Monday 25 November 2013

"One casualty of new restrictions could be 30-year mortgages"

"Since 2008, regulators have been trying to contain housing risk by piling on new mortgage rules, and bringing back some old ones. So far, the housing market has yet to crack under the weight of those policies.
In fact, home prices just keep reaching record highs. And each month they do, policy makers get more and more nervous about overextended borrowers.
In 2014, we’re virtually guaranteed to see new mortgage restrictions. One casualty of those new rules could be the 30-year amortization.
“We have noticed that there has been a shift in the marketplace to offer more 30-year amortizations,” chief banking regulator Julie Dickson said Monday at the mortgage industry's annual conference in Toronto. “About half” of new borrowers with down payments of 20 per cent or more are choosing 30-year amortizations, she added."

Saturday 16 November 2013

Scotia, RBC echo view of pulled-forward demand due to expiring rate-holds

- seems like the big banks' views are in line with my predictions back in June

Scotiabank Nov 15 Market Flash report
“On a very preliminary basis, this would feed into our view that sales rose over the spring and summer at the expense of future months as people exercised options to purchase within 90-120 day mortgage rate commitments on fears of losing the juicy rate commitments back in the spring. I maintain the view that the spring and summer market was a temporary interruption along a correcting sales path”

RBC Monthly Housing Market Update
Nov 15
“The resale decline in October was not entirely a surprise because we suspected that much of the strength in recent months reflected the unwinding of earlier restraint associated with the tightening of mortgage insurance rules last year and a rush by some homebuyers to lock-in lower mortgage rates this summer. Developments in October were consistent with that view”

Tuesday 12 November 2013

November Preliminary Stats Update

Over a third of November has passed, so far:
7 of 20 business days:

Sales: ~ flat vs 10Y Avg (Oct was -1.4% vs 10Y Avg)
New Lists: +11% vs 10Y Avg (Oct was -1.6% vs 10Y Avg)

Let’s look at the new listings closer:
New Lists:
Aug: +3.5% YoY, -1.0% vs 10Y Avg
Sep: -5.5% YoY, -1.6% vs 10Y Avg
Oct: -0.2% YoY, -1.6% vs 10Y Avg
Nov: +27% YoY, +11.0% vs 10Y Avg (!)

Total Inventory % Change: Nov 12 (1 day after Remembrance Day long weekend) vs Nov 1st:
2013: 0%
2012: -1.2%
2011: -1.2%

Total Inventory % Change: Nov 12 vs Oct 30th (to include effect of month-end expiry)
2013: -4.4%
2012: -6.4%
2011: -5.4%

- Both New Lists & Total Inventory holding up unseasonably…
- The next leg to drop is sales

Sunday 10 November 2013

Canadian Experience Class & Family Reunification getting tougher

Yesterday CIC changed the rules for the popular Canadian Experience Class program, eliminating 6 occupations from applying for immigration, most notably Cooks & Food Service Supervisors, but also administrative officers; administrative assistants; accounting technicians and bookkeepers; and retail sales supervisors.

In an article written in Chinese, it was revealed that a lot of international students have been flocking into cooking schools, hoping to gain immigration via the CEC program . At the VCC culinary arts program, “currently almost all students are international students from Mainland China”.

In addition to applicant job restrictions, “CIC will maintain the same language criteria for applicants but will verify them upfront as of November 9, 2013″

(anecdote here, on more than 2 occasions when I had dinner in Richmond, I saw the young 20-something waitress/waiter driving off in their respective M3 & 911 GT3. Makes one wonder who should be tipping whom doesn’t it ;))

- People already asking on Chinese forums whether these changes will affect Vancouver RE.
- re: “almost all students at VCC culinary arts program are Chinese”, apparently many people abandoned previous studies/employment in order to take the easy route to immigration.
- it’s a significant change removing cooks, “food services supervisor”, and “admin assistants” from the list of approved occupations, as these require minimal formal training and represent an easier path to immigrate, thus they are experiencing an “oversupply” now.

- it has also been brought up in that the removal of “accounting technicians and bookkeepers” will be a major blow to the Commerce/Economics grads since bookkeeping is the main entry-level job a new grad can do. I can say with confidence that the majority of SFU Economics program are international students from Mainland China (apparently lower English requirement than UBC). It is common practice for businessmen in China/HK/TW to send their kids to Canada to obtain a business degree, for eventual return to Asia to take over their family businesses.

- the removal of “retail sales supervisors” (eg. cashiers in Aberdeen Mall cube stores and clothing stores) also eliminates another popular easy route to immigration
- Looks like CIC is finally catching up to the widely known trends/loopholes to its immigration system

Also, CIC just increased income requirement for family reunification program by 30%, also requiring 3 consecutive years of qualifying income on notice of assessment. Also requires income to meet requirement every year until application’s final approval (couple more years).

Friday 1 November 2013

October 2013 Stats Summary (Estimated) & Historical Comparison

(Updated with more accurate Stats Nov 1)
Estimated October 2013 Stats:
2013 vs 2012
Sales 2635 vs 1931(+36%)
Lists 4277 vs 4323 (-1%)
Ratio 62% vs 46%
Est Month end Inventory: 15340 vs 17370(-11.7%)
MOI:5.8 vs 9.0 (Oct/12) vs 6.5 (Sept/13)

Historical Oct Sales: (2003-2012 10Y Avg=2700)
2002: 2866
2003: 3765
2004: 2734
2005: 3099
2006: 2722
2007: 3028
2008: 1364
2009: 3704
2010: 2337
2011: 2317
2012: 1931
2013~2635 (-2.4% vs 10 year average)

Oct vs Sept (same year) Sales: (2003-2012 10Y Avg = +4.4%)
2003: +12%
2004: -3.9%
2005: -7.3%
2006: +8.1%
2007: +9.1%
2008: -14%
2009: +4.1%
2010: +5.3%
2011: +3.2%
2012: +27%
2013: +6%

2013 vs 2012 YoY Monthly Sales:
May: +1%
Jun: +12% (Fixed rates started rising, last chance to get 5Y 2.79% preapproval)
Jul: +40% (Note: CMHC new rules implemented Jul 9, 2012)
Aug: +52%
Sep: +64%
Oct: +36% (declining YoY gain)(Running out of low-rate-holds?)

2013 Monthly Sales vs 10Y Same-Month Avg Sales
Jan: -18.7%
Feb: -30.9%
Mar: -30.2%
Apr: -20.9%
May: -19.4%
Jun: -22%
Jul: +0.1%
Aug: -4.6%
Sep: -1%
Oct: -2.4% (120 day preapproval is starting to expire now?)