December 20, 2016

BC Liberals program to aid first time home buyers comes with great peril

Christopher WilsonRebel Commentator
 

Is Vancouver in a housing bubble? It’s a question I’ve been asking for over five years now, and despite the majority of people saying yes, we have yet to see the kind of correction usually associated with housing bubbles when they burst. 

That leaves us in one of two places; either we have yet to reach the peak or the limit of the bubble or housing prices in Vancouver still have room to grow.

I think it’s time we face the music and realize we are at the former.

Watch as I lay out my case, which includes the point that with an election only five months away, the last thing the BC Liberals want to see is for that bubble to burst since it would almost certainly cause them to be defeated.

Late last week the BC government announced a new program that would allow first time home buyers struggling to put together a down payment, to get an interest free, or sub-prime, loan, that would match their down payment up to $37,500 or 5% of a $750,000 property.

While this program isn’t as crazy as the kind of policies we saw down south over a decade ago, it is awfully suspect and if there is a major price correction I wonder how many defaulted mortgages the taxpayer will now be partially on the hook for?

Will this policy do anything to help the average Vancouverite struggling to enter the real estate market for the first time?

Sure, but at what peril?

At the peril of expanding the Vancouver housing bubble just a few more months to ensure an election win while making the inevitable correction that much more painful it seems.

Comments
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commented 2016-12-22 11:18:58 -0500
Terrible idea only strung together with a looming election in mind. It’s a fight for that swing voter among the pro-NDP and and anti-NDP camps – the NDP hoping memories are short.
commented 2016-12-21 10:45:45 -0500
Hongcouver is in an eternal boom and bust realty cycle, nothing new there – government stimulus in such economic cycles is of course foolish, but “foolish” has come to define modern rob-peter-to-pay-paul-yet-nobody-wins politics.

If they were serious about allowing the middle class a shot at realty ownership, like they had in the camalot era of middle class ascension in mid last century, they would remove the horrendous tax burden that bogs middle class economic fluidity as well as the shitty low pay globalist job market – both keep the middle class in eternal debt and needy of government hand outs. Maybe universal middle class austerity and dependence IS the planned economy they always talk of..

You can have high taxes or you can have a middle class but you can’t have both.
commented 2016-12-21 08:50:19 -0500
Its teaching young people irresponsible borrowing and does nothing to encourage them to practice disciplined saving and budgeting that will inevitably lead to huge debt burdens they cannot pay. Hmmmm, sounds exactly the way governments in general handle the financial affairs of the tax payer; IRRESPONSIBLY.
commented 2016-12-21 08:36:53 -0500
It would be interesting to see how the loan would be secured. Most likely through an encumbrance on the land title. Which then begs the question: If it occurs first on the title (higher priority), then wouldn’t the homeowner be faced with paying the mortgage lender higher interest rate to compensate them for their lower security priority?
But if the loan is a second encumbrance (behind the bank’s mortgage), then isn’t the province opening themselves to the risk of loss in the event of a housing correction?
Thoughts?
commented 2016-12-21 01:40:03 -0500
The frightening thing is, Vancouver could very well be a target for a terrorist attack.
Now that will affect the price of houses.
commented 2016-12-21 01:03:58 -0500
Yeah this kind of thing worked so great in the US when the dems decided to meddle with mortgage rates and make banks act like charities. It may not seem as bad as what happened in the US right now, but once it starts to wreak havoc the liberals may dig the hole deeper. At least it can only apply to their province, well unless Justin gets some stupid idea.
commented 2016-12-20 21:50:18 -0500
Are these Chinese companies holding the mortgages, or involved in mortgage financing ??
commented 2016-12-20 20:17:27 -0500
CMHC only guarantees up to 80% of the first million. So someone buying a home for 1.6, would require a down of 800k. There is no risk to CMHC or the taxpayers.
commented 2016-12-20 18:07:15 -0500
Will this be a taxable benefit in the hands of those who receive it – The saved interest must be at least $1,000 per year. If this is a taxable benefit (which it should be) then a substantial portion of this BC government housing subsidy will find its way into federal coffers.