Daily Archives: 24 March 2012

“CMHC has signalled it will dramatically curtail its growth in the mortgage market”

“Canada Mortgage and Housing Corp. has signalled it will dramatically curtail its growth in the mortgage market in the coming years in an effort to cool Canada’s sizzling housing sector.
Documents released by the Crown corporation this week show CMHC expects to increase mortgage insurance over the next few years at only a fraction of the pace seen recently.”

- from ‘Bank regulator proposes heightened scrutiny of mortgage market’, G&M, 19 Mar 2012 [hat-tip Derp]

This ‘signal’ has been widely discussed across various blog sites.
Headlined here for the chronological record.
This could be enough to crash the Vancouver market.
A soft landing (a ‘cooling’) will not occur, as buyers will not step in at stratospheric high price levels without the expectation of abnormally large price gains going forward.
- vreaa

Global TV Bearish News Piece – “What you pay today may be considerably more than what your unit’s worth when you finally take possession.”

Global TV News, 23 Mar 2012

Excerpts -

Announcer - “Canadians are carrying more personal debt than ever before, and cheap mortgages are just adding to the problem”.
[... actuallyhave been adding, for the last 9 years.  - ed.]

Announcer - “The financial markets are already betting that the BOC will begin raising it’s trend setting rate by years end. It’s all adding up to a financial landscape that is about to shift.”

Announcer - “For those thinking of buying now, the warnings are out: What you pay today may be considerably more than what your unit’s worth when you finally take possession”.
[Remarkable. That statement, taken to heart, should freeze any prospective buyer. -ed.]

Michael Levy, Financial Analyst – “I think Vancouver and Toronto will probably lead on the way down, and it wouldn’t surprise me to see a 10-15% in this market.” … “The condo market is overbuilt in Vancouver.. and the financial institutions are saying maybe we better take a better look at the developers who are putting these schemes in front of us, because this market is heavy right now.”

Announcer – “…BC and Alberta are the two provinces with the highest average household debt. And in BC much of that debt is secured by equity in our homes. But what happens when property values drop and mortgage rates go up? which is now widely predicted to happen.”

Scott Hannah, Credit Counselling Society Of BC – “What a lot of consumers aren’t aware of is how quickly their circumstances can go from being able to manage their affairs effectively to being in extreme financial difficulty, in a short period of time..”
[Amen. -ed.]

Announcer – “But Canadian banks have only themselves to blame for ramping up household debt that in some cases may never get repaid. Every one of them offers HELOCs, encouraging you to use your home as collateral for yet another line of credit.”

This is the kind of news piece that can herald the start of the implosion.
10-15%-off will be nothing but a good start.
You can imagine the negative synergies that will be at play once the wheels come off: Buyers pause, construction freezes, economy freezes, buyers even more moribund, offshore buyers become sellers, owners come to market en-masse, etc. etc.
Virtuous cycle turns vicious.
50-66%-off, here we come.
- vreaa

“Some are saying that there is no legitimacy to claims that working class or low income people should be able to live in the City of Vancouver.”

“Some are saying that there is no legitimacy to claims that working class or low income people should be able to live in the City of Vancouver–and that the suburbs do these groups just fine.”

“But what’s being forgotten here is that, until recently, working class and low-income people have long lived in the City of Vancouver. I grew up in the City of Vancouver in the 80s and 90s and my dad was a working class non-union labourer who really made a pittance wage. My parents rented. They could afford to rent in Vancouver, not in social housing, in private market rental housing. We had half of a house and a big yard in the City of Vancouver on a working class single wage.”

“My mum’s family was also working class–also rented a big house in Vancouver–that house would probably go for $2 million in today’s market.”

“We’ve been forced out to Surrey because of high rents in Vancouver. The move was a slow progression, for me. My first place when I was 19 and living away from my parents for the first time was a rental in East Vancouver. I shared it with two other roommates. My share of the rent was $350 a month. I had a minimum wage full time job and paying rent in Vancouver was easy. That was in the late 1990s–not so long ago. Things don’t work out with roommates so you move around a lot when you’re young. But with each move I made, the rental market became progressively more difficult. It’s not just a problem with high rents. It’s also simply a lack of vacancies–or the only thing available is total dumps (I had a nice place for $350 a month when I started out)–or they don’t allow you to take your cat. So that forced me out of the city I grew up in.”

“I left Vancouver at the very end of 2001 because already by then the rental market was getting difficult in Vancouver. I went to New Westminster–which is a great city. I believe New Westminster is the densest city in Canada. It is very urban. Great place to live if you are an SFU student–skytrain to Production Way and then a bus up the mountain. So I lived in New West and I went to SFU. Incidentally, my ancestors built New West–I’m just learning about my genealogy now but it’s fascinating. I can trace my ancestry back in New West back to 1865.”

“But then I was renovicted out of New West. Transglobe Property Management went on a buying spree in New West in 2006 and bought up lots of apartments. My apartment building had about 70 units–all 70 households evicted–had to be out by Dec. 31–New Years Eve!!! They renovated and jacked up rents after we were gone. Many longterm tenants in that building, including war veterans and one woman who lived there 40 years. So then I ended up in Surrey–along with a lot of the other people who were evicted from that building.”

“Whalley is one of the last areas of affordable rental housing near skytrain (crucial for people renovicted out of Vancouver/New West but still working in Vancouver) left in the Lower Mainland. But Mayor Dianne Watts is putting up high rise condos everywhere. She’s built a new library. City hall is moving here. It’s not King George Highway anymore, it’s King George Boulevard. It’s not even Whalley anymore, it’s Downtown Surrey. This is to become Metro Vancouver’s second tier downtown core, after Downtown Vancouver. But this is also about gentrification. I’m afraid these dumpy rentals in Whalley are going to be demolished for condos. Then where will I go? Langley? Abbotsford? No skytrain there to connect me with work and social connections back in Vancouver. Time to leave the province soon. I’d rather live in Calgary than Abbotsford.”

“Working class and low income people do have a legitimate claim to the City of Vancouver because we (and our ancestors) built the City. It’s where we grew up. We have memories there. We have friends there. We go to school there. We work there. We access services there and amenities. If you’re gay–the City of Vancouver is so important for community and for just walking down the street holding your partners’ hand. Surrey is just a dump. It’s really hard to find community here and services. Everything is worse here. Even the hospitals and the medical clinics and grocery stores are worse in Surrey. And we have to pay 3 zone $5 bus fares to go back to Vancouver to visit old friends or for jobs. Try that when you’re making minimum wage $10 an hour. Your first hour of work is just to pay for your transit costs (and a lot of jobs only give 4 hour shifts–first hour pays transit, second hour pays lunch, you only net benefit from 2 hours–$20 per shift–less CPP, EI contributions–hardly worth it to work–probably make more money staying in Surrey collecting cans than commuting to Vancouver for min. wage).”

“Having said all that, I do think there is a bit of truth in the statement that the suburbs are becoming more urban and Vancouver is becoming more suburban. I mean, there’s actually a costco in Downtown Vancouver (a mark of suburbia)–but I can’t find a costco in Surrey. I used to go to UBC as well, since I’ve been living in Surrey (en epic commute by transit!). It’s weird that we have a rapid transit skytrain system in Surrey that connects us to Burnaby, SFU area, Lougheed, New West, but as soon as you come into the City of Vancouver you have to get off the train and board a bus the rest of the way to UBC. The west side of Vancouver (where I grew up) does feel like some strange enclavish suburb where hardly anybody lives. Surrey, New West, Burnaby, Lougheed area–all way more urban than vast portions of the City of Vancouver. And the feeling of community is coming here. You can see it right outside on King George Highway (I don’t call it boulevard because I don’t like gentrification)–the diversity of pedestrians walking up and down King George is more than the diversity you get in Vancouver, in terms of class and race. Way more working class feel in Surrey. Way more black people and people from all countries of the world in Surrey–compared to Vancouver which is mainly Chinese. The gays are coming this way too. Surrey has a gay pride parade now. There’s gay pizza shop/cabaret on King George.”

“So I’m actually starting to like Surrey now. I’m not sure I want to go back to Vancouver even if it did suddenly become affordable. I mentioned that I have memories in Vancouver–but it’s disturbing to go back there and see all the changes. The way Vancouver is now is not how it is in my memories. So I can remember more easily how it was, if I stay away. My community isn’t there either, increasingly. So I’m turning a page and I’m never going back to Vancouver no matter how affordable it becomes. But I do think working class people like myself still have a legitimate claim to Vancouver if we want to live there because it’s where we’re from.”

- Joe_Blown_Away_By_High_Housing_Costs at VREAA, 23 Mar 2012 8:21am