tag:blogger.com,1999:blog-7123542260692860177.post1879838567948481799..comments2023-12-02T00:38:46.467-08:00Comments on House Hunt Victoria: February 2010 statsHouseHuntVictoriahttp://www.blogger.com/profile/07456914359088891317noreply@blogger.comBlogger84125tag:blogger.com,1999:blog-7123542260692860177.post-80194851038031703032010-03-08T10:25:27.439-08:002010-03-08T10:25:27.439-08:00Even more tightening of mortgage rules at CMHC. S...Even more tightening of mortgage rules at CMHC. Stated income or Alt-A loans (known as "liar loans" in the US) have been curtailed in Canada. Fewer buyers as a result.<br /><br /><a href="http://wayne.mortgagecentrebc.com/" rel="nofollow">CMHC Business For Self Stated Income Program Changed</a><br /><br /><i>CMHC will no longer be accepting stated income for those who have been BFS** longer than 3 years or are commissioned sales. They have also reduced the LTV from 95% to 90% on the stated product.</i><br /><br />** Business For Self - CMHC lingoAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-42037877921937914512010-03-07T15:38:14.960-08:002010-03-07T15:38:14.960-08:00Those looking to refinance will also feel the brun...Those looking to refinance will also feel the brunt of these new rules. Here are some examples:<br /><br />- Those that are stretched to the max may not qualify for their mortgage balance if they decide to switch to another lender at renewal time. They will be forced to renew at whatever %rate is offered by their current lender. Lenders may just offer posted rates to fatten their bottom line.<br /><br />- The new rules only allow loans to be re-financed at 90% loan-to-value. This will slow down using the home as an ATM for automobile and vacation money. A real ding to those over their heads with credit or seeking a flashy lifestyle.<br /><br />- Those with rental properties that are not owner occupied may have trouble getting refinanced. Banks may not offer automatic renewals if RE prices drop significantly (think small condo box). Re-qualifying with the new 50% gross rental income and 20% down rules may force some high ratio investors to sell if they can't get alternate financing.<br /><br />- Divorce cases. It will be hard for one partner to continue to live in the family home if they have to pay out the other partner and re-finance.<br /><br /><br />Conclusion - These new rules are going to pop the bubble. Just be patient and wait a few months till all the pre-approval letters expire. The last of the <i>greater fools</i> will continue to buy at the peak and regret their hasty decision for years to come.<br /><br />As my name says - Just Waiting...<br />.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-41118469180002260172010-03-07T14:55:24.810-08:002010-03-07T14:55:24.810-08:00from what I can see, Toronto SFD average is 431K, ...from what I can see, Toronto SFD average is 431K, way below ours which is in the 600s.Animal Spirithttps://www.blogger.com/profile/14290032551579947421noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-37219231089396965632010-03-07T14:20:18.217-08:002010-03-07T14:20:18.217-08:00It appears that the new rules effect Vancouver and...It appears that the new rules effect Vancouver and Victoria, but also Trornto. It equally effects any center where the affordability is out of whack. The west is famous for boom and bust.<br /><br />Things could turn out very well for the financially prudent. If you can actually afford a home; the prices will be down and so will the rates.omchttps://www.blogger.com/profile/11570216584047858772noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-77519043922486735222010-03-07T13:01:13.750-08:002010-03-07T13:01:13.750-08:00Is it that the rules will have a much bigger effec...Is it that the rules will have a much bigger effect in Victoria and Vancouver then, say, Toronto, Ottawa and Montreal? Our house prices are a lot higher here, but our incomes are around the same. What we 'could' qualify for in Victoria will drop signficantly in the future, but there really won't be much of a market effect in the bigger eastern centres.<br /><br />This leads me to the question: has a political decision been made to hang the west out to dry (there are comparable fewer seats in play in B.C.) while ensuring that the east stays in reasonable market territory. If so, brilliant, however if I were a B.C. politician, I'd be more than a bit PO'ed at the probable effect in a year.Animal Spirithttps://www.blogger.com/profile/14290032551579947421noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-31937278467205498472010-03-07T09:35:49.419-08:002010-03-07T09:35:49.419-08:00Double Agent,
The new CMHC rules also change the ...Double Agent,<br /><br />The <a href="http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/02/devilish-details-from-yesterdays-announcement.html" rel="nofollow">new CMHC rules</a> also change the percentage of rental income you are able to use in order to qualify for a mortgage.<br /><br />The old number was 80%; the new number is 50%. So a buyer looking to finance an owner occupied home with a basement suite that rents for $1000 a month will only be eligible to add 6K to their qualifying income vs. 9.6 with the old rules. That works out to a mortgage loan which is 20K smaller.<br /><br />And then you have the new requirement for 20% down instead of 5% down for rental properties that are not owner occupied. A big blow to the speculators.<br /><br />In Victoria the high prices have had most FTBs taking out the max loan they could get, with 35 year amortizations and under 5 year terms (variable or 3/4 yr. fixed). The reduced loan limits means fewer buyers with the ability to buy at today's prices. With listings coming on strong price drops are inevitable.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-24984847219055014992010-03-06T18:33:07.692-08:002010-03-06T18:33:07.692-08:00Double Agent,
I'm of the belief that the lend...Double Agent,<br /><br />I'm of the belief that the lenders will implement these rules as soon as they understand them. In plain language, these changes will occur long before April 19 (if not now). There is no incentive for them to wait.HouseHuntVictoriahttps://www.blogger.com/profile/07456914359088891317noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-46289776628958624472010-03-06T17:55:11.294-08:002010-03-06T17:55:11.294-08:00Lets take a look at a few examples.
Household inc...Lets take a look at a few examples.<br /><br />Household income 100K - 8.3K per mo.<br />Est. property taxes 3K - 250 per mo.<br />Est utilities 1.5K - 125 per mo.<br />35K down payment<br />No other debts<br /><br />Using the <a href="http://www.cmhc-schl.gc.ca/en/co/buho/buho_007.cfm" rel="nofollow">CMHC calculator</a><br /><br />At 3.8% maximum loan 534K<br /> - 5 year discounted rate<br />At 3.6% maximum loan 548K<br /> - 4 year discounted rate<br />At 3.3% maximum loan 572K<br /> - 3 year discounted rate<br />At 5.39% maximum loan 436K<br /><br />So with the new rules the maximum mortgage loan is 534K and the rate is 3.8%. If the buyer opts to go variable at 2.25% or under 5 year fixed the maximum loan is 436K instead of 572K with the old rules.<br /><br />In Victoria this effectively will mean FTBs will be forced to take on five year fixed mortgages. They will have a higher interest rate and will be qualified for less than under the old rules.<br /><br />And to add insult to injury mortgage rates are increasing and you can expect the posted and discounted rates to go up next week.<br /><br /><b>Bears - stick a fork in the market. In a few months it will be done</b>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-38380929567754417242010-03-06T17:23:04.130-08:002010-03-06T17:23:04.130-08:00Breaking News
Yesterday, I said...
The rumour go...<b>Breaking News</b><br /><br />Yesterday, I said...<br /><br /><i>The rumour going around is that the 5 year fixed rate that will be used to qualify buyers (with under 5 year terms) will be the posted rate. Since this is higher than the 5 year discounted rate one can expect most mortgages in the future will be five year fixed. </i><br /><br />This has now been confirmed by <a href="http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/03/breaking-news-posted-is-the-new-qualifying-rate.html" rel="nofollow">Canadian Mortgage Trends</a><br /><br />The posted rate published on the Bank of Canada site, currently 5.39%, will be used after April 19th to qualify all mortgages under 5 years.<br /><br />What does this mean for buyers? They have two choices: <br /><br />- Take a five year fixed and qualify based on the lenders 5 year discounted rate (around 3.8% Friday)<br /><br />- Take a variable or 1-4 year fixed mortgage and get qualified (based on 5.39% rate) for a smaller mortgage but at a lower interest rate. <br /><br />Either way they are going to be qualified for less than they have been in the past when the 3 year fixed rate was used to qualify variable and under 5 year fixed loans.<br /><br />Now you might think that there will be a rush for pre-approvals prior to April 19th. CMHC and /or the banks may not allow this to happen and stipulate that all mortgages issued after April 19th must follow the new rules.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-64049552998352180992010-03-06T08:16:22.536-08:002010-03-06T08:16:22.536-08:00OMC said:
I didn't realize how smart the finan...OMC said:<br /><i>I didn't realize how smart the finance minister is until now. By making people qualify under the 5 year rate, he is actually going to pop the bubble and not get blamed. It is going to hurt, but not as much as if he let it go further.</i><br /><br />Yes, this is very political for two reasons.<br /><br />1. Blame avoidance is important in politics. Last month the Bank of Canada told us that they are responsible for overall economy it was the government who must reign in the housing market. That threw the ball into Flaherty's court. With these new April 19 rules, he's effectively allowing "affordability to erode" as a fault of the recovering economy and the Bank of Canada for forcing interest rate hikes. <br /><br />2. Getting the majority government in the next election is their first agenda and the baby boomer vote is key. If they had introduced new a new CMHC 10%/30yr rule, house pricing would immediately fall across the board. The boomers would tear the conservatives apart for devaluing their last resort retirement plan which is nothing more than their paid-off house.SuperBobhttps://www.blogger.com/profile/06852993834074206873noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-22744591675164500562010-03-05T23:57:16.928-08:002010-03-05T23:57:16.928-08:00"Summary - Prices are on the way down Perhaps...<i>"Summary - Prices are on the way down Perhaps not in the next month or two but in the second half of 2010. Just wait till HST kicks in and we all have less disposable income. Then Carney will start cranking up the bank rate and the whole interest rate yield curve will go up."</i><br /><br /><a href="http://www.financialsense.com/fsu/editorials/gtlong/2010/images/0224.h1.jpg" rel="nofollow">Then after the 2011 interest rate surge...</a>, get ready for the 2012 domino effect of sovereign currency collapses, thanks to the global impact (top X axis) of the derivative alphabet soup (Y axis). (full <a href="http://www.financialsense.com/fsu/editorials/gtlong/2010/0224.html" rel="nofollow">story here</a>)<br /><br />By then our <a href="http://www.bcbudget.gov.bc.ca/2010/highlights/2010_Highlights.pdf" rel="nofollow">BC Budget</a> will look like <a href="http://i47.tinypic.com/a27vhw.jpg" rel="nofollow">this</a>.<br /><br />Mr.4AMMr.4AMhttps://www.blogger.com/profile/06939742036749753862noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-88886706748183096962010-03-05T21:28:43.273-08:002010-03-05T21:28:43.273-08:00I didn't realize how smart the finance ministe...I didn't realize how smart the finance minister is until now. By making people qualify under the 5 year rate, he <b>is</b> actually going to pop the bubble and not get blamed. It is going to hurt, but not as much as if he let it go further.<br /><br />I am noticing good houses in oak bay now coming on the market near assesment. <br /><br /><br />Another 18 basis points on monday...<br /><br />I'll try not to do my dance again.omchttps://www.blogger.com/profile/11570216584047858772noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-46117532236722731532010-03-05T17:06:32.128-08:002010-03-05T17:06:32.128-08:00C said,
Double Agent--Not sure I can guess what h...C said,<br /><br /><i>Double Agent--Not sure I can guess what happens based on that info.</i><br /><br />OK here is my guess. <br /><br />- Those taking on a five year fixed mortgage will have higher payments and will qualify for a smaller mortgage. Anyone who is not pre-approved now will see this happen next week if the rate predictions come true.<br /><br />- Starting April 19th rising interest rates will result in a double whammy. Banks used to pre-approve variable and under five year fixed mortgages based on the 3 year fixed rate. This will stop with the new rules and they will calculate the maximum loan based on 5 year rates, regardless of term. Many marginal buyers were getting bigger loans based on the 3 year rate. Now they will get a smaller loan and will have less money to buy a property.<br /><br />- Those buying rental properties, like condos and townhouses, after April 19th will face higher interest rates and will now have to put 20% down instead of 5%. According to Mortgage Trends <i>"CMHC is declining more 95% LTV rental applications than usual. Seems they're already tapering down in advance of the April 19 rule changes."</i><br /><br />The rumour going around is that the 5 year fixed rate that will be used to qualify buyers (with under 5 year terms) will be the <b>posted rate</b>. Since this is higher than the 5 year discounted rate one can expect most mortgages in the future will be five year fixed. <br /><br />In essence, Bill and Mary will walk into the bank or a mortgage broker next month and get offered a smaller loan than they can get now and will pay a higher interest rate. As Reid has shown in the past prices in Victoria are determined by the maximum loan available to FTBs. Sellers will need to lower prices to what the buyers can pay or they won't sell.<br /><br /><b>Summary - Prices are on the way down</b> Perhaps not in the next month or two but in the second half of 2010. Just wait till HST kicks in and we all have less disposable income. Then Carney will start cranking up the bank rate and the whole interest rate yield curve will go up.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-72694572863031102212010-03-05T16:57:09.360-08:002010-03-05T16:57:09.360-08:00c - very true - the exact impacts of rate changes,...c - very true - the exact impacts of rate changes, increases in listings, increases in sales prices, or a glut of garlic in China are all very hard to predict. Of course there are rules of thumb (supply/demand, effect of prices on demand, etc), but strage things happen under the midnight sun. <br /><br />This is exactly why when the bubble bursts, we'll all be surprised as to the actual reason. My bet is that all of a sudden buyers disappear for a mysterious reason such as a libertarian karma punshment for real estate agents.Animal Spirithttps://www.blogger.com/profile/14290032551579947421noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-38640569273590621642010-03-05T16:15:13.288-08:002010-03-05T16:15:13.288-08:00Animal Spirit--I remember the discussion well. I m...Animal Spirit--I remember the discussion well. I mean only to point out that it's not always easy to "guess what happens" to house prices in Victoria when bond yields come up--as was implied by Double Agent.chttps://www.blogger.com/profile/05500718839857449284noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-46639594265822756472010-03-05T16:13:13.305-08:002010-03-05T16:13:13.305-08:00This comment has been removed by the author.chttps://www.blogger.com/profile/05500718839857449284noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-22959398879253868712010-03-05T16:04:25.828-08:002010-03-05T16:04:25.828-08:00c - there was lots of discussion about that on thi...c - there was lots of discussion about that on this board - what happened is that there was a massive amount of pre-qualifications at the lower rate, followed by a surge in sales for lower end houses. Think that the 5 year fixed then went down a few months later. Steam was already in the market - sales pushed up across all categories and the second peak occurred. <br /><br /><br />Interesting that the threat of the higher interest rate may have actually 'saved' the market from significant price declines. Realtors, brokers and others used it as ammunition for their 'buy now or priced out forever line'Animal Spirithttps://www.blogger.com/profile/14290032551579947421noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-17952004614554309712010-03-05T14:01:13.048-08:002010-03-05T14:01:13.048-08:00Double Agent--Not sure I can guess what happens ba...Double Agent--Not sure I can guess what happens based on that info. <br /><br />Looking at that site, I see that between May and June 2009, a 5-year fixed jumped 0.6%, from 5.25 to 5.85. What happened to house prices following that?chttps://www.blogger.com/profile/05500718839857449284noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-27367098041756887022010-03-05T10:39:46.489-08:002010-03-05T10:39:46.489-08:00This was just posted over on Canadian Mortgage Tre...This was just posted over on Canadian Mortgage Trends.<br /><br /><a href="http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/03/yields-catapult-higher.html" rel="nofollow">Cdn. Mortgage Rate Increase Predicted</a><br /><br /><i>Fixed mortgage rates should tick higher next week--barring any economic surprises.<br /><br />That’s because Canada’s 5-year government bond yield is up 18 basis points today, the most in almost five months. (Bond yields guide fixed-rate mortgage pricing.)</i><br /><br />Combine this with the new mortgage qualification rules which take effect next month and guess what happens.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-24082534493567513312010-03-05T09:20:54.365-08:002010-03-05T09:20:54.365-08:00More on the topic of real estate agents. What doe...More on the topic of real estate agents. What does it take in order to lose their license?<br /><br /><a href="http://www.straight.com/article-296381/vancouver/delta-realestate-broker-neil-wark-suspended-after-conviction-indecent-assault" rel="nofollow">Delta real-estate broker Neil Wark suspended after conviction for indecent assault</a><br /><br />A bad joke - a six month suspension and a $1000 fine! I bet women feel safe driving around in his car to look at houses.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-13642319474750836952010-03-05T09:11:39.683-08:002010-03-05T09:11:39.683-08:00And now we go back to our regular programing - re...And now we go back to our regular programing - real estate.<br /><br />I see the president of VREB is in the press again.<br /><br /><a href="http://www.timescolonist.com/business/Bidding+wars+take+their+toll/2635987/story.html" rel="nofollow">Bidding wars take their toll</a><br /><br /><i>Randi Masters, Victoria Real Estate Board president, sympathizes and urges the couple to "hang in" because more inventory is coming onto the market as spring approaches.<br /><br />Also, the ranks of first-time buyers may also thin after new federal mortgage rules come into effect in April, Masters said.</i><br /><br /><b>Randi provides free counselling in order to keep the hopper full of FTBs</b><br /><br /><i>However, for the longer term, Masters anticipates only modest increases in interest rates, expected later this year.</i><br /><br /><b>Was Randi trained as an economist prior to becoming a real estate agent?</b><br /><br />Real estate agents are licensed to sell real estate - period. Estimating today's market value and negotiating a deal is all a few months of correspondence school training permits them to do. <br /><br />Future market predictions, economic projections and financial counselling are beyond their capabilities and anything they say on these topics should be disregarded as drivel.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-73766137011546500542010-03-05T08:58:34.969-08:002010-03-05T08:58:34.969-08:00Marko and Dave -
Transferring more money to health...Marko and Dave -<br />Transferring more money to health services (doctors & nurses) and away from strategic planning and broader measures that might reduce the need for health services in the first place is precisely the type of 'sacred cow' I speak of. We don't supply seniors with help with transportation, cooking, and cleaning (all non-medical stuff) so many wind up in assisted or long-term care because their health suffers as a result (expensive medical care). Our system is further constrained by the very structure that is in place - Canada effectively has 11 to 13 different health systems...plus the administration required at the local/regional levels. Further, some innovations (such as partnering with private companies to supply non-medical frills to patients in the health system for profit - ie. partnering with Hilton to create nicer rooms, or local catering companies to provide better food) also aren't allowed, but the profits generated could pump more revenue into the system. Further, using wait times as a means of determining who is most deserving of a surgery at any given point in time might not be the best way to do it. If a person who is 60 (still working) needs a new knee and can't work until it's done, his wait is far more expensive to society than the person who is 60 and retired as he might have foregone income (and foregone tax income) as a result of having to wait. Those lost taxes are a loss to the system as a whole. Further, the best investments in health are likely to be in education, improved standards of living, improved activity levels, etc. - but these aren't politically great investments as there is no ribbon to cut and the payoff might be decades later in a different province (if the person leaves BC). <br /><br />The health system/problems are exceedingly complex and difficult - simple answers are not the right ones for the long run. Throwing more doctors and nurses might be okay for now but this certainly isn't the answer in the long run. <br /><br />I strongly believe in a strong health care system that meets the needs of the population in a way that ensures that nobody has to choose between their economic life and their health. But after spending more than a couple years looking into the issues of health care - I've come to the conclusion the the problem is far more complex than what is first assumed.<br /><br />If you're only taxing the capital gains from housing I don't see how that would impact labour mobility (arguably there could be a credit in the case of a capital loss)...further the taxes on housing are incorporated into the price - so unless housing is perfectly inelastic (ie. the same amount is demanded regardless of price) there would be a reduction in house prices to compensate for the tax and price would remain almost the same. If an increase in interest rates causes house prices to drop, so too would an increase in taxes...Just Janicehttps://www.blogger.com/profile/06002680972898096266noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-26183200084985138222010-03-05T08:44:47.572-08:002010-03-05T08:44:47.572-08:00The heathcare system protects doctors and nurses b...The heathcare system protects doctors and nurses by not informing the public.<br /><br />The next time someone goes to emergency or a check up, they should be presented with a copy of the invoice that the hospital will be presenting to the medical plan. Joe public should read it and sign it showing that they did so receive that level and care - and rate their experience and doctor.<br /><br />And you should be able to look up the rating of a doctor before you make them your family physician.<br /><br />Its about accountability and responsibility. If your a lousy doctor then the people will chose another doctor and eventually you will have to find a different vocation.<br /><br />Okay, thats all you get for 3 cents.Johnny-Dollarhttps://www.blogger.com/profile/12950799399842707067noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-32814112912480281752010-03-05T08:17:31.313-08:002010-03-05T08:17:31.313-08:00Good points Marko. These are complicated issues a...Good points Marko. These are complicated issues and I am definitely generalizing. I really don't know enough about the health care system and where savings could be had. I do know that health care keeps taking a larger percent of government revenues and I know that isn't sustainable. <br /><br />If VIHA could deliver services for $38 like your glass company, then I would pay their CEO whatever he wants. I can imagine that if government were in the business of eye glasses, the cost per customer would be a hell of a lot more than $38. Does that same analogy apply to other aspects of our health care system? Probably some, which is why I think there are likely areas that we can achieve better efficiencies and costs.Davehttps://www.blogger.com/profile/12522026256007882727noreply@blogger.comtag:blogger.com,1999:blog-7123542260692860177.post-33929656869235093152010-03-05T07:34:06.110-08:002010-03-05T07:34:06.110-08:00“I agree that the fattest cow is health care. We c...“I agree that the fattest cow is health care. We can't let those costs continue to grow. We need to make some tough decisions now. Delaying them will only make things more difficult later. I think we should put a 'debt tax' on the boomers and increase their health premiums.”<br /><br />I disagree with this Dave. I think what makes Canada such a great place to live is our healthcare system. The 5 key principles of our Canada Health Act are Accessibility, Portability, Universality, Comprehensiveness, and Public Administration. By increase premiums you are essentially going against accessibility and the Canadian Constitution. <br /> <br />Secondly, healthcare in Canada is only about 9% of GDP and holding steady, while in the states healthcare is about 15% of GDP. So I don’t think costs are “growing” and that health care isn’t sustainable, because it is and we need to ensure it remains a 1 tier public system. <br /><br />VIHA has 17,000 employees, the CEO makes $350,000. I am invested in a small company in Vancouver (142 employees – Coastal Contacts) and the CEO makes $900,000. I don’t think there is massive waste in health care unless you consider doing open heart surgery on an 88 year old a waste of money, but that is a moral discussion. <br /><br />In my opinion, trim the ministry of health to a minimum. Transfer more money to regional health authorities. Trim the CEO, executives, managers, etc. Hire more doctors, nurses and other health care professional and make a radical shift towards more investment in health promotion and education rather than tertiary care.Markohttps://www.blogger.com/profile/08315282480144281935noreply@blogger.com