Peregrine
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Everything posted by Peregrine
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Again, to correct another misconception: all insured mortgages now have to qualify at the 4.6% posted rate, which is over 2% higher than contracted rates. Uninsured mortgages also have to qualify at the high posted rate - except for 5 year and longer terms. But yes, interest rates act like gravity on all kinds of assets - including real estate.
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I'm not sure we're debating about the same thing. I have no idea where home prices will go. I'm just saying that what happened in the US in the mid-2000s and what's happening here are two completely different things.
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Yes - in Alberta. The point I was making is that what happens in practice matters.
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It is true that there are recourse states in the US - in fact, only 12 are 'non-recourse'. But in practice, many borrowers who were underwater during the foreclosure era still picked up and left in recourse states. Lenders often don't pursue deficiency judgments in a default event due to legal costs, length of delay and uncertain recovery. Defaulting in Canada is a completely different story.
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I do and I am glad that he did.
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This is unbelievable. So debt-to-income rations now don't matter in lending. And Canadian mortgage underwriting is substantially different from the US..... because it's driven mainly by income ratios. <head scratch>. In addition banks don't really have a way to independently verify borrower income and there have been lots documented cases of doctored income. Also as you said average figures don't matter and in the US the marginal buyer was the problem. So Canada is ok because on average Canadians have more equity in their homes and the marginal buyer until recently was able to buy property with 2% down and thanks to a new program in BC they can buy with 0% down over there. Got it. Your response seems like a jumbled interpretation of what I posted. 1) I did not say it doesn't matter, of course debt/income matters but it doesn't completely measure the ability to service that debt. Obviously, all regulated lenders in Canada must qualify borrowers on TDS and GDS ratios. Mortgage debt service ratios are not out of line compared to what it has been in the past. 2) The Canadian mortgage market is substantially different from what that of the US for a whole host of reasons that requires a far longer explanation than I care to delve into currently. I don't know why you brought up debt/income. 3) You need to provide a minimum number pay slips, notice of assessments, tax returns and sometimes a phone call to your employer to qualify on income at a regulated lender. There are regulatory safeguards to prevent shenanigans from happening but obviously there are still people who will try to get around the rules. Doesn't make it right but it's a reality. The idea that this is systemic or widespread is completely unfounded and not backed by data. 4) I didn't say that averages don't matter - I said that average figures can be misleading. Take a look at Countrywide's annuals back in 2006. Their average credit scores, LTVs and such didn't look bad. It was the marginal borrower that really did them in. Also, I didn't say that Canada was ok because on average they look better but I would say that mortgages in Canada are a lot more homogenous than the kind of stuff coming out of the US from 2003-2007. There are no exotic products like option ARMs, negative amortizing and teaser rates here. Plus, what's truly sub-prime is a speck of the mortgage market here compared to damn near 1/3 of originations in the US circa 2006. Lastly, I'll leave this: http://condo.ca/wp-content/uploads/2013/12/arrears-mortgage-Canada-United-States-comparison-Condo.ca_.jpg I know that history isn't a predictor of the future, but there's a reason for this.
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Without getting into specifics, I would say that the mortgage underwriting in Canada is substantially different than what took place in the US. In fact, I would say that the whole system is entirely different from that of the US. Comparing the two, in my view, is a major false equivalence that has been repeated ad nauseum by some economists. Soundness cannot be solely evaluated on debt-to-income ratios. For one, Canadians have a lot more equity in their homes. And second, the cost to service that $1 in debt has declined substantially. Also, you're painting the US with a broad brush when in fact the US housing collapse was particularly prominent in a few locations. Moreover, it's not the average home buyer that caused the most damage - it was the marginal buyer. So using simple average measures to gauge safety can be misleading.
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No one argues that recent price increases in the GVA or GTA are sustainable. What prices will do in the future is anyone's guess. In my view, real estate is not likely to be a great investment in the long run for the average person. But I don't think it ever has. Whether housing prices will crash, who knows? But the factors in play in Canada right now are vastly different than what happened in the US a decade ago despite the fact that the two situations often get conflated.
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I kind of knew that the "but xyz is worse!" response was soon to follow. Let's not let facts get in the way of arguments, though: http://www.politico.com/story/2016/07/obama-police-baton-rouge-225679 And hey, it looks like he can criticize the much derided BLM movement as well: http://www.nbcnews.com/news/nbcblk/president-obama-calls-out-black-lives-matter-activists-yelling-n561046 Anyway, this thread is showing harbingers of past political threads so I'll refrain from going further..
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INB4 Cardboard....oh wait. Not at all surprising that the Trump administration has been silent on this: http://www.slate.com/articles/news_and_politics/politics/2017/02/trump_s_silence_about_two_indians_shot_in_kansas_speaks_volumes.html
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It's the lot that ultimately matters, not the dwelling itself. For example, there are plenty of shoddy looking homes in my area that have recently been sold for likely $million+ prices, but they are being taken down to build condos. Those shoddy-looking homes happen to sit right next to a main subway stop. Taking out a couple of shabby homes for a few million dollars each to build a 200 unit condo selling at average prices of $400-500K/unit is a slam dunk for developers - if they can get the requisite permitting. Sometimes that's the case, but prices for houses and condos across the whole region are crazy and it's not condo developers and chinese princelings buying everything. Many of the houses you see are in residential neighborhoods full of other tiny houses on tiny lots, nothing much above 1-2 stories on the horizon. I doubt the whole neighborhood is getting razed and massive towers are being built there in every case. I would also say that the supply of single family detached homes in the city area is practically non-existent. So to satisfy the demand of an ever-growing city, condos and townhouses need to be built. Some parts of Toronto are trending more like Manhattan where those who own detached homes are the ultra-rich. New home-buyers in the Toronto region need to get used to the idea of living in a condo.
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Lol.
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It's the lot that ultimately matters, not the dwelling itself. For example, there are plenty of shoddy looking homes in my area that have recently been sold for likely $million+ prices, but they are being taken down to build condos. Those shoddy-looking homes happen to sit right next to a main subway stop. Taking out a couple of shabby homes for a few million dollars each to build a 200 unit condo selling at average prices of $400-500K/unit is a slam dunk for developers - if they can get the requisite permitting.
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A thread is like a room. A thread like this just so happens to attract a whole bunch of people into a room to incessantly yell at each other. This isn't productive discussion, in my opinion, and it also leaves other rooms vacant. This room is more like a gigantic clusterfuck of an argument that naturally leads to posters becoming more defensive and holding even stronger to their beliefs than when they first began. There is no middle ground left. I know many here who have a libertarian bent and believe in freedom everything. But some things just aren't productive.
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The vindictiveness that a thread like this foments is alarming. Some posters here appear to post not for the sake of debate but just to get back at another poster or "the other side". Does any of this make you feel good? Does any of this change anyone's position one iota? Reminds me more of the type of shitstorms in reddit and Facebook. I suggest that Parsad lock this thread.
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Agreed. Thank you for this balanced view.
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Assume you are correct on all points...even though hundreds of thousands of protesters disagree with you, including a number of Republican party members, supporters and well-known Conservatives. You are telling me that this President's conduct so far, his compulsive tweeting, choice of words when characterising those that disagree with him, and the ridiculously inane and incompetent way he has executed this travel ban, doesn't worry you in the slightest? Top brass at the borders, Department of Homeland Security, foreign embassies, travel bureaus, you name it...had no idea what this ban meant and how to enforce it. Citizens, green card holders, children, etc were held at borders or denied entry. This was a major f**k up. Sears executes their retail business with more competency! Cheers! George Bush, Obama and Hillary's State Department bomb and kill thousands of Muslims with unprecedented drone strikes, destroy entire countries, slaughter people in Iraq, create starvation in Yemen, and create this entire refugee crisis to begin with, and yet I don't recall any mass protests about that . . . But now your main worry is about how a travel ban was implemented. Do you not see that perhaps your moral compass is a little askew? Ah...the classic moving goal posts defense. Criticism of two completely different decisions by different people need not be mutually exclusive.
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You mean the cartoonist who correctly predicted a landslide win by Trump, one year before it happened? Landslide!? Lol... "Guy who predicted Trump" is like "Guy who predicted financial crisis". Just because they got one right doesn't make them fortune tellers and sure doesn't make their other views valid. But they do love harping on that one time they got it right. It's interesting how the narrative changes when you repeat something enough. Trump called his election win a landslide. The data shows anything but. He won key battleground states by 0-2% margins. And on top of it all, he lost the popular vote by nearly 3 million votes, or 2% of the total voting public.
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Those are just facts. Please limit the discussion to bone headed opinions only. The level of paranoia in a country like the US is truly astounding. I'm surprised that it exists to such a degree even on a board like this.
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It's probably best to ignore posts like that.
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Atul Gawande: The Heroism of Incremental Care
Peregrine replied to dcollon's topic in General Discussion
He writes remarkably and cogently. I hope people like him have a greater voice in policy debate. -
I think that many agree that there needs to be stronger immigration enforcement. There aren't as many who believe a wall is an effective tool. The times are also different. Clinton presided over years where there was mass net migration from Mexico. Today, there is net negative migration from Mexico. http://assets.pewresearch.org/wp-content/uploads/sites/7/2015/11/PH_2015-11-19_mexican-immigration-04.png
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So let me get this straight: if that is indeed true and you do understand its significance and the magnitude of consequences that would follow from that, you would still suggest that the US carry out an action that would dramatically escalate into a war between two nuclear powers?
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I call things like I see it, Cardboard. What you were advocating for would lead to very tenuous ground. For China, deliberate action to break up One China and other actions to divide the country is tantamount to war.
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It's quite easy to proclaim that you have something while having nothing to support it. I don't want to get into a back and forth in a thread with a completely different topic, but I'll just add this: nothing is as black or white, good or evil, right or wrong as it seems. Complexity and nuance exists and we should all strive to seek the other point of view just as vigorously as we sought our own.