in Canada are much better than in the US.
Simply frightening. None have ever seen a hard recession.
Unfortunately that may also come soon enough the way USA and Europe are heading
Wow, Americans almost seem smart next to this stat. See you guys on the 25th of October for the next interest rate announcement !
“I hope readers here can understand that this is a big freaking problem.”
This. This underlined.
(on an aside – US banks have tightened up loan requirements quite a bit since the late unpleasantness.)