|
Kafka Esq. posted:Probably a refusal to insure new five percent down mortgages popping up as bond yields lower. That'd be a totally smart thing for them to do. Can't wait to see what it does to house prices.
|
#
?
Feb 26, 2014 22:46
|
|
|
|
| # ? May 11, 2024 09:39 |
|
|
sigh http://www.vancouversun.com/business/affordability/Photos+Typical+home+prices+Metro+Vancouver/9550313/story.html
|
|
#
?
Feb 27, 2014 00:11
|
|
|
Cultural Imperial posted:sigh That shed is almost 900k?  I knew BC real estate was insane, but this is way beyond what I thought.
|
|
#
?
Feb 27, 2014 00:16
|
|
|
FrozenVent posted:That shed is almost 900k? How liquid is the Vancouver market? I can't imagine there are that many people falling over themselves to pay that sort of money for such a piece of crap.
|
|
#
?
Feb 27, 2014 00:20
|
|
|
Lexicon posted:How liquid is the Vancouver market? I can't imagine there are that many people falling over themselves to pay that sort of money for such a piece of crap. This liquid: http://www.dexterrealty.com/current-market-conditions.php Apparently Feb 2014 is better than Feb 2013. Also, contractors fall over themselves to snap up poo poo like that.
|
|
#
?
Feb 27, 2014 00:22
|
|
|
The structure sitting there is irrelevant, unless it's full of asbestos which would increase the costs of demolition. 100% of the real estate in Vancouver is being sold for the bare land value. Not that this reduces how insanely overvalued these 1/8th acre lots are, mind you.
|
|
#
?
Feb 27, 2014 00:25
|
|
|
http://www.scmp.com/comment/blogs/article/1435474/hk12m-garage-and-other-properties-prove-vancouver-realty-has-lost-plot I love the 1.7 million "coach house".
|
|
#
?
Feb 27, 2014 00:29
|
|
|
Today's Greater Fool is Garth at his best: http://www.greaterfool.ca/2014/02/26/youre-_-_-_-_-_-_-than-you-think/
|
|
#
?
Feb 27, 2014 02:32
|
|
|
Cultural Imperial posted:http://www.scmp.com/comment/blogs/article/1435474/hk12m-garage-and-other-properties-prove-vancouver-realty-has-lost-plot I am amused by that too but comparing houses in Vancouver to places in Burlington, Halton Hills and loving Oshawa is pretty silly.
|
|
#
?
Feb 27, 2014 02:52
|
|
|
eXXon posted:I am amused by that too but comparing houses in Vancouver to places in Burlington, Halton Hills and loving Oshawa is pretty silly. Perhaps but this is for a Hong Kong audience so it is unlikely the readers, or even the writers could tell you why the comparisons are silly. This is just as reasonable as the 9 French castles for one UBC tear down story a few months back. A silly, but telling comparison.
|
|
#
?
Feb 27, 2014 03:56
|
|
|
Cultural Imperial posted:http://www.scmp.com/comment/blogs/article/1435474/hk12m-garage-and-other-properties-prove-vancouver-realty-has-lost-plot Calling it a fancy garage is disingenuous though. Certainly not worth the 1.7 million, but according to the blueprint the place is over 1200 sqft.
|
|
#
?
Feb 27, 2014 04:09
|
|
|
xerxus posted:Calling it a fancy garage is disingenuous though. Certainly not worth the 1.7 million, but according to the blueprint the place is over 1200 sqft. You can get a beautiful condo on a high floor in the middle of downtown Calgary, around 1200 sq.ft., for under $500,000. We also have an insane growth rate, high salaries, and incredibly low rates of rental vacancies at the moment. Some of these markets are just crazy.
|
|
#
?
Feb 27, 2014 19:02
|
|
|
http://www.bnn.ca/News/2014/02/27/Mortgage-insurer-CMHC-primes-market-for-announcement.aspx That big cmhc announcement is probably gonna be about raising premiums.
|
|
#
?
Feb 27, 2014 19:12
|
|
|
Cultural Imperial posted:http://www.bnn.ca/News/2014/02/27/Mortgage-insurer-CMHC-primes-market-for-announcement.aspx I found this part interesting: quote:CMHC earned almost $1.28 billion in the first nine months of 2013. So, a mere 1200 homeowners defaulting on their mortgates would wipe out the CMHC profits for all of 2013. It really wouldn't take much to drive it into insolvency in the event of a US-style decline would it?
|
|
#
?
Feb 27, 2014 21:19
|
|
|
Rime posted:I found this part interesting: Without seeing their books, hard to say. It really depends on their assets, not their profit. There's a big difference between "not making profit" and "being insolvent."
|
|
#
?
Feb 27, 2014 21:22
|
|
|
Ben Rabidioux made a profound point on Twitter yesterday: there's good reason to believe mortgages are fundamentally uninsurable, anyway. If you're underwriting those concerned about their car being stolen, there's no correlation between a theft in Vancouver and one in Toronto - thus that risk can be distributed. Mass mortgage defaults probably aren't uncorrelated though, given the interconnectedness of the national economy, not to mention the global one.
|
|
#
?
Feb 27, 2014 21:30
|
|
|
Rime posted:I found this part interesting: Huh? What kind of funky math are you using to get that number?
|
|
#
?
Feb 27, 2014 22:38
|
|
|
Kal Torak posted:Huh? What kind of funky math are you using to get that number? $1 million (left to be paid) per mortage and all of that money being instantly absorbed by the CMHC rather than prorated.
|
|
#
?
Feb 27, 2014 22:48
|
|
|
Brannock posted:$1 million (left to be paid) per mortage and all of that money being instantly absorbed by the CMHC rather than prorated. Them's some big mortgages there.
|
|
#
?
Feb 27, 2014 22:50
|
|
|
^ What Brannock said. $1 Million * 1200 Mortgages = $1.2 Billion. Of course, in the event of US style bubble pop we're looking at far far more than 1200 defaults. I wasn't aware simple multiplication was "funky math".  FrozenVent posted:Them's some big mortgages there. Rime fucked around with this message at 22:54 on Feb 27, 2014 |
|
#
?
Feb 27, 2014 22:50
|
|
|
Kal Torak posted:Huh? What kind of funky math are you using to get that number? I am guessing he is using an average mortgage of a million to come to it. I doubt that is a reasonable number to use, though living in Vancouver it is an easy conclusion to jump to. I am not really up on expected rates of return in the insurance business, but isn't 1.2B profit insuring a portfolio of ~550B in assets really low? e: fb ee: Or does the federal government loot the CMHC too? ocrumsprug fucked around with this message at 22:54 on Feb 27, 2014 |
|
#
?
Feb 27, 2014 22:52
|
|
|
Brannock posted:$1 million (left to be paid) per mortage and all of that money being instantly absorbed by the CMHC rather than prorated. Yeah but the 1.28 billion is only 9 months of profit but fair enough, I get the point. But there can't be THAT many $1M insured mortgages out there. I guess the comment should be changed to 1200 $1M mortgages. Kal Torak fucked around with this message at 22:54 on Feb 27, 2014 |
|
#
?
Feb 27, 2014 22:52
|
|
|
Brannock posted:$1 million (left to be paid) per mortage and all of that money being instantly absorbed by the CMHC rather than prorated. That's a pretty rough assumption - the average Canadian mortgage is much smaller than that, likely to be paid down at least partially, and is backed by the value of a home and land that, while overvalued, certainly isn't worth nothing.
|
|
#
?
Feb 27, 2014 22:52
|
|
|
I don't know dick about Canadian housing or mortgages other than following this thread because I want to move to Toronto soon, I'm just explaining the math that that dude was likely using. 
|
|
#
?
Feb 27, 2014 22:55
|
|
|
Rime posted:^ What Brannock said. Do you have a source for these averages? Google is giving me smaller numbers. edit: And using a $1M assumption and not pro-rating the profit is the funky math part.
|
|
#
?
Feb 27, 2014 22:56
|
|
|
quote:Here’s how the process works:
|
|
#
?
Feb 27, 2014 23:14
|
|
|
iv46vi posted:
Well, that would definitely be more than 1200 defaults to equal 1.2B.
|
|
#
?
Feb 27, 2014 23:24
|
|
|
They also no longer insure mortgages greater then a million since 2012.
|
|
#
?
Feb 27, 2014 23:27
|
|
|
iv46vi posted:They also no longer insure mortgages greater then a million since 2012.  While true, in the time that they were they potentially signed on for a very large problem. If 5000 detached units trade hands in Vancouver over a year, and even half of them were CMHC insured, Vancouver alone could wipe them out a couple of times over. You don't even need to consider the poor sods in Abottsford that paid $120K for a condo that is actually worth $75K.
|
|
#
?
Feb 27, 2014 23:49
|
|
|
There's going to be tens of thousands of defaults, not a thousand or two, so I'm sure the math on a CMHC Armageddon works out! Like, any perusal of the critical statistics (average amount of equity in recent years, consumer indebtedness, all of that jazz) will tell you that 1,200 defaults nation-wide is like a loving unicorn queef level mythical dream.
|
|
#
?
Feb 28, 2014 01:56
|
|
|
iv46vi posted:The bank sells the property and submits a claim to CMHC for any shortfall. So... the bank has no incentive to get fair value for the defaulted property? Great... When poo poo gets bad we'll have the banks racing to the bottom to unload foreclosed homes.
|
|
#
?
Feb 28, 2014 04:38
|
|
|
EngineerJoe posted:So... the bank has no incentive to get fair value for the defaulted property? Great... When poo poo gets bad we'll have the banks racing to the bottom to unload foreclosed homes. That leeway to huff and puff back and forth between banks, CMHC, and likely Ministry of Finance intervention ("YOU FUCKERS BETTER SHOW FLAWLESS PAPERWORK FOR EVERYTHING!") about who owes what is precisely the reason anybody who thinks they know exactly who will pay for what is just jerking themselves off. Everybody involved has 100% incentive to pass the buck. Edit: To clarify, the banks aren't "insured" in any meaningful sense of the word. I can prove financial negligence just from public statistics/documents, never loving mind what the Feds will dig up when they go into full blown CYA Harpermania. Franks Happy Place fucked around with this message at 05:28 on Feb 28, 2014 |
|
#
?
Feb 28, 2014 05:24
|
|
|
Yes, the mortgage insurance premiums that you pay on top of your mortgage(with interest) are only used to cover lender shortfall in case of default. That's why we have such lax lending standards here.
|
|
#
?
Feb 28, 2014 05:26
|
|
|
quote:Canada Mortgage and Housing Corp. is raising its mortgage loan insurance premiums effective May 1, the Crown corporation announced Friday. http://www.theglobeandmail.com/report-on-business/cmhc-to-raise-mortgage-loan-premiums-may-1/article17159342/ http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2014/2014-02-28-1100.cfm Well that was dull.
|
|
#
?
Feb 28, 2014 17:28
|
|
|
Cultural Imperial posted:Well that was dull. Super dull. Would have been awesome if they said you need 20% down for 800k and up mortgages, moving it down from a million. Hit Toronto right in the sweet spot : )
|
|
#
?
Feb 28, 2014 18:10
|
|
|
On mortgage insurance, the cmhc's exposure is well below the full value of the mortgage, and a $1mm mortgage is silly to use as a base value anyways. They only pay to the extent that the bank is unable to fully recover. In the worst case, where a place goes upside-down immediately after purchase, this is probably only going to up 10-15% of the mortgage value ( not house value). I don't know the average nationwide property value but say it's $300,000. Disregarding impact of high-value properties which would drag average up as someone noted they're not insurance anyways. The mortgage insurer covering te difference between a (say) 90% average mortgages value and a fire sale price at say 80% of purchase price (the assumption baked into a regular uninsured mortgage), cmhc is only exposed on $30,000 per mortgage, on average. This means that to take out $1.6bn of profits (annualized from $1.2bn) you actually need 50,000 mortgages to go upside down very early in their amortization life. I sont think the cmhc is breaking any time soon, and these numbers eve disregard that genworth and whatever the other company is also have decent market share.
|
|
#
?
Feb 28, 2014 21:55
|
|
|
What if we had a US style meltdown that resulted in much greater losses?
|
|
#
?
Feb 28, 2014 22:26
|
|
|
Check out @kevinmilligan's Tweet: https://twitter.com/kevinmilligan/status/439545364836655105 BC male earnings lol
|
|
#
?
Mar 1, 2014 00:41
|
|
|
EngineerJoe posted:What if we had a US style meltdown that resulted in much greater losses? I don't think we will - most of the Canadian market's problems seem to be focused on a few key markets rather than systemic. My opinion fwiw. If we did, the comparison vs a year's profits is ultimately not realistic. The CMHC has had years to build reserves, and insurance profit estimates should be net of actuarial loss estimates, so the funds in the door are likely much higher than the profit number. Governments do funny things with reporting though so not sure if they're mislabelling what is actually revenue here. A systemic failure will be underestimated by actuarial estimates but the reserves built up will help cushion the blow substantially.
|
|
#
?
Mar 1, 2014 04:04
|
|
|
|
| # ? May 11, 2024 09:39 |
|
|
EngineerJoe posted:So... the bank has no incentive to get fair value for the defaulted property? Great... When poo poo gets bad we'll have the banks racing to the bottom to unload foreclosed homes. Isn't there also the issue of selling the property in the first place? I mean, wasn't part of the problem in the US housing crisis that there simply wasn't enough liquidity in the market for the banks to unload the properties at any price, let alone a fair one?
|
|
#
?
Mar 1, 2014 07:43
|
|
