wisdom

http://www.cbc.ca/news/canada/british-columbia/richmond-bans-airbnb-1.3930551 A suburb of Vancouver bans short term rentals to free up available stock.

http://business.financialpost.com/personal-finance/mortgages-real-estate/how-lenders-are-sidestepping-canadas-mortgage-rules-with-bundles-of-debt The regulators and media seem to be noticing it since this is now 12.5% of the market. I don't believe sub prime in US ever got that big. This is in addition to home owners whose houses are assessed at $1.6 mil being considered financially strapped. Thus, the government is giving them a break of $570 on average. That should make those $1.6 mil homes more affordable.

BTW - these funds are not for insurance if you read up. Their insurance arm is ICICI Lombard. Berkshire most likely pulled out because the insurance market in India is small and not as profitable. Fairfax tied up with one of the largest players very early in the game. Bajaj as you said has no edge in finance in India.

Similar to the India fund. From reports, they will partner with someone to target countries that will grow. They already have the first $500 mil (includes some funds from fairfax) and need to raise an additional $500 mil.

Looking at a $1 billion fund to invest in Africa.

How do you account for fraud in Canada which allowed Canadians to have higher debt levels than Americans in 2008? How do tighter standards stop fraud?

How has productivity been over the last 15 years?

Druckenmiller, Icahn and tepper have also changed their views.

http://s1.q4cdn.com/579586326/files/doc_downloads/2016/2016.12.18-Investor-Presentation_vF.PDF They have the option of bringing in partners like they did with Brit and probably buy that share back over time.

http://www.fairfax.ca/news/press-releases/press-release-details/2016/Fairfax-Financial-to-Acquire-Allied-World-for-49-Billion-in-Cash-and-Stock/default.aspx

Liberals in BC were formed when they combined with the conservative party in the province. They aren't the same as federal liberals.

Things have been getting tough over the last few months. So the industry is excited as it gives them something to work with. But, at a price point of $750k, all you can buy in most of the lower mainland are townhouses or condos. Which does not change the fact locals cannot buy SFD. If SFD prices keep dropping, at some point they should get close to townhomes. Not sure how things play out at that stage. PS. This improves the probability of her winning. The polls have already improved since the 15% tax. This should give her another boost.

Purpose is to win the election. Please all the sides - condo prices should go up along with sales - so they can claim to have helped the builders along with the average family. Single Family detached sales have stalled - they can claim to have chased away the foreigners (who in reality were responsible for 3% of sales) that were apparently buying up all the real estate (perception). People conveniently forget that Canadian banks were financing 65% of those purchases with no income, no job in Canada and no explanation of how people were able to get $1 mil plus out from a country that had restrictions of $50,000 per person per year. Bonuses must have been pretty good. My experience says - the problem is - the locals who have bought multiple properties using 100% financing or by beating the system. Thus, the government to an extent does not understand the problem on the ground level. The reason for the market stalling is because people now actually have to use cashflow to be able to borrow. Bank of Canada study released yesterday. Scroll down to the section on mortgage loan to income ratios. For reference - the number of households with mortgages over 450% of income used to be 3% approximately 16 years ago (going by memory here). Look at these numbers in Toronto and Vancouver and it is scary. http://www.bankofcanada.ca/2016/12/fsr-december-2016/

It is all about an election coming up in May. There is a lot of pressure on the government from realtors, builders, etc. and the market has stalled and they are hurting. They are big contributors. The government probably needed to be seen as trying to take care of them as well. So they are playing both sides.

I chose FFH for my kids education plan.

Answers: 1) Probably 2) Not likely 3) Currency - at the moment it tracks the price of oil which is interelated to the US dollar. 4) Some yes, some no. In some cases it is better to use Europe and GB as comparators. Partly of the reason the US is so innovative is the nature of its winner take all society. The most innovative people in many industries go to the US. Elon Musk being an obvious, non Asian example. Why didnt he build Tesla in Ontario, Canada? There are a whole host of reasons. Its better to be poor and disadvantaged in Canada, GB, or EU, than in the US. It is better to be highly skilled and ambitious in the US. 2) I am not sure because most of the networth is made up of equity in housing combined with highest debt loads in Canadian history. If housing prices go back to long term averages, that leveraged equity could disappear very quickly. With the steps that cities, provinces and Feds are taking to reign this in, I expect things to be very difficult over the next 5 years.

Vacancy tax approved - 1% and $10,000 a day penalty if not declared. http://www.cbc.ca/news/canada/british-columbia/city-of-vancouver-approves-empty-homes-tax-1.3853542 It will be interesting to see if this increases the rental supply and drops rentals. My view remains that the shortage is because of the local developers holding multiple properties. All 3 levels of government have enacted laws/rules to shut this down and the rising interest rates to top it off.

Interesting developments in Hong Kong real estate - 30% tax on foreigners and 15% stamp duty on locals. Plus the down payment requirements in cities like Beijing having a huge impact on sales there - 40-70% in down payments. Not sure how this will play out, but governments in Australia, Canada, UK, Singapore, Hong Kong and China seem to be coming down on real estate.

FFH dumps 90% of long dated US treasuries on Thursday.

SFD is not the benchmark. Where has the largest drop in sales been? SFD, townhomes, condos? I have so far only talked about SFD. Dig through the numbers and you will realize what I am saying could potentially be true even if the benchmark number is what it is. PS. I don't need anyone to agree or believe me. I am writing what I see. Do with it what you choose.

I am talking about SFD. So yes houses. They are clearing at 20% below what they would have sold at earlier this year. I am not talking averages here. In a city where the average single family house was in the $1.2-1.5 mil range with median household income of $72,000, what isn't high end?

The 20% drop is from the peak in June. Thus, it will not show up in the YoY numbers until next year. But it is coming. I am not sure most people understand the gravity. They are really in denial or are so used to it bouncing back everytime over the last 16 years, they think they just have to wait a few months and it will be back to the good old days.

Speaking to realtors and developers. I had started hearing that prices were down 15% by September end but was waiting for more people to confirm. Now I have spoken to enough people and I am confident in what I am saying. Banks that used to do 65% financing for foreign nationals with no income and credit in canada. I am hearing from internal sources that has stopped. Earlier a foreigner could land with $5 million and the banks would give them a $10 million mortgage. Thus, the top of the market has been taken out. Even for locals getting 65% financing is tightening up. You could live at home with low networth and low income and still buy a revenue property using rental income. Now it isn't consider prudent. FI's have started hitting their caps on lending to developers because the cities had slowed down approvals. Thus, they are unable to lend to these developers even though they have several homes that they purchased earlier this year during the frenzy and need to close on them in the near future. At the Same time, the demand has disappeared because of the tightening. So not sure who will buy the completed homes. And if they can't sell their completed homes, I am unable to figure out how they pay their mortgages on properties they own. Shadow banking was handled by brokers. Their money came from investors who had borrowed against their homes and their earning was the spread. If prices continue dropping, this capital could be written off and individuals who thought this was easy money will be left with no income on the capital but will have their outstanding mortgage/HELOC against their primary residence. New rules that start to role out next week will require banks to hold more capital against mortgages. I expect this to make mortgages unprofitable unless rates are increased. Thus, I expect banks to start pulling back even more starting next month. Realtors, etc believe this to be temporary because they can not believe the government will let things collapse. All this is happening in a economy that has a very high reliance on real estate. Any business that is housing related will have a tough time going forward -Reits, banks, retail sales (no home equity as ATM), etc. In my opinion, this is the last pillar holding up the Canadian economy and it too is on the the way down. We should feel the ripple effect right across. Not sure if there will be any safe place to hide other then exporters and businesses that benefit from a low loonie.

SFD right across the board is down 20% in Vancouver and suburbs. Financing is drying up. Time to hold on, it is about to get ugly.

I believe BMO Harris does provide Canadians financing for US real estate - up to 70% of the value. Maybe TD does too, but I am not sure about them.