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VanLord
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Re: Vancouver's housing market crash hits home.

Fri Aug 26, 2016 8:45 pm

Google "liar loans" or "mortgage fraud" in Canada. Prepare to be frightened. I'm guessing that you don't read business sections of newspapers, this stuff is well known.
Here's the first article I found on liar loans..haha, and um I have subscriptions to both the Globe and The Sun so I get my share of business news...thanks!
http://www.canadianmortgagetrends.com/c ... -more.html.
Your google must work different than mine.  Typed "liar loans bc" and came up with
http://globalnews.ca/news/2140474/liar- ... t-experts/

http://globalnews.ca/news/2186549/banks ... ng-market/

Not some article from 2010 that you linked - maybe time to udpate that subscription
Nah my article was just below those ones that you found...which by the way are over a year old...I guess you missed the point of the article I linked to, the biggest bear of them all is a liar himself, exaggerating statistics and making stuff up to try and prove his point. 
Oh and did you even read the articles you link to?
Here are the odds that two of the country’s biggest lenders have inadvertently given home loans to risky borrowers who may have lied about incomes in order to qualify for a mortgage: nil, they said.

Facing questions about their home-lending procedures, Royal Bank of Canada and Bank of Montreal said their internal checks are strong enough to weed out so-called “liar loans,” or applications that contain falsified information such as inflated income
Home Capital, the biggest non-bank lender in the country, said last month it learned that a very small number of third-party mortgage brokers in Ontario had lied about clients’ income statements.
Either way it appears to be a small problem and hasn't hit the news in over a year

Keep on Trolling RealReally!!
 
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semven
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Re: Vancouver's housing market crash hits home.

Sat Aug 27, 2016 2:49 pm

Here's the first article I found on liar loans..haha, and um I have subscriptions to both the Globe and The Sun so I get my share of business news...thanks!
http://www.canadianmortgagetrends.com/c ... -more.html.
Your google must work different than mine.  Typed "liar loans bc" and came up with
http://globalnews.ca/news/2140474/liar- ... t-experts/

http://globalnews.ca/news/2186549/banks ... ng-market/

Not some article from 2010 that you linked - maybe time to udpate that subscription
Nah my article was just below those ones that you found...which by the way are over a year old...I guess you missed the point of the article I linked to, the biggest bear of them all is a liar himself, exaggerating statistics and making stuff up to try and prove his point.  
Oh and did you even read the articles you link to?
Here are the odds that two of the country’s biggest lenders have inadvertently given home loans to risky borrowers who may have lied about incomes in order to qualify for a mortgage: nil, they said.

Facing questions about their home-lending procedures, Royal Bank of Canada and Bank of Montreal said their internal checks are strong enough to weed out so-called “liar loans,” or applications that contain falsified information such as inflated income
Home Capital, the biggest non-bank lender in the country, said last month it learned that a very small number of third-party mortgage brokers in Ontario had lied about clients’ income statements.
Either way it appears to be a small problem and hasn't hit the news in over a year

Keep on Trolling RealReally!!

Your word selection and sentence structure makes me think you might be an Aussie!   I wonder if at some point the "Liar Loans" that you are referring to are being confused with the "NINJA" loans that were rampant in the runup to the crash...Typically a self employed person in Canada can struggle with proving income to satisfy a Lending Threshold due to the fact that they may be spinning as little income off their business as possible since paying corporate taxes can be cheaper...or receiving their income in the form of dividends.
 I guess my point is that often the "inflated" income is closer to the truth than the income that is declared on personal returns
 
VanLord
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Re: Vancouver's housing market crash hits home.

Mon Aug 29, 2016 8:09 am


Your google must work different than mine.  Typed "liar loans bc" and came up with
http://globalnews.ca/news/2140474/liar- ... t-experts/

http://globalnews.ca/news/2186549/banks ... ng-market/

Not some article from 2010 that you linked - maybe time to udpate that subscription
Nah my article was just below those ones that you found...which by the way are over a year old...I guess you missed the point of the article I linked to, the biggest bear of them all is a liar himself, exaggerating statistics and making stuff up to try and prove his point.  
Oh and did you even read the articles you link to?
Here are the odds that two of the country’s biggest lenders have inadvertently given home loans to risky borrowers who may have lied about incomes in order to qualify for a mortgage: nil, they said.

Facing questions about their home-lending procedures, Royal Bank of Canada and Bank of Montreal said their internal checks are strong enough to weed out so-called “liar loans,” or applications that contain falsified information such as inflated income
Home Capital, the biggest non-bank lender in the country, said last month it learned that a very small number of third-party mortgage brokers in Ontario had lied about clients’ income statements.
Either way it appears to be a small problem and hasn't hit the news in over a year

Keep on Trolling RealReally!!

Your word selection and sentence structure makes me think you might be an Aussie!   I wonder if at some point the "Liar Loans" that you are referring to are being confused with the "NINJA" loans that were rampant in the runup to the crash...Typically a self employed person in Canada can struggle with proving income to satisfy a Lending Threshold due to the fact that they may be spinning as little income off their business as possible since paying corporate taxes can be cheaper...or receiving their income in the form of dividends.
 I guess my point is that often the "inflated" income is closer to the truth than the income that is declared on personal returns
I'm no Aussie Mate - but I can see the difficulty for a self employed person, proving income.  However this would seem like in Canada the burden of proof is on the person to prove income to get a loan, rather than the bank accepting risky loans.  I just don't see this factor having a major impact on a crash as Geyser is saying.
 
tdma800
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Re: Vancouver's housing market crash hits home.

Mon Aug 29, 2016 2:22 pm

Most people in Vancouver know getting a mortgage is so hard it isnt even funny unless you have a large down payment of 50% lol
 
Geyser
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Re: Vancouver's housing market crash hits home.

Mon Aug 29, 2016 2:50 pm

Most people in Vancouver know getting a mortgage is so hard it isnt even funny unless you have a large down payment of 50% lol
yes I heard they've been tightening a lot since the banks woke up to the high risk, that could explain why the number of sales collapsed months before the surprise introduction of the Crash Tax. We live in interesting times.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
HomelessinSD
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Re: Vancouver's housing market crash hits home.

Mon Aug 29, 2016 3:28 pm

House in East Van - 1M Mortgage - Monthly Housing Expenses $5860 , less 2 Mortgage Helper suites $2000 total per month, leaves Monthly housing at $3860

Large Condo Downtown - 800 k Mortgage - Monthly Housing Expenses $4650

Medium Condo Downtown - 500k Mortgage - Monthly Housing expenses $3050

So lets say that the company also provides a RRSP/ Pension matching program, plus an employee stock plan, plus a 15% annual bonus, for ease of math will say that is on top of the 100k salary. 

Using the worst case example, living in a large downtown condo, lets call it 6k all-in for car plus housing,  Their retirement savings is taken care, TFSA can get maxed out via the stock plan and they have  over 20k in after-tax bonus money (perhaps for vacations??), plus 6.5k per month to live-on (or approx $215 per day)

 
I guess it would make sense to first disclose that I don't personally know people who are working professionals, large mortgage, and living paycheck to paycheck. So I can't back any counter argument up with anecdotal examples. I'm just saying it could happen...
Your example of the house in East Vancouver with the $1 million mortgage... I think you've moved the goal posts. Adding $2000 in rental revenue really means that they don't have a $1 million mortgage on their own housing - part of the $1 million mortgage is associated with the rental investment.
For the big condo, the mortgage payments for $800k, 30 year fixed at 2.2% are just over $4100. Strata fees, utilities, cable, maintenance, property taxes, and the actual housing costs are probably closer to $5500 / month.
 
VanLord
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Re: Vancouver's housing market crash hits home.

Mon Aug 29, 2016 8:52 pm

House in East Van - 1M Mortgage - Monthly Housing Expenses $5860 , less 2 Mortgage Helper suites $2000 total per month, leaves Monthly housing at $3860

Large Condo Downtown - 800 k Mortgage - Monthly Housing Expenses $4650

Medium Condo Downtown - 500k Mortgage - Monthly Housing expenses $3050

So lets say that the company also provides a RRSP/ Pension matching program, plus an employee stock plan, plus a 15% annual bonus, for ease of math will say that is on top of the 100k salary. 

Using the worst case example, living in a large downtown condo, lets call it 6k all-in for car plus housing,  Their retirement savings is taken care, TFSA can get maxed out via the stock plan and they have  over 20k in after-tax bonus money (perhaps for vacations??), plus 6.5k per month to live-on (or approx $215 per day)

 
I guess it would make sense to first disclose that I don't personally know people who are working professionals, large mortgage, and living paycheck to paycheck. So I can't back any counter argument up with anecdotal examples. I'm just saying it could happen...
Your example of the house in East Vancouver with the $1 million mortgage... I think you've moved the goal posts. Adding $2000 in rental revenue really means that they don't have a $1 million mortgage on their own housing - part of the $1 million mortgage is associated with the rental investment.
For the big condo, the mortgage payments for $800k, 30 year fixed at 2.2% are just over $4100. Strata fees, utilities, cable, maintenance, property taxes, and the actual housing costs are probably closer to $5500 / month.
Funny the CIBC mortgage calculator for a 800k - 30 year fixed at 2.2% is $3034 monthly, I used 2.15 at 25 yrs which is $3446 monthly...The rest of the expenses work out to about $1400 per month, including $850 strata, $4100 annual property tax, Cable, Internet, Hydro and Insurance...I didn't include any other maintenance, but generally that would be quite small...maybe a few light bulbs and the odd minor thing, but my numbers are based on a real example.  Again this works out to about $4650 based on my mortgage assumption.
As for the house, I guess those new goal posts are important for people to keep in mind because most people have the rental suite(s) in their houses in East Van.  The beauty is your so-called rental investment is capital gains free and helps insulate against job loss or loss of income.  This is a common scenario, so people maybe aren't so bad off as you think.
Add in the extra incentives that a good paying job usually provides, and they have the retirement savings, the TFSA and some rainy day savings to put them in a very comfortable lifestyle, certainly not pay cheque to pay cheque. Even if you move them down to the  80k per person income, they would be still be relatively comfortable.
 
 
HomelessinSD
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Re: Vancouver's housing market crash hits home.

Tue Aug 30, 2016 7:44 am

My mistake: the mortgage calculator I was using was adding int property tax and insurance into the payment.

Most people agree with you that maintenance is a "small" thing and shouldn't be considered. I disagree - houses need painting, roofs need replacing, water heaters have a shelf life, appliances break down, etc.  Replace a $15k roof every 20 years and that is $65 you should be putting away month in reserve funds.
 
VanBullBear
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Re: Vancouver's housing market crash hits home.

Tue Aug 30, 2016 9:14 am

House in East Van - 1M Mortgage - Monthly Housing Expenses $5860 , less 2 Mortgage Helper suites $2000 total per month, leaves Monthly housing at $3860

Large Condo Downtown - 800 k Mortgage - Monthly Housing Expenses $4650

Medium Condo Downtown - 500k Mortgage - Monthly Housing expenses $3050

So lets say that the company also provides a RRSP/ Pension matching program, plus an employee stock plan, plus a 15% annual bonus, for ease of math will say that is on top of the 100k salary. 

Using the worst case example, living in a large downtown condo, lets call it 6k all-in for car plus housing,  Their retirement savings is taken care, TFSA can get maxed out via the stock plan and they have  over 20k in after-tax bonus money (perhaps for vacations??), plus 6.5k per month to live-on (or approx $215 per day)

 
I guess it would make sense to first disclose that I don't personally know people who are working professionals, large mortgage, and living paycheck to paycheck. So I can't back any counter argument up with anecdotal examples. I'm just saying it could happen...
Your example of the house in East Vancouver with the $1 million mortgage... I think you've moved the goal posts. Adding $2000 in rental revenue really means that they don't have a $1 million mortgage on their own housing - part of the $1 million mortgage is associated with the rental investment.
For the big condo, the mortgage payments for $800k, 30 year fixed at 2.2% are just over $4100. Strata fees, utilities, cable, maintenance, property taxes, and the actual housing costs are probably closer to $5500 / month.
Funny the CIBC mortgage calculator for a 800k - 30 year fixed at 2.2% is $3034 monthly, I used 2.15 at 25 yrs which is $3446 monthly...The rest of the expenses work out to about $1400 per month, including $850 strata, $4100 annual property tax, Cable, Internet, Hydro and Insurance...I didn't include any other maintenance, but generally that would be quite small...maybe a few light bulbs and the odd minor thing, but my numbers are based on a real example.  Again this works out to about $4650 based on my mortgage assumption.
As for the house, I guess those new goal posts are important for people to keep in mind because most people have the rental suite(s) in their houses in East Van.  The beauty is your so-called rental investment is capital gains free and helps insulate against job loss or loss of income.  This is a common scenario, so people maybe aren't so bad off as you think.
Add in the extra incentives that a good paying job usually provides, and they have the retirement savings, the TFSA and some rainy day savings to put them in a very comfortable lifestyle, certainly not pay cheque to pay cheque. Even if you move them down to the  80k per person income, they would be still be relatively comfortable.
 
Thanks for this perspective, however I find this over-simplified.
There are assumptions in these calculations:
1. Rates are to remain constant or decrease since the risk of rate increase is not put into account. This is unlikely over a span of 30 years.
2. The borrower has 20% down. I have not inquired about mortgages lately so forgive me if I make any wrong assumptions. To get over 25 years amortization you need to have 20% down - according to RBC website. This is 160 CAD on an 800K home. I don't know anyone who has 160k, let alone 100k to spare for a down without the help of bank of mom and dad. The probability of a person that is in the top 5% of income AND has 100K + for down is quite low, probably in the top 0.5% of the population. - quite an anomaly but they do exist.
3. This person has no plans of having a family. This is probably the biggest assumption here. Children are expensive. They require living space, child care, food, clothing, education... etc - all of which are extremely expensive. In my humble opinion, having to chose between creating a family or owning Vancouver property is about as uncomfortable as it gets, and I'm willing to bet that most people would agree. 
This scenario paints a picture for less than 1% of the population, furthermore it's for a person that does not want a family which filters it down to even less than 1%.
 
HomelessinSD
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Re: Vancouver's housing market crash hits home.

Tue Aug 30, 2016 10:17 am

"The borrower has 20% down. I have not inquired about mortgages lately so forgive me if I make any wrong assumptions. To get over 25 years amortization you need to have 20% down - according to RBC website. This is 160 CAD on an 800K home. I don't know anyone who has 160k, let alone 100k to spare for a down without the help of bank of mom and dad. The probability of a person that is in the top 5% of income AND has 100K + for down is quite low, probably in the top 0.5% of the population. - quite an anomaly but they do exist."

No offense intended, but my guess is that you are still quite young. There are lots of people in their 30's (and even more in their 40's) with several hundred thousand in the bank available for a downpayment.
 
westcoastfella
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Re: Vancouver's housing market crash hits home.

Tue Aug 30, 2016 10:42 am

"The borrower has 20% down. I have not inquired about mortgages lately so forgive me if I make any wrong assumptions. To get over 25 years amortization you need to have 20% down - according to RBC website. This is 160 CAD on an 800K home. I don't know anyone who has 160k, let alone 100k to spare for a down without the help of bank of mom and dad. The probability of a person that is in the top 5% of income AND has 100K + for down is quite low, probably in the top 0.5% of the population. - quite an anomaly but they do exist."

No offense intended, but my guess is that you are still quite young. There are lots of people in their 30's (and even more in their 40's) with several hundred thousand in the bank available for a downpayment.
I agree.  Especially if someone is in the top 5% of household incomes, which would mean ~250K per year?  Without a mortgage or any significant house expenses to deal with, it would take a fair effort to spend all that money every month.  Additionally, people that earn that much money tend to be more financially astute, and tend to save more than others.  If you have high income, and live a "normal" lifestyle, it should not take long to save 100K.
 
VanLord
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Re: Vancouver's housing market crash hits home.

Tue Aug 30, 2016 10:58 am

My mistake: the mortgage calculator I was using was adding int property tax and insurance into the payment.

Most people agree with you that maintenance is a "small" thing and shouldn't be considered. I disagree - houses need painting, roofs need replacing, water heaters have a shelf life, appliances break down, etc.  Replace a $15k roof every 20 years and that is $65 you should be putting away month in reserve funds.
Those big things don't apply when it comes to a condo...In the case of my condo that I'm using as an example, the $850 per month includes a fairly sizable contribution into the Contingency Reserve and no Special Assessments are going to be needed in the next 10-15 years, so it is safe to not include maintenance.  I would include the minor items in my month to month expenses. 
When talking about a house, or condo with a small reserve and big expenses coming up, yes absolutely that needs to be factored in.  As for my house example, I included about 7k per year in Maintenance, maybe that won't cover all the things like a roof, but would cover painting, appliances, water heaters, etc.
 
HomelessinSD
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Re: Vancouver's housing market crash hits home.

Tue Aug 30, 2016 11:02 am

A year old, but outlines Canada's top 1%, 5%, 10%.

You only needed to make $222k to be in the top 1% (but the average income of the top 1% earners was over $450k).

Only $115k to be in the top 5%.

Only $90k to be in the top 10%.

Of course, most the people making these top tiered are in Ontario, Alberta, and Quebec. BC was fourth.
 
VanLord
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Re: Vancouver's housing market crash hits home.

Tue Aug 30, 2016 11:14 am

I guess it would make sense to first disclose that I don't personally know people who are working professionals, large mortgage, and living paycheck to paycheck. So I can't back any counter argument up with anecdotal examples. I'm just saying it could happen...
Your example of the house in East Vancouver with the $1 million mortgage... I think you've moved the goal posts. Adding $2000 in rental revenue really means that they don't have a $1 million mortgage on their own housing - part of the $1 million mortgage is associated with the rental investment.
For the big condo, the mortgage payments for $800k, 30 year fixed at 2.2% are just over $4100. Strata fees, utilities, cable, maintenance, property taxes, and the actual housing costs are probably closer to $5500 / month.
Funny the CIBC mortgage calculator for a 800k - 30 year fixed at 2.2% is $3034 monthly, I used 2.15 at 25 yrs which is $3446 monthly...The rest of the expenses work out to about $1400 per month, including $850 strata, $4100 annual property tax, Cable, Internet, Hydro and Insurance...I didn't include any other maintenance, but generally that would be quite small...maybe a few light bulbs and the odd minor thing, but my numbers are based on a real example.  Again this works out to about $4650 based on my mortgage assumption.
As for the house, I guess those new goal posts are important for people to keep in mind because most people have the rental suite(s) in their houses in East Van.  The beauty is your so-called rental investment is capital gains free and helps insulate against job loss or loss of income.  This is a common scenario, so people maybe aren't so bad off as you think.
Add in the extra incentives that a good paying job usually provides, and they have the retirement savings, the TFSA and some rainy day savings to put them in a very comfortable lifestyle, certainly not pay cheque to pay cheque. Even if you move them down to the  80k per person income, they would be still be relatively comfortable.
 
Thanks for this perspective, however I find this over-simplified.
There are assumptions in these calculations:
1. Rates are to remain constant or decrease since the risk of rate increase is not put into account. This is unlikely over a span of 30 years.
2. The borrower has 20% down. I have not inquired about mortgages lately so forgive me if I make any wrong assumptions. To get over 25 years amortization you need to have 20% down - according to RBC website. This is 160 CAD on an 800K home. I don't know anyone who has 160k, let alone 100k to spare for a down without the help of bank of mom and dad. The probability of a person that is in the top 5% of income AND has 100K + for down is quite low, probably in the top 0.5% of the population. - quite an anomaly but they do exist.
3. This person has no plans of having a family. This is probably the biggest assumption here. Children are expensive. They require living space, child care, food, clothing, education... etc - all of which are extremely expensive. In my humble opinion, having to chose between creating a family or owning Vancouver property is about as uncomfortable as it gets, and I'm willing to bet that most people would agree. 
This scenario paints a picture for less than 1% of the population, furthermore it's for a person that does not want a family which filters it down to even less than 1%.
This discussion was about current owners living pay cheque to pay cheque and being in danger of needing to sell or going into foreclosure,etc if they were to lose a job, etc.  This wasn't about the need to save money for a downpayment, provide for children etc.  It was about how much money they would have left over after housing expenses.  I do believe the examples I gave still leave room for child expenses and a decent cushion to save money and not be in a pay cheque to pay cheque situation. 

I saved 150k and bought my house in East Van when I was 29. That was at a job I started at 32k per year and worked my way up to about 60k by the time I bought the house.  Luckily I was able to invest and that helped me get money I needed for the downpayment as well.

It can be done. 
Take a look at the couple are clients of Garth Turners who have saved over million and retired in their 30s.  http://www.cbc.ca/news/business/house-i ... -1.3716641
Their blog is quite interesting
 
VanLord
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Re: Vancouver's housing market crash hits home.

Tue Aug 30, 2016 11:45 am

A year old, but outlines Canada's top 1%, 5%, 10%.

You only needed to make $222k to be in the top 1% (but the average income of the top 1% earners was over $450k).

Only $115k to be in the top 5%.

Only $90k to be in the top 10%.

Of course, most the people making these top tiered are in Ontario, Alberta, and Quebec. BC was fourth.
This always seems low to me...I guess it the .01% that you really want to belong to!!
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