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Both mortgages were "demand loans", if that makes a difference. I still just don't get it. I know that there's this thing where if you're rich enough, you can get mortgages at a low enough interest rate that you can put the money into investments that yield greater than the interest, but I just can't imagine how you could generate a greater annual investment yield than 16%. I guess you could try and throw it into another bubbly property market, but it's basically full-blown gambling at that point.
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Sep 6, 2019 00:35
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Lead out in cuffs posted:Both mortgages were "demand loans", if that makes a difference. Money laundering is the only rational explanation.
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Sep 6, 2019 03:02
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ocrumsprug posted:I had to renew my mortgage in the fall of 2008 when it looked like credit itself might collapse, but a month before rates went to zero and everything was wonderful. Oh, i assumed you live in BC at the time where the collapse was never a concern other than the stock market taking a poo poo. We smugly looked at the world as our banking system did much better than most.
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Sep 6, 2019 04:40
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I didn’t even know banks did business with people needing a 15% mortgage rate. I would think the risk would be too great. I got 3.5 and I thought that was mediocre.
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Sep 6, 2019 08:44
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Gorau posted:I didn’t even know banks did business with people needing a 15% mortgage rate. I would think the risk would be too great. I got 3.5 and I thought that was mediocre. Like I said, these are apparently "demand" loans, which aren't a thing available to the average person. There's no payment schedule -- the debtor just has to pay at least the interest, but the bank can demand the entire principle be repaid at any time. In a way, they're basically just giant HELOCs, which presumably are being used to buy more houses. For the banks, the risk is mitigated in that the bank can always foreclose on the house. In the case of the recent buyer, the loan is for just over $1mil, but the house was just purchased for $1.6mil. The bank is gambling just a little that the house will end up still being worth that when the dust all settles, but the interest they can collect meanwhile probably makes that bet worthwhile. Also, these are people who probably have several other houses / millions of dollars squirrelled away elsewhere that the bank can go after. What it does make me wonder is how much of the enormous HELOC debt being reported across the country is just rich people juggling money to buy more houses.
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Sep 6, 2019 19:05
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Lead out in cuffs posted:Like I said, these are apparently "demand" loans, which aren't a thing available to the average person. There's no payment schedule -- the debtor just has to pay at least the interest, but the bank can demand the entire principle be repaid at any time. In a way, they're basically just giant HELOCs, which presumably are being used to buy more houses. Yeah, the only demand loans i ever see are for bridge financing where someone needs a short term loan to complete a purchase. With HELOCS, a couple years ago the rules changed so you can't exceed 65% loan to value. So if someone robbing Peter to pay Paul they will have to sell and at least have equity until we see a huge drop of more than 35%.
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Sep 6, 2019 22:22
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I am looking at the MLS listings for Vancouver and I'm just in awe. Who the gently caress are these people who are buying $1M plus detached houses? My partner and I make good money. Combined, our household is in the top 10% of the country. Yet even we balk at these prices. A mortgage on a $1M place would likely eat up half of our combined take home monthly pay. Who the hell are these people that are buying these places and how the gently caress are there so many of them?
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Sep 6, 2019 23:01
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And this is apparently the goddamn "bottom of the cycle" even!
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Sep 6, 2019 23:01
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sitchensis posted:And this is apparently the goddamn "bottom of the cycle" even! HA, no, this is just the beginning of the downward slope.
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Sep 6, 2019 23:09
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Franks Happy Place posted:HA, no, this is just the beginning of the downward slope. I hope you're right, however sales went up 27% last month. I know prices are still dropping but I wonder what is spurring sales. Lower interest rates?
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Sep 6, 2019 23:26
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sitchensis posted:Who the hell are these people that are buying these places and how the gently caress are there so many of them? I was chatting with my financial advisor about this and he reckons it's boomers downsizing/cashing out.
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Sep 6, 2019 23:29
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sitchensis posted:And this is apparently the goddamn "bottom of the cycle" even! Yeah, what Frank's Happy Place said. There are very, very few people buying property in Vancouver for the purpose of living in it. A cynical explanation is that there was a whole lot of liquidity floating around looking for high returns in the early 20-teens, and speculative bubbles seemed like a good place to park that. As someone pointed out on Twitter recently, Vancouver housing is basically "trading sardines". some random website posted:While gold was first discovered in Alaska during the 1870s, the 1890s have come to be known as the Yukon-Klondike Gold Rush days, as thousands of rugged individuals swarmed to the northern climes to find fortune and glory. Unsurprisingly, during the winter of 1896-97 the Alaskan ports were frozen solid and therefore closed to all shipping traffic. Food became very scarce and very expensive since new supplies had to be brought in over land at great hardship. Reportedly, a can of sardines that had cost $0.10 in New York could be priced at 10 times that amount by the time it reached the gold miners in Alaska. Still, there was great demand even at such inflated prices. For instance, in one remote mining town the price of a can of sardines was sold at rapidly escalating prices from $10.00, to $30.00, then $50.00. Finally, one desperately hungry miner paid $100.00 for a can of the highly sought after sardines. He took it back to his room to eat. He opened it. To his amazement he discovered the sardines were rotten. Angered, he found the person who sold him the tin and confronted him with the rotten evidence. The seller was amazed and shouted, 'You mean you actually opened that can of sardines? You fool; those were trading sardines, NOT eating sardines!'”
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Sep 6, 2019 23:29
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incontinence 100 posted:I hope you're right, however sales went up 27% last month. I know prices are still dropping but I wonder what is spurring sales. Lower interest rates? Unrest in Hong Kong? That said, I don't put much stock in single data points, and the overall price trend is still downwards. Purgatory Glory posted:Yeah, the only demand loans i ever see are for bridge financing where someone needs a short term loan to complete a purchase. With HELOCS, a couple years ago the rules changed so you can't exceed 65% loan to value. So if someone robbing Peter to pay Paul they will have to sell and at least have equity until we see a huge drop of more than 35%. I guess this might make sense for the new buyers. The other weird thing about the sale is that Zealty said it went through on April 23, but REW still doesn't have a record, and the deed transfer only happened last weekend. So there was a four month gap between the offer being made and the sale being finalised -- could've been the new buyers desperately trying to scrape together the money. I guess that HELOC rules also makes sense -- the loan the new buyers took out was for almost exactly 65% of what they paid for the house. But, um, a 35% or more drop in prices is certainly conceivable, and even well into likely as the housing crisis grows.
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Sep 6, 2019 23:35
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Lead out in cuffs posted:Unrest in Hong Kong? What do you make of openhousing.ca and this? https://openhousing.ca/2019/08/29/metro-vancouver-detached-house-prices-fall-to-lowest-level-since-2016/
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Sep 6, 2019 23:39
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incontinence 100 posted:What do you make of openhousing.ca and this? Yeah I like their stuff. This feels like a better representation of sales (using a moving average) than focusing on each month's performance: https://openhousing.ca/2019/09/04/metro-vancouver-detached-home-sale-volume-plummets-83-from-peak/
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Sep 7, 2019 00:35
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Lead out in cuffs posted:Yeah I like their stuff. This feels like a better representation of sales (using a moving average) than focusing on each month's performance: I just wonder why no one seems to talk about housing in Vancouver in terms of the Case-Shiller index except the openhousing guys.
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Sep 7, 2019 00:40
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incontinence 100 posted:I just wonder why no one seems to talk about housing in Vancouver in terms of the Case-Shiller index except the openhousing guys. S&P apparently does. https://ca.spindices.com/index-family/real-estate/sp-corelogic-case-shiller Also these guys: https://housepriceindex.ca/2019/08/july2019/ And these guys: https://betterdwelling.com/canadian-real-estate-price-growth-looks-absurd-when-compared-to-bubbly-us-cities/ I mean, I don't necessarily care whether they use or whatever it is the real estate industry use for their index. The trends are pretty well the same. https://www.crea.ca/housing-market-stats/mls-home-price-index/hpi-tool/
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Sep 7, 2019 01:21
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So it's just due to boomers selling endlessly to one another like some kind of sick gerontic real estate ouroboros?
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Sep 7, 2019 01:22
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Lead out in cuffs posted:
I hope you're right.
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Sep 7, 2019 01:39
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sitchensis posted:A mortgage on a $1M place would likely eat up half of our combined take home monthly pay. Just  if you've ever spent less than half of your pre-tax income on rent.
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Sep 7, 2019 02:58
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Well, you know, it only costs 28,000 a year to borrow a million, that's barely more than 2k/month up front and the outstanding balance gets smaller each year (unless you repeatedly refinance). Everything you spend on rent beyond that + a few thousand for property tax is totally throwing money away... in enough people's eyes to nearly support the market. Heck, you can pay most of that interest by renting out a 2br suite. Then you're living on your highly leveraged opportunity cost... 300k (on 1.5m house) x ~5% = 15k Add 6k property taxes, and a 1.5m house costs you what, 1750-2500/mo in "real" costs plus a bunch of repaid principal? (There is tax on the rental income unless you have a good way to dodge that, proxy buyer/low-income spouse/child, etc. And the opportunity cost would increase as you repay principal unless you take it out again.) All you need is that few hundred thousand up front! That, and the belief that prices are done falling. Edit: And the ability to qualify for the mortgage at the apparently unrealistic posted+2. James Baud fucked around with this message at 03:47 on Sep 7, 2019 |
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Sep 7, 2019 03:36
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This link: https://housepriceindex.ca/2019/08/july2019/ calculates some bullshit index Teranet–National Bank National Composite House Price IndexTM. And it shows Vancouver's market has only declined 6.23% from the peak in 2018. I don't even care to read up on this because it is so loving wrong. https://housepriceindex.ca/#maps=bc_vancouver
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Sep 7, 2019 03:58
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This is what the bottom looks like.
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Sep 7, 2019 04:10
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I'd want to move to Canada but it seems to cold everywhere but Vancouver, and Vancouver is expensive so I can't move there. 
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Sep 7, 2019 04:26
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punk rebel ecks posted:I'd want to move to Canada but it seems to cold everywhere but Vancouver, and Vancouver is expensive so I can't move there. If it makes you feel any better, even the people who live in Vancouver can't afford Vancouver.
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Sep 7, 2019 06:35
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sitchensis posted:So it's just due to boomers selling endlessly to one another like some kind of sick gerontic real estate ouroboros? I really don't think the people I looked up are just boomers with property equity from the 90s. Those were investors treating housing like bitcoin or gold. There are definitely boomers in that position out there, but generally they're selling their multimillion dollar house to the investors, then buying a condo that's overpriced, but which they can afford with their newfound million(s). They're also giving their kids the downpayment that they could never afford to buy their overpriced condo. James Baud posted:Well, you know, it only costs 28,000 a year to borrow a million, that's barely more than 2k/month up front and the outstanding balance gets smaller each year (unless you repeatedly refinance). Lol where the gently caress did you pull this figure from? The monthly payments on $1.2 million are $5.6K/month, at the lowest possible interest rate. The monthly payments on a million are $4.6K. incontinence 100 posted:This link: I think the problem with the price indices (all of them) is that they aren't stratifying the prices. There's clearly been a big crash at the top end of the market (at least going by all the anecdotes being dug up on Twitter), but that's still trickling down.
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Sep 7, 2019 06:58
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Lead out in cuffs posted:
James Baud posted:Add 6k property taxes, and a 1.5m house costs you what, 1750-2500/mo in "real" costs plus a bunch of repaid principal? Also, as he says, you just need a few hundred thousand dollars downpayment. I'm sure anyone in Vancouver can find that under their mattress.
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Sep 7, 2019 07:09
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incontinence 100 posted:I was chatting with my financial advisor about this and he reckons it's boomers downsizing/cashing out. Anecdotally this makes sense, my mom was saying that out there stuff is selling just as fast as it always has been and more or less at asking price, and she suspects it's Vancouver people cashing out and buying out in the valley where the prices seem super cheap because it's Mission so they don't care about spending $800k on a house when they just sold their old one for $3 million.
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Sep 7, 2019 07:42
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punk rebel ecks posted:I'd want to move to Canada but it seems to cold everywhere but Vancouver, and Vancouver is expensive so I can't move there. Give it a few more years, Vancouver prices will go down once it floods and everything else should be heated up nicely.
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Sep 7, 2019 12:02
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sitchensis posted:I am looking at the MLS listings for Vancouver and I'm just in awe. There's only ~40k detached homes in CoV and over double that number of households that earn over 100k a year. The amount of wealthy people in Vancouver is substantially growing over time.  Look at that leap in people earning over 150k ! Ya hate to hear it but it's a supply vs demand problem that is pushing detached home prices into the stratosphere. What we've seen over the last few years is folks in the west side of Vancouver selling to immigrants and foreign investors, then them themselves buying homes in East Vancouver. Now it's common to hear Vancouverites talk about how the 'Dunbar Diaspora' is influencing the neighbourhood politics of Grandview Woodlands and other East Van hoods. Most Vancouverites with more 'normal' incomes that are having kids and forming larger households are moving out to the valley and buying up ~$350-400k townhomes that are being built like crazy. The dynamic we're seeing now is that due to foreign buyer taxes and it becoming more difficult to move money out of China, the amount of external buyers is drying up and the very high priced real estate is seeing big drops. On the lower end however, there's high earning couples that YOLO'd themselves into a condo thanks to boomer parent loans a few years ago which now have the ability to leverage that into a detached house. That's keeping those prices at the low end a bit more stable. I've seen 'cheap' $1.2M houses in Grandview Woodlands sell very quickly for a tad over asking. Franks Happy Place posted:HA, no, this is just the beginning of the downward slope. This is a big question. Are we nearing the bottom or are we in the 'bull trap'? CI and HALT folks would probably say that we're in the bull trap and poo poo is gonna go down to like $500k or some poo poo but I'm not so sure. As I mentioned before there's plenty of DINKs which have been on the sidelines with some condo(s) they bought a decade ago which has doubled in value. They're now trying to figure out if they can leverage that into a SFH. They probably can and I think that'll keep the floor around $1M.
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Sep 7, 2019 21:14
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sitchensis posted:I am looking at the MLS listings for Vancouver and I'm just in awe. I sympathize. My wife and I are top 5% and we still find it obnoxious that we have to spend this much money to have a dumpy piece of garbage SFD house. We can't justify it, so are actively looking to relocate out of the province. We're tired of waiting for sanity to return, life is passing us by, and we want a better quality of life than we can have living in this idiotic place.
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Sep 7, 2019 23:54
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Lead out in cuffs posted:Yeah, what Frank's Happy Place said. There are very, very few people buying property in Vancouver for the purpose of living in it. A cynical explanation is that there was a whole lot of liquidity floating around looking for high returns in the early 20-teens, and speculative bubbles seemed like a good place to park that. I was able to attend the freestyle moguls event at Cypress Bowl during the Olympics. You may remember that it was a disaster - no food, no drinks, rainy and miserable. Anyway, at some point I went looking for food, expecting to find a place to buy a sandwich or hot dog without too much trouble. Couldn't find the end of the line because it was so long, and wasn't moving. One guy got a hot dog and people in the line were offering him a hundred dollars for it. He wouldn't sell it at any price, so desperate was he for food. I never did find anything to eat, but did get an impressive memory. Glad I wore snow gear - the people just wearing hockey jerseys in the pouring rain didn't fare so well. Just goes to show market failure shows up everywhere!
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Sep 7, 2019 23:57
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Mandibular Fiasco posted:I sympathize. My wife and I are top 5% and we still find it obnoxious that we have to spend this much money to have a dumpy piece of garbage SFD house. We can't justify it, so are actively looking to relocate out of the province. We're tired of waiting for sanity to return, life is passing us by, and we want a better quality of life than we can have living in this idiotic place. Just rent something more expensive, you don't need to own a place. My wife got tired of waiting for "some day" and now we're spending over 50k/year on rent (which is stupid and leads to me second guessing myself, see above), but at least we live somewhere pretty decent now while continuing to watch prices fall.
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Sep 8, 2019 00:44
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sitchensis posted:I am looking at the MLS listings for Vancouver and I'm just in awe. This is why those of us who actually lived in Vancouver laughed when people said there was no/small international influence on housing prices. Now I live in a city where prices actually go down in a neighbourhood when they build a bunch of towers, and banks require bigger deposits for those areas because it's expected that your apartment value will go down, despite having a much faster growing population than Vancouver. So weird to see actual supply and demand.
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Sep 8, 2019 01:45
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hey this is the debt bubble thread, not the bad with money thread
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Sep 8, 2019 01:46
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https://twitter.com/housingopen/status/1170429366037176320?s=21
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Sep 8, 2019 16:02
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James Baud posted:Just rent something more expensive, you don't need to own a place. My wife got tired of waiting for "some day" and now we're spending over 50k/year on rent (which is stupid and leads to me second guessing myself, see above), but at least we live somewhere pretty decent now while continuing to watch prices fall. Oh, we rent a nice house - it's close to my wife's work, close to SkyTrain for me to get downtown. Modern appliances (SubZero fridge, etc.), great landlord, but our family has grown since we moved in, and we're ready to upgrade to something bigger with more room and with more accessible schools (our house is a hike to the nearest elementary school). Problem is anything we like is $1.6M, which is just insane considering the income required to afford such a thing. Now these houses aren't extreme luxury by any stretch, but are decent upper middle class sort of places. Given our incomes, we should be able to afford something like this, but the market is non-functional for anyone that didn't inherit massive wealth, or is a 1%er, or is bringing money in from overseas. Our rent is also really low by current standards, so finding something nicer is likely going to double our costs, but give us none of the security of tenure (landlord owns the house right next door) or a proportionally better place for the cost. All to say the usual pathways that families were able to advance through for housing aren't accessible anymore, and there is a long way for the market to fall before we reconnect incomes to costs. On a side note, I was listening to CBC Radio 1's town hall yesterday on the opioid crisis and the homelessness crisis on the DTES...where we are now is a logical outcome of treating housing as a commodity and allowing foreign money to distort the market. If families like mine, that twenty years ago used to live on the west side or North Vancouver are no longer able to, and we move to Burnaby/New Westminster, where are the people who used to live in Burnaby/New Westminster going to go? It's trickledown homelessness.
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Sep 8, 2019 16:48
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Reliable Mortgages had lent Hua $2,150,000 at a yearly interest rate of 11.95% and another $350,000 at 12.95%. 
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Sep 8, 2019 18:46
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McGavin posted:Reliable Mortgages had lent Hua $2,150,000 at a yearly interest rate of 11.95% and another $350,000 at 12.95%. I wonder for whom the reliability in "Reliable" mortgages applies to...and these interest rates are insane.
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Sep 8, 2019 18:55
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$350,000 at 12.95% would be a great mortgage... for 1985.
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Sep 8, 2019 20:34
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