Calgary Real Estate predictions?

[troutman]

Originally Posted by BrownDrake

The problems in Canada are very similar to the US housing crash, we were just saved by a lowering of interest rates in 2008/9

Our home prices are out of control and going lower for the next 5 years even in a moderate oil recovery. Credit will not be easier to come by in the next 5 years as the previous 10. No more 40 year, zero downs, 35 year amortizations are now difficult. Down payment requirements going up and amortizations going down.

I think I saw on CBC last week that Toronto and Vancouver set records for February sales volume.

http://www.thestar.com/business/2016...-february.html

Prices rise 11% in Toronto, 27% in Vancouver as buyers come out in force
http://www.cbc.ca/news/business/toro...tate-1.3474439

[canadianmoosette]

Yeah that's true, when you are in those higher price ranges and talking hundreds of thousands in savings, it is worth waiting for sure. We were only looking in the 420-450k range where there definitely isn't going to be such large drops. We figured houses in our budget maaaybe could drop 3-4% by the next year so when we put in an 3% lower offer on the listing price and it was accepted right away we felt that we recouped any savings that would have been had by waiting it out.

[BrownDrake]

Originally Posted by Slava

Are there a lot of NINJA loans and subprime in general here that have been securitized and passed through the system?

Sub prime loans were loans that reset at market interest rates after a 3 to 5 year period unlike the typical US mortgage rates that had locked in interest rates for 30 year terms.

Where could you ever get a locked in interest rate in Canada for 30 years? That's correct, never. By definition all mortgages in Canada are subject to market interest rates at renewal term, typically 5 years on the long ones.

As for NINJA loans, I know of a live-out nanny and a girl who works at Superstore, both with their name on a 300K mortgage in Airdrie. Its a 40 year mortgage, they didn't have to put anything down. Cheaper than rent I guess. Had to talk sense into my brother-in-law who was approved 2 years ago for a 330K mortgage, he is (was) roughneck making +/-75K per year and she works a daycare at $28K per year.

Several people out of work, are those now NINJA loans?

Banks in Canada have also been selling loans you know. Just how thorough are they when there is a quick buck to be made on a government guaranteed mortgage.

[Canehdianman]

Originally Posted by BrownDrake

Sub prime loans were loans that reset at market interest rates after a 3 to 5 year period unlike the typical US mortgage rates that had locked in interest rates for 30 year terms.

Where could you ever get a locked in interest rate in Canada for 30 years? That's correct, never. By definition all mortgages in Canada are subject to market interest rates at renewal term, typically 5 years on the long ones.

As for NINJA loans, I know of a live-out nanny and a girl who works at Superstore, both with their name on a 300K mortgage in Airdrie. Its a 40 year mortgage, they didn't have to put anything down. Cheaper than rent I guess. Had to talk sense into my brother-in-law who was approved 2 years ago for a 330K mortgage, he is (was) roughneck making +/-75K per year and she works a daycare at $28K per year.

Several people out of work, are those now NINJA loans?

Banks in Canada have also been selling loans you know. Just how thorough are they when there is a quick buck to be made on a government guaranteed mortgage.

a mortgage:debt ratio of 3.3 would be considered conservative in today's economy (well, 2013's economy at least). I have friends who are sitting at 5-6:1.

[BrownDrake]

If you went into a bank in the USA now at 50 years old asked for a 30 year mortgage you would be laughed out of the building. Even in Canada its a well known fact your earning power past the age of 60-65 is negligible.

How come I know so many people with mortgages that will run into their low earning pension years?

We don't have exactly the same problems but we have our own problems. The government guarantee has been a gift to real estate in Canada. Someone will pay the bill eventually.

Heloc's are also a major issue in Canada, as well as 20 year boat and RV loans.

Everything reverts to norm eventually.

The problem with a lot of theses threads is guys like me don't understand its different here.

[Slava]

Originally Posted by BrownDrake

Sub prime loans were loans that reset at market interest rates after a 3 to 5 year period unlike the typical US mortgage rates that had locked in interest rates for 30 year terms.

Where could you ever get a locked in interest rate in Canada for 30 years? That's correct, never. By definition all mortgages in Canada are subject to market interest rates at renewal term, typically 5 years on the long ones.

As for NINJA loans, I know of a live-out nanny and a girl who works at Superstore, both with their name on a 300K mortgage in Airdrie. Its a 40 year mortgage, they didn't have to put anything down. Cheaper than rent I guess. Had to talk sense into my brother-in-law who was approved 2 years ago for a 330K mortgage, he is (was) roughneck making +/-75K per year and she works a daycare at $28K per year.

Several people out of work, are those now NINJA loans?

Banks in Canada have also been selling loans you know. Just how thorough are they when there is a quick buck to be made on a government guaranteed mortgage.

Those aren't NINJA loans though. In the US they were talking about people who literally had no income and no job who were getting approved for mortgages. Could that happen in Canada? Sure, but it would be against the regulations in place. That is a marked difference from what was taking place in the US.

The ARM issue doesn't strike me as prevalent here either. I don't work in that field so I can't say that they don't exist, but I haven't come across one. There were 30 year mortgages available in Canada though. I called a broker I know a few years ago and asked what kind of rates there were and it was incredibly high, but available.

I recognize that the banks securitize debt in Canada as well, but the other factor is that a lot of that subprime debt was packaged up and re-rated as being AAA. So people thought that they were buying higher credit quality stuff than they really were. I don't see any evidence that this is currently taking place in Canada?

Overall, I just think that the comment that this situation is a lot like the US in 08-09 is misleading. Surely there are concerns and issues with the number of layoffs and things like that, but what we saw in 08-09 in the US had a lot of other factors that we just don't see today.

[Red]

Originally Posted by Slava

Those aren't NINJA loans though. In the US they were talking about people who literally had no income and no job who were getting approved for mortgages. Could that happen in Canada? Sure, but it would be against the regulations in place. That is a marked difference from what was taking place in the US.

The ARM issue doesn't strike me as prevalent here either. I don't work in that field so I can't say that they don't exist, but I haven't come across one. There were 30 year mortgages available in Canada though. I called a broker I know a few years ago and asked what kind of rates there were and it was incredibly high, but available.

I recognize that the banks securitize debt in Canada as well, but the other factor is that a lot of that subprime debt was packaged up and re-rated as being AAA. So people thought that they were buying higher credit quality stuff than they really were. I don't see any evidence that this is currently taking place in Canada?

Overall, I just think that the comment that this situation is a lot like the US in 08-09 is misleading. Surely there are concerns and issues with the number of layoffs and things like that, but what we saw in 08-09 in the US had a lot of other factors that we just don't see today.

I think it's safe to say that all Canadian mortgages are ARM. Not in the teaser rate sense, but none the less, if rates go up here people will be affected at renewal.
And we had 40 year mortgages with 0 down here, not just 30 year. The rates were no different.One hopes that the banks did their due diligence with approvals on those.

[Canehdianman]

Originally Posted by Red

I think it's safe to say that all Canadian mortgages are ARM. Not in the teaser rate sense, but none the less, if rates go up here people will be affected at renewal.
And we had 40 year mortgages with 0 down here, not just 30 year. The rates were no different.One hopes that the banks did their due diligence with approvals on those.

The 40 year mortgages were ended almost a decade ago (2008), so I doubt there is much risk left for those, as the value of the property is probably high enough that the bank won't lose money in it goes into foreclosure.

[Slava]

Originally Posted by Red

I think it's safe to say that all Canadian mortgages are ARM. Not in the teaser rate sense, but none the less, if rates go up here people will be affected at renewal.
And we had 40 year mortgages with 0 down here, not just 30 year. The rates were no different.One hopes that the banks did their due diligence with approvals on those.

Well again, I don't work in that field. But the mortgages here are not at all like the ARMs in the US as far as I can tell. Sure the terms come up and you have to get another one, but if you had a mortgage in the early-mid 2000's and it came up for renewal you were almost surely seeing reductions as opposed to increases that were mandated by the contract. That is a whole different animal.

[ranchlandsselling]

Originally Posted by BrownDrake

The problems in Canada are very similar to the US housing crash, we were just saved by a lowering of interest rates in 2008/9

Our home prices are out of control and going lower for the next 5 years even in a moderate oil recovery. Credit will not be easier to come by in the next 5 years as the previous 10. No more 40 year, zero downs, 35 year amortizations are now difficult. Down payment requirements going up and amortizations going down.

You do realize that anything greater than a 25 year amortization requires a 20% downpayment?

Our residential lending is nothing like the US was. Their lending was basically a giant case of fraud with applications altered by brokers and lenders to make bonuses. HELOC's max out at 65%.

At worst we have a nation that's very house poor and a bunch of people with zero savings or retirement. Well, Vancouver could see some crazy implosion, but I don't know the market well enough to comment.

You're coming across as a little dramatic.

[ranchlandsselling]

Originally Posted by BrownDrake

If you went into a bank in the USA now at 50 years old asked for a 30 year mortgage you would be laughed out of the building. Even in Canada its a well known fact your earning power past the age of 60-65 is negligible.

How come I know so many people with mortgages that will run into their low earning pension years?

We don't have exactly the same problems but we have our own problems. The government guarantee has been a gift to real estate in Canada. Someone will pay the bill eventually.

Heloc's are also a major issue in Canada, as well as 20 year boat and RV loans.

Everything reverts to norm eventually.

The problem with a lot of theses threads is guys like me don't understand its different here.

HELOCs are capped at 65% LTV.

What % of the population owns a boat? If you want to use anecdotal evidence I know of thousands of people and I know 4 boat owning people. Two own them own outright and two finance them and have a household income above $250k.

Having a mortgage is irrelevant into retirement if there is substantial equity. It's not ideal since paying a mortgage without long term payment stability is a risk, but as long as there's equity in the house that's not going to contribute to a default situation followed by a value crash. The retired person will just have to downsize or have a crappy retirement. My boss has a mortgage. I think he's in his 60's. He could also likely wipe the entire thing out with one years salary or amortize the mortgage all through retirement. Why wouldn't he? At 2.89% it's great. '

Do you only hang out with poor planned near retirement aged people or something? I think you're being anecdotal to make a point that isn't working. CMHC comes out with statistics often enough on the Canadian mortgage market that show the majority of mortgages are well amortized, there is significant equity in the WHOLE market (not in little anecdotal side story's) with the risk of default very low.

Who will pay this government guarantee bill? No one, the vast majority of CMHC insured mortgages are well paid down. CMHC has been derisking for the past 7 years, the current default rate on insured mortgages is tiny. With improvements and now 25 year amortizations the risk to the system has declined substantially from a decade ago. And all those 35 year mortgages are now 25-27 year mortgages resetting in an ultra low rate environment. You know back when those 35 year mortgages were being done interest rates were in the 5-6% range? And they're now sub 3.00%.

The housing market could be volatile in the future and we could see some value destruction for sure. Some markets a lot, some a little. But the underlying mortgage market isn't going to crash and see a crises.

[Canehdianman]

The price drops in the 700k-900k range keep coming.

One of our 'favourites' just dropped 25k and it's been on the market for less than a month.

[troutman]

Originally Posted by Canehdianman

The price drops in the 700k-900k range keep coming.

One of our 'favourites' just dropped 25k and it's been on the market for less than a month.

Across the City, or in certain communities?

[Canehdianman]

Originally Posted by troutman

Across the City, or in certain communities?

I can't say for sure that it is across the entire city. We are looking in the SW (Springbank Hill, Discovery, Aspen area) and they keep dropping.

I would suspect that it is more or less across the city (in that price range) but I don't have any evidence (anecdotal or otherwise) to support it.

[MillerTime GFG]

On the topic of CMHC...

"CMHC considers deductible for mortgage claims"

Mortgage lenders may have to pay a deductible to the CMHC for any claims made on loans the agency insures. That’s an option that is still on the table, president and CEO Evan Siddall said Tuesday.

http://www.mortgagebrokernews.ca/mar...ms-204546.aspx

Somewhat surprising to me, as mortgage insurers such as CMHC underwrite every deal in a similar fashion to what the lenders do. The volatility in AB has already made deals harder to fund, and a move like that would further that trend. I'd be interested to see what kind of premium they're considering.

[pseudoreality]

Originally Posted by MillerTime GFG

On the topic of CMHC...

"CMHC considers deductible for mortgage claims"



http://www.mortgagebrokernews.ca/mar...ms-204546.aspx

Somewhat surprising to me, as mortgage insurers such as CMHC underwrite every deal in a similar fashion to what the lenders do. The volatility in AB has already made deals harder to fund, and a move like that would further that trend. I'd be interested to see what kind of premium they're considering.

That is interesting and makes sense. It bugs me how banks push the high ratio mortgage and are less likely to give you a deal if you actually have a decent down payment. They should shoulder some of the risks when it comes high ratio defaults as well. I also read there was a proposal to make the banks pay the premium, and not just have the borrower roll it into the mortgage. I'm sure the bankers will fight this.

[BrownDrake]

Originally Posted by pseudoreality

That is interesting and makes sense. It bugs me how banks push the high ratio mortgage and are less likely to give you a deal if you actually have a decent down payment. They should shoulder some of the risks when it comes high ratio defaults as well. I also read there was a proposal to make the banks pay the premium, and not just have the borrower roll it into the mortgage. I'm sure the bankers will fight this.

Banks push high ratio mortgages because they are CMHC insured. Those mortgages are really easy to sell and for a premium, backed by the Feds. Why do a mortgage where there is risk to the bank?

Like I said earlier - after +/- 2002 your banker went from the cheapest person you knew to the loosest. Many people have also bought large shacks and have been talked out of large down payments and into CMHC insured mortgages prior to the 1.0 million cap that was put in. Many people buying the mid range 600K to 900K with 10% down or less. "Keep your cash and invest it, money is cheap"

[username]

Originally Posted by BrownDrake

Banks push high ratio mortgages because they are CMHC insured. Those mortgages are really easy to sell and for a premium, backed by the Feds. Why do a mortgage where there is risk to the bank?

Like I said earlier - after +/- 2002 your banker went from the cheapest person you knew to the loosest. Many people have also bought large shacks and have been talked out of large down payments and into CMHC insured mortgages prior to the 1.0 million cap that was put in. Many people buying the mid range 600K to 900K with 10% down or less. "Keep your cash and invest it, money is cheap"

Everything you post is based on your opinion and you haven't provided a single shred of research to back up anything you post. Many people have been talked out of large down payments.....where do you come up with this stuff????

[BrownDrake]

Originally Posted by username

Everything you post is based on your opinion and you haven't provided a single shred of research to back up anything you post. Many people have been talked out of large down payments.....where do you come up with this stuff????

This is a forum full of opinions, find yourself a bank manager or executive you really trust and ask him/her some questions.

I won't get into my personal experiences with who and where but it has also happened to me, I knew going in it would, and played out exactly like I expected. I put 60% down, when I wouldn't listen to my banker, they actually brought in a financial planner for me, spreadsheets an all showing how much more sense it made to go with 10% down and CMHC, invest my other 50% for 8% returns, while only paying 3.5% on my mortgage.

And I could really care less if you believe what I'm telling you.

[fundmark19]

My first mortgage broker advised me to go from 15 percent to 5 percent since the long term goal of the property was to eventually turn it into a rental and to save my capital. Worked out for me since I used the savings to invest into my second home!