Canada bubble is popped

[darkmarket]

Now Toronto prices are in a downward spiral, chains are breaking down, buyers are walking away from agreements and lenders are freezing up:

https://www.thestar.com/business/2017/08/12/home-sellers-struggling-with-closing-complications-after-big-chill-hits-market.html

 

[stuckmojo]

9 hours ago, darkmarket said:

Now Toronto prices are in a downward spiral, chains are breaking down, buyers are walking away from agreements and lenders are freezing up:

https://www.thestar.com/business/2017/08/12/home-sellers-struggling-with-closing-complications-after-big-chill-hits-market.html

 

Beautiful.

[North London Rent Girl]

On 04/08/2017 at 4:25 AM, VancouverGuy said:

This little beauty will warm a few hearts on here.

http://www.cbc.ca/news/canada/british-columbia/buyer-who-walked-away-from-real-estate-deal-ordered-to-pay-360k-1.4232844

 

9 hours ago, darkmarket said:

Now Toronto prices are in a downward spiral, chains are breaking down, buyers are walking away from agreements and lenders are freezing up:

https://www.thestar.com/business/2017/08/12/home-sellers-struggling-with-closing-complications-after-big-chill-hits-market.html

 

How do these two things pair up? How does the court system work there? Will each province have to pass a judgment ordering buyers who've opted out to cough up the difference? I don't like the decision, btw, darkmarket, seems very unfair that after all of these years of gazumping that a buyer can't just walk away when the market turns. Isn't that what a deposit is all about - aboot?!

Hmm, might this approach get taken up here when the crash comes? We seem to like importing Canadian things that are shit (shame when it's generally such a nice country). The lawyers would love it, there would be a bloodbath, bloody hell, can you imagine? It would throw the market into total disarray so my inner nihilist doesn't mind but it seems sooo unfair on the individual buyer.

Edit - btw favourite bit: "He says he’s still surprised by how emotional what is routinely now a million-dollar home buying experience can be." Yeah, that's really surprising, don't we all have a million bucks in change down the back of the sofa?

Edited August 14, 2017 by North London Rent Girl

[Guest]

The only thing that worries me is that Canada took house ramping and HPI much further than us with maybe the exception of London and parts of the SE, and we are not going to catch up with them now unless we get a bribe of all bribes to encourage the sheep to keep borrowing. 

[darkmarket]

26 minutes ago, North London Rent Girl said:

How do these two things pair up? How does the court system work there? Will each province have to pass a judgment ordering buyers who've opted out to cough up the difference? I don't like the decision, btw, darkmarket, seems very unfair that after all of these years of gazumping that a buyer can't just walk away when the market turns. Isn't that what a deposit is all about - aboot?!

I think it's an unfair system too, designed to keep a moving floor under the highest market price. But after hearing so many Canadians cite that and 'responsible lending' as the reasons their market couldn't crash, it's interesting to see it break down so quickly.

I'm sure it could be used here, if it's not already, in private contracts that would be enforceable. As far as legislation goes I'd be surprised at this stage of the bubble but it is a prop after all, and we do like props.

[darkmarket]

The Bank of Canada, now free of the influence of Mark Carney, just raised the benchmark rate by 0.25% to 1%.

This was not because everything is fine and the economy is booming. It's because they didn't have a choice.

[Exiled Canadian]

On 8/14/2017 at 9:17 AM, North London Rent Girl said:

 

How do these two things pair up? How does the court system work there? Will each province have to pass a judgment ordering buyers who've opted out to cough up the difference? I don't like the decision, btw, darkmarket, seems very unfair that after all of these years of gazumping that a buyer can't just walk away when the market turns. Isn't that what a deposit is all about - aboot?!

Hmm, might this approach get taken up here when the crash comes? We seem to like importing Canadian things that are shit (shame when it's generally such a nice country). The lawyers would love it, there would be a bloodbath, bloody hell, can you imagine? It would throw the market into total disarray so my inner nihilist doesn't mind but it seems sooo unfair on the individual buyer.

Edit - btw favourite bit: "He says he’s still surprised by how emotional what is routinely now a million-dollar home buying experience can be." Yeah, that's really surprising, don't we all have a million bucks in change down the back of the sofa?

What are you trying to say? 

Edited September 6, 2017 by Exiled Canadian

[Si1]

50 minutes ago, darkmarket said:

The Bank of Canada, now free of the influence of Mark Carney, just raised the benchmark rate by 0.25% to 1%.

This was not because everything is fine and the economy is booming. It's because they didn't have a choice.

How come no choice?

[darkmarket]

4 minutes ago, Si1 said:

How come no choice?

Because the asset bubble presents such a systemic risk they can't afford to keep inflating it - sound familiar?

[Si1]

1 minute ago, darkmarket said:

Because the asset bubble presents such a systemic risk they can't afford to keep inflating it - sound familiar?

You mean they give a sh1t? It's just that's a new one on me, sadly.

[darkmarket]

13 minutes ago, Si1 said:

You mean they give a sh1t? It's just that's a new one on me, sadly.

They did have a high growth rate for August and I think that made it difficult to maintain the facade, though I've no doubt Carney would have found a way.

[crashbaby]

On 14/08/2017 at 9:17 AM, North London Rent Girl said:

How do these two things pair up? How does the court system work there? Will each province have to pass a judgment ordering buyers who've opted out to cough up the difference? I don't like the decision, btw, darkmarket, seems very unfair that after all of these years of gazumping that a buyer can't just walk away when the market turns. Isn't that what a deposit is all about - aboot?!

The guy didn't show at the trial. From the article:

Quote

Nevertheless, the default judgment awards the sellers the $350,000 price difference, plus about $10,000 in carrying costs for the property over the five months, including utilities, property taxes and hot tub chemicals.

The buyer didn't respond in time for the court to hear his side of the case, and retained his current legal counsel just days before the judgment.

He can apply to overturn the judgment, which he plans to do, his lawyer said.

 

[Maynardgravy]

2 hours ago, darkmarket said:

Because the asset bubble presents such a systemic risk they can't afford to keep inflating it - sound familiar?

it's like a 50 stone bloke looking in the mirror and realising it's not a good idea to get any fatter.

[Fence]

38 minutes ago, Maynardgravy said:

it's like a 50 stone bloke looking in the mirror and realising it's not a good idea to get any fatter.

Sorry but had to be done....

 

Come on sir, just a wafer thin bit of ........!

[Si1]

32 minutes ago, Fence said:

Sorry but had to be done....

 

Come on sir, just a wafer thin bit of ........!

That's very accurate. Carney is offering the mint. He doesn't seem bothered about the consequences to fatty.

[rollover]

On 8/14/2017 at 9:17 AM, North London Rent Girl said:

 

How do these two things pair up? How does the court system work there? Will each province have to pass a judgment ordering buyers who've opted out to cough up the difference? I don't like the decision, btw, darkmarket, seems very unfair that after all of these years of gazumping that a buyer can't just walk away when the market turns. Isn't that what a deposit is all about - aboot?!

Hmm, might this approach get taken up here when the crash comes? We seem to like importing Canadian things that are shit (shame when it's generally such a nice country). The lawyers would love it, there would be a bloodbath, bloody hell, can you imagine? It would throw the market into total disarray so my inner nihilist doesn't mind but it seems sooo unfair on the individual buyer.

Edit - btw favourite bit: "He says he’s still surprised by how emotional what is routinely now a million-dollar home buying experience can be." Yeah, that's really surprising, don't we all have a million bucks in change down the back of the sofa?

We've been here before:

Quote

A financial bubble in the tulip market really did occur, followed by a crash. So most buyers simply refused to pay up for the bulbs after the crash. Unfortunately, in today's financial markets people don't have that kind of luxury. Nowadays, with a single click of a mouse, all your money disappears instantly and forever. hoaxes.org

 

[North London Rent Girl]

18 hours ago, crashbaby said:

Nevertheless, the default judgment awards the sellers the $350,000 price difference, plus about $10,000 in carrying costs for the property over the five months, including utilities, property taxes and hot tub chemicals.

ffs - so warmly self-congratulatory on the way up, so weepy and petty on the way down. am sure UK sellers will be quite different - reasonable and philosophical, you win some you lose some.

 

19 hours ago, darkmarket said:

The Bank of Canada, now free of the influence of Mark Carney, just raised the benchmark rate by 0.25% to 1%.

This was not because everything is fine and the economy is booming. It's because they didn't have a choice.

Great news, a step towards sanity - am sure MC will see sense and follow suit. Hahahahaha, hahahaha bletch.

[cashinmattress]

Popped? That's not really and apt description.

From another article:

"average sale price in the Greater Toronto Area was $732,292 in August, up three per cent from a year ago but down from the $746,218 average in July, 2017."

Popped? Crashing? Bargains abound? Thinking not.

Cost of debt service up with BoC recent move. If credit is extended then it won't make a bean of difference, however, if credit is restricted then things will get interesting.

There are still plenty of wealthy folk around the globe who will either bet on Toronto/Vancouver real estate or move and reside there.

 

[darkmarket]

On 07/09/2017 at 5:58 PM, North London Rent Girl said:

Great news, a step towards sanity - am sure MC will see sense and follow suit. Hahahahaha, hahahaha bletch.

At least the united front of low-rate central bankers is beginning to crack.

[MarkG]

On 2017/08/14 at 2:57 AM, wotsthat said:

The only thing that worries me is that Canada took house ramping and HPI much further than us with maybe the exception of London and parts of the SE, and we are not going to catch up with them now unless we get a bribe of all bribes to encourage the sheep to keep borrowing. 

Canada didn't. Parts of Canada did: most obviously Toronto and Vancouver.

As I mentioned when I moved over in 2007, my detached house here cost as much as a friend in the UK paid for a two-bed flat in what used to be a Victorian house in a rural town at around the same time. Our house would probably only sell for 20% more than that after ten years of inflation, and prices have been static to slowly falling around here for the last year or two.

The other day, I was driving through a small town about half an hour from here, and there was an ad at the side of the road for a house that would have been the equivalent of about 50k. Outside the big cities, housing can still be real cheap unless you move into a yuppie dormitory development.

[Guest TheBlueCat]

On 14/08/2017 at 4:17 AM, North London Rent Girl said:

 

How do these two things pair up? How does the court system work there? Will each province have to pass a judgment ordering buyers who've opted out to cough up the difference? I don't like the decision, btw, darkmarket, seems very unfair that after all of these years of gazumping that a buyer can't just walk away when the market turns. Isn't that what a deposit is all about - aboot?!

How does the court system work - other than Quebec which uses the pre-revolutionary French legal system all Canadian provinces operate on an English common law basis so the system is an near to the England & Wales as makes no difference. On top of that we have a federal system for certain types of case and, in general, all cases can be appealed all the way to the supreme court.

Contracts for sale of property - when you make an offer to purchase a property that is accepted, you sign contracts on the spot. There's a deposit payed to show good faith but you've committed yourself to paying the full amount on a certain date. Contracts can have caveats (e.g. a get out if you are unable to obtain financing or if a title search shows issues etc) but a lot of people, particularly when there's a boom in progress, sign unconditional deals. In that case, if you don't complete the purchase, it's a simple breach of contract where the other party is justified to sue for you any losses they incur. Buyers can, and have, sued sellers who refused to complete the deal too so it works both ways.

[North London Rent Girl]

On 08/09/2017 at 7:03 PM, darkmarket said:

At least the united front of low-rate central bankers is beginning to crack.

Quite right, we mustn't make bad news out of good, it is really cheering.

[North London Rent Girl]

On 09/09/2017 at 3:27 PM, TheBlueCat said:

How does the court system work - other than Quebec which uses the pre-revolutionary French legal system all Canadian provinces operate on an English common law basis so the system is an near to the England & Wales as makes no difference. On top of that we have a federal system for certain types of case and, in general, all cases can be appealed all the way to the supreme court.

Contracts for sale of property - when you make an offer to purchase a property that is accepted, you sign contracts on the spot. There's a deposit payed to show good faith but you've committed yourself to paying the full amount on a certain date. Contracts can have caveats (e.g. a get out if you are unable to obtain financing or if a title search shows issues etc) but a lot of people, particularly when there's a boom in progress, sign unconditional deals. In that case, if you don't complete the purchase, it's a simple breach of contract where the other party is justified to sue for you any losses they incur. Buyers can, and have, sued sellers who refused to complete the deal too so it works both ways.

Thanks blue cat, interesting. So unless there is a federal ruling on it it will need to be decided like that in each individual province.

As for contracts, I suppose that's how it works here, too, with the deposit. Unconditional contracts, though, yowzer, that is gambling. Any losses, including hot tub chemicals, unbelievable.

[Guest TheBlueCat]

3 hours ago, North London Rent Girl said:

Thanks blue cat, interesting. So unless there is a federal ruling on it it will need to be decided like that in each individual province.

As for contracts, I suppose that's how it works here, too, with the deposit. Unconditional contracts, though, yowzer, that is gambling. Any losses, including hot tub chemicals, unbelievable.

There's a stack of case law covering it in various provinces (e.g. that Supreme Court of BC ruling referenced earlier on) but I don't know how much of it will have gone all the way to the Federal Supreme Court as they hear a limited number of cases and seem to focus mainly on constitutional stuff. The legal fees to go all the way would be huge though so I can't see anyone doing it off the back of a residential house sale gone wrong. Unconditional sales are not my cup of tea although, for houses at least, the bulk of the cost is the land so, as long as you cover that with title insurance (which is cheap), the risk is not as high as it might be. 

 

 

[North London Rent Girl]

You know an awful lot about this - are you a Canadian property lawyer hpc-er?! I'm in the middle of work, am taking a sneaky HPC-5, so can't think about this properly but the thought crosses my mind that this sort of liability will have a good effect on prices, it will go to accelerate the fall - if I were buying into a falling market and people were getting into hot water - to the extent of sums like these - by backing out, I'd sit back and wait for a while.