tag:blogger.com,1999:blog-31427364.post4408546740696516467..comments2024-03-26T03:52:23.395-07:00Comments on Housing Analysis: Carney says a four letter wordmohicanhttp://www.blogger.com/profile/06094213357140749289noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-31427364.post-71291236591031065192011-05-19T11:37:12.660-07:002011-05-19T11:37:12.660-07:00Thought of another one: increase the lender's ...Thought of another one: increase the lender's deductible on defaults.jessehttps://www.blogger.com/profile/02155122147972263497noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-2320982241543008382011-05-19T11:24:59.280-07:002011-05-19T11:24:59.280-07:00FWIW, here's what I posted on Ben Rabidoux'...FWIW, here's what I posted on Ben Rabidoux's theeconomicanalyst.com blog for what CMHC can do:<br /><br />Mild:<br />1. Larger down payments<br />2. Further reduction in insured amortizations<br />3. Stricter credit rating restrictions for MI qualification <br /><br />More severe:<br />4. Adjusting upwards the capital reserve ratio requirement for residential real estate related assets<br />5. Removing MI (mortgage insurance) on investor loans (WAY overdue IMO)<br />6. Reducing allowable DSRs<br />7. Require qualification at 5 year rate plus an additional premium (poster "John in Ottawa" also suggested a cap on the maximum allowable mortgage that CMHC will insure....a 'ceiling' that existed until 2003) <br /><br />"Ludicrous":<br />8. Remove government guarantee on CMHC insurance going forward -- privatize the mofo.<br />9. Limit insured loans based on rental equivalence.<br /><br /><br />mohican's suggestion I put as "ludicrous" because, for detached properties, it is. I think a requirement for rental equivalence would be better structured based on a long-run cap rate calculation for condos (which would be around 7%) from a third-party accredited appraiser. I would advocate that if someone is using underutilized land like an older vintage SFH in Vancouver (i.e. has justifiably lower cap rate), CMHC should only insure based on current utility; if owner rebuilds for highest and best use they can apply for a refi based on the new cap rate; until then, GTFO.<br /><br />Provincial and civic bodies can of course impose other curbs based on their jurisdictions.jessehttps://www.blogger.com/profile/02155122147972263497noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-1906448627473938272011-05-19T10:07:21.288-07:002011-05-19T10:07:21.288-07:00My proposed CMHC policy:
Limit loan insurance to ...My proposed CMHC policy:<br /><br />Limit loan insurance to loans where the interest paid on the loan on a monthly basis does not exceed the monthly rental rate on a similar housing unit.<br /><br />The risk on loans larger than this amount would need to be taken on by the financial institution.mohicanhttps://www.blogger.com/profile/06094213357140749289noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-69750058703219182932011-05-18T14:53:22.189-07:002011-05-18T14:53:22.189-07:00In addition to the transfer tax (everyone loves pr...In addition to the transfer tax (everyone loves progressive taxation!), why not involve CMHC as well? Why does CMHC back $2M mortgages? Or even $500k? That is clearly not affordable housing, and counter to CMHC's mandate.pod_xhttps://www.blogger.com/profile/15563878261558272350noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-87331564438096853032011-05-18T11:37:26.276-07:002011-05-18T11:37:26.276-07:00Good idea, Thomas! On the racism front, there is n...Good idea, Thomas! On the racism front, there is no restriction on ethnic origin when buying property in Vancouver, nor should there be.jessehttps://www.blogger.com/profile/02155122147972263497noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-44889787795150620012011-05-18T11:17:21.413-07:002011-05-18T11:17:21.413-07:00Property transfer tax. It's not racist and it...Property transfer tax. It's not racist and it can be targeted by province. BC clearly needs to raise the level. Why not raise it a lot at the high end? This effectively targets Vancouver because the rest of the province doesn't have those prices.<br /><br />Here's the current rule:<br /><br />* If the fair market value is $200,000 or less, the tax is 1% of the fair market value.<br /><br />* If the fair market value is greater than $200,000, the tax is 1% of the fair market value up to $200,000, plus 2% on the portion of the fair market value that is greater than $200,000.<br /><br />Since we're talking dumb money anyway, what's wrong with say 5% over 1.5mm.<br /><br />What to do with the proceeds?<br />1. Olympic village debts<br />2. Affordable housing<br /><br />Pick one or both.Thomashttps://www.blogger.com/profile/08539322720156665534noreply@blogger.com