Canada

Canada Has A Subprime Real Estate Problem, You Just Don’t Know It

A few weeks ago, a real estate agent told me about his client. Relatively wealthy older dude, closed on not one but two townhouses he plans on flipping. After some questions regarding who financed such a deal, he explains it was a private lender. Right before adding, “don’t worry, it’s not like in the US. This guy has good credit, he just couldn’t get enough money from his bank.”

I realized that people aren’t lying when they say Canadian real estate is nothing like the US in 2006. Canadians just don’t understand what happened during the US subprime crisis. They also don’t really understand subprime lending is alive and well in Canada, we just use different names.

Subprime Borrowers Vs. Subprime Loans

First, a quick lesson on subprime. The S-word is a dirty word in Canada, so there’s little discussion about what it means. Most people think “broke ass borrower” when they hear the term, but that’s not always the case. There’s subprime borrowers and subprime loans.

Subprime loans are any loans that are below prime, as in the typical lending criteria isn’t met. The part that’s poorly understood is a borrower, a loan, or any combination of those can be subprime. A borrower with excellent credit, might want a subprime loan. This happens more often than you think, and is usually because a bank won’t lend as much money as needed. No one thinks of a family in a nice neighborhood with a private loan to buy their fourth or fifth condo as subprime, but they are.

Don’t worry, it’s not just average people that don’t understand this. There’s still a lot of confusion about the issue in the finance community around the US subprime crisis. Most people knew subprime lenders blew up, and naturally blamed poor people and immigrants with low credit scores, as is the way. However, new research shows that the sudden rise in foreclosures during this period were due almost exclusively to investors with good credit. Good credit, but using subprime lenders.

Subprime borrowers defaulted at the same rate they always did. Investors using subprime lenders jumped by a “factor of 10.” When prime borrowers couldn’t get the loans they wanted, they went to the lenders that would. So yes, it was a subprime lending problem – but not due to poor people. These were mostly middle class investors. Whole textbooks will be written on the topic, but what you need to remember today is not all subprime loans are to people with bad credit. However, all have insufficient credit for the size of loan they’re looking to borrow.

Subprime Lending, Private Lenders, and Interest Rates

Canadian subprime lending is often done through private lenders, you access through a mortgage broker. Good brokers always start at the best lender, that usually has lower rates than your bank. When you don’t qualify for these, they move up the chain. If your credit  profile won’t even work at “bad credit” lenders like HomeTrust, they’ll suggest a private lenders. Bad credit, no credit, no problem. There’s usually a private lender that’s willing to make a deal.

Sounds great, so why doesn’t everyone use private lenders? They aren’t taking bank rejects as a charitable cause, they’re doing so because they can charge a risk premium. Despite being off of record low interest rates, these lenders charge upwards of 8% and we’ve seen mortgages well into the 20s. The broker also gets 1%-3% of the loan, so there’s little reservation suggesting them. If you can do math, you’re probably wondering how people make money on these deals? They can only do so if they hold it for a short period of time. If you’re bad at math, you may be one of these borrowers not realizing you’re only paying interest on your loan, and not reducing your debt. Regardless, this is where Canada’s subprime borrowers lurk.

Canada’s Subprime Market

You know that commercial from the Big Six bank, where the borrower goes into a bank and they tell them they’re richer than they think? Well, according to the credit rating TransUnion, over 1 in 10 Canadians probably wouldn’t get that reaction. Transunion estimates that 11.9% of the 28.4 million Canadian consumers with credit profiles are subprime. That’s roughly 3.4 million Canadians, but we can’t be sure these are the borrowers. What we do know is private lenders became extremely popular in Ontario recently.

Bank of Canada (BoC) numbers show that despite a decline in sales, private lending is growing in Ontario. Mortgage originations at private lenders in the Q1 2018 rose to $2.09 billion in Ontario, a 2.95% increase from last year. That should raise a few flags, since dollar volume of real estate sales are down 37.64% during the same period. The market share of private lending went from 5.71% of originations in Q1 2017, to 7.87% in Q1 2018. While originations at other channels are dropping, private lender originations are growing. The province either has a lot of people with bad credit jumping in, or a lot of over leveraged speculators. Neither should inspire market confidence.

Canadian Mortgages Held By Private Lenders

The percent of Canada’s mortgage market that is held by private lenders.

Source: Bank of Canada. Better Dwelling.

Subprime Goes To The Toronto Condo Market

As a result of apathy (or incompetence) the government doesn’t track subprime lending. Shocker, right? However, if you wanted to see how it contributes to the market look no further than Toronto’s “healthy” condo market. We don’t have the number of subprime borrowers in that market, but we do have the interest rates being paid. Since we know that unusually high interest is charged by private lenders, we at least have a proxy to help us understand condo buyers.

Interest rates are just above record lows, but a lot of people aren’t paying low rates. CIBC Economics numbers show that over 1 in 10 Toronto condos registered in 2017 were attached to astronomically high mortgage rates. Over 17.4% of owner occupied condos registered in 2017 had a mortgage rate above 9%. Over 16.2% of condo investors with units that registered last year were paying more than 9% as well. That’s a lot of units with unusually high interest rates buying condos – not a great sign of buyer quality. These buyers are likely waiting to flip at the first sign of buying weakness, or don’t realize how difficult it’s going to be to make a profit at that rate.

Toronto Condo Interest Rates Paid In 2017

The percent of owners and investors, by interest rate paid on Toronto condos that registered in 2017.

Source: CIBC Economics, Better Dwelling.

The government doesn’t track subprime borrowing, but the signs are there. More middle class speculators or broke-ass buyers are going to private lenders. Many of these buyers likely think they’re the only people doing this. The market appears “healthy,” because not a lot of these people understand that a lot of other people are doing this. As rates rise, price growth tapers, and sales decline – this becomes what equity traders call a crowded trade. If you’re unclear what a crowded trade is, there was this thing called the US subprime credit crisis. It’s pretty similar to what’s happening right now.

TL;DR Bad loans happen to good credit.

Like this post? Like us on Facebook for the next one in your feed.

67 Comments

COMMENT POLICY:
We encourage you to have a civil discussion. Note that reads "civil," which means don't act like jerks to each other. Still unclear? No name-calling, racism, or hate speech. Seriously, you're adults – act like it.

Any comments that violates these simple rules, will be removed promptly – along with your full comment history. Oh yeah, you'll also lose further commenting privileges. So if your comments disappear, it's not because the illuminati is screening you because they hate the truth, it's because you violated our simple rules.

  • Reply
    Party on 1 month ago

    The borrowing and spending binge by Canadian households, businesses and governments (all levels) continues unabated. Growing the debt in the economy significantly faster than the economy itself grows seems to have developed into a way of life in Canada.

    At the end of March, 2018 the total debt outstanding in Canada (bottom line of the Statistics Canada credit market summary data table) was $7.745 trillion. At the end of March, 2017 the total debt outstanding was $7.34 trillion. In the 1 year period from the end of March, 2017 to the end of March, 2018 it increased by $404.4 billion. This is an increase of 5.5%.

    Looking at the total debt outstanding of domestic non-financial sectors in Canada (17th line up from the bottom of the credit market summary data table): At the end of March, 2018 the total debt outstanding of domestic non-financial sectors was $5.427 trillion. At the end of March, 2017 the total debt outstanding of domestic non-financial sectors was $5.115 trillion. In the 1 year period from the end of March, 2017 to the end of March, 2018 it increased by $311.3 billion. This is an increase of 6.1%.

    https://owecanada.blogspot.com/2018/06/canadian-total-household-business-and.html

    • Reply
      EC 1 month ago

      Subprime loans happen everywhere. The reason why it was so much more pronounced in the US was that they were wrapped up as investment products that were leveraged multiple times. With vacancy rates of 25% there was rampant speculation. When owners began to default, it created a domino effect which impacted the credit markets too. In toronto vacancy rates are below 1.2%, and there are no such investment products that are using subprime mortgages as a mortgage backed security. It is different here, not to say that it isn’t a problem, but it is not the same situation.

  • Reply
    Sammy 1 month ago

    Lenders are in a tough place these days. It used to be you go into a bank, ask for a loan, and if they reject you they tell you what to do to improve your criteria, and you come back in a year.

    Now if you tried to tell a borrower they don’t qualify, they go down the street, and get a loan from someone else. There’s a culture of pressure for generation entitled.

  • Reply
    Bluetheimpala 1 month ago

    Yall know where I stand with private lenders and how badly this is going to end for Canada; mainly BC. We’re scratching the surface and the unfortunate reality is we have no idea how bad this is. Such a shit slurry of funny money out West. I could see there be layers of leverage tied to one loan at this point…this could be our version of CDO bundling.
    A preemptive ‘Really? Really?’ to anyone even attempting to spin this into anything positive.
    Oh and a big ‘F-you!’ to the partisan shills who are going to blame ‘the government’ and promote a subversive narrative that will most likely lead to a retraction to right wing beliefs and ideologies…can’t complain now that ON is PC led but after hearing old Stevie might make a comeback, I had to visibly cringe…the darkness is coming. Tick tock.

    • Reply
      Trader Jim 1 month ago

      😂😂😂

      Blaming partisan government is ridiculous. Governments regulate too late, and different issues happened under a broad spectrum of parties. This wasn’t the PCs or the Liberals, it was overly enthusiastic borrowers trying to win the lottery.

      Private lenders and foreign capital are just happy to make scratch off of their bad decisions.

    • Reply
      Investor 1 month ago

      True, but we can’t ignore the fact that the government acted too little too late though. The data was always there for the government to know that consumers behave irrationally, but they delayed things to satisfy their own selfish interest of shoring up the GDP. And I’m not downplaying the fact that some people are real morons when it comes to home purchases.

  • Reply
    Ahmed 1 month ago

    One percenters don’t pay 10%. The cheapest money possible, or you don’t borrow… unless you have an extreme scenario. House flippers that renovate would be a good example, they might be able to add value fast enough, but even then it’s a gamble. A new condo buyer definitely should not.

    • Reply
      @xelan_gta 1 month ago

      I don’t think flippers are immune. We all know stories when you rebuild you house, spend $800k and get $1M on top of that.
      This only works in speculative growing markets, so as soon as this trend changes renovations in Canada will be like everywhere else: You spend 200k on reno, you got 150k back at most if you sell it.
      In case of downturn flippers/renovators will actually suffer financially more than those who just held their properties and did nothing.

      • Reply
        Joe 1 month ago

        Flippers aren’t immune but even in a slowing market like this, I still see them coming out on top. For sure that in the case of a serious downturn these flippers/renovators will suffer the most since they will be stuck with holding the house at very high financing rates. The margins for flippers/renovators in this current market is still healthy imo…they may not get 1M on top but perhaps double what they put in.

        • Reply
          Bluetheimpala 1 month ago

          508 Main street in Brampton. Purchased by a flipper for $700K 2 years ago. With costs and everything $745, Renovated it with $15000 ranges and $10000 fridges on top of a full interior gut and an open concept floor plan. I believe in total the put in $100K, to be conservative. In for $845. Listed at $1.2 and didn’t move. Now listed at $999,999. So now they have $155K to play with but the house will not move at that price within this environment. If they are carrying a mortgage and it is not a primary residence (hint: it isn’t) they are probably burning $3K a month for the last 12 months, so again less $$…if they can get out in the $900s good on them but with blood in the water I think they’ll be lucky to hit that…time will tell..tick tock. BD4L.

          • RM 1 month ago

            … and not to mention that if they do manage to turn a profit they’ll still be paying capital gains. That’s a lot of work and stress for maybe 10s of thousands (in that particular case).

          • @xelan_gta 1 month ago

            Yep, there are also numerous examples when flippers are selling at a loss right now.
            https://twitter.com/policy_robot/status/997614491058647040

          • Joe 1 month ago

            For flippers outside Toronto proper, you are right..but I almost never seen a flipper losing in Toronto city (not GTA) itself. Capital gains tax? I think they have ways to minimize this a lot!

  • Reply
    Vitalia 1 month ago

    What happens if private lenders don’t renew after an interest only loan?

    • Reply
      Adam 1 month ago

      The answer is simple. Either the borrower comes up with the money (which they never do). Or they find a new private lender to step in (rare).
      Or they lose the property.

    • Reply
      Tonka4 1 month ago

      Time to pay up baby or power of sale closing within 100 to 120 days with massive legal costs.

    • Reply
      Grizzly Gus 1 month ago

      But don’t worry, prices always go up by 10% YOY so you will have some nice equity and can always refi with someone else…………

  • Reply
    James Wolfe 1 month ago

    In Canada I feel we will never recover from what the radical left started in the 1960’s. All the debt accumulated, all sorts of big government, social engineering, big union, baby boomers, public sector greed…remember to all these parasites in government, its all free!!! But its not scum bags. Go look at a debt chart from the 1960’s to today, straight up. no matter who was in power, no matter which mainstream party was in power, and here lies the real problem. This all started under Trudeau Sr and the all the crooked, corrupt scum he brought to Ottawa from Quebec, and every party since has continued the lie, the scam, the fraud, the corruption, money laundering (disguised as grants, subsidies, equalization…)…what a bloody mess.

    Solution? Well only one folks – We need a new party, a new leader willing to deal with the facts, the truth for a change. We need a real fiscally conservative, common sense leader/party…. Things need to be cut, reduced and eliminated in all government, federal, provincial and local. Government is too big, intrusive, and they are accumulating too much debt, year after year after year. That’s right let’s get cutting non-essential services – expensive waste, bilingualism – (code for french), multiculturalism, phony rights departments…the charter, CBC, all this phony green nonsense, carbon taxes, cap and trade, equalization – (code for government money laundering into Quebec)… all sorts of big government BS.

    The future is at stake here and no one is willing to deal with this, how sad, how pathetic, all of you clowns in government and the mainstream media.

    “If a law is unjust, a man is not only right to disobey it; he is obligated to do so.”-Thomas Jefferson

    • Reply
      Bluetheimpala 1 month ago

      Wow James, world cup is on so I’m in a euphoric state (Go Uruguay!). No need to go all nuts on you today. I’ve seen you on this block, clearly a political shill with an agenda and that is big No No. That’s fine. When I am in worse mood your reckoning will come as you don’t monitor your comments as we both know. Whatever crap you try to stick here I will gobble up because I eat pieces of shit like you for fun. yes, I just admitted to eating shit…nom nom nom.
      You need the darkness to spread your sickness. We live in the light. See you on monday my friend.

    • Reply
      @xelan_gta 1 month ago

      Good observation, but you need to dig deeper my friend.
      This is not even government’s fault it’s the financial system’s fault where rich are getting only richer and poor are getting only poorer. In order to mask that difference poor people/governments borrow (from the same rich btw) but the whole system is not sustainable. It’s not the first financial system in world’s history, it won’t be the last one, but no doubt transition will be painful.

      • Reply
        Bluetheimpala 1 month ago

        Ding ding ding… Spot on but irreversible. Our entire system of fiat currency is based on future value which degrades cash/income overtime. The concept of inflation was designed to generate wealth for money lenders with them doing nothing. I lend at 5% with inflation at 2% so my net is 3%. A plebe who just, you know works hard and tries to be productive, has 2% of his money erode so he needs to go it by a min of 2%…how do most regular people do this? Wage increases which are more or less stagnant. Or FOMO risk taking and doing things a normal person would never do like suddenly buy property using leverage. Ultimately we’re shackled by our own financial system which will never be disrupted… Live off grid if you truly want to get away from it.

  • Reply
    Tonka4 1 month ago

    TO STEPHEN PUNWASI:
    Since it seems that you are quite familiar with the foreclosure process when a residential borrower defaults in the US, could you please elaborate what happens if the US homeowner defaults on the mortgage? The bank takes posession through foreclosure (here in Canada lenders just do power of sales), then sells the property, then records the losses it incurred due to default, then it receives a judgement against the borrower, then applies the judgement against any other asset the borrower may have or garnish any wages, renewing the judgement whenever it expires and continue this process until the borrower pays the debt in full or dies or declare bankrupcy, right? Is that how the US lenders do it? Because that’s how it is in Canada. And if this is not how the US lenders do it, but instead the US borrowers can simply walk away from their property without any consequence other than losing their equity they invested in the property, then it provides a greater incentive for the US property owner to walk away vis-a-vis the Canadian property owner. This in turn has an implication on the default rate in Canada vs. the US: everything else being equal there is a decreased probability that Canadaian home owners will default versus US home owners.

    Could you comment on that?

    • Reply
      @xelan_gta 1 month ago

      While you are waiting for response from Stephen you may want to check foreclosure process in Spain which is very similar to Canada’s:
      http://www.velascolawyers.com/en/property-law/134-the-foreclosure-process-in-spain.html

      It didn’t prevent Spain from having 20% default rate during the housing crash in 2008.

    • Reply
      Jon Tario 1 month ago

      I’m not Stephen, but I am an American who can offer an additional layer of info. True that in many states borrowers can simply walk away from their homes. But, some states do have rules that make it very hard to do this. In fact, Florida and Nevada, which were two of the hardest hit states in the RE crash are recourse states. In Florida, you are responsible for paying the difference between the amount you owe and the foreclosure sales price – and make no mistake you will see garnished wages and levy on non-exempt assets. Interestingly, in Florida home prices didn’t bottom out until 2012. So from the start of the crash 2009-2012 they continued to fall. I remember wondering if the financial “punishment” for defaulting actually made things worse because people were not only trying to find housing but any money they could pull together had to go to the bank rather than help them rebuild.

    • Reply
      Jon Tario 1 month ago

      Actually, according to this article, if Canadians file bankruptcy they too can walk away from their homes. https://www.macleans.ca/economy/realestateeconomy/heres-how-canadians-could-walk-away-from-their-homes-if-house-prices-fall/

      • Reply
        Alistair McLaughlin 1 month ago

        Recourse vs. non-recourse only counts in scenarios where bankruptcy doesn’t happen. Once you are discharged from bankruptcy, your debts are gone. There is no recourse after bankruptcy, regardless of whether you’re in a “recourse” or “non-recourse” jurisdiction. That confuses a lot of people, but it’s very simple:

        Recourse – the only way you can avoid paying up is to declare bankruptcy.

        Non-recourse – you don’t need to declare bankruptcy, you just drop off the keys and the house becomes the bank’s problem.

        In NEITHER scenario does the lender have the ability to pursue you AFTER you are discharged from bankruptcy. So in the end, recourse vs. non-recourse isn’t the huge deal it’s made out to be.

        • Reply
          Grizzly Gus 1 month ago

          Alistair! Where you been? Thought maybe ketchup chips had come after you for tearing him apart so much.

        • Reply
          @xelan_gta 1 month ago

          Nice to see you Ali.

          I just want to add that in both options Recourse or Non-recourse if you default on your mortgage your credit history will be ruined even if you don’t declare bankruptcy.

          So from that perspective they are not really different as well.

  • Reply
    James Wolfe 1 month ago

    ‘Bluetheimpala’, you should go into comedy you clown…i am just pointing out facts, no agenda, no left, no right, no good, no bad nonsense, just facts…now get lost Mr happy, or get back to eating shit…i’m off the my MMA class, off to having another great day…lollllllllll

    • Reply
      Grizzly Gus 1 month ago

      Easy there “Punchy”

    • Reply
      Bluetheimpala 1 month ago

      Wolfey, I’m like the elephant liam neeson…I do not forget. You posted the same drivvle recently, yesterday I believe…a cut and paste job which is generally the mark of a PR shill. We’ve had your kind here before; pretty low hanging fruit. The regulars here who reads your shite aren’t fooled by your subversive partisan nature. I’m no Baby J nut hugger but you’re someone who influences those who are easily influenced and we live in an era where people are being exploited by those who wield influence. This is something I can’t tolerate. Hope your MMA class goes well! Bye muffin, see you on Monday! BD4L.

  • Reply
    Rick Abrams 1 month ago

    This article again shows no real understanding of the criminal behavior in the US which lead to the Crash of 2008. The mortgage lenders were following the pattern of Equity Funding with its bogus life insurance policies in 1970. The frauds cost us trillions of dollars when Wall Street bundled mortgages which it knew to be defective and had rating agencies give them fraudulently high ratings. When the buyers of the bundled mortgages started to experience losses since they were paying Cadillac prices for broken down Pintos become upset, Wall Street sold the buyers Credit Default Swaps (which financial Weapons of Economic Destruction),

    The bad part of the CDWs was that all the wal Street executives who had made the defective bundles also would buy CDWs on the defective bundles when meant that as soon as their defective mortgages tanked, they cashed in their CDWs. It’s was like letting the mobster all buy fire insurance policies on houses they did not won and then wondering why they were all during down. Duh! Here we are a decade later and people still cannot recognize massive criminal fraud.

    The more defective the mortgage, the more Wall Street wanted it because the sooner it would fail and cause the bundled mortgages to ail and they could cash in on their CDWs. Of course, that bankrupted their investment houses, but criminals do not care about their victims.

    Canada has to see whether there is criminal behavior causing its housing problems or whether the problem is the natural result of the New Urbanism which is economic tomfoolery balanced upon naivete.

    • Reply
      Jon Tario 1 month ago

      In the US there was a credit crisis as well as a housing bubble. We can conclude that the credit crisis was in part caused by criminal behavior on wall street and we can know that the housing crash was in part related to predatory lending, subprime loans, and quickly rising interest rates. What we can’t conclude is whether the housing market would have tanked if wall street hadn’t been so shady. Unfortunately Canada, we may find out what a housing crash looks like when banks are not at fault of defrauding everyone.

      • Reply
        @xelan_gta 1 month ago

        Jon, you are right here.
        There is an easy answer to your question – CDS were applied to RE market only after investors like Steve Eisman realized the RE market will collapse so they can benefit from it.
        They engineered this product because they knew RE market will tank and banks readily accepted it because none of their senior analysts saw RE crash coming so it looked like “free money” to them.
        Those CDS did a lot of damage in financial sector but it’s a direct result of the US housing bubble and correct prediction of its crash.
        I think even “The big short” movie showed those events.

  • Reply
    Shane 1 month ago

    First off there is NO Canadian housing market. The two cities referenced are Toronto and Vancouver. Other housing markets in Canada do not have these same issues so please quit referencing it that way. Two, one factor you failed to mention with the US housing bubble which is less likely to happen in Canada, is fraud. That was the major underlining issue with the “bust” there. Grocery tellers were getting approved for $1M home purchases with the intent of flipping them and making a buck. No lender in Canada can do that because of the approval process for a mortgage loan. Subprime? No, It’s called a high interest loan and you still have to be able to qualify for the mortgage based on your income.

    • Reply
      Ian 1 month ago

      BAHAHAHAHHAHAHA!!! Good one. No fraud, that’s fucking hilarious.

      That or it’s your first day learning about Canadian real estate. You want fraud? HCG, and Laurentian are good places to start looking into. Then, look up what an Oklahoma loan is, and the Big Six lender that issued the loans attached. Then find the Equifax survey where 13% of Canadians told THEIR CREDIT AGENCY that mortgage fraud isn’t real fraud in their opinion.

      That’s just the tip of the iceberg, but it should be a good start on why the average Canadian is going to feel like they got hit with a ton of bricks when this shit starts unraveling, and they’re all shrugging saying “but there was no signs.”

      • Reply
        Tim2 1 month ago

        thanks for saving me the time on this one……hilarious, these Cdn house lusting chumps will never learn…..

      • Reply
        Tim2 1 month ago

        uhumm FORTRESS Developments yackkkkkk!

    • Reply
      Bluetheimpala 1 month ago

      Sorry to burst your bubble but there is fraud in Canada. I’ve gotten 2 mortgages in the last 10 years and in both cases the mortgage broker or bank (yes a bank) not only allowed but promoted fudging numbers to max out the lending. As a fiscal conservative and you know, not being an animal, I knew that stretching my income made no sense (I also only get fixed rates, dumb I know but whatever). Then there is the fraud regarding the funds origination. Then there is ownership fraud. Home valuation fraud. Valuation fraud (wonder how people were getting tear downs valued at $1M in toronto…ding ding ding…fraud!).
      When were were printing gains and banks had a booming mortgage business no one cared. Now their money is in jeopardy. Funny how they suddenly care.

      • Reply
        @xelan_gta 1 month ago

        This is a good point and big downside risk for Canadian RE and economy.
        Nobody knows real amounts of fraud related to RE and their current impact on financial stability but the fact is that this fraud can only be underestimated there is 0 chance it is overestimated.
        Banks perform stress-testing, borrowers perform stress-testing and it’s all good on paper with only one assumption: there is zero fraud in the system.

    • Reply
      MM 1 month ago

      When I was getting pre-approved for a mortgage. I had 2 different mortgage people suggest ways I could “get around” the rules and they would look the other way. One was at CIBC and one was a mortgage broker from some company. I wasn’t even in need to skirt around the rules. I qualified just fine but if lied here and there they could get me even more money, so I could get the most house. I can’t quite remember the details of the scheme they were suggesting. Something about borrowing money to add to a down payment and paying it back after with some scheme. I can’t remember how it was supposed to work since I wasn’t interested at all. This was before the B20 rules sometime last year. Not even joking. It was then that I knew that if this thing busts we will suddenly hear about all the fraud that was going on. They were just no matter of fact about it. Like everyone was doing it.

  • Reply
    Bluetheimpala 1 month ago

    Has it begun? It should be noted that the US recession was called AFTER the fact as the data is lagging. Expected 0.6 pop but neg 1.9? Analysts were off that much…think about it people. I’d like to see any heavy equipment sales because as we know, transport and heavy equipment are generally the canaries in the coal mine…that’s why when Caterpillar or JD show pain there is more to the story…need to do some digging.

    https://www.thestar.com/business/2018/06/15/manufacturing-sales-fell-13-to-562-billion-in-april-statistics-canada-says.html

    Economists had expected an increase of 0.6 per cent, according to Thomson Reuters Eikon.
    Manufacturing sales in volume terms fell 1.9 per cent.
    “Not only did sales pull back significantly, contrary to expectations, the decline was not at all a price story,”
    Statistics Canada said sales fell in 10 of 21 industries, representing 49.6 per cent of the manufacturing sector.
    “In fact, volumes were far more disappointing than shipments measured in current dollar terms which effectively wiped out the March gain.”
    Transportation equipment sales fell 2.3 per cent to $10.9 billion in April, largely due to weaker sales of other transportation equipment.

    • Reply
      Justin Thyme 1 month ago

      Again I will state: Governments do not make policy in isolation. Any action they take in the real estate market has repercussions in other markets.

      Home sales are down by 10%, or are projected to drop by that much. Home sales are the driver of appliance and furniture sales. When people buy a new house, they buy new furniture and appliances.

      So, projected, consumer demand for ‘new home stuff’ would also drop (by 10%? Probably not, but in the ball park). Manufacturing sales are down 1.9%, which leaves a lot of room to fall. And the manufacturing drop-off was just as sudden as the home sales drop-off. A government that had done due diligence would know the relationship, and would do everything possible to moderate a decline in home sales. Now, the government is in the position of having to PROMOTE home sales, just to keep the manufacturing sectors from tanking.

      Don’t expect drastically higher mortgage interest rates in the near future as a result.

      But in Ontario, there is another factor at play, completely removed from real estate. That is the still-undetermined effect of the minimum wage hike of 20%. Who’s pocket is this coming from, and who’s pocket is it going into? It will NOT result in higher prices. Companies ALREADY charge as much as they can, irrespective of labor costs. If they could raise pries, they would have, with or without a minimum wage hike, and by exactly the same amount. Only the increase would have gone into their profit, not the employees’ pocket. Except that, if the minimum wage consumer has 20% more in their pocket, they can afford to pay more, and therefore the prices will go up. Not because their costs went up, but because the consumer can now afford to pay more.

      • Reply
        Bluetheimpala 1 month ago

        Rates will go up. That is a certainty. The pain is here and is getting worse. Pray. For. Mojo. BD4L.

        • Reply
          Justin Thyme 1 month ago

          Read EVERY word.

          “…drastically higher mortgage interest rates…’

  • Reply
    Mark Baum 1 month ago

    CAD tumbles to $.75xx USD for first time in ~a year.

  • Reply
    RM 1 month ago

    Off topic… apparently TREB shut down the access to sold data on House Sigma? It was so helpful at illuminating what was happening in the market. Un-f*cking-believable (yet totally believable). I’m assuming they’ve come down on other sites too but I haven’t checked.

    • Reply
      @xelan_gta 1 month ago

      Just so you know, there is a motion to make GTA RE sold data available to the public.
      Judge decided that this data must be made available and TREB appealed that decision and lost.
      Now they have their last chance with supreme court appeal, if verdict will be the same all those online brokerages will start posting sold data and it would be great for all of us.

      Victory is near!
      Here is the proof: business.financialpost.com/real-estate/treb-appeal-to-supreme-court-over-mls-data-serves-no-purpose-competition-commissioner

      • Reply
        RM 1 month ago

        Thanks Xelan. Any idea when the next ruling will be?

        What’s so ridiculous is that TREB are such luddites that they can’t see the benefits to an informed consumer. Adapt! Make your services better! Hell, even create a platform that’s a subscription service for those who just want to stay informed on what the market is doing. So many industries fail to learn the lesson that the world always moves forward and you’re so much better off to pivot and figure out how to incentivize what you’re doing, rather than oppose the inevitable.

        In this particular case, I just want to keep an eye on things so I can decide when to buy. That could be years. Does an agent really want me to string them along for sales data for that long? It would be such a waste of their time.

        • Reply
          Michael 1 month ago

          This has little to do with consumer . If they allow access to all they bring no added value to the transaction.

          • @xelan_gta 1 month ago

            Michael, why don’t you say: “I’m a Real Estate agent and I’m afraid I will get less business if customers are able to determine the fair value of their houses themselves”.
            Every homeowner would be happy to have a choice either to trust their RE agent with their most valuable asset evaluation or doing it himself/herself.

        • Reply
          @xelan_gta 1 month ago

          No, I don’t have the date but looks like it’s going on for a while.
          I think as soon as it happens it will be all over in the news.

  • Reply
    Steve 1 month ago

    When in the car, I tend to listen to 2 radio stations. CBC (about 5% of the time) to see what the latest politically-correct, neoliberal narrative they’re selling is and the FAN590 (about 95% of the time) for sports summaries or the latest Toronto sports game. What I’ve noticed is that even just a few minutes of listening to the FAN, I am exposed to several advertisements for shadow banking businesses. Private lenders that offer subprime mortgages or offer loans against home equity. I cannot remember a time that such offers are not made in the limited time I am driving and listening to the radio.
    And, anecdotally, I can tell you that the homes for sale in our area of the GTA are NOT selling. Most of them have been up for months and there’s little to no movement on them at all even with the prices being reduced again and again…

    • Reply
      RM 1 month ago

      I noticed the same thing listening to Q107 whenever I get a car rental. Actually, I’ve noticed a lot of print ads for debt relief, loans, etc., as well. It certainly is anecdotal but I think it says a lot about what businesses are making money.

  • Reply
    garry 4 weeks ago

    verry interisting post.s here

Leave a Reply

Your email address will not be published. Required fields are marked *