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BC Government offering interest free loans for house down payments!
- Thread starter SimpleTrades
- Start date
And?? You, I, other savvy individuals will make money. I actually hope this will happen.The USA proved that it wasn't simply the problem of the person with bad math. The shared bad math crashed the entire world economy.
I get your point and I still stand by mine.
The issue with BC is their is a ridiculous housing bubble. A lot of foreigners started swooping in and rose prices up. I work in the industrial trades and travel back and forth for major projects and I've worked with multiple guys who have realtors knocking on their doors with offers when their not even listed.
Eastern Canada where wages are significantly lower you can get a 2000 sq foot home for 200-250k, even cheaper on the outskirts of any city. On Vancouver island or around Vancouver you can't even find condemned property for that price.
They recently put in a foreign buyers tax, think its somewhere around 15% to try and get prices under control. When the normal working class can't afford to live, and a lot of the properties are already vacant to begin with, not good for the cities.
We also have here in Canada CMHC which is a insurance you pay at purchase of a home if your down payment is less then 20%. It's ranges from 1.8-3.5 % depending on the amount your mortgaging vs the down payment. CMHC is basically an insurance policy for the mortage issuer. Theirs definitely some bubbles in the Toronto area as well as BC. Definitely wouldn't want to be a buyer in these areas right now.
HCG.TO (Home Capital) is a mortgage company for people with no background to check or making small money. Very risky. In fact Steve Eisman, from "The Big Short" fame has been shorting this for a while now. Most of its business is in Ontario, Canada. They have been accused of mortgage fraud (Jun 2016) through their brokers. Like most stories with Canadian media, they lose interest, and no end to the story. I do have long dated puts on this mess.
MIC.TO (Genworth MI Canada) is a entity that does both shaky and first time mortgages, and insurance. They operate throughout Canada, however their core business seems to be Alberta and west. I also have long dated puts on this, just waiting for an inevitable implosion.
Before Trump was elected, I thought both these company's were treading water in the deep end. Now that he's in, Canada, due to their ridiculous high taxes and weak leadership is in for some serious pain (bubble burst).
The first half of your post is great and very useful, thanks.HCG.TO (Home Capital) is a mortgage company for people with no background to check or making small money. Very risky. In fact Steve Eisman, from "The Big Short" fame has been shorting this for a while now. Most of its business is in Ontario, Canada. They have been accused of mortgage fraud (Jun 2016) through their brokers. Like most stories with Canadian media, they lose interest, and no end to the story. I do have long dated puts on this mess.
MIC.TO (Genworth MI Canada) is a entity that does both shaky and first time mortgages, and insurance. They operate throughout Canada, however their core business seems to be Alberta and west. I also have long dated puts on this, just waiting for an inevitable implosion.
Before Trump was elected, I thought both these company's were treading water in the deep end. Now that he's in, Canada, due to their ridiculous high taxes and weak leadership is in for some serious pain (bubble burst).
I am confused about the second half of your post. The top marginal rate in 2016 for personal income in Canada is 33% and capital gains is 16%, my marginal rate in the U.S. is 39.6% and my LT capital gains rate is 15% plus I lose some of that LT rate with increasing income and pay more. Perhaps you're just saying both countries have ridiculously high taxes, if so fair enough. I also don't get what Trump has to do with the price of real estate in Canada, or what makes Trudeau weak and what that has to do with real estate? Can you spell out the logic chain on that piece?
The first half of your post is great and very useful, thanks.
I am confused about the second half of your post. The top marginal rate in 2016 for personal income in Canada is 33% and capital gains is 16%, my marginal rate in the U.S. is 39.6% and my LT capital gains rate is 15% plus I lose some of that LT rate with increasing income and pay more. Perhaps you're just saying both countries have ridiculously high taxes, if so fair enough. I also don't get what Trump has to do with the price of real estate in Canada, or what makes Trudeau weak and what that has to do with real estate? Can you spell out the logic chain on that piece?
I'll let Jones answer your question fully, but I will tell you what impact Trump has on our house prices in Canada, or at least this is how I understand it.
In the US, you were already at the beginning of a planned increased interest rates process. Trump's policies are widely viewed as highly inflationary. This puts even more pressure on rising interest rates. This of course, effects bond prices.
Our mortgage rates in Canada are impacted by those bond prices. If your interest rates down south are rising. We will feel it up north in Canada. Higher mortgage rates tends to have a downward pressure on house prices in Canada. Many view many parts of Canada as being in a housing bubble. In other words, rising rates down south may pop our bubble, and with the introduction of Trump policies, our bubble may be popped much more aggressively. I know of at least two banks in Canada that have already raised mortgage rates because of the USA FED decision. This is only the beginning.
http://www.theglobeandmail.com/glob...eans-for-canadian-homeowners/article33324145/
Makes sense, thanks.I'll let Jones answer your question fully, but I will tell you what impact Trump has on our house prices in Canada, or at least this is how I understand it.
In the US, you were already at the beginning of a planned increased interest rates process. Trump's policies are widely viewed as highly inflationary. This puts even more pressure on rising interest rates. This of course, effects bond prices.
Our mortgage rates in Canada are impacted by those bond prices. If your interest rates down south are rising. We will feel it up north in Canada. Higher mortgage rates tends to have a downward pressure on house prices in Canada. Many view many parts of Canada as being in a housing bubble. In other words, rising rates down south may pop our bubble, and with the introduction of Trump policies, our bubble may be popped much more aggressively. I know of at least two banks in Canada that have already raised mortgage rates because of the USA FED decision. This is only the beginning.
http://www.theglobeandmail.com/glob...eans-for-canadian-homeowners/article33324145/
I also don't get what Trump has to do with the price of real estate in Canada, or what makes Trudeau weak and what that has to do with real estate? Can you spell out the logic chain on that piece?
If you don't believe Trump is going to have an affect on our economy (think of America first), who am I to argue.
As far as Trudeau, he's has zero business acumen. He's all about the environment (they used to be known as tree huggers) stifling building (construction) regulations and "look at me" social standing at the UN…and… this is very important… within a month of his election, he goes onto the world stage and says, (now quoting verbatim) "we are no longer a resource nation". This guy is laughable.
How will all this effect real estate?…continue losing good paying jobs to third world countries, stagnant wages at home, higher flat taxes on everything, inflation on imported goods and last but not least, qualifying people for mortgages that put themselves in vulnerable positions.
This, and more, all equates to 2017 as a real estate bubble burst in Canada…IMHO…Happy New Year!
Isn't stifling building something that decreases real estate supply, thus keeping prices steady? The housing bubble burst in the U.S. was in large part due to overbuilding, perhaps that is't the case in Canada?If you don't believe Trump is going to have an affect on our economy (think of America first), who am I to argue.
As far as Trudeau, he's has zero business acumen. He's all about the environment (they used to be known as tree huggers) stifling building (construction) regulations and "look at me" social standing at the UN…and… this is very important… within a month of his election, he goes onto the world stage and says, (now quoting verbatim) "we are no longer a resource nation". This guy is laughable.
How will all this effect real estate?…continue losing good paying jobs to third world countries, stagnant wages at home, higher flat taxes on everything, inflation on imported goods and last but not least, qualifying people for mortgages that put themselves in vulnerable positions.
This, and more, all equates to 2017 as a real estate bubble burst in Canada…IMHO…Happy New Year!
The housing bubble burst in the U.S. was in large part due to overbuilding, perhaps that is't the case in Canada?
The housing bubble in the U.S. was mainly caused by sub prime mortgages given to people making …minimum wage… yet buying mini mansions, and not being credit checked. The local banks were issuing the paper, then selling the mortgages in tranches to the credit rating agencies (Moody's, S&P, and lesser extent Fitch). And of course the agencies didn't do any checking, and in turn sold these tranches to investment banks like Lehman Brothers, Merrill Lynch, Freddie and Fannie etc.
And then time to renew at a higher rate… pop…there's your bubble.
Coming back full circle, B.C. in Canada is doing the same thing by giving interest free loans for five years to people that don't have the means to accumulate that money on their own, and it's usually because they don't make enough. Companies like Genworth and Home Capital are only too happy to oblige.
Certainly that was one factor. However huge swaths of subdivisions were also being built across the country, in many places they literally used up all the buildable land for miles and miles. If the people who shouldn't have had loans just defaulted on their loans it would have been a minor blip. When you add in far more houses than are needed with more being built every day, it becomes a crash.
In any event, just pointing out that one factor you seem to be counting on to contribute to a future crash is actually mitigating a future crash.
In any event, just pointing out that one factor you seem to be counting on to contribute to a future crash is actually mitigating a future crash.