Whatever happens to the housing industry in this country, the damage will invariably be papered over by financial institutions marking assets to book value instead of market value. That’s what they’ve been doing since 2008 and most everyone seems okay with it. What could possibly go wrong?
“I think the last time I saw this was in 2008-2009 during the financial crisis,” she said. “And in 2020 during COVID-19.”
Calderwood has built a career specializing in selling luxury real estate from condos to waterfront properties, and she has recently noticed both a decline in sales and prices, as well as a rise in foreclosures.
“It really picked up last year, but this year, too,” she said. “A lot of foreclosures and then you just see the price dropping. Sometimes people are losing a couple of million.”
Just need to import more fine quality future truck drivers and doctors from Khalistan. 4 families per house mind you, but will still help take up the slack.
Falling housing prices, particularly in the more exorbitant parts of the country, are a good thing. It means buying is now an option for more people.
But more foreclosures is an inevitible consequence of falling prices, as people walk away from houses they have no equity in.
There’s a song about this: “Catch a falling house and price it in your pocket, save it for a rainy day..” Along those lines.
This is much on point than house prices falling enough to really hurt people, but not enough for wage slaves to afford.
https://www.youtube.com/watch?v=K5xCPP_0amk
Recently retired CA here, spent the last 15 years in the mortgage accounting/reporting area of a large, well-known financial institution with a $15 billion commercial mortgage portfolio. Mortgage assets are marked to market, not carried at book value. I know this because I was the person responsible for ensuring the correct market value inputs every month (and daily for some of our mortgage funds offered to private investors) and correct market values were calculated. The internal and external audit teams were constantly verifying our team’s calculations to ensure compliance with IFRS standards which came into effect about 5 years ago for non-publicly traded assets. Mark-to-market (MTM) is a high profile line item on the income statement because of its potential variability.
The only time an asset is marked to book value is if a provision is applied to it. This provision will show as a charge against income so there is no way of hiding it.
Having said this, I am in no way approving of the Lieberal’s mass immigration, money printing extravaganza and zero interest rates which has led to the current situation. My first mortgage was at 14.5% in 1988 so I find it hard to be sympathetic for 5% rates….
I bought a new home in 1987, put money down in 1986 to hold the price. Builder had a deal with TD for a 12% discount mortgage. Hold price was $101K, same house being sold by builder when we moved in 1 year later was about $130K. Got transferred in 1990, sold for $190K, bought a new bigger house for $204K at I think about 8% interest. Sold when we had to move again 6 years later for $164K.
You would like to think so, but RBC in particular has a way around it. They have given “blanket appraisals” to new condo buildings in the GTA, even though they are 30-40% less than when pre-sold. The bank is issuing underwater mortgages because they have massive development loans outstanding with the builders and they know if people can’t close the builders will take the fall, impossible to sue 40% of the pre-buyers if they renege on closing. The bank is choosing to have thousands of small borrowers rather than one or two big ones who default.
I paid 12.5% in 1983 on a 5-year ARM … and considered myself lucky and clever to get it! Canada’s problem is that they have no such thing as a 30-year mortgage. I was fortunate to get OUT of that ARM at a much better rate after Reagan fixed Carter’s Bidenesque shitshow.
https://assets.themortgagereports.com/wp-content/uploads/2020/07/Screen-Shot-2020-07-20-at-12.20.52-PM.png
You can’t do a 30 year mortgage in a country where you can’t write off interest payments.
Can you show in any of the annual reports how many mortgages that the banks have on their books that are at or above the 95% threshold for residentials?
There have been a number of buildings, especially in the Toronto Area where the closings exceed the current value of the condo.
“The developer, Gairloch, partnered with RBC to offer a blanket appraisal program, which would allow buyers to secure financing based on their original purchase price rather than the lower appraised value. But Baradziej declined.” For reference, Baradziej agreed to buy a preconstruction condo at $2.195M, paid $439k as a deposit, and received an appraisal of $1.6 million before walking away.
So in this deal betweem Gairloch and RBC, who is on the hook for the $595k difference?
Frankly, there are confectioners in Calgary who produce better fudged numbers than these. They’re great on birthday cakes!