Garth Turner - Real Estate in Canada

[Hoodlum]

Unbelievable.  I have no idea when this will end.

 

B.C. offers interest-free loans up to $37,500 to first-time homebuyers

 

The B.C. Home Owner Mortgage and Equity Partnership program will provide a maximum of  $37,500 — or up to 5 per cent of the purchase price — with a 25-year loan that is interest-free and payment-free for the first five years.

 

 

 

[TBW]

Wow! How incredibly stupid. The best way to get affordable housing is to let the mkt correct. Not hand out taxpayer money to be levered 20x. When I think I cant be surprised anymore by the stupidity in Canadian housing they find new ways...

[Liberty]

Unbelievable.  I have no idea when this will end.

 

B.C. offers interest-free loans up to $37,500 to first-time homebuyers

 

The B.C. Home Owner Mortgage and Equity Partnership program will provide a maximum of  $37,500 — or up to 5 per cent of the purchase price — with a 25-year loan that is interest-free and payment-free for the first five years.

 

:o

[gurpaul88]

The same look I had on my face when i saw this..

[rb]

The BC people have lost their minds. Housing bubbles can literally drive people mad.

[scorpioncapital]

Governments have no social or financial engineering agendas, just keep moving on :) I don't think any place in the world is a free market. That ship has sailed along time ago if it ever existed. Probably they are trying to promote resident ownership versus foreign ownership, to compensate for the foreigner tax. Also the loan is interest free only for 5 years after which it goes to market rate. It's not a particularly large amount after which it sits like a 1st or 2nd mortgage on the property.

 

 

 

 

 

[wisdom]

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.

[rb]

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.

Yea but this kinda defeats the purpose wouldn't you say?

[RichardGibbons]

I think it's also important to put this in the political context, that a significant chunk of Christy Clark's pay comes from condo developers. And those condo developers were annoyed that Clark didn't give them advance notice of the foreign buyer's tax.

 

So, this allows her to give a kickback directly to the condo industry while framing the loan as helping first-time buyers.  It's clearly bad encouraging people to buy overvalued properties that they can't afford by giving them money when they aren't disciplined enough to save up a down payment themselves.  But it's great for Bob Rennie.

[wisdom]

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/

 

 

[TBW]

What are the odds this bs gets Christy relected? What are people in BC saying about it? Trying to gauge if the delusion of the people continues or if mkt has already turned and this doesnt matter.

[wisdom]

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.

[RichardGibbons]

I think the other factor when thinking about the Provincial election is the dearth of the alternatives. At the federal level, both the Liberals and Conservatives are reasonable options most of the time.  At the provincial level, the primary alternative is the NDP, which is a total non-starter for many people.  It would be helpful if there were a center-left provincial party to balance the center-right Liberals party.

[ourkid8]

Which liberal party is center-right? At the federal and provincial level they are all center-left.  I would say the conservative are center-right.

 

I think the other factor when thinking about the Provincial election is the dearth of the alternatives. At the federal level, both the Liberals and Conservatives are reasonable options most of the time.  At the provincial level, the primary alternative is the NDP, which is a total non-starter for many people.  It would be helpful if there were a center-left provincial party to balance the center-right Liberals party.

[Cardboard]

"Which liberal party is center-right? At the federal and provincial level they are all center-left.  I would say the conservative are center-right. "

 

LOL!

 

RichardGibbons must be a devout reader of Karl Marx...

[wisdom]

Liberals in BC were formed when they combined with the conservative party in the province.

 

They aren't the same as federal liberals.

[lessthaniv]

This benefit is targeted towards new buyers with less than $150k in income. The inventory of homes that are affordable to this segment of the market are already in tight supply.

 

If buyers can only afford a purchase price of $350k and are then given $37,500 in "free" money those dollars will likely flow to the benefit of the sellers. Meaning, they will buy the home for $387,000.

 

The buyers will be left with higher debt levels.

 

[RichardGibbons]

Liberals in BC were formed when they combined with the conservative party in the province.

 

They aren't the same as federal liberals.

 

Exactly. The federal Liberals are center-left. The BC Provincial Liberals are center-right conservatives in everything but name.

 

Just out of curiosity, Cardboard, what major actions have the BC Provincial Liberals taken that lead you to conclude that they are a left-wing party?  The only thing that immediately comes to mind for me is the carbon tax.

[Cardboard]

The only center-right party in B.C. is still the B.C. Conservative Party but, it is tiny or like in Quebec where the three main parties are left.

 

Like for most provinces in Canada, they are so far to the left that they no longer have a clue what center is. So any party talking about a balanced budget or tax cuts is a center-right party!

 

And regarding an example, you found a great one yourself.

 

Cardboard

[RichardGibbons]

The only center-right party in B.C. is still the B.C. Conservative Party but, it is tiny or like in Quebec where the three main parties are left.

 

Like for most provinces in Canada, they are so far to the left that they no longer have a clue what center is. So any party talking about a balanced budget or tax cuts is a center-right party!

 

And regarding an example, you found a great one yourself.

 

Ah, I see. Your assertion that they're center left is sufficient evidence in your mind. But while you've struggled to find any indications that they are left-wing, they've done quite a few right wing things.  Here's a few:

• Cracking the hospital unions
  
• Cutting back on public education
  
• Cutting taxes to grow deficits
  
• Public/private partnerships
  
• Toll bridges rather than public bridges
  
• Cutting funding for healthcare
  
• Privatizing components of the healthcare system
  
• Massive cuts to legal aid services
  
• Cutting early childhood and literacy programs
  
• Cutting income assistance programs
  
• Eliminating environmental programs
  
• Releasing the agricultural land reserves to developers
  
• Privatizing BC Gas
  
• Cuts to mental health and addiction facilities
  
• Public private partnerships
  

 

That said, I understand that your thoughts on this topic might not be well-formed, and that in a pinch, it's much easiest to assume that because the party is called Liberal, it's actually, um, liberal.

 

Though, if you've been planning to vacation this summer in the Democratic Republic of Korea, watch out. It's really not what you think it is....

[Cardboard]

As an American friend once told me, spicy for Canadians is maple syrup.  :o

[jm25]

See attached (September 2016).

JKD_Capital_-_Canadian_Housing.pdf

[rb]

See attached (September 2016).

Do you know what trades they have to take advantage of this?

[alertmeipp]

I live in Toronto. Still bidding war.... and price seems going higher still..

 

now the selling point is shortage of supplies... u better get in now.

[Liberty]

A little upbeat video from the Bank of Canada for the holidays: