Wednesday, October 9, 2013

Pre-sales closing crunch in Toronto? And... Vancouver foreclosures running at 6-7 per working day.

Debt is endemic. They use lines of credit to make mortgage payments. They routinely increase the size of their home loans to renovate. Four in ten people now say they have trouble paying their monthly bills. And yet 70% own a house. Prices have been bloated by cheap money, not greater income.
That's a quote from one of Garth Turner's posts (May 16th, 2013)

Mortgage brokers, realtors and developers have seen a surge the last few months in people who bought pre-construction condos two to three years ago “scrambling” to get financing to close deals. 
Some have had to walk away from deposits worth tens of thousands of dollars. Others have been forced to borrow from family — or against their principal residence — to come up with final payments on condos that lenders are no longer keen to finance, according to interviews with a number of players in Toronto’s condo industry. 
Hardest hit have been the self-employed who had pre-approvals from lenders when they bought their pre-construction units. But now, with the unit almost complete and final payments due, they are being told they need 35 to 50 per cent down, instead of just 20 per cent of the purchase price, unless they want to rely on secondary lenders offering rates that can hit double digits. 
Many investors who bought units intending to flip them on completion, or rent them out for a few years, have also been shocked to find they thought they had pre-approvals, but they are no longer being honoured in the wake of tighter lending rules imposed by Ottawa.
Can you imagine what things will be like if the Federal Government responds to the idea that mortgage debt is a threat to the economy?

Or if interest rates really do start to rise?

On another note, an interesting post over on Vancouver Condo Info from Ham Solo

From the start of the last paragraph: "Looking at a couple of weeks of data, adjusting for double-counting, we are seeing Vancouver foreclosures totalling about 6-7 per working day."


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  1. Whisperer - do you know where the foreclosure data comes from?

  2. Not sure where Ham Solo accesses his data

  3. Just received my second bank notice offering to lower my minimum LOC payment from 2 - 1% monthly. Don't know if this is to entice me to use them or more people are having a problem making the monthly payments.....?


    1. Just had my bank phone me to tell me that I qualify for a car lone. My response: "what part of _poor grad student_ don't you get? Offering cheap easy credit to people like me is exactly why the economy in a smoking grease ball on the tarmac despite what our politicians like to tell us."

  4. Blah blah blah. Such doom and gloom, with all these bitter renters hanging off of every Whisperer's word... waiting and waiting for their ship to come in.

    Bottom line, even if the market corrects 20-40% most owners will be better off than if they had rented for the past decade.

    The longer this blogger rants and raves with little if anything to justify his pessimistic prophecies, the more pathetic it all looks.

    1. Have a look at this graph, that might open your eyes...

    2. Do you feel revulsion when you are leeching off others to make yourself "better off"?

    3. Who sounds more like a person clinging to the rear view mirror and pure hope instead of basic economic facts?

    4. Yes if someone had bought a decade ago...
      But we are talking about the decision to buy today.