Oh, Canada...

[dirtysquatter]

Anyone have any insight on the role of the Canadian banks in financing the property bubbles in Vancouver and Toronto?

[Ardillaun]

Get in while you can lads…

cbc.ca/news/offbeat/story/20 … asons.html

$28M Toronto condo sets Canadian price record

An international buyer has paid $28 million for a penthouse suite at the Four Seasons development in Toronto, the highest price ever paid for a condo in Canada.

The unnamed buyer stepped up with the eye-popping bid for the suite, which sits atop the 55-storey West Residence building in Toronto’s tony Yorkville area. The suite has 9,038 square feet of living space and offers a panoramic view of the city with 3.6 metre ceilings and four terraces.

It also comes with separate quarters for household staff.

The building is 85 per cent sold, developer Alan Menkes said. Prices in the 210-residence building start at $1.9 million for a 1,000-square-foot condo. First occupancies and the opening of the adjacent hotel are expected in the summer of 2012.

“The discerning international buyer of the penthouse suite was attracted to all that this landmark project has to offer,” Menkes said, while declining to name the buyer.

Former BMO president Tony Comper used to hold the record for the most expensive condo in the city, laying down $15 million for the penthouse on 1 St. Thomas Street several years ago. But that was eclipsed by the $20 million billionaire Alex Shnaider reportedly paid for the penthouse at the yet-to-open Trump International Hotel & Tower.

[Power_Shower]

Try your hand at this game:
crackshackormansion.com/

[Zoran]

Canada is in very similar situation to Australia, same bubble, same dutch disease economy. I think they will pop together!

[Julio_Medallion]

@Zoran

Canada is in very similar situation to Australia, same bubble, same dutch disease economy. I think they will pop together!

Oh God, implications for the Canadian Dollar?

[Ardillaun]

@Julio Medallion

@Zoran

Canada is in very similar situation to Australia, same bubble, same dutch disease economy. I think they will pop together!

Oh God, implications for the Canadian Dollar?

We only compare ourselves to the greenback over here so as long as it falls quicker than ours, we’ll feel rich.

[murf]

I just returned ( to the US) from Canada.
It was like stepping back in time to Chicago circa 2006.

[Ardillaun]

“Housing valuations have lost all touch with fundamentals and household debt is at a record high,” economists at the research consultancy Capital Economics say in their most recent Canada Economic Outlook, issued Wednesday.

“Our fear is that, with the housing bubble now close to bursting and commodity prices retreating, Canada will go from leader to laggard.”

The report predicts a fall in house prices by as much as 25 per cent over the next three years.

A domestic housing boom coupled with high commodity prices worldwide have spared the economy the severe recession felt by other developed countries.

‘Housing valuations have lost all touch with fundamentals.’
—Capital Economics

cbc.ca/news/business/story/2 … omics.html

[Elka]

Hmmm… Although I have a permanent job here and no debt, I’m wondering should I go home to Canuck land…

[BoyRacer]

Is the CMHC financing a house of cards? → theglobeandmail.com/report-o … le2137716/

Is there a bubble in real estate? Canadians have been arguing about this for years. We’ll keep arguing, because asset bubbles are hard to identify until they’ve deflated, and this one hasn’t. Besides, it depends on which of Canada’s many real estate markets you’re looking at. In Saint John, New Brunswick, where a detached home can be had for a monthly payment of $750, or Calgary, where prices have levelled off and the typical house sits on the market for six weeks, there’s no sign of trouble. But if you’re in Vancouver and must sign up for 25 years of financial servitude for the privilege of owning a small glass box in the sky, prices look very dangerous indeed.

there is more

**
Is Canada in bubble-trouble? Check out what the experts have been saying since 2009 **-> blog.buzzbuzzhome.com/2011/08/is … k-out.html

Stephen Dupuis (BILD): “Bubble worries are a thing of a past…[2011 will be] healthy, not hyper”

CMHC: “Soft landing is a nice way to describe it…I don’t see a reasonable scenario where the housing market would crash.”

TD: Housing bubble fears are “pretty out the windows now”.

When they start mentioning soft landings you don’t have long left to sell…

[yonexsp]

Canada Mortgage and Housing Corp. says that it has seen mortgage refinance activity drop nearly 40 per cent since Ottawa brought in new rules.

The crown corporation, which must now issue quarterly financial results as a result of a new law, issued its second-quarter results on Monday and they include insight into how Canada’s housing industry is faring.

CMHC said that refinance activity fell by almost 40 per cent and has continued to remain around that level since Finance Minister Jim Flaherty made changes to the mortgage insurance rules earlier this year. One of those rules was to reduce the maximum amount that Canadians can borrow in refinancing their mortgages from 90 per cent to 85 per cent of the value of their homes. That rule kicked in on March 18.

Among the other rule changes, Mr. Flaherty cut the maximum term of new mortgages where the home-buyer’s down-payment was less than 20 per cent from 35 years to 30 years.

CMHC said Monday that after the rules took effect purchases of CMHC homeowner mortgage insurance initially fell by about 10 per cent, and by the end of June was still about five per cent below the level of sales before the rule changes.

But CMHC’s profits still rose by $61-million or 19 per cent, to $383-million, for the three months ended June 30 thanks to earnings from mortgage-backed securities, gains from selling financial instruments, and lower expenses.

theglobeandmail.com/report-on-business/economy/housing/mortgage-refinancing-drops-under-new-rules-cmhc/article2145492/

[yonexsp]

To be fair, outside of Vancouver and the downtown cores. Housing where I live north of Toronto is extreme,y affordable.

It’s not like Ireland where shot holes in Leitrim cost more than my 5 year old 5000sq ft house with all the bells and whistles. I’d say 10% maybe for some properties in the burbs.

We are so far away from what Ireland/USA experienced for most people.

The real problem is going to be condos etc downtown. Full of speculators

[yonexsp]

Vancouver faces highest risk of housing downturn
Low interest rates and tight inventories have pushed Vancouver house prices into uncharted territory, even as affordability across the rest of the country remains near historical levels.

The Royal Bank of Canada said yesterday it would take 92 per cent of the median household’s pretax income to own a bungalow in the city at current prices – the highest reading yet in its quarterly national survey on affordability.

“Vancouver really stands alone in its extremes across all housing types,” said Craig Wright, the bank’s chief economist. “It is no doubt the most stressed market in Canada and the one facing the highest risk of a downturn. With the bar set so high, owning a home is a dream that only the area’s highest-earning households can contemplate.”

The bank said most Canadian cities offered “reasonably affordable” housing options in the second quarter compared to the first. Nationally, a condo required 29.2 per cent of pretax household income (a 0.8 per cent increase), a bungalow 43.3 per cent (1.7 per cent) and a detached home 49.3 per cent (1.8 per cent).

“Despite the erosion so far this year, most local housing markets in Canada continue to be reasonably affordable at this juncture or, at worst, just slightly unaffordable,” the bank stated in its release. “Affordability measures generally continue to stand near their respective long-term averages.”

The bank’s affordability index looks at the proportion of pre-tax household income needed to service the costs of owning different categories of homes at current market values. Its standard measure is a 1,200-square-foot bungalow, and the carrying costs include mortgage payments (principal and interest), property taxes and utilities.

It assumes a 25-per-cent down payment, a 25-year mortgage and a five-year fixed rate mortgage. The higher the reading, the more costly it is to own a home based on current market values.

The numbers are still high by its own standards, however, and that’s with low interest rates keeping mortgage payments low. The bank said that “typically” no more than 32 per cent of a borrower’s gross annual income should go toward servicing a home.

That has some questioning just how affordable the Canadian market actually is, especially if interest rates begin to rise and mortgages become more expensive.

“We’ll get people who ask how much they can afford and we quite often tell them that they just can’t afford what they want to pay,” said Ted Rechtshaffen, president of financial planning company TriDelta Financial in Toronto.

“They have agents saying that prices are only going up, and the banks are willing to give them loans for more than they can afford. They don’t like what we say sometimes, but it has to be said.”

RBC said it would take an income of $157,800 to buy a Vancouver bungalow in the second quarter, and that the average house price in the city was $822,300 – 19 per cent higher than a year ago.

Mr. Wright said part of the problem is that there aren’t that many bungalows in Vancouver. To find something more affordable, he said, most people turn to condos which carry a lower carrying cost.

“Vancouver has always been a bit of an outlier and it still is in this report,” said Mr. Wright, adding the city’s affordability readings were also affected by a downward revision to income growth in Vancouver going back to 2009. “What those numbers tell you is that it’s basically impossible for someone making a median income to buy a bungalow in the city.”

High prices have put home ownership out of the reach for many, at least if they want to stay in the city and live in a standalone house instead of a condo tower. Financial planner Adrian Mastracci has one standard piece of advice for young families who walk through the door of his Vancouver office looking for advice on how to buy a house.

“I tell them they need to go to the Bank of Mom and Dad and see how much money they can withdraw for a giant down payment,” says Mr. Mastracci, president of KCM Wealth Management Inc. “Otherwise, I tell them to consider a condo or to look outside of the city.”

theglobeandmail.com/report-on-business/economy/housing/vancouver-faces-highest-risk-of-housing-downturn/article2136957/

[BoyRacer]

BC In-migration Turns Negative

[yonexsp]

BC is totally fucked. I have no idea how people afford to live there. It is all bloody Chinese now anyway

[Ardillaun]

@yonexsp

To be fair, outside of Vancouver and the downtown cores. Housing where I live north of Toronto is extreme,y affordable.

It’s not like Ireland where shot holes in Leitrim cost more than my 5 year old 5000sq ft house with all the bells and whistles. I’d say 10% maybe for some properties in the burbs.

We are so far away from what Ireland/USA experienced for most people.

The real problem is going to be condos etc downtown. Full of speculators

Vancouver gets too much attention. It’s a special case, delinked from the Canadian market by Chinese money.

[yonexsp]

chpc.biz/Plunge-O-Meter.htm

[Ardillaun]

@yonexsp

https://chpc.biz/Plunge-O-Meter.htm

You can see how Albertan prices march to their own oil-powered drumbeat separate from the rest of the country. Out East in Newfoundland, our oil boom continues and still offers excellent opportunities for buying into a bubble.

[BoyRacer]

Merrill: ‘classic bubble’ signs in Canadian housing market → theglobeandmail.com/report-o … le2276241/

Canada’s housing market shows the “classic signs of over valuation, speculation and over supply,” but Bank of America Merrill Lynch says that’s no reason to think that there will be an epic crash of American proportions.

In a report issued Monday, the bank’s Canadian analysts said record Canadian household debt and increased joblessness are cause for concern over the next year. There will likely be fewer sales, and prices could slip as much as 5 per cent in the next year.

there is more

[Ardillaun]

And another cause for concern:

Ontario credit downgrade possible, Moody’s warns
Debt outlook downgraded to ‘negative’ from ‘stable’
McGuinty says Ontario economy ‘facing challenges’

The influential bond rating agency Moody’s Investors Service has warned that it could downgrade the Province of Ontario’s debt rating.

Late Thursday afternoon, the New York-based agency downgraded Ontario’s debt outlook to “negative” from “stable.”

Moody’s said it’s concerned the provincial government won’t be able to meet its targets for reducing the deficit given the sluggish economy.

A downgrade would affect the government’s $190-billion debt and likely increase future borrowing costs.

cbc.ca/news/canada/story/201 … rning.html