There is no Canadian Housing Bubble!

[Aman A.K.A. Ahamburger]

I wonder how long TO and Vancouver will hold up once international monies dry up?

Half Of Canada's Housing Markets Now ‘Very Weak': BMO

[Aman A.K.A. Ahamburger]

I repeat; there is no Canadian Housing Bubble!! It is completely normal that Over 40% of first-time home buyers in Canada can’t afford a house without their parents’ help

That is all.

[Aman A.K.A. Ahamburger]

Yes, it's "normal" now to carry excessive amounts of debt. Canada IS different, there are NO real estate problems here because Canada is "special".

The debt ‘crisis’ in Canada? If your paycheque is $100,000 plus, that means you

Canada used to be known as a nation of savers: In 1982, we stockpiled 20 per cent of our annual income. But by 2014 that rate was down to 3.6 per cent – and at the end of last year our combined debt was $1.82-trillion, greater than the total value of what we produced in goods and services.

Today, households with at least $100,000 or more in total income account for 37 per cent of all debt in Canada. Households with income of at least $50,000 but less than $100,000 represent 38 per cent.

Even Americans, who we like to think are more spendthrift than us, are managing to save more than Canadians. In fact, we are second only to Greece in the growth rate of household debt.

Not surprisingly this has spurred major international watchdogs like McKinsey, Fitch and Moody’s to call our consumer debt level “unsustainable,” and in “urgent” need of monitoring. But is our new relationship to debt really a crisis – or a new, necessary, normal?

The vast majority of household debt is actually for what many of us consider the basics of middle class life: education, cars, and most significantly homes. Incomes haven’t gone up much, but prices have, so credit has filled the yawning gap.

The car loan business, for example, ballooned to $64-billion from just $16.2-billion seven years ago. Renovation spending has also been climbing for 15 years – hitting a record $63.4 billion in 2013, 3.7 per cent of total Canadian gross domestic product. And installment loans – now available for everything from skidoos to funerals – have spiked.

Mortgage debt, however, is what is truly driving debt nation. As Jim MacGee, professor of economics at University of Western Ontario in London, explains, “The primary reason that household debt has gone up so much is because housing prices have risen so dramatically. It takes more debt to purchase the same house today than it did in 1999, because housing prices have increased more than the amounts that mortgage rates have declined.”

The bills will come due. There is no difference between our situation and the US's, only that Canadians perceive that we are different. The funny part is that this so called soft landing could end up being the worst situation anyway. It's called - we ran up 25 yrs of debt in a matter of 5, and now it's going to take 25 yrs before housing prices rise past the point they are now. Math; it's a bitch.

[Aman A.K.A. Ahamburger]

Bills, bills, bills...

Real estate woes: The secret lives of house-poor Canadians

They look like the family that has it all. Louise Edgerton, her partner, John Camus, and her 10-year-old daughter, Fianna, joke around while making brownies. They move around with ease in the gleaming white kitchen of the new dream home they designed themselves.

But for Edgerton, one financial setback could change everything. "I am discouraged, because I don't see the light at the end of the tunnel. It's a little bit of a house of cards that could fall down at any time," she says.

The family is house poor, or as Edgerton puts it, "house rich and cash poor." They live in Lachute, Que., about an hour outside of Montreal, far from the housing hot zones of Toronto and Vancouver.

Edgerton estimates she and Camus spend 43 per cent of their combined income paying down their $418,000 mortgage and covering other fixed housing expenses. Once they pay the rest of the bills and buy groceries, "there is nothing left," she explains. She describes their existence as living "hand to mouth."

Edgerton says she knows they're not alone. "I don't feel we are the only couple who are in debt and wondering how the hell we will get out of this."

"It's the dirty little secret," she concludes. "Nobody talks about it."
With skyrocketing house prices in some regions and the lure of ultra-low interest rates, more Canadians are living closer to the edge. But, naturally, many don't want to talk about their own house of cards.

"There definitely is a lot more going on than we see," says Laurie Campbell, CEO of Credit Canada Debt Solutions.

"Add the cost of running a vehicle to the cost of having a mortgage, the cost of raising a family [and] a lot of people are struggling. It could be your next door neighbour, it could be somebody at work, it could be one of your family members and you know nothing about it."

According to Statistics Canada, Canadians' debt-to-income ratio in the fourth quarter of 2014 was at an all-time high of 163 per cent. That means for every dollar of disposable income in a typical year, Canadians carry $1.63 of debt.

"It worries me immensely that so many of us have allowed ourselves to live on the edge like this and not realize what happens should something out of daily life take a different turn," she says.

Unexpected turns are exactly what drove Edgerton and Camus this close to the edge.

Last year, just a week after they signed the deal to start building their house, Camus lost his sales job at a construction company. Then, the day before they moved in, their contractor handed them a surprise $27,000 bill for extra costs. The couple were forced to tap into their line of credit to pay for it.

So far, they've managed. Edgerton still runs her own website design company. Camus recently found a new, largely commission-based sales job at a car dealership. "I feel we can handle what we are dealing with right now," he says.

The tipping point

The two also say they live frugally, cutting out the extras and halting contributions to their retirement fund and an RESP for Fianna. But Edgerton's main concern is what happens if there's another financial emergency. "Should any bad luck happen, we are going to be in trouble," she believes.

[Aman A.K.A. Ahamburger]

Bills, bills, bills..

Bruce Yaccato: You’d have to be crazy to buy real estate

As a columnist at The Week recently observed: “If median-income people borrowed hundreds of thousands of dollars to speculate on the price 30 years hence of a single, highly illiquid asset that wasn’t a house, they would be called financially insane.”...

“People are making so many trade-offs in order to have that home,” according to, associate professor of psychology at the University of British Columbia, Elizabeth Dunn, who studies consumerism and happiness. She finds that people are highly unlikely to admit any fault in past decisions. They are in fact even more convinced buying a house is the only way to go. Like a reformed smoker, they are militantly evangelical.

It could well be that people are happier spending on vacations and lifestyle than being house-rich, cash-poor. Or worse still, they could further erode their dismal rates of return by taking on lines of credit to try to have their cake and eat it too.

Wait. You mean having a housing market built on hot money from the Chinese house of cards is going to end up back firing?

U.S. short sellers betting on Canadian housing crash: ‘An accident waiting to happen’

The hedge fund investors, known as short sellers, are betting against what they believe is a housing bubble in Vancouver, Toronto, Calgary and other Canadian cities. They believe Canadians hold too much mortgage debt, and that Canadian banks, mortgage insurers and “subprime” private lenders will lose money on unpaid loans when property prices fall.

“The cross currents are beyond crazy in Vancouver — it’s a mix of money laundering, speculation, low interest rates,” said Marc Cohodes, once called Wall Street’s highest-profile short-seller by The New York Times. “A house is something you live in, but in Vancouver you guys are trading them like the penny stocks on Howe Street.”

He says Vancouver real estate has reached peak insanity, and any number of factors could trigger a collapse....

..The Canadian housing analyst noted short-selling bets against big Canadian banks have doubled in New York markets in the past several months. And the risk of a sharp housing correction connected to Canadians’ high household debt has risen since December, the Bank of Canada recently reported.

While short sellers point to Vancouver as the most extreme housing bubble in Canada, the analyst noted that some investors believe a massive flow of investment from Mainland China makes the market impervious to corrections.

Others speculate that if China’s economy slows dramatically, Vancouver housing will bust.

[Aman A.K.A. Ahamburger]

It's going to be an interesting second half..

A housing correction is likely to happen this summer: Author

[Aman A.K.A. Ahamburger]

Some crazy facts here. Certain numbers out of Toronto are starting to look like China....

Canada's Biggest Housing Bear Just Turned Even More Pessimistic

Housing analyst Ben Rabidoux of North Cove Advisors crunched the numbers on population growth and concluded that a major oversupply is headed for Canada’s housing market.

Canada is undergoing a considerable slowdown in growth in the working-age population, which does most of the home-buying.

"In 2010, Canada added 240,000 people to the working-age population. Today that number has dwindled to just 90,000," he wrote.

Rabidoux concluded that Canada is building two new homes for every person coming into the core home-buying age group.

“The current level of housing construction in Canada is absolutely unprecedented relative to underlying demographic trends.”

[Aman A.K.A. Ahamburger]

It is truly amazing how much Vancouver and Toronto distort the National numbers in Canada.(Alberta has taken a beating, and to a lesser extent so has Saskatchewan and Manitoba.) This has lead many young people to continue to believe that things are fine in Canada and has turned into another situation in which irrational behavior has taken hold, and proven my rational thinking wrong.

However, just because the Canadian housing market didn't see broad based declines in the second half of last year doesn't mean there is no Canadian Housing bubble. In fact, it's only gotten worse.

1st-time homebuyers at risk because of heavy mortgage debt, says C.D. Howe study

The number of households with a primary mortgage debt-to-disposable income ratio in excess of 500 per cent has climbed from three per cent in 1999 to 11 per cent in 2012, according to the study. That's half a million households.....

.....The C.D. Howe study, titled Mortgaged to the Hilt, found 1-in-10 mortgage-indebted households have less than $1,500 in financial assets to address any shock.

Years of low interest rates and escalating housing prices in Ontario and British Columbia have made the problem worse

Too pricey, too many: CMHC reports 'moderate' problems in housing market...... Moderate!! ....

[Aman A.K.A. Ahamburger]

How very interesting. First the reports of "foreign buyers" drying up appeared, and now a few numbers...

DATA: Is the Metro Vancouver real estate market in free fall?

There were only three home sales in West Vancouver between Aug. 1 and 14 this year, compared to 52 during the same period last year. That’s a decrease of 94 per cent.

But no, "foreign buyers" were having no impact on the Vancouver market, and they still have no impact on Toronto's. On a broader scale, prices in 50% of the Canadian housing market(Vancouver&Toronton) have not distorted the picture in Canada, because prices across Canada in other housing markets aren't dropping.

Have to love the commies response to the long overdue foreign owners tax..

Chinese Media Warns Canada's Housing Crash Will Put U.S. To Shame

[Aman A.K.A. Ahamburger]

Aug 18, 2016 22:20:18 GMT -5 Aman A.K.A. Ahamburger said:

How very interesting. First the reports of "foreign buyers" drying up appeared, and now a few numbers...

DATA: Is the Metro Vancouver real estate market in free fall?

There were only three home sales in West Vancouver between Aug. 1 and 14 this year, compared to 52 during the same period last year. That’s a decrease of 94 per cent.

But no, "foreign buyers" were having no impact on the Vancouver market, and they still have no impact on Toronto's. On a broader scale, prices in 50% of the Canadian housing market(Vancouver&Toronton) have not distorted the picture in Canada, because prices across Canada in other housing markets aren't dropping.

Have to love the commies response to the long overdue foreign owners tax..

Chinese Media Warns Canada's Housing Crash Will Put U.S. To Shame

It will be interesting to see where things go from here; debt to GDP ratio at 163% and Alberta already in a deep recession.

So what happens to the national average when instead of posting 30% gains, 25% of the housing market looks like the post above, and the news story below

Real-time sales numbers show decline in ‘average’ Vancouver home prices

Zolo, a national real estate brokerage, has been attracting attention for its tracking of MLS home sales in real time. It says the “average price” of homes sold in the last 28 days in the City of Vancouver has fallen 21.4 per cent, is down 25.1 per cent over the last three months, and down 7.4 per cent from last year.

In Richmond, the average selling price of homes is currently $779,000, down by 18.1 per cent in the last 28 days, down by 21.1 per cent in the last three months and down by 13.1 per cent from last year. In Burnaby, the numbers fell by 11.8 per cent and 21.9 per cent, respectively, according to Zolo, which posted similar drops in other areas, too.

[Aman A.K.A. Ahamburger]

The hits keeps coming. Now, all these empty homes are going to come under fire... Vancouver to implement empty home tax by next year

Of course the next step will be TO to follow suit because they will have no choice... Ontario will need to implement foreign buyer tax on housing, CIBC says

[Aman A.K.A. Ahamburger]

The last two post are important because when mixed with the article below, it has become very apparent that the average price of a home in Canada is a useless metric. Stay

Prices plunging: Houses selling well below asking, some under $1M

Sutton West Coast realtor David Hutchinson has been tracking plunging prices and found several detached homes listed below $1 million, some of which had been recently renovated.

"If you want to sell, you have to be priced sharply, and you see a lot of price drops," Hutchinson told CTV.

And even with price drops, he added, he's seen many sale prices lower than what sellers are asking for. He said he knew of one home in the west side of the city that was initially priced at $3.9 million, but when it didn't sell, the owners reduced the price. They kept reducing it in small increments, but eventually they couldn't wait any longer, and had to drop the price by nearly $1 million.

Another home on West 8th in Kitsilano was listed for $2.5 million, but could only fetch $1.6 million.

[Aman A.K.A. Ahamburger]

Apr 29, 2014 22:00:37 GMT -5 Aman A.K.A. Ahamburger said:

Canada's debt levels are just as bad now as they were in the US, and while I don't see a US style meltdown up here, Canada could be in for a very Japanese style housing correction.

Unfortunately, it's looking more and more likely that this is what the Canadian market is in for.

Liberals paint gloomy picture of Canada's economy

[Aman A.K.A. Ahamburger]

Some more "fun". All hell is going to break loose in Vancouver': Ex-trader's real estate forecast

[zibazinski]

Don't be ridiculous. Canada is perfect, don't you read the posts from our Canadiens?

[Aman A.K.A. Ahamburger]

Jan 1, 2017 19:49:35 GMT -5 zibazinski said:

Don't be ridiculous. Canada is perfect, don't you read the posts from our Canadiens?

Sorry I missed this Zib. Well, au Canadiens better keep an eye on the separatists movement in tandem with the rising Muslim population... Of course if they would have left it up to the rest of us Canadians, there would have been one less province up here years ago.

[Aman A.K.A. Ahamburger]

Per Re: 542...

Ontario Is Becoming Last Bastion of Canada’s Hot Housing Market

In terms of new construction, 2016 was still a two-city story -- Toronto and Vancouver -- with new building starts at historical highs for both. Combined, the pair accounted for 37 percent of new starts, the most ever.

[Aman A.K.A. Ahamburger]

and they cracked down on foreign buyers in Ontario because of it; next up, Canada is the new Switzerland??

The big new on BNN today though; Home Capital shares plunge after mortgage lender seeks $2 billion credit line as deposits decline. While the CMHC continues to be Captain Obvious in saying,Strong evidence of overall problematic conditions.

How could this be? Record domestic debt? Insane valuations in 50%+ of the market? Affordability?

While owning a home in Vancouver or Toronto these past four years would have turn a nice profit if one were sell today, I do feel bad for my neighbours who have seen 100k+ evaporate in equity during that same time period. Low rates don't help those numbers, and have actually made the affordability issue much, much worse. Stay

[Aman A.K.A. Ahamburger]

Low rates don't help those numbers, and have actually made the affordability issue much, much worse. Stay

A 10% hike to mortgage payments would sink almost 3 quarters of homeowners, Manulife says

[Aman A.K.A. Ahamburger]

How could this be? Record domestic debt? Insane valuations in 50%+ of the market? Affordability?

But it has nothing to do with foreign ownership..

Canada's Housing Bubble Will Burst

Canadian home sales fell the most in five years last month. That didn’t stop an increase in prices, which were up 18 percent nationwide from a year earlier....



....When you couple this unfathomable rise in housing prices with near-record high household debt-to-income ratios,...

The truly insane this is that these gains are fueled almost entirely because of Vancouver and Toronto(50% of the market). The rest of the country has found people already underwater. Couldn't be happier to be a renter these past four years.

[Aman A.K.A. Ahamburger]

Average Canadian house worth $504,458 in June, down 10% since April

Home sales have now fallen 14 per cent since peaking in March. The April to June period is typically a busy time for home sales as the warmer weather tends to bring out buyers.

Prices down, too

More than 70 per cent of all markets saw fewer homes sold in June than they did in May.

Prices have been skewed higher for a long time by the hot Toronto and Vancouver markets, but the price in both fell in June compared to May, dragging down the national figure.

If those two cities are stripped out, the average Canadian house cost $394,660 in June. A year ago, that figure stood at $374,760, which means excluding Toronto and Vancouver, average Canadian house prices have increased by just over five per cent in the past 12 months.

And the reason for those increases is because across the rest of the country you can get way more house for much less+ the oil patch has a heartbeat.

Toronto home sales plunge 40.4% in July as slowdown intensifies

But, no foreign buyers haven't skewed the market..

[djAdvocate]

we could use an update on this, Aham.  any softening up North, yet?

[Aman A.K.A. Ahamburger]

Depending on where you live things have been softening for the past four years. Here in Saskatchewan/across most of the country we are seeing ppl in negative equity that are refi and are stunned because "average prices have gone up!"

Now that distortions have been nip in the bud; Canada's Average House Price Drops As Toronto’s Slump Spreads

Basically, people have been able to buy more for the same price and in the meantime have driven debt to historic rates on frivolous items. Thanks to Trudeu's moronic economic plan mixed with the oil patch coming back to life after the fires in Ft. Mac, the BOC is essentially backed into a corner on rates. Of course the larger issue is the impossible Trinity I'm going to post about later, mixed with global conflict in the deflationary environment we are in...

On the bright side, have been looking at 150ac on a lake in North Sask that has been for sale since last Nov; which would make a great location for one of these "Doomsday bunkers" that have been selling like hotcakes.

[Aman A.K.A. Ahamburger]

It's just a gully...

-After rate hikes, Canadian housing braces for 'biggest rule change of all time'
-Toronto home prices in bear market as sales sink 34.8% in August

[Aman A.K.A. Ahamburger]

I don't feel like looking for the quotes, but 1) as Chinese money dries up Vancouver, Toronto, NYC, etc are going to feel the burn; and 2) the only solution for Canada is to become like Switzerland. You must be a resident to buy property here. Stay

-Toronto’s housing market is ‘puzzling’ the experts — and that’s worrying
-CMHC turns to Airbnb for help with affordable rental housing supply
-Is China bursting Vancouver’s housing bubble?

[Aman A.K.A. Ahamburger]

New Zealand ban on foreign home ownership gains attention in B.C.

[Aman A.K.A. Ahamburger]

An interesting study on over supply.

Academic takes on Vancouver’s housing-supply ‘myth’

he has concluded that Vancouver does not have a shortage of housing units. In fact, we have a surplus. And, as anybody in Metro Vancouver knows, prices have not plummeted as a result.

"If we are looking back at the last 15 to 20 years, we have been providing more than enough units of housing – and it's still unaffordable.

"And yet, you see this argument being thrown out there by various quarters, that we have this housing shortage."

Dr. Rose is an instructor in the department of geography and environment at Kwantlen Polytechnic University. He's been teaching there since 2002. He calls his report The Housing Supply Myth, based on data from the Statistics Canada censuses and the Demographia Survey House Price Data. He also looked at supply in housing markets elsewhere in Canada, the United States and Australia.

"As a resident of Metro Vancouver and observing all this construction around me, I thought: 'How do we have a housing shortage?' Maybe I'm missing something, but this doesn't seem to stick. And this data supports that idea."

In order to ensure his findings weren't just a blip, Dr. Rose went back to the 2001 census, covering a 15-year span. He found that for each household added during this period, the region added 1.19 net units of housing. Put another way, for every 100 households that came along, Metro Vancouver added 119 net units of housing. According to census data, there are also 66,719 unoccupied dwellings in Metro Vancouver.

And despite a surplus of housing stock, affordability has significantly worsened – a contradiction to the supply mantra.....

...."Here we've had more than enough supply and yet the housing costs have gone crazy."

It's important that people understand the true nature of the affordability problem so we can take significant action to correct it, says Dr. Rose. He favours taxes on speculation, and doesn't rule out a ban on foreign buying of existing properties, as New Zealand is implementing next year. He also questions the building of housing units that are overpriced and intended for speculation, and therefore "pointless."

And he's not a man without "skin in the game."

"I am doing research that would, if acted upon, significantly degrade the value of my property, and I think to myself, 'if I sell it now maybe I could retire earlier.' So the self-interested side of me would say, 'don't interrupt the party.' The good side says, 'no, for this situation to get reined in, something more dramatic is necessary.'"

[Aman A.K.A. Ahamburger]

With pre-qualification for mortgages and refinancing hitting 7% starting in January, debt levels exceeding that of the US prior to the sub prime crisis, housing prices that far exceed peak prices in the US prior to the meltdown; it's important to note 1) people in Canada can't walk away from mortgages 2) easy(cheap) money has been flowing in the Canadian economy far longer than in the US prior to the meltdown.

Now, more fraud has been discovered in Canadian subprime lending as, Laurentian Discloses Flawed Mortgages in Home Capital Echo. So, while Canadian Banks were herald for their standards which helped them avoid the brunt of the '08/'09 fallout, they could very well end up being the catch 22 due to surrounding circumstances. Stay

[Aman A.K.A. Ahamburger]

Canadian home sales, listings slump in January with arrival of new mortgage rules CREA says monthly home sales through the MLS system declined by 14.5% in January

But even before the new rules: Canadian real estate prices see biggest drop worldwide.

With a spillover from the Asian crisis on top: Canadian Real Estate Worth Billions Seized By Chinese Government China may decide to liquidate some of the assets it seized from insurance giant Anbang

[Aman A.K.A. Ahamburger]

The numbers can no longer hide the fact prices in many markets peaked in 2013; widespread the declines have become.

Canadian home sales fall 16.9% as average price drops 5% in February: CREA