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Old 02-01-2012, 09:06 AM   #1981
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Is it reasonable to expect a major bank to ever say that markets are about to crash hard?

Has this happened anywhere in modern times?

If not, is a "slow correction" considered the most negative outlook predicted by a major bank?

Is BMOs statement really that hard to argue?

Highest debt levels ever. Kids with no savings buying houses at historic high prices. CHMC tapped out (again). Lowest (due to government emergency) interest rates ever. 2/3rds of poplulation owning houses already. 1/3rd bought on sub prime mortgages.
Flaherty and Carney sending warnings to Canadians about debt levels.
Banks warning people about debt.
And now a bank predicting a slow decline. Most negative statement a bank will release.

What could go wrong there?
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Old 02-01-2012, 09:20 AM   #1982
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Not to argue the point but more so inquire,
how are kids with no savings buying when they still need to save for the down payment and other costs involved in home ownership?
It also seems to be more common to get a mortgage through ones parents.
I do understand the point BMO is making but also feel that the younger generation has been very lucky to see this crash as it taught many many life lessons.
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Old 02-01-2012, 09:33 AM   #1983
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Quote:
Originally Posted by Realtor 1 View Post
Not to argue the point but more so inquire,
how are kids with no savings buying when they still need to save for the down payment and other costs involved in home ownership?
It also seems to be more common to get a mortgage through ones parents.
I do understand the point BMO is making but also feel that the younger generation has been very lucky to see this crash as it taught many many life lessons.
Cash back mortgages. There are probably plenty other ways; assumables, manipulated prices to "show" a downpayment. Borrowed money allowed for downpayments etc. Things that would happen in losely regulated industry. Banks don't even send appraisers to sites anymore. Scary.

http://www.tdcanadatrust.com/product...5-cashback.jsp

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Old 02-01-2012, 09:35 AM   #1984
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And now the media is getting on the "crash" bandwagon. Not a day goes by without articles like these.

http://www.canadianbusiness.com/arti...ket-will-crash

http://business.financialpost.com/20...of-debt-cliff/
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Old 02-01-2012, 09:40 AM   #1985
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Quote:
Originally Posted by Realtor 1 View Post
Not to argue the point but more so inquire,
how are kids with no savings buying when they still need to save for the down payment and other costs involved in home ownership?
It also seems to be more common to get a mortgage through ones parents.
I do understand the point BMO is making but also feel that the younger generation has been very lucky to see this crash as it taught many many life lessons.
I don't think that this crash has taught 20-30 year old people a damn thing. Everyone I know is still using credit like a free pass.
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Old 02-01-2012, 09:42 AM   #1986
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^^ fair enough, there are ways however in my experience, clients are going with at least 5%.
Things have drastically picked up over the past 10 days in terms of showings, calls from buyers etc. Granted my activity is not even a 1% reflection of what is really happening.
What happened to Alberta leading economic growth and possible mini booms
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Old 02-01-2012, 09:42 AM   #1987
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Quote:
Originally Posted by Realtor 1 View Post
Not to argue the point but more so inquire,
how are kids with no savings buying when they still need to save for the down payment and other costs involved in home ownership?
It also seems to be more common to get a mortgage through ones parents.
I do understand the point BMO is making but also feel that the younger generation has been very lucky to see this crash as it taught many many life lessons.
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Old 02-01-2012, 09:44 AM   #1988
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Quote:
Originally Posted by Realtor 1 View Post
Not to argue the point but more so inquire,
how are kids with no savings buying when they still need to save for the down payment and other costs involved in home ownership?
It also seems to be more common to get a mortgage through ones parents.
I do understand the point BMO is making but also feel that the younger generation has been very lucky to see this crash as it taught many many life lessons.
They DON'T need to save for a downpayment. You can get 0 down mortgages that you can qualify for as long as you show them income. The interest rate is slightly higher, but with interest rates so low, it's not a deal breaker. Either that or they borrow the money from their parents.
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Old 02-01-2012, 09:44 AM   #1989
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Originally Posted by Kybosh View Post
I don't think that this crash has taught 20-30 year old people a damn thing. Everyone I know is still using credit like a free pass.
fair enough, my point was more so that anyone in the younger generation with a grade 6 education should have taken some life lessons from it.
*dont mean to sound arrogant, just tough to imagine someone saying to themselves it wont happen again in my lifetime.
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Old 02-01-2012, 09:45 AM   #1990
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Old 02-01-2012, 09:47 AM   #1991
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Anyone know if a stat for % put down on your mortgage over the past 20 or so years in Canada exists?
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Old 02-01-2012, 09:51 AM   #1992
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Dinking around with maximum allowable amortization periods really helped to F everything up. If they would have just left it at 25 years people would have run out of borrowing power a lot faster, and prices would have been curbed sooner.

All that allowing longer mortgages does is hand a whole bunch of artificial equity to land owners in an arbitrary manner. Scaling it back does the reverse, and people that bought when 40 year mortgages were around got screwed.

I think some lessons were learned for a lot of people that found themselves upside down on houses when it came time to move, and even more will happen when interest finally goes up and a lot of people will have their pants down with debt and LOC payments.

We're going to be a pretty poor bunch when we retire compared to our parents/grandparents (depending on your age).
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Old 02-01-2012, 09:52 AM   #1993
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Anyone know if a stat for % put down on your mortgage over the past 20 or so years in Canada exists?

The average is around 7% down from closer to 20% years ago.

I'm concerned that as a realtor you aren't aware how people are getting mortgages without down payments, or what the average down payment is.
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Old 02-01-2012, 09:59 AM   #1994
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Anyone know if a stat for % put down on your mortgage over the past 20 or so years in Canada exists?
Read somewhere that it's 7% average and most are 35 year amortizations.
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Old 02-01-2012, 10:02 AM   #1995
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Dinking around with maximum allowable amortization periods really helped to F everything up. If they would have just left it at 25 years people would have run out of borrowing power a lot faster, and prices would have been curbed sooner.

All that allowing longer mortgages does is hand a whole bunch of artificial equity to land owners in an arbitrary manner. Scaling it back does the reverse, and people that bought when 40 year mortgages were around got screwed.

I think some lessons were learned for a lot of people that found themselves upside down on houses when it came time to move, and even more will happen when interest finally goes up and a lot of people will have their pants down with debt and LOC payments.

We're going to be a pretty poor bunch when we retire compared to our parents/grandparents (depending on your age).
The low emergency interest rates are only prolonging this madness.

PC will try to keep it going till elections, but things are not looking too rosy for the long term.
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Old 02-01-2012, 10:12 AM   #1996
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Invest in what you can, money is worthless. I'm in the 20-30 sum and buying as many houses as i can. The manufacturing industry in Calgary is booming, we can't find employees, it's only a matter of time when it will all be reflected on housing prices once again. See referal to Vancouver, TO etc. We're behind!
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Old 02-01-2012, 10:16 AM   #1997
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It gets better. Purchasers will need to prove their income now.

Nope, sub prime was a USA problem only :-)

http://www.thestar.com/business/arti...ng-market?bn=1
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Old 02-01-2012, 10:19 AM   #1998
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clients are going with at least 5%.
Is that supposed to be comforting? Buying something while borrowing 95% of the purchase price is having virtually nothing as a downpayment. Basically if CMHC has to get involved, it's a transaction that doesn't fly on it's own merits and needs taxpayer subsidization.
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Old 02-01-2012, 10:45 AM   #1999
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Is that supposed to be comforting? Buying something while borrowing 95% of the purchase price is having virtually nothing as a downpayment. Basically if CMHC has to get involved, it's a transaction that doesn't fly on it's own merits and needs taxpayer subsidization.
How is it taxpayer subsidization? When was the last time CMHC went to the government for funds for their commercial operations? Oh that's right, never! When was the last time CMHC wasn't a profitable business? The CDN Government has earned over $14 billion from CMHC over the past decade.
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Old 02-01-2012, 10:48 AM   #2000
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Mike F has his usual update for January (trying to catch up on the stat updates here). Interesting that sales are so soft considering the rock bottom rates and how much the city has grown in the last decade - the last two years having essentially being the lowest ebb in roughly 10 years.


http://calgaryrealestatereview.com/2...te-statistics/

Despite being buttressed by record low fixed rates, single family home sales in January were unable to match year ago levels. A total of 773 homes were sold, with an average price of $438,682 and a median of $395,000.
Year-over-year this represents a -1.4% decline in sales, -3.3% drop in average price, but a +1.3% increase in the median.

Condo sales were able to eke out a year-over-year increase with a total of 305 units changing hands, compared to 302 in January 2011. The average price was $268,526 with a median of $245,000. Year-over-year sales were up +1%, the average price was down -6.9% and the median declined -3.9%
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