Canada's MASSIVE Housing Bubble has begun bursting and financial regulators and RE mortgagecucks are panicking.
>Summary
CMHC = Fannie/Freddie Mac
Canadian housing has nearly tripled in 10 years. A single detached house has gone from about $200K CAD to over $800K CAD.
CMHC has $20B in assets and $946B in liabilities >50:1 leverage
Banks have lent out a trillion dollars in mortgages for hyperinflated crackshacks while removing any risk of default for them by offloading them to the CMHC (mortgage insurer). At one point, the CMHC allowed 40 year mortgages (in 2008 60% of all new mortgages were 40 year terms), with 0% down (cashback mortgages were a thing with 7-10% cashback), and no maximum loan value. In 2008, over 90% of mortgages were insured by the CMHC (read:
>the entire Canadian housing market is subprime
CDIC = FDIC
Insures up to $100K.
CDIC has $3.4B in assets CDIC has $679B in liabilities >200:1 leverage
Both CMHC and CDIC are backstopped by the government.
A 20+% correction would wipe out the CMHC and at least one major Canadian bank as they have uninsured mortgages (already happening with Home Capital, the Canadian CountryWide). A bank being wiped out would wipe out the CDIC.
The CDIC and CMHC being wiped out would require the Canadian government to issue hundreds of billions of loonies in new debt, sending the loonie to sub-50 cents, possibly to 20-30 cents or even hyperinflating.
Harper bailed out the Canadian banks with a $119B secret bailout. The Canadian banks were all insolvent at the time.
Xavier Ross
>What's happening now? The CMHC has been reigned in to a max loan value of $1M, max amortizations of 25 years (from a high of 40), 5% downpayment on the first $500K, 10% on the next $500K (7.5% on $1M).
People have been using "alternative lenders" who loan $2-3M on self-declared income or with fake documents. Now these lenders are blowing up and not making new mortgages, hence prices have stagnated or dropped (as in Van, already down 15% this year).
Once a massive across the board drop occurs, lots of people who are leveraged to the tits with negative/0/5% downpayment 30/35/40 year mortgages will be underwater (they will owe more than they can sell their house for).
>Canadian mortgages are all Adjustable Rate Mortgages (ARMs) that reset every 5 years
When renewal comes up, which is soon for a lot of 2010-2012 mortgages on 40 year terms with negative/0/5% downpayments, they will be forced to come up with hundreds of thousands of cash to bring their mortgage Loan-to-Value back down to 80-95%. 99% of people won't be able to come up with the money, so the bank will write off the mortgage with the CMHC mortgage insurer, who will pay the bank the loan back then take possession of the house and do a fire sale, and then go after the homecuck for the balance which will be hundreds of thousands for life. Bankruptcy can't discharge CMHC debt since it is Crown debt.
In fact, banks can call in mortgages at any time for any reason (lol). So if they see prices dropping, they will pre-emptively call in mortgages and write them off to stay afloat. Once this occurs, it's a race to the bottom as banks are forced to call in more and more mortgages to stay afloat (in order to maintain their Tier 1 capital ratios with marked market values of the houses on their books)
>A significant price drop will put millions of homecucks underwater >Banks call in mortgages >Homecucks can't come up with margin >CMHC bails out banks and dumps toxic houses on market collapsing prices
Colton Scott
>NINJA lenders Home Capital Group, the "CountryWide" of Canada that does jumbo ($2-3M) NINJA (No Income No Job or Assets) and liar loans (self-declared income), has a $20B mortgage book.
In 2015, they were forced to cut ties with nearly 50 brokers due to massive fraud (homecucks using forged documents or lying about their income). They estimated $2B in mortgages on their books are fraudulent. They don't know which ones. In fact, the number is likely to be far higher. The Ontario securities regulator recently accused the former CEO/CFO of material fraud by lying to the public (the # of fraudulent mortgages is in fact far higher).
As a result, people have been withdrawing nearly all their savings from Home Capital's High Interest Savings accounts. These are term deposits and must be paid out immediately; the run on Home Capital has resulted in their HISA account going from $2B to under $400M in just under a week. As a result, they obtained a $2B credit line from a government pension fund at 22.5% interest and drew down $1B today to stay afloat.
They are essentially bankrupt. They cannot borrow at 22.5% and loan at 3%. Their stock dropped 65% on Wednesday last week and over 30% today. The Canadian bank regulator (OFSI) is "staging" them (seeing how bad their books are). It's rumoured they are terminal, and the OFSI is forcing them to liquidate. This will result in hundreds of thousands of million+ cuckshacks flooding the market, crashing prices.
Cooper Torres
Canada will be bankrupt essentially
Currently 10 year yields on Loonie bonds are 1%, which is hilarious because 10 year US Treasuries pay 2.3%. The Loonie has gone from 1.09 USD to 0.66 USD in just 4 years. It's at around 73 cents now. But if the bubble starts to collapse, capital flows will be intense as investors will pull out, collapsing the loonie.
The Bank of Canada will be forced to go negative as an extreme life-saving CPR measure (Poloz, the Bank of Canada governer already discussed these Negative interest rates (-0.50%) in a Dec 2015 speech when the markets were in dire straits). He also discussed Quantitative Easing (buying up Canadian bonds/debt, increasing it's value, hence decreasing interest rates and making credit cheaper for both the government and the consumer).
Essentially Canada will probably be forced to issue $500B+ in new debt (on top of the $1.5T Canada already has) to bail out the CMHC's liabilities of $947B and the CDIC's liabilities of $679B. This will cause interest rates on Canadian debt to soar, probably to junk level (10%+).
Poloz will go negative, possibly -1 to -2%.
Poloz will print loonies, inflating the money supply, in a desperate attempt to do QE and keep interest rates from soaring.
The Loonie will likely drop extremely low-- 20-30 cents would the very least, possibly 10 cents. Hyperinflation is a very realistic scenario in this case, and may actually be used by the government to wipe out the debts.
>Day of the Rake is real
Dominic Johnson
I don't see Canada being allowed to hyperinflate alone. There would be an international effort to shore it up beforehand due to the current global financial and geopolitical instability.
Not to say it won't suck anyway, but that could only not set off a global collapse if we were already in one.
Parker Clark
...
Eli Cruz
The last housing bubble was a world wide effort. This does not bode well.
Ian Price
Short the mortgages owned by the banks
Asher Sanchez
> Canada missed the 2008 crash, and their bubble continued to build:
U guys are dreaming....... negative interest rates will come and make housing even sky higher!!!!!! That or they'll just print more money... right?
Owen Robinson
Just remember: every time you eat a piece of fruit, you're eating a bloated vagina that's already been cummed inside.
Colton Russell
Can someone with experience in the market estimate when this will all happen
Gavin Barnes
(Continued)
Here's how the bubble forms...
1. The "value" of a home is not determined by its objective worth, but by how much homes in the neighborhood have sold for recently.
2. The first home sells for grossly above its value, and that raises the "value" of all of the neighboring homes.
3. This continues and people start to think that home prices always go up.
4. They stop thinking about what a home is worth, and start thinking about what it will be worth later.
5. This makes them willing to spend more money than they should. They voluntarily overpay because they "know" they can sell it later and still make a profit.
6. As the housing market heats up, people are willing to buy with variable rate mortgages or buy more home than they can afford because they know they can unload it in a hurry for a profit before the rate resets up.
7 As more and more people do this, people who are conservative are made to look stupid for not getting involved in this everyone-wins game.
8. Eventually, home prices are no longer based on anything but the buyers hope for making a profit later.
James Cruz
Quality post m8. Good work in here.
Easton Myers
this happend here and in 7 the housing prices still haven't recovered
Bentley Barnes
(Continued)
How the bubble becomes a crash, and then a contagion...
9. Eventually anyone who can get a loan has bought a house, and there is a dip in demand.
10. The first home sells for less than asking price, or well below asking price if the variable rate has reset on the homeowner.
11. The "value" of every home in the neighborhood drops because of the sale.
12. As the decline spreads, the mortgage lender starts to run out of cash and fails.
13. Banks who have parked some of their money in the mortgage lender or the CDO start to lose money, and their share price drops.
14. Other companies who have used their shares in the bank as collateral on their own loans start to get margin calls because their collateral is no longer worth what it was.
15. These companies now scramble for cash and their share price goes down.
16. As more companies go scrambling for money, and as there is no clear end to the drop in prices, credit markets start to freeze up.
17. Companies who rely on day to day borrowing to support their operations suddenly can't get the cash to buy their inventory and they fail.
18. Eventually the government has to step in and start bailing out companies, which doubles their national debt and kills the taxpayer.
Noah James
Yeah fuck the Canadians, can't wait for it to happen
Brody Nguyen
More!!!!!!!!!!!!
Jordan Bailey
REMINDER: The market can stay irrational longer than you can stay solvent.
Samuel Garcia
This kills the taxpayer.
Oliver Wood
Also how can I buy discounted property? If my money is in the bank and the bank fails I lose my money. Do we ever win user?
William Collins
What does this mean for young canadians like me? How will this effect me directly?
Please spoonfeed me, I know fuck all about this subject
Yeah, not happening, at least in the non-shitty places in this country. I live in a place of anomaly, the prices will not drop ever again.
Hunter Powell
There is only one way to survive this, and even to thrive....
... avoid debt.
Don't buy the home right now. Don't buy the boat, save your cash and keep it in cash.
When the crash happens, when people are screaming the most, THAT is the time to buy.
You will see prices so low it will never happen again for a generation.
Jaxon Bailey
Good I've been getting SO sick of my developers based in Winnepeg or wherever blabbing about how smart they are owning a house, why don't you Americans own non-depreciating assets, blah blah smug smug leaf, WATCH the SHIT DROP OUT OF YOUR LAME ASS FREEZEHOUSE
Jayden Nguyen
Not true. Deposits are secured up to 100k. There are also shorting funds.
Aaron Edwards
Currently have $4M CAD worth of Vancouver Property. Also building an $800k CAD house + property in metro vancouver. What are my options?
Levi Perez
Maybe that would keep you safe 100 years ago, but not today.
Toronto accounts for about 25% of the entire Canadian real estate market. I'm not sure how much is Vancouver. Both are large enough to sink the entire market nation wide.
And when things hit the fan, the government is going to be going to the rest of the country to bail them out.
Jack Martinez
>18. Eventually the government has to step in I'd rather they didn't desu
Kayden Bell
>I watched the Big Short and think i'm a housing market guru: The Thread
Kayden Miller
What the fuck is this mean for Quebec?
Jaxon Richardson
For me, it was finding a blog called "housing panic" about 4 years before the US crash hit.
It was so far ahead of the curve that many of us knew to go to ground before it happened.
I knew we were at peak when one of my employees, who made 25k per year was pre-approved for a home worth $400k.
It's not that any of us are smarter than the rest, it's that we lived through it a brief 9 years ago.
Bubbles always act the same, and they always end the same.
Jose Butler
>Just sold my grandmas condo for 410k >fixed it up did all the work ourselves >350k left after all the bullshit taxes
what do
We were gonna buy another condo and flip again.
Im gonna start buying foreign currency USD, Swiss, new zealand dollar. And Sliver obv.
But then again Sup Forums said this last year and house prices continue to rise.
Isaiah Richardson
...
Juan Ross
Too Big To Fail is probably a better movie.
But before there were these movies, there were those of us who lived through it.
You don't have to believe us. None of you do.
But we've been there.
Leo Stewart
It's not going to sink in Vancouver though. It's beautiful, safe, clean and prosperous; there is very limited amount of very desirable dirt here.
Sorry millennial guys, but home ownership is done here unless you are very wealthy. International knowledge of Vancouver as a safe haven assures unattainability for home growns.
Liam Young
Options for?
Nathan Miller
It depends. Do you own it outright or do you mean you have $4 million in debt?
Xavier Cox
>CMHC has $20B in assets and $946B in liabilities
Any source for this? I tried to check it the last time you pasted the copy pasta but I only found numbers like ~$200B:$240B, so nearly 50:50.
Kevin Garcia
Diversify your shit, if the bubble is real, you need to get some money out. How much do you really think RE is going up in Vancouver in another 10 years? It can't get much higher.
Gavin Green
when would you say that shit is really going to hit the fan? approximate.
Anthony James
you're fucking retarded.
Michael Lee
CMHC is the largest Crown corporation in terms of assets with some C$252,107 as of 2015.
Carson Hughes
>Can't read a basic balance sheet
Justin Nguyen
>40 year mortgage >0% down
kek
Ethan Wilson
No one can say for sure, I would say fairly certain within the next 10 years, and maybe like 30% likely in the next 3.
Luis Collins
Hate to break it to you, Vancouver is in peak bubble right now.
Quiz... can you give one objective reason why this
Austin Sanders
>mfw got a contract working abroad in Japan next year
Sorry leafbros but I really hope our dollar crashes within the next year so I can sell my yen and buy a harem when I come home.
Aaron Johnson
i believe, desu.
what do you recommend i do?
>be me >20 >2nd year architecture >19k in savings (loonies) >renting apartment 1500 Loonies in Downtown Toronto
Joseph Hill
>I'm 22 and think nobody could possibly know more than me on the subject because I don't know anything about it and mom told me I was gifted
Kayden Harris
mfw! let it blow!
Ethan Hill
i was thinking within the next 2 years 90%, thanks for clear up, bud
Josiah Nelson
If that doesn't bury Trudeaoff into the ground then I don't know what will
Parker Morales
Because it will be instantly bulldozed and replaced with one worth $4 or $5 million. There's an awful lot of really wealthy people in the world user, they like it here. There isn't much land, the city has no room to spread out.
So what's the point in spreading shitty copy pasta with fake facts every 3 days?
Benjamin Hall
Tell you the truth... you are in REALLY good shape if you handle it right.
Here's what I would suggest....
1. Keep saving. Cash will be king.
2. Avoid any long-term debt. I'm not talking about spending money on your credit card, (as long as you pay it), I mean don't buy a house.
3. Keep renting, but try to keep yourself on a reasonable length lease.
When the crash happens, rental prices are going to drop like a rock. At that point you will have the option of either moving to a place where the rent is half, or buying a home that is 50% cheaper than it is now.
Bottom line... debt is death.
Gavin Bennett
We have the same shit over here. Our bubble is about to burst as well.
Dominic Wright
someone link the previous thread
Isaac Garcia
It's not the house, it's the land. I'd double check on a map but based on the address it's probably in an area that's been quietly rezoned for condos, buy up all the houses on the block, build big cheap shit building and print money by selling to your Chink Chong friends so they can auction it amongst themselves in a circle jerk of shitty profit, then sell it to someone who actually intends to live in it at the inflated price.
Find new area, bribe our Cuck mayor and do it all over again, be labelled as a hero becuz muh affordable houzing
Nicholas Brooks
lol u have assets in canadian dollars? AHAHAHHAA
Ryder Turner
Which means you're spending $5 million for a 1/4 acre plot of land.
This is the definition of a bubble.
You think that overpaying on a lot is worth it because you can make more money later.
Instead of building the home on the lot, why not grow tulips.
Jose Stewart
thanks, user.
I eat like a peasant and dont have a life so i just save and save, I have a credit card, refuse to go into debt and owe banks interest like most of my fellow peers.
Thank you, again.
Elijah Hernandez
t. rich Lee
Easton Morgan
anything more recent?
Good call tho I didn't believe those asset/liability numbers in the screencap.
Nathan Gomez
see Again, your thinking defines a bubble.
Connor Thomas
Can you give me an objective reason why anything is the price it is?
(and by objective, I mean a reason that doesn't involve... that's what people are paying)
Josiah Miller
Alright but I want a global financial collapse, not a leaf one. Sweden's largest cities are similar, but mainly because of the overpopulation + low interest rates. But the most important country is burgerland, and I know interest rates have been rediculously low there but the economy is apparently improving.
So I don't want to get my hopes up just to be disappointed like in
SEPTEMBER E2015 P T E M B E R
Ian James
get aload of this guy
Brandon King
As an American, you should understand supply and demand. There is a huge demand for property here, and no more to be had -- prices up.
A gas station on a smallish lot at the edge of downtown sold for $72 mil last week user. But I guess those silly investment bankers should have called you first before buying.
There is nothing more recent, except OP works inside CMHC and has the current numbers, but then I want some proof or I call it bullshit.
Christian Reyes
Look on the bright side, soon you'll be able to buy back the property the Chinese have been snatching up for 1/5 what you originally sold it to them for.
Aaron White
No. Home grown, just older than you. I sold and moved downtown.
Jose Smith
My mate owns this big mansion originally brought for 900K euro but he paid 90K € when the Irish bubble burst. His place will suck compared to what I'll get in the great white north when she goes. Skookum af!
Jayden Nelson
german humour, everyone.
Joshua Collins
So what's the point of regularly spreading fake numbers here? Are you a short seller or what?
Josiah Turner
Nah I believe you. There's no way that guy's A/L numbers are accurate and that out of whack. It would be all over the news and social media. He has no sources. Any idea what CMHC's assets are actually in? I hope it's not mortgages.
Ryan Garcia
Again, no one is forced to believe me.
But I see several errors in your statement...
1. You say that prices are justifiably high because of demand. This doesn't take into account that irrational demand creates the bubble and that it disappears as soon as the bubble bursts.
2. You think the land has value because other people have been making money doing the same thing. But that too is typical bubble activity. Everyone makes lots of money right up until they all go broke.
3. You think that just because the investment brokers are doing it, it's a smart move. You forget that it was the investment bankers who damn near collapsed the entire world before they went broke themselves.
Tyler Cox
The German is right to call out bs and has sources.
Easton Jackson
Markets do not function properly when demand is dependent on credit supplied with arbitrarily set interest rate.
Just as democracy doesn't work when more than land owning white fathers are allowed to vote.
Get raked kanack
Christian Green
ROFL what a beautiful shit show
Jackson Morris
This collapse mutual happen while Trudeau is still in office.
Charles Ward
>drumpfkins actually belive this lmaooooooo
Luke Johnson
>Harper bailed out the Canadian banks with a $119B secret bailout. Then how do you know about it? But are unable to provide any supporting documentation?
Xavier Gomez
What to do before shit hits the fan Own it outright. No mortgage or anything. Into what though? already own $40k USD worth of gold but idk
Dylan Green
Finally a proper discussion on /pol
Jackson Bell
>12. As the decline spreads, the mortgage lender starts to run out of cash and fails. This step here doesn't logically follow.
Noah Williams
That bailout was secret at the time but it wasn't much really. I mean it's bullshit that we had to bail them out but it was really just cheap financing from the BoC. It's all made up anyways. Plus the big banks now make like $50 billion combined in profits per year. They should be taxed a lot more imo.
Gabriel Taylor
>mutual *must
Justin Sullivan
If you lived here, you'd understand, but you don't.
Small amount of dirt in city.
Viewed as safe haven by much of the world.
Beautiful as fuck, nearly impossible to beat.
Thousands upon thousands of people with wealth you can't really imagine immigrating here
Did I mention no physical room to expand?
Supply and demand. Huge demand, no supply.
They will build a tower on that corner overlooking Stanley Park, the ocean and the mountains. It will have unblocked views all the way to Vancouver Island; each luxury suite will be worth millions, the ones near the top worth maybe $50 mil. This building will sell out on the day that sales open.
You simply don't understand this city and the challenges here -- this isn't Iowa. Think Manhattan without black people or Mexicans, that's where we have headed.
Nolan Evans
Some of us aren't fluent in Yiddish.
Wyatt Watson
wow disgusting. just bought 3.5 acres of riverfront property in commiefornia for 23k. 30k more to build a 1200sq ft home and above ground well, plus fence.
no chinks in my neighborhood
Gabriel Davis
Yes but how do you know if as claimed it was secret? Where is the evidence?
