Canada Housing/Debt: Trust me, I'm a landlord.

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namaste friends: Sep 18, 2004; by Smythe

http://ipolitics.ca/2016/07/28/houses-built-on-sand-the-coming-crisis-in-real-estate/

quote:

Houses built on sand: the coming crisis in real estate

By Alan Freeman, ipolitics.caView OriginalJuly 28th, 2016
The Great Canadian Real Estate Bubble may be about to burst. When it does, the results won�t be pretty.

But it�s not as if we didn�t know it was coming. For years, this bubble has been carefully nurtured by governments desperate for economic growth, realtors who will do anything for a sale and financial institutions happy to plow billions into housing, knowing Ottawa would always backstop their losses.

And as more and more people, particularly in Vancouver and Toronto, find themselves shut out of the housing market, those who had the good fortune to get in early sit in self-satisfied silence, content in the knowledge that their modest bungalows have turned them into millionaires � on paper, at least.

Of course, no government agency is going to call this situation a �bubble�, with all its connotations of folly and irrational exuberance � but you may have noticed an increasing note of alarm in recent official dispatches on the state of Canada�s housing market.

The Canada Mortgage and Housing Corp. (CMHC) reported this week growing signs of �problematic conditions� in the housing market, particularly in Vancouver and Toronto, where there is �a combination of price acceleration and over-valuation.� An overheated price climate was a problem in nine cities; over-building was a problem in seven.

�CMHC assesses that there is now strong evidence of overvaluation across Canada: house prices across Canada remain higher than levels consistent with personal disposable income, population growth and other fundamental factors,� the agency said. In other words, there�s no rational reason justifying current prices.

The Office of Superintendent of Financial Institutions (OSFI) has an even grimmer assessment of the situation. It has imposed harsher criteria on stress tests for smaller lenders, forcing them to evaluate how their balance sheets would be affected by a decline of at least 50 per cent in house values for Greater Vancouver and at least 40 per cent for Greater Toronto.

While the stress tests themselves are not forecasts of future housing prices, OSFI didn�t pull those scary numbers out of the air. The Bank of Canada, which carefully weighs its pronouncements, warned in June of �increased riskiness� in mortgage debt. �The pace of house price increases in Toronto, and especially Vancouver, is unlikely to be sustained, given the underlying fundamentals,� said BOC Governor Stephen Poloz.

British Columbia was happy to look the other way for years as a flood of cash poured in from across the Pacific, aided and abetted by a real-estate industry that clearly had never heard of sound business practices. Recently, the provincial government finally took action.

Blindly encouraging the residential real estate market isn�t cost-free for the economy at large. For the sake of generational equity and the long-term economic health of Vancouver and Toronto, home prices need to come down � a lot.
Worried that housing affordability could be an issue in next year�s provincial election, Premier Christy Clark�s Liberals have ended self-regulation of realtors (a concept as absurd as leaving firearm manufacturers in charge of gun control) and proposed a 15 per cent property transfer tax on home buyers in greater Vancouver who are not Canadian citizens or permanent residents.

There are those who call the B.C. government�s tax an intrusion into free markets. What these critics forget is that governments have had their thumbs on the scale of the residential real estate market for years, with measures that only fed price inflation.

First off, there�s the capital gains exemption on residential home ownership � a gift to homeowners unavailable to renters or investors in any other class of assets. The federal government also has been underpinning the residential mortgage market by providing financial institutions with billions of dollars in mortgage insurance through CMHC.

Though the insurance is paid for by homeowners, the ultimate beneficiaries are banks; they can rest easy knowing that if homeowners default, much of those losses will be covered by CMHC insurance.

Ottawa has introduced a range of other policies that have encouraged home ownership � allowing people to borrow from RRSPs to buy homes, for example, and permitting interest-only mortgages and 40-year amortizations. These moves, introduced by the Harper government, were so slipshod in effect that they had to be rolled back in subsequent years.

Making home ownership accessible to more Canadians may be a laudable social goal, but blindly encouraging the residential real estate market isn�t cost-free for the economy at large. For the sake of generational equity and the long-term economic health of Vancouver and Toronto, home prices need to come down � a lot.

Will B.C.�s tax measure work? Hard to say at this point � but it�s probably going to put some kind of a damper on prices. The influx of money from China has been driving up demand for housing in Vancouver well beyond what it would be otherwise, and raising barriers to entry will encourage would-be buyers to think twice or look elsewhere.

But according to Premier Clark, as reported by The Globe and Mail, nobody is supposed to lose out. She said her intention is to rein in �these silly increases that we�ve seen� in Vancouver, where prices for detached homes increased by more than 30 per cent in just the past year.

In the next breath, Clark said that the tax on foreign buyers shouldn�t lead to any drop in house prices. The last thing B.C. wants is a market drop that hurts homeowners who have built up substantial equity in their homes. So basically, the B.C. government wants to protect the bubble, not burst it � to make sure that �these silly increases� in prices are forever cast in concrete.

Not hard to see why. Lots of existing homeowners � many of them the baby boomers and older residents who are the most enthusiastic of voters � are pretty happy with the current state of affairs. If prices fall by that �silly� 30 per cent, the same people who have been quietly counting the gains on their homes will be blaming Ms. Clark and other politicians for the �loss� of those paper profits.

There will be other losers when the bubble bursts � real estate agents, governments and imprudent financial institutions. Particularly vulnerable are those homeowners who were among the last to jump into the market � the young families with $600,000 or $700,000 mortgages predicated on perpetually low interest rates and constantly rising house prices.

But that�s the nature of bubbles. Eventually, they break.

The views, opinions and positions expressed by all iPolitics columnists and contributors are the author�s alone. They do not inherently or expressly reflect the views, opinions and/or positions of iPolitics.

you motherfuckers seem to love ipolitics for some reason

# ? Aug 6, 2016 05:15

Adbot: ADBOT LOVES YOU

# ? Jun 7, 2024 03:11

apatheticman: May 13, 2003; Wedge Regret

namaste faggots posted:

http://business.financialpost.com/i...-hiring-new-cfo

guys vancouver's tech scene is awesome and ryan holmes is canada's peter thiel

He secretly funded Bret Heart to take down Canadaland?

# ? Aug 6, 2016 05:17

namaste friends: Sep 18, 2004; by Smythe

no he's canada's libertarian superman

# ? Aug 6, 2016 05:20

Lain Iwakura: Aug 5, 2004; The body exists only to verify one's own existence.; Taco Defender

namaste faggots posted:

http://business.financialpost.com/i...-hiring-new-cfo

guys vancouver's tech scene is awesome and ryan holmes is canada's peter thiel

Just a reminder that working for Hootsuite is like winning the lottery and that you should be super honoured to work there and devote your life to them.

# ? Aug 6, 2016 05:29

Femtosecond: Aug 2, 2003

namaste faggots posted:

http://business.financialpost.com/i...-hiring-new-cfo

guys vancouver's tech scene is awesome and ryan holmes is canada's peter thiel

They don't even have sleeping pods what kind of tech company is this?

# ? Aug 6, 2016 05:31

namaste friends: Sep 18, 2004; by Smythe

http://www.theglobeandmail.com/real-estate/vancouver/priced-out-of-rental-market-simon-fraser-students-sleeping-on-campus/article31291389/

quote:

Nicholas Ree is an intensely hard-working, 23-year-old theatre student at Simon Fraser University who is currently homeless.

For the last three months, Mr. Ree has been sleeping inside SFU downtown, because his meagre student budget can�t support the growing cost of shelter.

Mr. Ree, who is from Japan and has lived in Vancouver for four years as a Canadian citizen, is one of a growing legion of people who have been pushed out of rental properties for any number of reasons. Most often, they are �reno-victed�, which is what happens when your landlord wants to renovate to charge a higher rent. With a vacancy rate of 0.6 per cent, landlords know they can demand more money. The situation is pushing students, and other low and average income earners, into a precarious and stressful survival mode. Mr. Ree sometimes couch-surfs, or, in winter months, during off-season, he might stay in a hostel. During summer, the downtown campus is quiet.

�Once it gets busy it�s not possible to have my stuff in school, so I�m taking for granted that there aren�t many people at school right now,� he says. �I don�t have much stuff. I have a suitcase and a box, because I�m a student from another country.�

His professor, Cole Lewis, says she�s horrified to see some of her students pushed into this state of semi-homelessness as they struggle to get through school. Looking for answers, she�s written letters to government officials and housing activists. Some of her students are getting up in the small hours of the morning to commute long distances from Surrey and Abbotsford, where they either live with relatives or rent places that are more affordable. She sees students couch-surfing for months. Another student has up to 16 people at a time living in her apartment.

Ms. Cole has helped at least one of her students find a home, and she�s cautioned the ones sleeping at the school about safety issues when living in a publicly accessible building.

�I am definitely seeing a struggle. And none of us wants to boot them out. But we can�t allow that, for their safety. It�s near East Hastings, and people can come in and out. I�ve had to ask them to find other arrangements. We�ve encouraged the student union to talk with students about who has an extra bed or couch, and they can come to us and we can put them in touch. But they are young and proud and want to figure things out.�

Ms. Lewis, a Yale University graduate who was thrilled to land her assistant professor job at SFU, is shocked at the city�s housing problem. She and her husband and daughter share a basement suite. When she sees friends undergoing eviction, she�s grateful to have her rental.

�I�ve never seen anything like this anywhere else. I�m from Ontario, and we moved here a year and a half ago so I could take this position at SFU. We are stressed more about money than before we came here. I have no idea how I will ever own a home here.

�I don�t care about a single detached home. I can�t even imagine owning a condo near my daughter�s school. Our rent right now is half my take-home wage. We can no longer save, which is new for us.

�I could definitely get hired in the U.S., but we are Canadian and we want to raise our daughter here in Canada. But if it doesn�t change, I don�t know.�

Cindy Kao, 21, expects she too will return to sleeping over at the campus when the school year begins in September. Ms. Kao and Mr. Ree used to rent a basement suite together but were threatened with eviction when they tried taking in a third tenant. They couldn�t afford the rent between the two of them, so they started sleeping at the school. Ms. Kao is off for the summer, and living at home with her mother in Langley. At school, she often finishes her work at midnight. Returning to her mother�s house in Langley isn�t a viable option because of transit schedules, so the school has become her part-time home.

�This is a huge problem, and we haven�t had much of a voice about it,� says Ms. Kao. �Just the whole market has gone too far.�

Friends have offered to take her in for a while, but she knows that�s not a long-term solution. Otherwise, the options are bleak, including renting someone�s couch for $600 a month, which Mr. Ree has done. Ms. Kao decided if she was going to sleep on a couch, she might as well sleep at the school. And for the most part, the security guards are sympathetic. She�s learned all the choice hiding spots, and knows the other secret nighttime residents also hiding out. Because the lights are on, she sleeps with a scarf over her face. But she worries about her belongings being stolen.

�It�s hard to keep it a secret living at school sometimes. But a lot of people do it. Definitely.�

Some say the anxiety and unease over housing is casting a mild depression over the city.

�It is definitely depressing,� says Mr. Ree. �I know there are worse cases. But it makes it feel like Vancouver is not livable, or a kind place for a lot of young people,� says Mr. Ree. �Vancouver is more like a pit stop for people�s lives and they move on, even though it�s an amazing place.�

Mr. Ree says once he graduates he will probably move to Montreal, where life is more affordable. His classmate Mischa Sadloo, who pays $400 and lives with eight people, plans to move to Montreal or Europe one day.

She sees friends becoming resourceful in order to cope.

�Our friend would care-give all night for her grandmother, and go to school during the day. Then she found herself homeless and in transitional housing. There are two things � not much housing suitable for students, and nothing affordable in the city.�

Madisen Steele was waking up at 4 a.m. to go to her job at Starbucks, where she�d work until 1 p.m. and then go straight to class at 2 p.m. She�d stay at school until 10 p.m. and get home by 11 p.m. She did that for the fall semester but burned out and quit her job. She�s one of the lucky ones: She found a suite for nearly $800 a month, but her finances are stretched. She says indebted youth like herself, barely making ends meet, are an invisible group.

�The vast majority of us are living below the poverty line, and we�re all in debt. I have credit card debt right now, and I am only 24. It shouldn�t be that way but I went through a month in May where I was transitioning between school and jobs, and I didn�t have anything and I had to buy food and feed myself. So now I�m even further in debt than I would be with student loans. But it doesn�t show on the outside � it�s not obvious that people are becoming homeless. It�s a bit under the veil.�

Children are also feeling the pressures of semi-homelessness. A special needs assistant who works at an inner city school says her students are feeling the pressures of not having a permanent shelter over their heads.

The woman, who didn�t want to give her name because of her job, said she developed her first ever bout of depression this year when a student�s parents were evicted and couldn�t find a home. Today, the child is sleeping on the floor of his grandparent�s apartment, with his family crammed into the space.

She says he is one of five children in her class without a fixed address.

�Every single one of them is staying in a condo with their grandparents.�

These parents don�t always have the option of moving outside the city or to another neighbourhood. Parents that face eviction have the double challenge of wanting to keep their kids in the school catchment area. She�s angry at the suggestion that people who simply want to live in the city in a proper-sized, central home are getting accused of expecting too much.

�There is a lot more going on, with people who just want to keep their kids in school. We�ve all lowered our expectations. I don�t know anybody who wants a house. These parents aren�t bad parents. There�s just no end in sight, and it pisses me off when people say this is a first-world problem.�

She and her young family live in a secure rental, but she worries about her own future.

�I always thought one day, if we wanted to, we could afford a two-bedroom condo in East Van. Nope, that�s not happening. There�s no hope.�

Ms. Lewis, who lives on the west side, is also noticing kids in her daughter�s school that are anxious over their living situations.

�My daughter is seven years old, going into Grade Two, and there are a number of children who worry about it. They talk about how they don�t know if they will have their bedrooms for much longer, because their apartments aren�t stable. It impacts them. And we found out two days ago another friend got evicted. It�s this constant instability.�

why the gently caress would you bother studying theatre at sfu? Is it not obvious that it's a loving waste of time that you couldn't get into berklee or tisch

also lol 'madisen' with a loving name like that you're doomed to a life of debt and failure

# ? Aug 6, 2016 06:14

Scaramouche: Mar 26, 2001; SPACE FACE! SPACE FACE!

I like Madisen's cat. He's like an angry Stalin or something.

# ? Aug 6, 2016 06:18

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

OSI bean dip posted:

Just a reminder that working for Hootsuite is like winning the lottery and that you should be super honoured to work there and devote your life to them.

Someone in here once remarked that Hootsuite = the Twitter API + a cron job. I still chuckle to this day about that.

# ? Aug 6, 2016 06:25

namaste friends: Sep 18, 2004; by Smythe

http://www.theglobeandmail.com/report-on-business/how-earthquake-affect-canada-financial-system/article31231187/

quote:

FINANCIAL FAULT LINES

It would be the biggest natural disaster in Canadian history � and scientists say there�s a one-in-three chance it will happen in the next 50 years. If �the big one� hits, who would pay the bill?

A massive earthquake off the British Columbia coast could plunge the Canadian economy into a deep financial crisis, Canada�s former top financial regulator is warning in a new report.

Catastrophe-modelling firms depict an earthquake and ensuing tsunami that could cause thousands of casualties in coastal British Columbia, liquefy inhabited land and damage homes and infrastructure in Vancouver, Victoria and Nanaimo.

While the province and country would first address the human toll in the aftermath of a disaster, a chain of subsequent events with �potential grave systemic financial effects� could further devastate the economy, Nicholas Le Pan, former superintendent of financial institutions, said in a report to be released by the C.D. Howe Institute on Wednesday.

Scientists predict a one-in-three chance that an earthquake strong enough to cause significant damage will hit the North American West Coast in the next 50 years. At its worst, key ports and the Vancouver airport would face months of incapacitation, disrupting global supply chains and crippling Canada�s gateway to Pacific markets. The value of land and many homes would crater, particularly in built-up areas expected to sustain the most damage in the Fraser River Delta. Insurers would be forced to stretch to cover billions in insured losses, while mortgage insurers and banks could be sideswiped by credit losses.

Although this risk has been known for many years, recent worse-than-expected earthquakes � such as those that struck Japan and New Zealand in 2011 � have put the issue back in the spotlight, prompting new studies of preparedness in Canada and elsewhere. The federal government has pledged to plan better for natural disasters in the wake of recent dramatic flood and wildfire events. This year�s fires in Fort McMurray, Alta., rank as the costliest natural disaster in Canada�s history, but would represent just a small fraction of the potential cost of an earthquake.

Also sounding the alarm have been the private enterprises most likely to feel the financial pain of earthquakes on a large scale: insurers. �Earthquake is the one risk that is so much larger than anything else that Mother Nature can throw at us,� said Don Forgeron, chief executive officer of the Insurance Bureau of Canada.

Property and casualty insurance companies are trying to put the issue on the public agenda, part of a larger effort to engage institutions and lobby the government to make sure that their industry is not wiped out by a natural disaster.

If an earthquake were to hit at a higher magnitude than the models show, as happened in Japan and New Zealand, �the impact gets magnified. It�s a classic systemic risk knock-on effect � across companies to other companies that might otherwise be healthy,� said Mr. Le Pan, who helped to develop some of the first earthquake capital testing rules for insurers while at the Office of the Superintendent of Financial Institutions from 1995 to 2006. He said his report is �about preventing that knock-on effect that would potentially impact auto insurance, home insurance, business interruption insurance far beyond the earthquake zone.�

The risks are not limited to British Columbia. Another active seismic zone stretches from the Ottawa Valley past Quebec City, where a significant earthquake could also have crippling economic consequences. All told, two in five Canadians live in homes tucked in these two seismic pockets separated by more than 4,000 kilometres.

Simplified seismic hazard map for Canada

From Natural Resources Canada: The map below provides an idea of the likelihood of experiencing strong earthquake shaking at various locations across the country. This map shows the relative seismic hazard across Canada for single family dwellings (1-2 story structures).

The insurance industry has been analyzing earthquake-linked risk for more than two decades, and some insurers calculate that the economic losses from either the eastern or western scenario could top $100-billion.

�We sailed through the financial crisis with no issues. And this led us, at the time, to say: �What is a big issue for us? What is the systemic risk for the industry?� There was one in my mind. And it was quake,� said Charles Brindamour, CEO of Intact Financial Corp., the country�s largest property and casualty insurer. �As far as I�m concerned, this is the risk that could take the industry down, and could have a significant macroeconomic impact for the country, as we�ve seen in other countries.�

Insurers say that if Canada acts now, it can help mitigate the risks to the financial system. With the post-earthquake experiences of other nations fresh in their memories, Canadian insurers, regulators and governments have collectively begun to rethink their strategies and approaches to account for earthquake risk and limit the potential impact.

Still, troubling questions hang in the air: When the �big one� comes, how will we recover � and who will be left with the bill?

O n a late-November Sunday evening, nine-year-old Veronica Scotti was building a wooden dollhouse with her father on the family�s kitchen table in Naples, Italy. Suddenly, her world was in motion.
Wood clattered to the floor and kitchenware slid from shelves as her engineer father pushed her to safety under the table � a swift reaction to the magnitude-6.9 earthquake that shook the region on Nov. 23, 1980.

Her family lived out of their car for a week, while the economic and political ramifications affected the region for many years.

Feelings of vulnerability lingered. �People [who] haven�t experienced it don�t know how quickly it goes, and how very devastating it can be,� said Ms. Scotti, who now lives in Toronto and works as Canadian chief executive of Zurich-based Swiss Reinsurance Co., which insures other insurance companies.

She said a significant earthquake is among Canada�s most potentially devastating perils, and one of the least insured.

At greatest risk is the southwestern coastal region of B.C. that includes Canada�s third-largest metropolitan area near the Cascadia subduction zone, where two tectonic plates, locked against one another for hundreds of years under the ocean, will one day violently give way � a scenario illustrated in a Pulitzer Prize-winning 2015 New Yorker story, which examined the potential devastation a cataclysmic quake could cause if it hit off the coast of the western United States.

Two years before that story, a study by the Insurance Bureau of Canada (IBC) and catastrophe-modelling firm AIR Worldwide sounded the alarm for Canadians, estimating the impact that a magnitude-9 earthquake on a late July weekday would have. The last time the region sustained something similar was in 1700, before European colonization and the building of Vancouver and Seattle, and their skyscrapers, bridges, pipelines and sewage systems. Today, the quake and subsequent devastation could cause $75-billion in economic damage in Canada. Less than one-third of that would be covered by insurance.

AIR�s report also pointed to the Charlevoix zone in the East, where the shaking could feel more violent than on the West Coast, despite registering far lower on the Richter scale. There, a quake at a magnitude of 7.1 would ruin architecture and structures in Montreal and Quebec City much older than Canada itself and cause about $61-billion worth of damage. There is a 5- to 15-per-cent chance that such an event will strike in the next 50 years, the study noted.

The last major earthquake in this area � on Feb. 28, 1925 � predated the Richter scale, but researchers would later rank it as a 6.2 event. The quake damaged churches and statues and wrecked plumbing and chimneys.

There�s more at stake now.

Fewer than half of B.C. residents have bought earthquake insurance, according to the IBC, although take-up rates in Victoria and Vancouver are 70 per cent and 55 per cent, respectively. In Quebec, fewer than 5 per cent of people have earthquake insurance.

�A lot of people might think they are covered. They think: �I have homeowners insurance,� you know? �What else am I paying for?�� said Gerry Glombicki, who oversees North American insurance at Fitch Ratings. �Turns out, not.�

Businesses tend to plan better for such events: About 85 per cent of B.C. businesses and roughly 60 per cent of Quebec businesses have earthquake coverage, the IBC said. There are more than 200 companies that provide property and casualty insurance in Canada, an industry separate from life and health insurance coverage offered by Manulife Financial Corp., Sun Life Financial Inc. and others.

Earthquake insurance is sold by the private sector with an expectation that a lot of people � but not everyone � will need to be paid a claim at once. That is unlike other types of insurance such as automotive, where accidents and damages happen in a less concentrated way. As with all types of insurance, however, there is a risk that losses will exceed what the insurers have foreseen. But when that happens on a large scale in an earthquake, companies can get into trouble.

The Office of the Superintendent of Financial Institutions (OSFI) requires insurers to hold enough capital to ensure that they can cover claims from a significant earthquake and many have added financial cushions on top of that. Insurers also spread risk around globally through deals with reinsurers. All told, the industry should be just be able to manage a collective $30-billion loss event triggered by a very, very large earthquake.

Mr. Le Pan�s concern is that this preparation does not go far enough, and he said an emergency backstop agreement with the federal government should be put in place so that money is quickly and clearly available to fund losses and prevent financial shocks to the economy.

Such a large earthquake would cause the bankruptcy of some insurance companies, shifting the responsibility for paying their claims to an industry group called Property and Casualty Insurance Compensation Corp. (PACICC), which insurers are required by law to join. It is PACICC�s job to wrangle surviving insurers to help absorb costs, all without receiving any government funding.

But PACICC has its limits. If multiple large insurance companies were to become insolvent, its demands on the remaining companies would cause them to fail their own regulatory solvency tests, threatening the survival of the whole industry. That would be a huge hit for an industry with nearly $160-billion in assets that employs more than 120,000 people.

�You�d start having all the companies in trouble all at the same time,� PACICC head Paul Kovacs said. �The insurance industry has a limited amount of money. At some point, it�s paid everything it�s got.�

An insurance industry in crisis would limit other kinds of coverage on which people rely. Without that insurance, people would not be allowed to drive their cars, get a mortgage or operate businesses.

Mr. Kovacs supports a deal that addresses this risk. �The government of Canada doesn�t immediately have $60-billion, but it can handle it on a better scale than the 100 or so insurance companies that would get this bill.�

And there is a precedent for emergency backstop arrangements with the private sector that protect against such disasters, since nuclear power operators and offshore oil drillers both have emergency funding plans, Mr. Le Pan said. If the government could pledge to pay outsized damages to the insurers in the wake of an earthquake, it could �minimize the systemic financial impact resulting from such a catastrophic and likely an uninsurable event on those affected and on the economy at large,� his C.D. Howe report said.

The Department of Finance said in a statement that insurers are expected to �assist their clients by settling policy obligations,� but it also noted that it works with the OSFI to foster �a framework that is robust enough to protect policyholders and preserve financial stability in the event of insurance company failures.� The statement said officials would review the C.D. Howe Institute�s recommendations.

Given the spotty insurance coverage in parts of Canada and the volume of unprotected public infrastructure, a large earthquake would require a government intervention anyway. The federal Disaster Financial Assistance Arrangements program for providing provincial and territorial governments financial relief has never been tested at such a large scale. The costliest natural disaster in Canadian history happened this year when Fort McMurray was struck by wildfires and insured losses climbed to $3.6-billion. Ottawa stepped in with an initial aid payment of $300-million.

Governments have never had to manage the delicate question of how to fund a recovery from a catastrophic disaster where some people have purchased insurance to protect themselves while others have opted not to and would be left, at worst, with a large mortgage on a home that has been destroyed.

�In the extreme [earthquake] scenario that I�m concerned about � I think that it is not a stretch of the imagination to think that an economic area could lose a decade rebuilding,� Mr. Brindamour said.

The C.D. Howe Institute is part of a growing chorus calling for actions to mitigate this systemic risk.

The Conference Board of Canada is due to release a report on earthquake risk this year. The IBC is working on a more detailed economic-impact report. In British Columbia, some municipalities are considering banding together to purchase earthquake insurance to cover repairs of public infrastructure.

And the federal government has been increasingly focused on disaster relief as it prepares to spend billions on new infrastructure and heightens climate-change awareness.

Last year, Canada Mortgage and Housing Corp. � the Crown corporation that backs more than half of Canadian properties with mortgage insurance � began stress-testing for earthquake risk for the first time, at the OSFI�s request. The CMHC found that a major quake would slash profits by $2.4-billion over the five-year period from 2015 to 2020. But it would not be on the hook for default losses, since mortgage loan insurance does not protect lenders against unexpected major events � often called acts of God, or force majeure.

�If someone�s house was destroyed in an earthquake, and they did not have earthquake insurance, then the next institution that is exposed to the loss is their financial institution,� said Brad Fischer, director of insurance and guarantee risk at the CMHC.

Canadian banks do internal reviews of credit and business continuity risk to satisfy both the OSFI and their own internal standards. But the results are not disclosed publicly. �Generally speaking, from a lending perspective, banks are aware of the risks that natural disasters can pose,� said Maura Drew-Lytle, a spokeswoman for the Canadian Bankers Association.

Regulators have also been tightening their insurance requirements. By 2022, insurers with exposure to British Columbia and Quebec will have to show that they can cover the probable maximum loss stemming from a one-in-500-year earthquake, which many are already doing.

The Department of Public Safety said in a statement that it is �shifting from a reactive model to one that allows us to better identify risks, plan for and prevent natural disasters and the economic disruption that comes with them,� and has many initiatives with provincial and territorial governments under way. The Department of Finance said the potential economic impact of an earthquake is uncertain, but added that the effects have been �limited� in other industrial countries as reconstruction efforts offered a boost.

Even as insurance companies push other institutions to increase awareness and season the public about the risks, they are wary of sounding the alarm too loudly. Some do not really want to sell more earthquake insurance, and have tightened their sales in areas of Vancouver, or cut them off completely.

�I don�t want to be making a black cloud everywhere,� said Philipp Wassenberg, Canadian chief executive officer of Munich Re Group, who is largely critical of Canada�s level of preparedness and attention to quake risk. �You see a lot of risk mitigation efforts [in British Columbia], by the IBC, by insurers, by municipalities,� he said, adding that in some countries that are well prepared, the economy can actually get a boost in the aftermath of an earthquake, as insurance money pours in.

Mr. Kovacs said the Canadian insurance industry is much better prepared than the industry in other countries. �But, again, there is a threshold,� he said. �At some point, there is the potential for an earthquake that is bigger than what we�ve prepared for. Big enough to be really a serious problem.�

for all you innumerate morons like helsing, 1/3 chance of doom is really loving high

# ? Aug 6, 2016 06:25

ocrumsprug: Sep 23, 2010; by LITERALLY AN ADMIN

THE BEATWEAVER posted:

The current jam is caused by a single accident closing one side of a bridge. This has paralysed traffic on major arteries and our only highway.

Now imagine the impact of, say, a significant earthquake or natural disaster requiring evacuation.

If there is anything approaching a natural disaster in Vancouver, just resort to cannibalism immediately.

No need to wait for hungry pains. You aren't getting out, and no rescue is coming.

# ? Aug 6, 2016 06:35

namaste friends: Sep 18, 2004; by Smythe

http://www.theglobeandmail.com/news...rticle31300873/

quote:

California family rushes condo purchase before B.C.�s foreign tax kicks in

The Pate family was terrified their offer on the Vancouver condominium would be accepted.

Just hours after riding rented bicycles to a bank and transferring enough U.S. dollars for the 50-per-cent down payment, the Californians learned the British Columbia government had introduced a new tax aimed at them � foreign buyers.

The 15-per-cent property transfer tax, which would take effect in days, amounted to an extra $105,000 on the $700,000 price tag of the property they wanted.

�If they would have accepted our offer and we were bound to it, I don�t know what we would have done,� recalled Sarah Pate, whose family lives in Alamo, Calif.

In late July, the BC Liberals passed the tax on foreign buyers amid an electorate exasperated that housing prices are being pushed through the roof. Figures released by the government of a five-week period starting June 10 showed foreign nationals purchased 10 per cent of the houses in Metro Vancouver.

Housing prices have jumped exponentially in Metro Vancouver. The Real Estate Board of Greater Vancouver said the benchmark price of houses last month was is $930,400, a 32.6-per-cent increase from July last year. The city�s rental vacancy rate is 0.6 per cent.

The Pate family�s ordeal illustrates the obstacles buyers have met since the province implemented the measure for cooling the market.

Industry insiders say they�re seeing all kinds of reverberations from the tax that don�t match with the government�s target goals.

Initially, the family was elated.

Ms. Pate�s daughter, Emily, had been accepted to her preferred school, the University of British Columbia, to earn a master of fine arts. But she was number 3,740 in line for a campus residence room, so her parents decided to buy an investment property with the favourable currency exchange rate.

Ms. Pate said their relief was palpable when their offer on the $700,000 condo wasn�t accepted by the seller, although Emily still didn�t have a place to live. They wondered if she�d have to commute from an aunt�s home across the border in Bellingham, Wash.

Ms. Pate had an idea: Maybe they could squeak in ahead of the tax if they downsized and paid in cash.

�Everybody told us it was impossible,� she said of the deadline, which was just four days away at the time.

They launched into a rushed house buy.

Mother and daughter raced around the campus viewing the options. They liquidated assets and juggled bank accounts. They went back to their aunt�s house in Washington, scrambled to find lawyers for the paperwork, worked the phones and managed minutiae in two states and two countries. Finally, everything was in place.

On July 29 � the Friday before the tax took effect on Aug. 2 � the family celebrated Emily�s 23rd birthday by closing a deal.

�From seeing the condominium to filing the registration was 33 hours,� Ms. Pate said.

A rush to file ahead of the tax lead to a record 15,000 property transfer applications on July 28 and 29, temporarily crashing the electronic filing system, said a spokeswoman for the Land Title and Survey Authority of B.C.

Tim Tse, a builder and real estate agent in Metro Vancouver, said the tax has �put a lot of people in a very difficult situation.�

�The implementation of this tax was not the best. They should have had some type of warning or transition,� he said, adding he doesn�t believe it will have the intended effect.

Among his mix of clients � local, permanent residents, new citizens and foreign buyers � each has been impacted differently, Mr. Tse said.

At least one local client, who was buying to build and sell is now in a �wait-and-see game,� he said.

�Foreign buyers will not care about this extra 15 per cent, at least the ones I know,� he said. �But it is affecting the mentality of the local buyers.�

The tax seems punitive on top of Vancouver�s already incredibly high prices, Ms. Pate said.

�People kept saying this is going to stop this crazy money that�s coming in from China and stop these foreign investors,� she said.

�I looked at them saying, �I�m a foreign investor, I�m just trying to get my daughter into school safe and secure.��

all these unfairly maligned people having to pay 100k more for their 700k purchases

won't someone thinkg of the the middle class

# ? Aug 6, 2016 06:50

Bob Ross Nuke Test: Jul 12, 2016; by Games Forum

namaste faggots posted:

http://www.theglobeandmail.com/news...rticle31300873/

all these unfairly maligned people having to pay 100k more for their 700k purchases

won't someone thinkg of the the middle class

I'm not sure what the media intends with these woe-pieces about foreigners who can't afford to buy condos for their spoiled brats and vacation homes for the summer.

Unless they're trying to drum up disgust and xenophobia, because they aren't soliciting many tears.

# ? Aug 6, 2016 08:20

Throatwarbler: Nov 17, 2008; by vyelkin

THE BEATWEAVER posted:

I'm not sure what the media intends with these woe-pieces about foreigners who can't afford to buy condos for their spoiled brats and vacation homes for the summer.

Unless they're trying to drum up disgust and xenophobia, because they aren't soliciting many tears.

It's really not even dog whistling any more.

https://www.youtube.com/watch?v=5IPKL1Oy-CA

# ? Aug 6, 2016 10:20

I would blow Dane Cook: Dec 26, 2008

The best thing about climate change is rich people's houses falling into the sea.

# ? Aug 6, 2016 10:47

peter banana: Sep 2, 2008; Feminism is a socialist, anti-family, political movement that encourages women to leave their husbands, kill their children, practice witchcraft, destroy capitalism and become lesbians.

namaste faggots posted:

ryan holmes is canada's peter thiel

in certain respects, unironically agree

# ? Aug 6, 2016 14:26

HookShot: Dec 26, 2005

"I'm not a rich Chinese person, I'm a rich American!! This shouldn't apply to me!!!"

# ? Aug 6, 2016 17:34

Subjunctive: Sep 12, 2006; ✨sparkle and shine✨

namaste faggots posted:

Nah Dogg I'd tell the cmhc they aren't allowed to issue mortgage insurance for houses beyond a certain ltv

Oh, ban insurance, not loans. Got it.

# ? Aug 6, 2016 18:00

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

peter banana posted:

in certain respects, unironically agree

At least Peter Thiel is a Bond-villain who lives in a volcano (presumably). Ryan Holmes is just an insufferable, hipster rear end in a top hat who runs a joke of a company.

# ? Aug 6, 2016 18:39

leftist heap: Feb 28, 2013; Fun Shoe

This one is for u CI:

http://www.cbc.ca/beta/news/canada/british-columbia/foreign-buyer-tax-15-per-cent-metro-vancouver-1.3709442

quote:

As a long-time appliance shop owner, Joe Notting says if he did business like the provincial government has handled the foreign buyer tax, he would have had to close down years ago.

"If you made a deal in my store on an appliance and when you came to get it I said, "Oh, it's $50 more," you'd say 'No I'm sorry, we had a deal. That doesn't work,'" he said.

The Nottings made a deal to sell their home � subject to a home inspection � the day before the announcement. The following day, in the middle of the inspection, the buyers backed out unable to drop an extra $250,000.

The Nottings have had to re-list their White Rock home for less than the original list price and less than the offer that fell through after the tax was announced.
Meanwhile, the Nottings had already purchased a smaller, one-level home in Langley a few weeks earlier.

They are retiring and downsizing, and felt they had no choice but to buy first and sell later, given the specific type of home they needed.

"My wife has had two knee surgeries," Notting said.

"We live on a hillside, lots of stairs. She's fallen a couple of times. That type of home[one-level] is hard to find. They get scooped."

While Notting was prepared to hold two homes for a period of time � in the long run he says it's not a practical solution.

But after buying in a hot market, they will now be forced to sell in a cooler one.

"Part of the sale was to deal with our retirement. I don't have any official pension plans other than what we've been able to save."

British Columbians first?

The incredulity in Notting's voice is clear. The small business owner can't grasp what he feels has been unfair and ruthless treatment on the part of the province.

"In today's newspaper there's a photo of the premier with the quote, 'British Columbians first.' I sent a note to my MLA and asked, "Which ones? It's not me," he said.

"We're just the middle of the road taxpayer. We're always paying our taxes. We're always there. Why wouldn't they just say everything that was in place[before the tax was brought in] is going to be grandfathered? We[the government says] won't put people in jeopardy. How many people are in jeopardy?

"What's affordable?"

What makes Notting's personal plight even tougher for him to accept is that he doesn't see how the tax is a way forward for locals to end up in homes.

"I certainly don't disagree with some sort of tax or measure taken," he explained. "But how quick are you going to get social housing off the ground? This isn't going to help affordability."

Notting is looking to the province for a definition of 'affordability,' saying he and his wife had to find a place farther out than they wanted in 1972, even though they both had good jobs and thought they made "decent money."

"We couldn't live where we wanted to live ... we just said well that's the way it is. Let's just move to Langley and commute."

The 'Donald Trump' thing

In the end, Notting says he's hoping for more moderate voices in the debate over housing � and who is to blame.

"I'm an immigrant. I came here when I was four," he explained.

"We're trying to get people to join our country, to be part of our culture. We've done the old Donald Trump thing."

Notting said he intends to "do the Donald Trump thing" now with his vote and keep the Clark government out.

lmao. More "moderate" voices than those extremist BC Liberals. Are all these stories honestly meant to evoke sympathy? These people are goddamn stupid as hell. :qq:

I'll only be able to realize most of my insane housing gains instead of all of them :qq:

# ? Aug 6, 2016 19:37

tsa: Feb 3, 2014

Subjunctive posted:

You'd make it illegal to write a loan secured by a house beyond a certain LTV? How would that work?

I think you guys have a parliament correct? Or was that mortgaged too?

# ? Aug 6, 2016 19:38

unknown: Nov 16, 2002; Ain't got no stinking title yet!

Ccs posted:

Does anyone have a subscription to Globe and Mail and can post this whole article? It's about the recent bankruptcy of the Toronto animation studio that displaced 500 people.

Apparently the studio involved just stopped working on the feature film they were supposed to be doing, but still asked the distributor for an advance payment to cover their other debts. The distributor suspected something, called their lender, and the lender realized they weren't going to get their money back.

http://www.theglobeandmail.com/report-on-business/samurai-film-delivered-final-blow-to-torontos-arc-productions-documents/article31284805/

quote:

The sword fell on financially troubled animation studio Arc Productions Ltd

On July 26, and it was the forthcoming film Blazing Samurai � Arc�s marquee project � that delivered the final blow, court documents say.

After months flirting with financial disaster, an e-mail from a company involved with Blazing Samurai sealed Arc�s fate, setting in motion the company�s failure. Within days, the Toronto studio known for helping create the beloved television series <em>Thomas & Friends</em> would be forced into insolvency by its creditor, Grosvenor Park Media Fund LP, which was demanding payment of $30.8-million (U.S.) in debts.

From the rumour mill the real reason was Arc has two of their major projects slashed from like 24 episodes to 12 eps. All upfront investments (think: render gear, office space for staffing, etc) are done based on the extra production requirements/income, so it was a losing battle unless they scored a replacement feature (which they didn't). The loan call was just the killing blow.

# ? Aug 6, 2016 19:49

cowofwar: Jul 30, 2002; by Athanatos

Small business owners are the worst

# ? Aug 6, 2016 20:34

Subjunctive: Sep 12, 2006; ✨sparkle and shine✨

tsa posted:

I think you guys have a parliament correct? Or was that mortgaged too?

Well, LTV on credit cards is pretty high typically, as on unsecured lines of credit. I was asking how one would effectively go about structuring a law to make low-down-payment mortgages illegal, not whether the rule of law remained in force.

CI clarified that he meant "keep CMHC from insuring low-down mortgages" (which may not require parliament to act), not actually banning some forms of loan, but I'm interested to hear your opinion: what would a bill look like if parliament were to pass it?

# ? Aug 6, 2016 20:35

namaste friends: Sep 18, 2004; by Smythe

http://www.ctvnews.ca/canada/i-have-no-options-b-c-man-has-home-dreams-dashed-by-foreign-buyer-tax-1.3014134

quote:

'I have no options': B.C. man has home dreams dashed by foreign buyer tax

An Iranian man living and working in Metro Vancouver says the new foreign buyer real estate tax has upended his dream of owning a home.
Hamed Ahmadi, who arrived from Iran to Vancouver in 2012 to get his PhD from the University of British Columbia, found a $360,000 condo with his girlfriend in Coquitlam back in May.
"I balanced my budget according to that," he told CTV Vancouver.

But with the implementation of the foreign buyer tax earlier this week, he has to pay an extra $54,000 on top of the $18,000 due as part of his down payment by Friday.
If he fails to do so, he would forfeit his $18,000 deposit and face the threat of a lawsuit from the property seller.

Adding to Ahmadi's woes, he's months away from receiving a permanent resident status and has a contract with BC Hydro.

"I have no options. I cannot close the deal because I don't have the money and I cannot leave the deal because then I'll be sued for that," he said. "So I'm just left high and dry. I don't know what to do at this time."
Ahmadi had saved money from winning awards while studying at UBC as well as money he received from his family back in Iran.

The B.C. government's new foreign buyer tax came into effect on Tuesday with the aim of making housing more affordable for middle-class property buyers. It places a 15 per cent property transfer tax on foreign nationals who buy residential real estate in Metro Vancouver.

Real estate officials had called on the government to exclude deals in the process of being completed from the tax, but to no avail.

The provincial opposition NDP's spokesman for housing says the situation would have been avoidable if the Liberals had accepted amendments from the opposition.

"It's heartbreaking, it's preventable, it's bad policy and the government could fix it if they wanted to," said MLA Dave Eby.

Eby says the provincial government could write a regulation that would exempt people who find themselves in a situation like Ahmadi, and hopes that the government chooses to do so.
"Any time you have a tax that starts on a certain day and is only on transactions, there are loopholes that come in through that and there are additional victims you don't want," he said.
B.C. Liberal cabinet member Andrew Wilkinson advised people who find themselves in a situation similar to Ahmadi should seek legal advice.

With the deadline fast approaching, Ahmadi says he's unsure how to respond to his housing crisis.

"I have never been this hopeless in my life. I've been through a lot but I have never been this hopeless," he said.

1) gently caress you HAmed. You're getting a loving phd and you can't do math? You're a motherfucking power engineer. http://www.ece.ubc.ca/~hameda/ What's that in extra mortgage payments a monht? gently caress you rear end in a top hat
2) gently caress you david eby. This motherfucker is going to be at the forefront of appealing for bailouts for fuckin homeowners who are going underwater when the loving bubble bursts. Mark my fuckin words.

# ? Aug 6, 2016 21:38

yippee cahier: Mar 28, 2005

Subjunctive posted:

CI clarified that he meant "keep CMHC from insuring low-down mortgages" (which may not require parliament to act), not actually banning some forms of loan, but I'm interested to hear your opinion: what would a bill look like if parliament were to pass it?

Take a look at a few of the parameters here: https://www.cmhc-schl.gc.ca/en/co/moloin/moloin_003.cfm. They'd just have to increase the minimum down payment from 5% to some higher number. If the buyer doesn't have that, the loan can't be insured by CMHC and the liability falls on the bank or some dumb third party insurer.

# ? Aug 6, 2016 21:42

namaste friends: Sep 18, 2004; by Smythe

omg can you imagine if minimum downpayment requirements were raised to 25%? You'd have to save 250000 to buy a million dollar house!!! Who can save that much money anyway? Poor families can't afford to put away that much money! We can't solve this housing crisis by making it harder for hard working families to borrow a million dollars, especially if downpayments are increased to such prohibitive levels!!

# ? Aug 6, 2016 21:46

namaste friends: Sep 18, 2004; by Smythe

https://twitter.com/penultsquire/status/762003480244424705?s=09

Basic laws of supply and demand u guys

# ? Aug 6, 2016 21:49

cowofwar: Jul 30, 2002; by Athanatos

Raising the the minimum downpayment would improve rental stock and the renting experience as renting would then not only be for poors and drug addicts.

Kind of like how increasing the cost of driving improves the transit experience once the average person is now obligated to do so.

# ? Aug 6, 2016 21:49

leftist heap: Feb 28, 2013; Fun Shoe

namaste faggots posted:

http://www.ctvnews.ca/canada/i-have-no-options-b-c-man-has-home-dreams-dashed-by-foreign-buyer-tax-1.3014134

1) gently caress you HAmed. You're getting a loving phd and you can't do math? You're a motherfucking power engineer. http://www.ece.ubc.ca/~hameda/ What's that in extra mortgage payments a monht? gently caress you rear end in a top hat
2) gently caress you david eby. This motherfucker is going to be at the forefront of appealing for bailouts for fuckin homeowners who are going underwater when the loving bubble bursts. Mark my fuckin words.

lol, Eby's comments are so idiotic. "Buuhhh, laws like this are going to have loopholes and that's bad. but we should have made loopholes for these poor millionaires trying to close on a half a million condo 3 months before they get their PR."

Is there a conspiracy in the media to write as many of these pathetic stories as possible?

# ? Aug 6, 2016 21:50

namaste friends: Sep 18, 2004; by Smythe

holy poo poo this loving guy

https://twitter.com/oneredpaperclip/status/761806580975214592

i bet he thinks hong kong cage living is just an equitable consequence of the laws of supply and demand

# ? Aug 6, 2016 21:52

leftist heap: Feb 28, 2013; Fun Shoe

The BC NDP is so goddamn dumb. Are they really going to do a 180 now and tell us all about how we should feel bad about all these :airquote:

middle class :airquote:

people are being screwed by the foreign buyer tax? That party is unbelievably dumb. The BC Liberals are going to win the next election.

# ? Aug 6, 2016 22:01

namaste friends: Sep 18, 2004; by Smythe

leftist heap posted:

The BC NDP is so goddamn dumb. Are they really going to do a 180 now and tell us all about how we should feel bad about all these middle class people are being screwed by the foreign buyer tax? That party is unbelievably dumb. The BC Liberals are going to win the next election.

I can't wait for THC's response. :allears:

# ? Aug 6, 2016 22:02

cowofwar: Jul 30, 2002; by Athanatos

The BC NDP and BC LP compete for the same middle class lovely voter base.

# ? Aug 6, 2016 22:04

Fuzzy Mammal: Aug 15, 2001; Lipstick Apathy

unknown posted:

From the rumour mill the real reason was Arc has two of their major projects slashed from like 24 episodes to 12 eps. All upfront investments (think: render gear, office space for staffing, etc) are done based on the extra production requirements/income, so it was a losing battle unless they scored a replacement feature (which they didn't). The loan call was just the killing blow.

If your contract is formulated so that the other side can cut your payment in half after you've already made unrecoverable investments you deserve to go out of business.

# ? Aug 6, 2016 22:38

Femtosecond: Aug 2, 2003

cowofwar posted:

Raising the the minimum downpayment would improve rental stock and the renting experience as renting would then not only be for poors and drug addicts.

Kind of like how increasing the cost of driving improves the transit experience once the average person is now obligated to do so.

No need to raise the minimum downpayment as sky high prices have already pushed more people, including those of higher classes, into renting, which is why the vacancy rate is now around 0.6% in Vancouver.

We haven't really seen a subsequent move toward a increased rate of purpose built supply creation, excepting the City of Vancouver squeezing a few hundred units here and there out of developers with special incentives. The result of all this is more landlord shenanigans, renovictions and crazy stories like that one posted earlier about homeless SFU students.

Amongst the giant pile of promises Trudeau made during the election there was something about rental housing, but I haven't heard anything about it since the election. Everyone is off on holiday now it seems.

# ? Aug 6, 2016 23:59

Femtosecond: Aug 2, 2003

Raising the minimum downpayment could potentially make the condo market less active enough that developers would actually build rental but I really have no idea where that balance is.

# ? Aug 7, 2016 00:10

Bob Ross Nuke Test: Jul 12, 2016; by Games Forum

Its delightfully ironic that this panic move by the Liberals to tamp down on the housing issue was so poorly arranged that it has angered the very voting base the Liberals were seeking to placate. :allears:

If nothing else, at least we're most certainly going to see them voted out next year now that they've cost fiscally irresponsible old people their retirement slush funds and pissed off the FOBs.

# ? Aug 7, 2016 00:51

namaste friends: Sep 18, 2004; by Smythe

All the loving alligator tears over broken ~dreams~ of home ownership

Get the gently caress out of here lmao

# ? Aug 7, 2016 00:54

Powershift: Nov 23, 2009

Dreams of condo ownership.

How far away is a $360k vancouver condo from a bank breaking special assessment.

# ? Aug 7, 2016 00:55

Adbot: ADBOT LOVES YOU

# ? Jun 7, 2024 03:11

namaste friends: Sep 18, 2004; by Smythe

https://twitter.com/Silver_Watchdog/status/762025123117424646?s=09

# ? Aug 7, 2016 01:17

The Something Awful Forums > Discussion > Debate & Discussion > Canada Housing/Debt: Trust me, I'm a landlord.

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