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Thread: Baby, we got a bubble!?

  1. Default

    Mortgage lending change could trigger soft landing or ‘apocalypse’
    Published On Thu Apr 26 2012

    Canadian Mortgage and Housing Corp. to be overseen by Canada's finance regulator in hopes of reining in risky mortgages.
    BILL SIKES/AP
    Susan Pigg and Les Whittington Staff Reporters
    The federal government has moved to further tighten up mortgage lending and cool the overheated Canadian real estate market by effectively reining in the Canada Mortgage and Housing Corp.
    What’s unclear is whether the move will throw a cold compress on Toronto’s feverish housing market or just mean there’s one more person keeping a close eye on its temperature.
    Under a bill tabled Thursday, the Office of the Superintendent of Financial Institutions will be given oversight of CMHC, which now insures nearly 50 per cent of the $1.1 trillion in residential mortgage credit now outstanding in Canada.
    “I’ve been concerned about the CMHC for some time in the sense that it’s become an important financial institution in Canada and it was not subject to the same supervision by the Office of the Superintendent of Financial Institutions,” Finance Minister Jim Flaherty told a news conference.
    “So I think this is an important step forward.”
    Flaherty made it clear he’s particularly concerned about the condo markets in Toronto, Vancouver and Montreal. The bill, which he’s been hinting at for weeks, is aimed at discouraging high-risk borrowing and reducing the risk to taxpayers if those major markets take a tumble.
    It is inevitable that OSFI’s oversight of the CMHC will have at least some dampening effect on the housing market as more mortgage applications inevitably get rejected or subjected to scrutiny that has slipped over the last decade, says Ben Rabidoux, an analyst at M Hanson Advisors.
    It would be "apocalypic" for the condo industry, but highly unlikely, if investors found themselves no longer backstopped on mortgages by CMHC, as some housing analysts have suggested could eventually happen, says Brian Persaud, a realtor and co-author of a book on condo investing.
    Rabidoux agrees: “This is a credit-driven housing market and (Flaherty) is walking a tightrope when he tries to slowly rein it in and induce a soft landing, particularly when you see how reliant the economy is on this current housing boom.
    “I think he is starting to get the sense, rightfully so, that a soft landing is not in the cards and, by passing the dirty work off to OSFI, he’s not the one seen to be responsible for it.”
    But CIBC deputy chief economist Benjamin Tal predicts “the surprise will be how little this will change as far as the overall activity of CMHC goes,” calling the change of oversight as nothing more than “changing reporting lines.”
    The amount CMHC insures has almost tripled just since 2000, from about $200 billion to $541 billion as of last September — so close to the $600 billion insurance cap set by Ottawa that it’s raised fears taxpayers could be left hugely exposed if prices start dropping and over-leveraged homeowners start defaulting on mortgages.
    Just this week, the governor of the Bank of Canada warned Canadians, yet again, that household debt is a significant risk to the country’s economic health with interest rates bound to rise and house-prices-to-income levels running 35 per cent above historic levels.
    The budget implementation bill tabled Thursday would also stop CMHC from providing insurance to major banks on conventional loans that aren’t considered high risk. That practice has become big business for CMHC and only served to boost the bottom lines of banks, says Rabidoux.
    Carleton University professor Ian Lee, a former mortgage broker, called the move “long overdue” along with OSFI’s recommendations that lending be tightened on home equity lines of credit.
    He’s urged Ottawa to privatize CMHC in the past, believing that “the role of government is to referee the hockey game and regulate it aggressively. But they shouldn’t be owning one of the teams.”
    The aim of the bill introduced Thursday is to ensure that CMHC’s commercial activities “are managed in a manner that promotes the stability of the financial system” and contributes “to the stability of the housing market,” said Flaherty.
    “CMHC was created to assist in social housing but it’s become much more than that.”


  2. #5582

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    Quote Originally Posted by marsh View Post
    Mortgage lending change could trigger soft landing or ‘apocalypse’
    Published On Thu Apr 26 2012

    Canadian Mortgage and Housing Corp. to be overseen by Canada's finance regulator in hopes of reining in risky mortgages.
    BILL SIKES/AP
    Susan Pigg and Les Whittington Staff Reporters
    The federal government has moved to further tighten up mortgage lending and cool the overheated Canadian real estate market by effectively reining in the Canada Mortgage and Housing Corp.
    What’s unclear is whether the move will throw a cold compress on Toronto’s feverish housing market or just mean there’s one more person keeping a close eye on its temperature.
    Under a bill tabled Thursday, the Office of the Superintendent of Financial Institutions will be given oversight of CMHC, which now insures nearly 50 per cent of the $1.1 trillion in residential mortgage credit now outstanding in Canada.
    “I’ve been concerned about the CMHC for some time in the sense that it’s become an important financial institution in Canada and it was not subject to the same supervision by the Office of the Superintendent of Financial Institutions,” Finance Minister Jim Flaherty told a news conference.
    “So I think this is an important step forward.”
    Flaherty made it clear he’s particularly concerned about the condo markets in Toronto, Vancouver and Montreal. The bill, which he’s been hinting at for weeks, is aimed at discouraging high-risk borrowing and reducing the risk to taxpayers if those major markets take a tumble.
    It is inevitable that OSFI’s oversight of the CMHC will have at least some dampening effect on the housing market as more mortgage applications inevitably get rejected or subjected to scrutiny that has slipped over the last decade, says Ben Rabidoux, an analyst at M Hanson Advisors.
    It would be "apocalypic" for the condo industry, but highly unlikely, if investors found themselves no longer backstopped on mortgages by CMHC, as some housing analysts have suggested could eventually happen, says Brian Persaud, a realtor and co-author of a book on condo investing.
    Rabidoux agrees: “This is a credit-driven housing market and (Flaherty) is walking a tightrope when he tries to slowly rein it in and induce a soft landing, particularly when you see how reliant the economy is on this current housing boom.
    “I think he is starting to get the sense, rightfully so, that a soft landing is not in the cards and, by passing the dirty work off to OSFI, he’s not the one seen to be responsible for it.”
    But CIBC deputy chief economist Benjamin Tal predicts “the surprise will be how little this will change as far as the overall activity of CMHC goes,” calling the change of oversight as nothing more than “changing reporting lines.”
    The amount CMHC insures has almost tripled just since 2000, from about $200 billion to $541 billion as of last September — so close to the $600 billion insurance cap set by Ottawa that it’s raised fears taxpayers could be left hugely exposed if prices start dropping and over-leveraged homeowners start defaulting on mortgages.

    Just this week, the governor of the Bank of Canada warned Canadians, yet again, that household debt is a significant risk to the country’s economic health with interest rates bound to rise and house-prices-to-income levels running 35 per cent above historic levels.
    The budget implementation bill tabled Thursday would also stop CMHC from providing insurance to major banks on conventional loans that aren’t considered high risk. That practice has become big business for CMHC and only served to boost the bottom lines of banks, says Rabidoux.
    Carleton University professor Ian Lee, a former mortgage broker, called the move “long overdue” along with OSFI’s recommendations that lending be tightened on home equity lines of credit.
    He’s urged Ottawa to privatize CMHC in the past, believing that “the role of government is to referee the hockey game and regulate it aggressively. But they shouldn’t be owning one of the teams.”
    The aim of the bill introduced Thursday is to ensure that CMHC’s commercial activities “are managed in a manner that promotes the stability of the financial system” and contributes “to the stability of the housing market,” said Flaherty.
    “CMHC was created to assist in social housing but it’s become much more than that.”
    To me, the crux of this is in the highlighted area. I concur with Ben Taal that this will have little effect. And this concerns me as once again it leaves the taxpayers potentially on the hook for large losses (as occurred in the US with Freddie and Fannie Mack). Hopefully it curtails enough of the speculators to slow down the price increase or slowly deflate prices mildly without creating the "hard landing" clearly Carney and Flaherty are trying to avoid.

    What is unsaid here but implied is that the Banks have padded their bottom lines and shifted all the risk to the taxpayer (via CMHC). One can't blame them because they could but in the US we saw how badly that has turned out and if the bank is not carrying the risk, only the reward, it gives them incentive to behave in this fashion.

  3. #5583

    Default

    This is from Condovultures in the US related to Florida real estate:

    3 New Projects With Hundreds Of Residential Units Proposed For Miami Beach
    Published on 4/23/2012 7:40:57 PM

    Bookmark and Share

    Developers are proposing three new unrelated projects in the neighborhoods of South Beach and Middle Beach that combined would create hundreds of new residential units in Miami Beach at a time when the coastal South Florida condo market is showing signs of recovering from the dramatic real estate crash that began in 2007, according to a new report from CondoVultures.com.

    None of the projects being proposed by the prospective developers - Related Group, Crescent Heights, and Lionheart Capital - have obtained final governmental approval so the details could change before anything is ever constructed, industry watchers said.

    The three newly proposed projects follow the announcement of 30 new condo towers with more than 6,200 units that are already being planned for the South Florida coastal market of Miami-Dade, Broward, and Palm Beach counties, according to the Preconstruction Condo Projects list based data from the licensed Florida brokerage CVR Realty™.

    CondoVultures.com is scheduled to profile new unit sales by project in the first quarter of 2012 in the seven largest coastal condo markets in the tricounty South Florida region.

    Since the week of April 16, 2012, the Condo Vultures® Market Intelligence Report™ plans to publish a seven-part weekly series analyzing new condo sales trends in Greater Downtown Miami, South Beach, Sunny Isles Beach, Hollywood / Hallandale Beach, Downtown Fort Lauderdale and the Beach, Boca Raton / Deerfield Beach, and Downtown West Palm Beach and Palm Beach Island.

    Working from south to north in Miami Beach, an entity managed by the Related Group - South Florida’s largest vertical condo developer - is proposing a mixed-use project with 32 "residential" units, nearly 20,000 square feet of restaurant and retail space, and a 320-space “mechanical parking garage” on South Pointe Drive in the South of Fifth neighborhood of South Beach, according to Miami Beach records.

    A few blocks north, Crescent Heights – a longtime condo developer and converter based in Greater Downtown Miami – is in the early stages of selecting a design firm to create a plan for a mixed-use project with “200,000 square feet of condo space” and “roughly 450,000 square feet of retail space” at the intersection of Alton Road and Fifth Street in South Beach, according to the Miami Herald.

    The third project proposes to convert the nearly vacant nine-story Miami Heart Institute medical facility with nearly one million square feet at Alton Road and 48th Street into a “residential multifamily” project with amenities and parking, according to Miami Beach records.

    Under current zoning for the 4.3-acre site that fronts a canal leading to Biscayne Bay, the “maximum number of units that could be developed within the existing structures is 260 units,” according to a Miami Beach Planning Board staff report dated April 24, 2012.

    Fueled by investors primarily from overseas, less than 4,300 new condo units remain unsold from a supply of nearly 49,000 units created since 2003 in South Florida’s seven largest coastal markets of Greater Downtown Miami, South Beach, Sunny Isles Beach, Hollywood / Hallandale Beach, Downtown Fort Lauderdale and the Beach, Boca Raton / Deerfield Beach, and Downtown West Palm Beach and Palm Beach Island as of Dec. 31, 2011, according to a recent CondoVultures.com report.

    In the South Beach condo market, nearly 700 developer units are still unsold from a pool of about 5,600 units created during the last South Florida real estate boom as of March 31, 2012, according to a new CondoVultures.com report.

    An additional 265 condos created since 2003 in South Beach are on the resale market as of April 24, 2012, according to CVR Realty™.

    South Beach is a 24-block-long neighborhood in the barrier island city of Miami Beach that stretches from South Pointe Drive north to 24th Street, the Atlantic Ocean west to the Venetian Islands in Biscayne Bay, according to the Condo Vultures® Official Condo Buyers Guide To South Beach™.

    During the recent real estate boom, developers created 37 projects with nearly 5,600 units in the South Beach neighborhood during the South Florida real estate boom beginning in 2003.

    Prior to the real estate boom, South Beach - a historical district with a large number of Art Deco, low-rise structures - had 110 condo projects with 10,800 units.

    Condo Vultures® relied on public records and private research to complete this study over the course of the last three years.

    The results of this exhaustive researching of deeds, condominium documents, and government files is the basis for a series of seven ebooks titled the Official Condo Buyers Guide™.

    This information is also the foundation for a new Condo Ratings Agency™ service designed to provide guidance on the financial stability of nearly 1,000 condo projects - old and new - with 125,000 units east of Interstate 95 in Miami-Dade, Broward, and Palm Beach counties.

    On the proposed condo project front, at least five condo towers - Hollywood's Apogee Beach; Miami's 23 Biscayne Bay and MyBrickell towers; Sunny Isles Beach's Regalia; and Aventura's Bellini At Williams Island - are under construction as of April 25, 2012, according to a recent CondoVultures.com report.

    Construction on a pair of 40-story condo towers at the proposed six-tower Brickell Citicentre complex in Greater Downtown Miami is scheduled to begin in the upcoming weeks, according to a recent report from CondoVultures.com.

    Other than the Brickell Citicentre and Bellini At Williams Island projects, none of the other developers with proposed condo towers have announced financing.

    It is unclear how many of the other proposed towers could get developed in the short term as construction financing is challenging - and expensive - to secure, industry watchers said.

    To overcome the obvious financing hurdle, most of the newly proposed projects are requiring prospective buyers to commit to deposits - to be paid in phases - of as much as 80 percent of the preconstruction contract price, industry watchers said.

    During the most recent South Florida condo boom, preconstruction buyers were generally asked for deposits of about 20 percent, industry watchers said.

    It is important to note there are various stages to a residential real estate transaction in South Florida.

    A transaction begins when a property is made available for sale and ends when a title is conveyed from one party to another party as a result of the recording of a deed with the local government.

    As part of the process, a property typically goes under contract and into a due diligence phase by which a deal can be canceled.

    The CondoVultures.com new condo sales report is based on completed transactions where a deed is recorded and taxes paid as a result of the sale.
    Condo Vultures® LLC is a real estate consultancy and marketing company based at 1005 Kane Concourse, Suite 205, Bal Harbour, Florida, 33154. You can reach Condo Vultures® LLC at 800-750-0517.

    Don't forget to sign up for our weekly Market Intelligence Report™ for detailed condo reports to stay informed on the latest market trends and to find out about our various Condo Vultures® Seminars. Looking for a property at a deep discount? Take a peek at the Vultures Database™ or view our Video Library. Looking for bulk projects direct from developers or lenders? Visit the Condo Vultures® Bulk Deals Database™. Our new books, the Official Condo Buyers Guide to Miami™, Official Condo Buyers Guide To South Beach™, Official Condo Buyers Guide to Sunny Isles Beach™, Official Condo Buyers Guide to Downtown Fort Lauderdale and the Beach™, Official Condo Buyers Guide to Hollywood / Hallandale Beach™, Official Condo Buyers Guide to Downtown West Palm Beach™, and Official Condo Buyers Guide to Boca Raton / Deerfield Beach™, are now available. Want to see every foreclosure filed in South Florida since 2007? Check out our Foreclosure Database™.

    © Copyright 2012. Condo Vultures® LLC. All Rights Reserved.


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    Note the following: I appreciate this is SE Florida and not Toronto:

    However.... 1) they talk of "foreign investors", a topic that keeps coming up and no one has a good pulse of that component of the market here. I have heard from 3% to much more.
    2) up to 80% financing by purchasers. Before the crash, it was 20% deposits. I would point out that 20%-25% is current deposit structure in Toronto.
    3) challenging environment for builders to get financing....I wonder in view of the change in rules for CMHC if this will make our environment in TO "more challenging" going forward and if there will be need for higher deposits, which would dent presumably the "investment driven/flipper market".


    Thoughts anyone?

  4. #5584

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    Some interesting data from Globe and Mail: Sorry, I can't copy and paste the numbers.
    I think the data is being skewed by product mix and so averages may be very deceiving.

    http://www.theglobeandmail.com/life/...rticle2414899/

    http://www.theglobeandmail.com/life/...rticle2414825/

    Central Toronto: the state of the market
    Published Thursday, Apr. 26, 2012 2:29PM EDT
    Last updated Thursday, Apr. 26, 2012 3:03PM EDT

    Corktown and the Financial District see big drops, but things are looking up for Don Mills and Regal Heights
    1 comment

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    Is your neighbourhood hot - or not? A look at the Toronto market
    Last edited by interested; 2012-Apr-27 at 10:23. Reason: additonal graph

  5. #5585

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    And another article:

    I have bolded what I find intriguing: About Foreign Buyers ? a myth. Also, investors would dump even at significant loss. Would be good if we could get good data. He also says maybe a problem in 2017-2018. I doubt that it will take that long.

    The references to housing selling above ask in over 50% of cases in 1 region may just be "underpricing" to create bidding wars but it is striking none the less.


    http://www.theglobeandmail.com/life/...rticle2414625/
    House hunting in Toronto? Here’s a few hidden gems....
    Carolyn Ireland
    Toronto— From Friday's Globe and Mail
    Published Thursday, Apr. 26, 2012 9:12AM EDT
    Last updated Thursday, Apr. 26, 2012 3:04PM EDT

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    How do buyers get a toehold in the most aggressive real estate market in the country?

    By seeking out the little-known slivers where house price gains haven’t kept pace with the breakneck pace set in the rest of the city.

    That appears to have been the strategy employed by many people bent on buying in Toronto in the first quarter of 2012.
    More related to this story

    Is your neighbourhood hot - or not? A look at the Toronto market
    When rent money isn't dead money
    In Toronto, eager buyers prowl for pods in the driveway

    Infographic
    First quarter rush to buy

    But April’s numbers so far suggest a slight cool down from the blistering pace set in the first months of the year.

    In the first half of this month, sales climbed seven per cent compared with the first two weeks of April, 2011. The average price in the Greater Toronto Area rose five per cent in the same period compared with the same time last year, according to data from the Toronto Real Estate Board.

    The average price in the GTA jumped about 10 per cent in March compared with the same month last year, while sales increased eight per cent in the same period.

    Prices were pushed higher by the combination of tight listings and low interest rates in the first three months of the year, says John Pasalis, broker at Realosophy Realty Inc.

    Mr. Pasalis adds that the bidding wars that astounded observers in February are a little more tame these days. “Now you might have three to eight offers instead of 15 to 20.”

    As usual, more listings have come onto the market with the arrival of spring blossoms, while the competition has also eased up because nearly 10,000 parties dropped out of the race after buying a house or condo in March.

    Mr. Pasalis says some of the successful buyers set their sights on neighbourhoods that have been overlooked in the past. He picks out hot spots by looking at the number of houses that sold over the asking price, which is a good indication that the seller received multiple offers.

    In Wallace-Emerson, for example, near Dovercourt and Bloor, 65 per cent of houses sold for more than the asking price, which is more than double the city average. The average list price, meanwhile, is about $485,000 compared with just under $507,00 overall for the city.

    That suggests to Mr. Pasalis that first-time buyers and those looking to move to a house from a condo but who still want to live downtown were looking to the up-and-coming hood for deals.

    “It’s one of the only pockets on the subway line that is still affordable.”

    Similarly, Woodbine-Lumsden in Toronto’s east end saw prices appreciate of 21 per cent in the quarter compared with the first quarter of 2011. The niche, close to the eastern boundary of East York, has an average house price of $462,000 and seven out of 10 properties sold over asking, says Mr. Pasalis.

    “Both of these neighbourhoods are on the outer edges of the core.”

    Farther north, low-profile Park Woods is gaining in popularity. Standing between Lawrence and York Mills and just east of the Don Valley Parkway, the community offers buyers the possibility of a detached house, large lot and private drive for between $600,000 and $700,000.

    As a real estate agent, Mr. Pasalis says he often points buyers towards neighbourhoods they might not have thought of in the past.

    Prices that seem to rise unchecked draw new waves of house hunters who in turn are forced to become increasingly creative in their search.

    But a Queen’s University professor cautions that the fortunes of the Toronto real estate market could be in for a swift reversal in a few years.

    John Andrew, director of the Queen’s Real Estate Roundtable, says he’s worried about the number of towers going up in the city.

    “The amount of condo building going on right now is staggering. They’re going to overshoot the market,” he says of the building industry.
    The search for affordability has driven Toronto buyers into lesser-known enclaves. - The search for affordability has driven Toronto buyers into lesser-known enclaves. | For The Globe and Mail
    Enlarge this image
    House hunting in Toronto? Here’s a few hidden gems....
    Carolyn Ireland
    Toronto— From Friday's Globe and Mail
    Published Thursday, Apr. 26, 2012 9:12AM EDT
    Last updated Thursday, Apr. 26, 2012 3:04PM EDT

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    Prof. Andrew adds that because builders have been building declining numbers of single-family houses in recent years, buyers who would have bought a house in the suburbs in years past are opting for condos instead.

    Appreciating real estate also draws investors, he points out. While statistics on the number of overseas investors are hard to come by, Prof. Andrew believes that anecdotal reports that many such buyers are based in China are exaggerated.

    “I think that’s a bit of a myth.”

    He does believe, however, that many condo units are being sold to people who don’t intend to live in them. These buyers may have a principal residence and purchase the condo unit with plans to rent it out. But if interest rates rise and make mortgages tough to carry, says the professor, those owners could flood the market with units for sale.

    The professor does not think a downturn is imminent, but he points out that many mortgages taken out today will be up for renewal in 2017 or 2018. By that time, interest rates could be substantially higher.

    An increase to five or six per cent is probably not a problem for most people, he says, but it wasn’t all that many years ago that rates were at seven or eight per cent. In the more distant past, they’ve been much higher than that.

    “What are people thinking?” questions Prof. Andrew, who is confounded that people don’t seem to believe that rates that high are within the realm of possibility.

    While homeowners will do everything they can to ride out a rough patch in order to keep their principal residence, he says, they typically are very quick to unload an investment property if it becomes a burden.

    “On an investment property, people are more willing to take a loss - even if it’s a substantial loss.”

    Prof. Andrew says data on building permits shows that builders are responding to the shortage of single-family houses by making plans to build more in the coming months. If house hunters can be patient until September, he says, more low-rise properties should be heading to the market.

    Long commuting times and poor public transit options are driving people from the suburbs back to the core, he says. In years past, the breadwinners in families were willing to commute in order to have a larger house and a backyard.

    “Before everybody complained about it but still bought the suburban dream.”

    But a trend towards moving back from the burbs may intensify if the city doesn’t fix its inadequate network of public transportation, the professor states.

    “The transit issue is going to be a real problem in Toronto in the coming decade.”
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  6. #5586
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    Quote Originally Posted by interested View Post
    Some interesting data from Globe and Mail: Sorry, I can't copy and paste the numbers.
    I think the data is being skewed by product mix and so averages may be very deceiving.

    http://www.theglobeandmail.com/life/...rticle2414899/

    http://www.theglobeandmail.com/life/...rticle2414825/
    As you suggested might the case, I think those numbers are meaningless. They didn't indicate the numbers of homes sold, but I suspect they are relatively few. So if a couple of houses sell for $5 million in Rosedale when most houses are $3 million, that's going to seriously skew the numbers.

  7. Default

    Quote Originally Posted by Eug View Post
    As you suggested might the case, I think those numbers are meaningless. They didn't indicate the numbers of homes sold, but I suspect they are relatively few. So if a couple of houses sell for $5 million in Rosedale when most houses are $3 million, that's going to seriously skew the numbers.
    Exactly. Hillcrest is a good example of that: the last time they published this the average house price had jumped staggeringly maybe 19 opr 30 something percent, and this year the number has plumetted (sp?), probably because that area includes Wychwood as well as more modest areas so more sales in one spot relative to the other messes everything up.

  8. #5588

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    I have seen large, small, glass , no glass condos, and can't find a direct corelation to maintenance fees. I have a gut feeling, in order to save building cost, the builders do costing cutting and choose lower quality choices. In the long run these choices result in issues an costs that are uploaded to the condo board. Higher maintenance fees would be required keep funding the higher maintenance cost. I would differentiate between deficiency and poor quality. Deficiency is supposed to be corrected early and paid for by the builder. Poor quality is not a deficiency but has long term cost factors that affect maintenance fees.
    Last edited by Ron; 2012-Apr-30 at 09:30. Reason: typos

  9. #5589
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    Quote Originally Posted by Ron View Post
    I have seen large, small, glass , no glass condos, and can't find a direct corelation to maintenance fees. I have a gut feeling, in order to save building cost, the builders do costing cutting and choose lower quality choices. In the long run these choices result in issues an costs that are uploaded to the condo board. Higher maintenance fees would be required keep funding the higher maintenance cost. I would differentiate between deficiency and poor quality. Deficiency is supposed to be corrected early and paid for by the builder. Poor quality is not a deficiency but has long term cost factors that affect maintenance fees.
    i've noticed a few of the new pre-cons are stating maintenance fees in the mid-$0.50s psf with gas and electricity as metered separately.

    i don't know if this is a change in strategy by stating the realistic amounts and they've come to realize that glass walled condos lose heat easily in the winters and heat up quickly in the summers .

  10. #5590

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    ^^^
    I believe the builders have to give a responsible estimate of the costs. We know gas and electricity have gone up considerably the past few years and I am sure newer projects reflect this.

    As well, I believe there has to be a Reserve fund estimate and that went up by the HST a couple of years ago. My point is that mid $0.50's I think is totally realistic for pretty much any condo that has amenities today. I think if they post $0.49 or less it is a massage of the numbers to psychologically have the agents say fees are in the "40 cents + but below 50 cents".

    finally, remember it is an estimate about what fees will be 5 years from now. Naturally they have an incentive to understate but have to be careful since I believe a material underestimate might provide grounds for late claiming cause to get out of the contract in that fees were deliberately/grossly understated.

  11. Default


  12. #5592

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    Quote Originally Posted by brockm View Post
    Reading Zero Hedge I see.

    If you get stomach the despicable racial intolerance that's so prevalent on it I agree there's some good financial info there that goes beyond the conventional MSM reporting.

    Regardless, we all knew of the back door bailout executed by the BOC and CMHC during the peak of the financial crisis. This is simply not news.

  13. #5593

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    Quote Originally Posted by brockm View Post
    Reading Zero Hedge I see.

    If you can stomach the despicable racial intolerance that's so prevalent on it I agree there's some good financial info there that goes beyond the conventional MSM reporting.

    Regardless, we all knew of the back door bailout executed by the BOC and CMHC during the peak of the financial crisis. This is simply not news.

  14. #5594
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    Quote Originally Posted by CN Tower View Post
    Regardless, we all knew of the back door bailout executed by the BOC and CMHC during the peak of the financial crisis. This is simply not news.
    you'd be surprised at the number of people that don't know that fact.

    it wasn't a 'bailout' per se; however, they did increase the liquidity available to the banks by buying the non-CMHC loans and taking the risk off the banks books and transferred it to CMHC (aka taxpayers)

  15. #5595
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    speaking of the above, i just came across this article:


    http://ca.finance.yahoo.com/news/can...--finance.html

    Canadian banks got $114B from governments during recession

    Canada's biggest banks accepted tens of billions in government funds during the recession, according to a report released today by the Canadian Centre for Policy Alternatives.

    Canada's banking system is often lauded for being one of the world's safest. But an analysis by CCPA senior economist David Macdonald concluded that Canada's major lenders were in a far worse position during the downturn than previously believed.

    Macdonald examined data provided by the Canada Mortgage and Housing Corporation, the Office of the Superintendent of Financial Institutions and the big banks themselves for his report published Monday.

    It says support for Canadian banks from various agencies reached $114 billion at its peak. That works out to $3,400 for every man, woman and child in Canada, and also to seven per cent of Canada's gross domestic product in 2009.

    The figure is also 10 times the amount Canadian taxpayers spent on the auto industry in 2009.

    "At some point during the crisis, three of Canada's banks — CIBC, BMO, and Scotiabank — were completely under water, with government support exceeding the market value of the company," Macdonald said. "Without government supports to fall back on, Canadian banks would have been in serious trouble."

    During October 2008 and June 2010, the banks combined to report $27 billion in profits on their balance sheets.

    One of the most well-known ways in which policymakers helped the banks during the crisis is through a $69-billion CMHC program whereby the housing agency took mortgages off the balance sheets of big Canadian banks. In contrast with other support facilities, all of the funds granted by the CMHC were through selling assets (in this case mortgages) to the housing agency. They were not funds that had to be paid back.

    The CMHC has provided the aggregate total of how much was given out, but has yet to release specifics on which banks sold how much to them, and when, the CCPA says.

    When asked for comment in reaction to the CCPA report, the Canadian Bankers Association noted that the $69 billion that Canada's big banks sold into the CMHC program is in fact only 55 per cent of what was allocated for the program.

    "Many of the mortgages were already insured and therefore, created no additional risk for the government," the CBA noted in an email to CBC News. The CMHC estimates that by the time the program is wound up, it will have generated $2.5 billion in profit as those mortgages are paid off, the bankers' group noted.

    But Canadian lenders also dipped into a program set up by the U.S. Federal Reserve aimed at providing cash to keep American banks afloat. CIBC and BMO took almost $3 billion each out of the fund, RBC and TD took out $8 billion and Scotiabank drew down almost $12 billion, the CCPA report found.

    That data came from the U.S. Federal Reserve, which released it publicly. But Macdonald's analysis found that Canadian banks got a comparable amount — $41 billion — from Bank of Canada facilities, an agency that has been far less transparent in sharing information.

    "Despite Access to Information requests for the data, the Bank of Canada refuses to release it," the CCPA report states.

    "The federal government claims it was offering the banks 'liquidity support,' but it looks an awful lot like a bailout to me," says Macdonald. "Whatever you call it, Canadian government aid for the country's biggest banks was far more indispensable than the official line would suggest.

    "The support for Canadian banks was much more substantial than Canadians were led to believe," Macdonald said.

    The Canadian Bankers Association disputes the notion that the funds in question were any sort of bailout, arguing they were routine transactions aimed at keeping the financial system liquid.

    "These funding measures were put in place to ensure that credit was available to lend to businesses and consumers to help the economy through the recession," the CBA said. "These funding measures were not put in place because banks were in financial difficulty."

    Since the start of the recession, the CBA notes 436 U.S. banks have failed. No Canadian financial institution went under, but Canada's banking sector was hit by an overall crisis of confidence in the banking sector that caused some of the banks' normal lending sources to dry up, the CBA says.

    Canadian banks get about two-thirds of their funding from consumer and business deposits, but the other third comes from credit markets.

    "It was these markets that were seizing up. Funding was less available," the CBA says. "Canadian banks continued to lend and increased their lending after some non-bank lenders pulled out of the Canadian market."

    While some of the funding came from government sources such as the Bank of Canada, the bankers' association points out that the central bank itself says Canadian banks needed less official central bank liquidity support than their foreign counterparts.

    To show the scale of the funding, the CCPA report contrasted the total value of the support Canadian banks took against the bank's total value at the time. Under that comparison, CIBC received $21 billion in support — almost 1.5 times the value of the company at the time. BMO maxed out at $17 billion or 118 per cent, Scotiabank peaked at $25 billion or 100 per cent of its value, while TD and RBC maxed out at $26 billion and $25 billion — good enough for 69 and 63 per cent, respectively, of the total value of those companies at the time.

    "It would have been cheaper to buy every single share in these companies," Macdonald said.

    But the CBA disputes those numbers too, saying comparing a bank's value to the level with which it participated in a liquidity program aimed at boosting confidence in the market is "an apples to oranges comparison as the two factors are not at all related."

    "The Oxford dictionary defines bailout as 'financial assistance to a failing business or economy to save it from collapse," the Canadian Bankers Association noted.

    "That definitely was not the case here: not one bank in Canada was in danger of going bankrupt or required the government to buy an equity stake under taxpayer-funded bailouts."

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