The Elusive Canadian Housing Bubble

[GRG55]

Re: The Elusive Canadian Housing Bubble

The times have sure changed. When I was a kid my Mom used to lose sleep over the fact my parents had a mortgage. They put more than 50% down when they bought the place. But that was eons ago.

Just today Mrs. GRG55 dropped by the local branch of the bank to deposit a cheque (remember those?). TNL@TB (Garth Turner's "the nice lady at the bank) points at her all knowing computer screen and announces: "Did you know you've been pre-approved for an unsecured personal line of credit?". The rest of the conversation apparently went something like this:

Yes, I got a letter in the mail but I threw it away because it asked for the name of my employer, and I am not employed.
Oh, well I see you have a business account with us. You can write in "self-employed".
Yes, I am an owner but not an employee of that business and therefore cannot claim to have a regular income.
Oh. Well let me check with our credit manager. I am sure if you have a business account you should still qualify.
blah, blah, blah.
Apparently, no amount of protesting about the lack of necessity or desire for such credit was going to deter TNL@TB from seeing it through.

I only found out because this evening I got home before Mrs. G and picked up a voice mail from TNL@TB informing her that all the forms were filled out and ready, just requiring her to pop by tomorrow for a signature. And, by the way, a "no monthly fee" pre-approved overdraft on our chequeing account has also kindly been arranged (without our asking) as well. Seems the only thing missing is a HELOC to fund an extended South Sea cruise. I think the banks refer to all of these things as "relationship products"

By way of explanation when she was confronted on her arrival home to the bunker, Mrs. G says they told her she is such a good customer they would loooove to lend her money. Yikes!!

Hahaha, the bankers who push these products don't care or even understand what they are doing. They see it on their computer screen and have to push the product because that is the only way they make commission.

Postscript: Mrs. GRG55 decided to take the bank up on its generous offer. Her unsecured credit limit is 50% greater than what the same bank offered her husband. Apparently it pays to have an honest looking face.

[jpatter666]

Re: The Elusive Canadian Housing Bubble

Postscript: Mrs. GRG55 decided to take the bank up on its generous offer. Her unsecured credit limit is 50% greater than what the same bank offered her husband. Apparently it pays to have an honest looking face.

The current economic reality baffles me. Bought a new car for Mrs. Jpatter a few years ago. Was prepared to pay cash. Dealer offered three years at 0.0% and $1000 off if we'd finance. Say what? But OK -- and that's how it worked.

Current thing is the rash of credit card offers with tens of thousands of points (often worth about $500+) for accepting the card and spend X amount in the first N months. First year free then $Y per year. When the year runs out, we cancel the card.

We've played this one over the past few years with multiple cards, sometimes the *same* card (we cancel, they give us the same offer to re-up).

I sometimes wonder if the current monetary virtual reality has warped everyone's mind. You hardly ever see cash anymore. All virtual bits that you make, pay and/or invest. It's Monopoly on a world scale.

[don]

Re: The Elusive Canadian Housing Bubble

Postscript: Mrs. GRG55 decided to take the bank up on its generous offer. Her unsecured credit limit is 50% greater than what the same bank offered her husband. Apparently it pays to have an honest looking face.

I decided to take my business checking account's repeated offers for a business CC, expecting a modest limit based on my low level of activity on the account. They started at $18K and bumped it to $24K on the first statement. Wonder if we'll break 30 next month?

[santafe2]

Re: The Elusive Canadian Housing Bubble

Current thing is the rash of credit card offers with tens of thousands of points (often worth about $500+) for accepting the card and spend X amount in the first N months. First year free then $Y per year. When the year runs out, we cancel the card.

Yes, the credit card offers are crazy right now. I just picked up a Chase / Southwest credit card. Spend $2,000 in the first couple of months and receive 50,000 pts. from Southwest. That's worth $700-$850 on "wanna get away" fares. The points just showed up in my account last week so we'll use them this summer instead of buying airfare. It makes no sense to me but if they want to give away airfare I'm happy to take it.

I got this offer at a kiosk on a layover in Phoenix but I suspect they're available anywhere Southwest flies.

[GRG55]

Re: The Elusive Canadian Housing Bubble

The current economic reality baffles me. Bought a new car for Mrs. Jpatter a few years ago. Was prepared to pay cash. Dealer offered three years at 0.0% and $1000 off if we'd finance. Say what? But OK -- and that's how it worked.

...

The 0.0% part is recent, but the rest of this part isn't. For many decades one of the little known secrets buying a new car was that one could get a lower price if it was financed through the dealer (as opposed to paying cash or financing it privately through your bank). A long time back the dealer owners discovered the value of providing credit and it was common for those owners to set up their own private credit companies. In the early 1970s these also started providing the credit required to promote car leasing as tax laws made that more popular for company owned vehicles. Back then the best way to work the system was to negotiate the price down by taking the dealer finance and then pay it off after the first monthly installment.

Of course we all know how it played out. The car manufacturers weren't about to be left out of a good thing, GMAC et al, sub-prime, auto makers become banks in drag, financial crisis, bailout, etc...

[don]

Re: The Elusive Canadian Housing Bubble

I got an excellent out-the-door price on a new Hyundai for my wife - her vehicle of choice (with a great warranty). It was a cash buy but the dealership insisted on financing to make the deal. Worked for both of us. I paid it off in a couple of months. They made it clear the Hyundai financing was critical, and non-negotiable at that price , for them.

[thriftyandboringinohio]

Re: The Elusive Canadian Housing Bubble

I had a similar experience some years ago at a Ford dealership. I was buying a new little Ford ranger pickup cash. We had all the papers signed and I had written the check and handed it to the sales manager. The finance manager came in and explained they would not sell the truck at that price unless I financed it. He actually gave me back my check and let me walk out.
The junior salesman was pretty crestfallen when his commission walked out the door with me.

[GRG55]

Re: The Elusive Canadian Housing Bubble

May data. VancouverGoingUp and Taraaaanta too!

[vt]

Re: The Elusive Canadian Housing Bubble

American mortgage alarm:

I’m hearing this over the radio just this week: 125% mortgage loans, credit only fair? No problem!


http://www.thetruthaboutmortgage.com...re-back-again/

Isn’t this what caused the meltdown in the first place? They also say if your credit is only “fair”, that’s ok.

Low quality customers, loans for more than the house is worth equals the beginning of the end.

Will they ever learn?.

This actually was created a few years ago to help people who bought at the top and have been under water, but these ads seem like they are trying to lure in new victims.

[Polish_Silver]

learning fast

American mortgage alarm:

I’m hearing this over the radio just this week: 125% mortgage loans, credit only fair? No problem!

. . . .

Will they ever learn?.

. . . .

They learned "bankruptcy for profit" very quickly. They mortgage issuer keeps the loan origination fees.
Other institutions and tax payers
keep the loan contract and the associated risk.

The incentive structure, including the legal system, does nothing but encourage the practice. Until the loan issuers get a major stake
in the downside (for example, by holding the loan to maturity) the practice will continue.


PS

[GRG55]

VancouverGoingSmaller...

...and smaller, and smaller.

I wasn't sure if I should post this here or on the "You Can't Make This Stuff Up" thread.
My alma mater, the University of British Columbia, is tackling the pumped up price of housing in Vancouver in the most obvious way. You will be forgiven it you think Canada is a country with limited land mass.

UBC proposes 145-sq-ft micro apartments as affordable student housing

June 3, 2015Updated : June 3, 2015 | 8:44 pm

A proposal for tiny student apartments at the University of British Columbia is grabbing a huge amount of attention in this housing-obsessed city.

UBC’s managing director of student housing Andrew Parr has been yielding a flurry of media requests about the proposal to build 145-square-foot apartments – at 12 feet by 12 feet, that’s about the size of a parking spot – as part of a new student housing complex for upper year students.

If approved by the university’s board of governors, the units that aim to squeeze in a bathroom and a kitchenette would rent for between $660 and $690 a month when complete in 2019, Parr said Wednesday...

...“It’s a unique notion for Vancouver, and a somewhat unique notion for North American society, the idea of living in a really small compact space like this and relying on the community around you for other parts of your living environment,” he said. “It does come down to a psychology about how North Americans feel about property… bigger is always better.”

While some students think the proposal is “nuts,” Parr said most feedback is positive in discussions he’s had with students and administration. Ultimately it boils down to trying to get more, cheaper housing at the Vancouver campus, which doesn’t have enough housing supply. Constructing smaller units costs less, so Parr estimates students will save about $350 to $500 to month compared to other campus units.

“That’s quite substantial for students on a budget,” he said...

[jk]

Re: VancouverGoingSmaller...

...and smaller, and smaller.

I wasn't sure if I should post this here or on the "You Can't Make This Stuff Up" thread.
My alma mater, the University of British Columbia, is tackling the pumped up price of housing in Vancouver in the most obvious way. You will be forgiven it you think Canada is a country with limited land mass.

UBC proposes 145-sq-ft micro apartments as affordable student housing

June 3, 2015Updated : June 3, 2015 | 8:44 pm

A proposal for tiny student apartments at the University of British Columbia is grabbing a huge amount of attention in this housing-obsessed city.

UBC’s managing director of student housing Andrew Parr has been yielding a flurry of media requests about the proposal to build 145-square-foot apartments – at 12 feet by 12 feet, that’s about the size of a parking spot – as part of a new student housing complex for upper year students.

If approved by the university’s board of governors, the units that aim to squeeze in a bathroom and a kitchenette would rent for between $660 and $690 a month when complete in 2019, Parr said Wednesday...

...“It’s a unique notion for Vancouver, and a somewhat unique notion for North American society, the idea of living in a really small compact space like this and relying on the community around you for other parts of your living environment,” he said. “It does come down to a psychology about how North Americans feel about property… bigger is always better.”

While some students think the proposal is “nuts,” Parr said most feedback is positive in discussions he’s had with students and administration. Ultimately it boils down to trying to get more, cheaper housing at the Vancouver campus, which doesn’t have enough housing supply. Constructing smaller units costs less, so Parr estimates students will save about $350 to $500 to month compared to other campus units.

“That’s quite substantial for students on a budget,” he said...

put in communal bathrooms and kitchens and lo-and-behold, you've got a dormitory. the craziness is trying to shoehorn in individual bath and cooking facilities. seems to me a lot of students have lived in spaces like that. i had rooms somewhat bigger than that my first 2 years of college, but otoh i also had a roommate each year.

[santafe2]

Re: VancouverGoingSmaller...

UBC’s managing director of student housing Andrew Parr has been yielding a flurry of media requests about the proposal to build 145-square-foot apartments – at 12 feet by 12 feet, that’s about the size of a parking spot – as part of a new student housing complex for upper year students...
“That’s quite substantial for students on a budget,” he said...

Coming to a "university" near you for "students on a budget".

[GRG55]

Re: VancouverGoingSmaller...

put in communal bathrooms and kitchens and lo-and-behold, you've got a dormitory. the craziness is trying to shoehorn in individual bath and cooking facilities. seems to me a lot of students have lived in spaces like that. i had rooms somewhat bigger than that my first 2 years of college, but otoh i also had a roommate each year.

When I was a student at UBC in the 1970s the premier student residence on campus was Walter Gage Towers (named after a very popular President of the University). Each floor in the Towers had 6 "single gender" bedrooms with bed, closet and desk space & sharing a common bath, kitchen, lounge area and balcony - and all handily within a very short late night crawl from the Student Union pub.

[Polish_Silver]

choices

...and smaller, and smaller.

I wasn't sure if I should post this here or on the "You Can't Make This Stuff Up" thread.
My alma mater, the University of British Columbia, is tackling the pumped up price of housing in Vancouver in the most obvious way. You will be forgiven it you think Canada is a country with limited land mass.

UBC proposes 145-sq-ft micro apartments as affordable student housing

Some rooms in my college dorm were smaller than 145 sq feet. One of the students could stretch his finger tips from one wall to the other, and he was short.

I think it's a question of whether you want a very small private space, or a larger room shared with others.