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Toronto condo market is about to get fuuuuuuuucked https://twitter.com/ac_eco/status/435204680965029888/photo/1
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Feb 17, 2014 04:57
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Cultural Imperial posted:Toronto condo market is about to get fuuuuuuuucked Holy gently caress. From an internal TD presentation, no less. I'm going to go on record: there's no way the banks will be materially affected by a housing downturn/crash, no matter how bad it gets. They are too smart. The taxpayer will be left holding the bag - I can feel it in my bones.
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Feb 17, 2014 05:07
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Lexicon posted:Holy gently caress. From an internal TD presentation, no less. Just look at the US system for a classic example of moral hazard, on bright side is the banks and CMHC have better rainy day funds if something bad happens, while US leviathans like Goldman Sachs were over leveraged 32:1. It's interesting how in the graph you see the number of new units spiking in 2014/2015 with ~70,000 total while it drops off greatly after those years. I guess guess smart money bailed out a few years before perhaps leaving only the most gullible investor behind to hold the bag in 2014/2015. etalian fucked around with this message at 05:37 on Feb 17, 2014 |
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Feb 17, 2014 05:34
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Lexicon posted:Holy gently caress. From an internal TD presentation, no less. It doesn't take any intuition to know that.  Just watch for CHMC to start acting squirly.
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Feb 17, 2014 05:36
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Lexicon posted:Holy gently caress. From an internal TD presentation, no less. I thought the way this is supposed to work is that the CMHC has worked out the accounting so that all the money being paid is supposed to cover all of the (potential) defaults. Have I completely misunderstood the premise of the CMHC? I hate the idea of 30 thousandaires living up their baller lifestyles more than anyone else but in actual fact, this is all supposed to be firewalled from the taxpayer, isn't it? (no sarcasm)
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Feb 17, 2014 06:48
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Cultural Imperial posted:I thought the way this is supposed to work is that the CMHC has worked out the accounting so that all the money being paid is supposed to cover all of the (potential) defaults. Have I completely misunderstood the premise of the CMHC? It's basically a 500 billion insurance fund and also was changed fairly recently to not provide insurance for things such as HELOCs. On side note Canada didn't get through the 2008 recession unscathed, there was a secret bailout in 2008. The government bailed out the main banks to the tune of $114 billion dollars: https://www.policyalternatives.ca/newsroom/updates/study-reveals-secret-canadian-bank-bailout Basically all the spin about the banks not needing help in a crisis is spin as shown by the above rescue package.
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Feb 17, 2014 07:03
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etalian posted:Just look at the US system for a classic example of moral hazard, on bright side is the banks and CMHC have better rainy day funds if something bad happens, while US leviathans like Goldman Sachs were over leveraged 32:1. While I agree that it looks scary on its face, this is honestly hard to interpret without comparison to previous years' versions of the forward looking charts. For example, if the market has historically reported expectations of builds well above actual builds, then this doesn't mean that much. It's actually very common for industries like this to look potentially oversupplied but not actually become so. For example, in the mining sector, if you looked at copper mine supply forecasts in say 2008, you might have reasonably concluded that copper would become oversupplied on the basis of in construction + planned projects through 2013. However, the changing economic situation as well as the vagaries of large project construction resulted in a huge number of these projects being deferred or cancelled and we continue to be in a relatively balanced market. E: the dramatic decline is also not surprising given the construction cycle for a condo. If they only take 2-3 years to build, there's no reason to expect visibility on 2018 builds yet.
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Feb 17, 2014 07:55
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You are misinterpreting the chart. It's the number of units scheduled to be completed, not projected to be completed. Edit: Kalenn Istarion posted:E: the dramatic decline is also not surprising given the construction cycle for a condo. If they only take 2-3 years to build, there's no reason to expect visibility on 2018 builds yet. Exactly. Linkletter fucked around with this message at 08:05 on Feb 17, 2014 |
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Feb 17, 2014 07:58
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Linkletter posted:You are misinterpreting the chart. It's the number of units scheduled to be completed, not projected to be completed. Yup basically 75,000 new condo units to be completed in the 2014-2015 timeframe, I wish we had a similar nice graph for the Vancouver market.
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Feb 17, 2014 08:01
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etalian posted:Yup basically 75,000 new condo units to be completed in the 2014-2015 timeframe, Correct. So what this means is that the sudden decline after 2015 has to do with construction timelines, not any drastic change being predicted. There just aren't a lot of 2018 condos formally scheduled for completion yet.
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Feb 17, 2014 08:04
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Linkletter posted:Correct. So what this means is that the sudden decline after 2015 has to do with construction timelines, not any drastic change being predicted. There just aren't a lot of 2018 condos formally scheduled for completion yet. Still multi-story Condos have roughly 2-4 year lead time once they get going which says something about the market. On the bright side who's looking forward to buying some reasonably priced Canadian REITs? etalian fucked around with this message at 08:11 on Feb 17, 2014 |
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Feb 17, 2014 08:08
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Linkletter posted:You are misinterpreting the chart. It's the number of units scheduled to be completed, not projected to be completed. No, I'm not misinterpreting. A schedule is a projection. Invariably, some of the units scheduled for 2014/2015 will be deferred or cancelled. Without knowing the historical rate of this happening (ie, does the scheduled number always come in significantly higher than actual builds in a year), the scheduled builds for 2014 vs actual for 2013 is a less meaningful comparison. Looking back to copper mine builds (numbers are made up because I can't be arsed to dig up the specifics right now), in 2008 the scheduled 2009 builds were 10 million tons of new capacity. Actual capacity built in 2009 was 8 million tons. In 2009, scheduled builds for 2010 were 11 million tons, including deferred 2009 builds, while actual builds in 2010 came in at 8.5 million tons, and so on. My point is that in markets like this with large, long gestation projects, a build can be sped up or more commonly slowed down while in progress should the builder need to respond to market conditions. Without knowing the historical propensity of condo builders to over-estimate their build completion rates, it's hard to conclude that the chart is bad, only that the forecast for this year is higher than historical actuals... Which might be perfectly normal. Hopefully that makes sense. E: I guess what I'm saying is that chart would be much more meaningful if it showed a given year's scheduled builds, as of the prior year, in a dashed box above the actuals. Kalenn Istarion fucked around with this message at 08:32 on Feb 17, 2014 |
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Feb 17, 2014 08:27
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Kalenn Istarion posted:A schedule is a projection. No, it is not. A projection is partially based on scheduled numbers, but the similarity ends there.
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Feb 17, 2014 08:43
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Linkletter posted:No, it is not. A projection is partially based on scheduled numbers, but the similarity ends there. I could argue this further, but I won't as it's not relevant to the thread. Definition aside, my point about comparison of the numbers stands.
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Feb 17, 2014 09:25
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Cultural Imperial posted:I thought the way this is supposed to work is that the CMHC has worked out the accounting so that all the money being paid is supposed to cover all of the (potential) defaults. Have I completely misunderstood the premise of the CMHC? Firewalling the average person is a nice thought, but ultimately very difficult. When something that takes up a significant percentage of your GDP goes up in flames the spillover effects are massive, you need to retrain people to other industries, deal with the direct costs of building overpriced units and so on. Even psychology changes- when something so many people were "certain" of changes, it causes a massive downturn in demand in all industries, which of course is real bad in consumer-based economies. Also, easy credit allows people to go into debt, so the current economic stimulation from people spending doesn't actually represent something that is sustainable. It might not be all bad though, comparisons to the US crash are difficult to make because it doesn't look like Canada allows for the more dangerous types of mortgages like option ARMs and cash- out refis.* Someone correct me if I'm wrong on that point, but those are the types that cause downswings to become a lot bigger than they need to be- it allows people to "realize" their paper profits and spend it- then when the crash comes there's no way to get the money back because it really didn't even exist in the first place (can't bleed a stone). *or they just aren't that common
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Feb 17, 2014 17:56
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Oh I'm not taking into account 2nd and 3rd order effects. This is simply mortgage accounting I'm talking about. However I agree with you.
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Feb 17, 2014 18:29
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enbot posted:Firewalling the average person is a nice thought, but ultimately very difficult. When something that takes up a significant percentage of your GDP goes up in flames the spillover effects are massive, you need to retrain people to other industries, deal with the direct costs of building overpriced units and so on. Even psychology changes- when something so many people were "certain" of changes, it causes a massive downturn in demand in all industries, which of course is real bad in consumer-based economies. Also, easy credit allows people to go into debt, so the current economic stimulation from people spending doesn't actually represent something that is sustainable. There are others details too such as the CMHC deciding fairly recently to not cover HELOCs and looking at debt levels people are pretty much using their houses as piggy banks similar to the US bubble.
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Feb 17, 2014 18:33
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http://www.bcstats.gov.bc.ca/Publications/PeriodicalsReleases.aspx I was just reading the report on CPI for BC. It's essentially 0. I'm getting a humungous hard on for the impending lost decade of BC deflation.
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Feb 17, 2014 18:43
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etalian posted:There are others details too such as the CMHC deciding fairly recently to not cover HELOCs and looking at debt levels people are pretty much using their houses as piggy banks similar to the US bubble. How are they doing so though? Like I said the main mechanisms in the US were the huge numbers of option arms (which allow you to roll the principal payments into the loan (thus your loan actually increases every year) or cashing out in a refinance, or HELOCs (thank you- forgot to mention them). But they don't seem to be present in canada as much- are these just done by private banks and there aren't good numbers on them? Are there any charts similar to this: 
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Feb 17, 2014 18:44
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Pixelboy posted:It doesn't take any intuition to know that. Yeah, agreed. I only make the claim because there has been talk in months past in this thread that the banks would blow up when the crash eventually comes.
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Feb 17, 2014 18:57
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Lexicon posted:Yeah, agreed. I only make the claim because there has been talk in months past in this thread that the banks would blow up when the crash eventually comes. I don't get that. The CMHC, if anything, has been complicit in setting up this disaster out of profit motive. Why would they care at this point? They don't give a poo poo about the taxpayer.
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Feb 17, 2014 19:06
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enbot posted:How are they doing so though? Like I said the main mechanisms in the US were the huge numbers of option arms (which allow you to roll the principal payments into the loan (thus your loan actually increases every year) or cashing out in a refinance, or HELOCs (thank you- forgot to mention them). But they don't seem to be present in canada as much- are these just done by private banks and there aren't good numbers on them? Are there any charts similar to this: I think the Canadian equivalent to some of those would be the flexible mortgages that have payment holiday options in them. 
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Feb 17, 2014 19:41
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Cultural Imperial posted:I don't get that. The CMHC, if anything, has been complicit in setting up this disaster out of profit motive. Why would they care at this point? They don't give a poo poo about the taxpayer. Can you rephrase your point? I don't think you're refuting what I'm saying, but I don't quite get what your point is. (I agree the CMHC is complicit, but not out of profit motive - rather out of incompetence and organizational scope creep).
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Feb 17, 2014 19:42
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ocrumsprug posted:I think the Canadian equivalent to some of those would be the flexible mortgages that have payment holiday options in them. It's a good job the people taking these "payment holidays" couldn't do an NPV calculation if their life depended on it. A very costly decision.
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Feb 17, 2014 19:43
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Cash-out refinancings are very doable in Canada. All you need is an appraisal showing the new value of the home and a willingness to (at least threaten to) go to a new bank. Banks continue to have a hard-on for adding mortgages to their balance sheet. Spreads for them are not bad right now in spite of the low mortgage rates on offer. I'm not suggesting that this is a thing that people should do as an individual, but it is possible to do.
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Feb 17, 2014 19:53
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Lexicon posted:Can you rephrase your point? I don't think you're refuting what I'm saying, but I don't quite get what your point is. That's what I mean. Somehow the CMHC board warped itself into insuring garbage out of profit motive.
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Feb 17, 2014 20:39
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Cultural Imperial posted:That's what I mean. Somehow the CMHC board warped itself into insuring garbage out of profit motive. The mortgage racket is a really great business until the whole thing comes crashing down.
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Feb 17, 2014 20:53
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It's been discussed in this thread before but I'm suffering enormous angst about how the CMHC does what it does. Imagine if BC MSP suddenly acted for-profit? What in loving gently caress
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Feb 17, 2014 21:30
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Cultural Imperial posted:It's been discussed in this thread before but I'm suffering enormous angst about how the CMHC does what it does. Imagine if BC MSP suddenly acted for-profit? What in loving gently caress It seems possible to me that a government-run insurance scheme could be both profitable and socially-useful, or at least not socially-harmful. Although I'm not a fan of ICBC, I think it fits that definition. Same with CMHC - if it were properly pricing its risks, it could still be profitable to its owner (the government), useful to the banks as a hedging mechanism, and not a massive driver of moral hazard. With CMHC in place and functioning correctly by sound underwriting principles, a Canadian bank's willingness to offer a mortgage with a 19% down payment through 21% should be roughly a continuous function of the down payment. The fact that there is a massive discontinuity implies a huge consumer surplus to the bank in the value of that insurance => underpriced risk.
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Feb 17, 2014 21:52
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etalian posted:It's basically a 500 billion insurance fund and also was changed fairly recently to not provide insurance for things such as HELOCs. Edit: Also it wasn't secret. Twiin fucked around with this message at 14:58 on Feb 18, 2014 |
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Feb 18, 2014 14:53
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A realtor friend of mine just posted this on FB: http://www.timescolonist.com/sale-of-david-foster-s-5m-victoria-penthouse-would-set-new-record-1.856558#story-carousel "Out of town investors" are snapping up Victoria's prime real estate!!! Buy now before you get priced out of the market!!!
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Feb 18, 2014 14:57
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http://m.theglobeandmail.com/life/h...?service=mobile Globe story about millenials buying poo poo they can't afford. Love the anecdote about the guy with a house who has to rent out 4 bedrooms to make ends meet. Dumb gently caress.
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Feb 18, 2014 15:53
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Cultural Imperial posted:http://m.theglobeandmail.com/life/h...?service=mobile I was going to post this yesterday, but after reading it I decided it was so retarded that it wasn't worth wasting a forum post on. Does anyone else subscribe to the Landquest Realty newsletter? I find rural BC properties to be a good barometer overall in the province, and this month saw a massive correction in the market. Top end lost an average of $250k and even low end properties dropped by $10K-ish. One massive development in particular, 350 acres on Bowen Island, had the developer throw in the towel and put it on the market. Originally at $5.9M, dropped to $4.8M now. Seems small, but that's a fuckoff huge drop in price for what's essentially a Vancouver suburb. Rime fucked around with this message at 18:37 on Feb 18, 2014 |
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Feb 18, 2014 18:25
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Cultural Imperial posted:http://m.theglobeandmail.com/life/h...?service=mobile One could quadruple one's money in five years and I still wouldn't be interested in living like that. Imagine packing your 4 bedrooms with 4 strangers - a huge sacrifice at the altar of almighty Vancouver real estate. It is madness on a cultural scale that he can admit to this and barely anyone blinks an eye that this is a normal way to function.
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Feb 18, 2014 18:35
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Lexicon posted:One could quadruple one's money in five years and I still wouldn't be interested in living like that. Imagine packing your 4 bedrooms with 4 strangers - a huge sacrifice at the altar of almighty Vancouver real estate. It is madness on a cultural scale that he can admit to this and barely anyone blinks an eye that this is a normal way to function. I bet you Realtors love these stories precisely because they normalize idiotic behaviour like this. Shared mortgages also come to mind.
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Feb 18, 2014 18:49
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Cultural Imperial posted:I bet you Realtors love these stories precisely because they normalize idiotic behaviour like this. Shared mortgages also come to mind. Totally. I can't even describe the lengths to which I would go to avoid doing either of those things: I'd cram myself into an apartment, rent forever, hell, emigrate if need be.
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Feb 18, 2014 19:16
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http://www.cbc.ca/m/news/#!/content/1.2535685 Retailers catering to the middle class are packing up and out. That's because we all can't afford anything and shop at the dollar store or we pretend to be rich and pay for poo poo worth credit. quote:And in a phenomenon that sociologists and economists have been observing for years, he says watching rich people spend was contagious. Even though he no longer works in retail, Era says the people of his generation – ages 25 to 35 – are desperate for status and living on debt, and do not want to identify as "Sears people."
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Feb 18, 2014 21:02
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Cultural Imperial posted:http://www.cbc.ca/m/news/#!/content/1.2535685 This article is bullshit. While the underlying dynamics might be concurrently true - I'd hardly hold up Sears and Eatons as paragons of successful, competent retailing. There are tons of retailers that are solidly middle-class that are absolutely thriving.
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Feb 18, 2014 21:08
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I think things like department stores are closing up because they're essentially useless in this day and age. They don't hold enough stock that you can comfortably be assured the thing you want will actually be available, they rarely have competent, well-trained salespeople who know the products they're dealing with, and they are large and inconvenient to navigate. You're going to end up paying the same (or lower) prices at a retailer that specializes in whatever it is you want to buy, and you'll be a lot happier with the shopping experience. Unless of course you already know exactly what you want, in which case you might as well just order it online.
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Feb 18, 2014 21:13
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They could also just be terribly run businesses.
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Feb 18, 2014 21:16
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