Buying a home at Inflated Price? CMHC could soon kick in 10% of the cost to help the Seller Make More Profits? – March 20, 2019,
If you go to the CMHC Website (I’ll provide the links below) you’ll see quickly where Bill Morneau and Justin Trudeau will get the money from to kick in 10% of the Cost.
Government of Canada offers Homeownership Incentives – CMHC Website
CMHC Announces $1B Dividend to the Government of Canada – CMHC Website
CMHC to pay $4-billion special dividend to Ottawa – theglobeandmail.com
I want to make it clear, that although it may appear that writings appear to seem like they’re praising the work done by CMHC and The Federal Government, the truth is actually the opposite. If you’re wondering why home prices are so high? Why there’s so much foreign ownership in Canadian real estate, why rental prices (which hurt te poor the most btw) are so inflated and why instead of rental units, Condos that Canadian families don’t want are being financed with relative ease it all comes back to CMHC which is a State-owned Crown Corporation picking winners and losers.
Why isn’t CMHC financing rent for taxpayers who can’t afford to put a down payment on a house? The mortgage-backed securities being offered by CMHC are backed by Canadian taxpayers. Don’t believe me or don’t understand, consider visiting the TDCanadaTrust website.
Things to understand about CMHC Mortgage Backed Securities which are causing price inflation in the Canadian housing market.
Risk/Return
Fully guaranteed by CMHC, an agency of the Government of Canada. There is essentially no risk with any investment held to maturity–the full and timely payment of principal and interest is guaranteed, regardless of the size of the investment. Very competitive yields.
CMHC operates its mortgage loan insurance and securitization businesses on a commercial basis, without funding from the government and at no cost to taxpayers you say? Well, why are they a Crown Corporation? If you’re not understanding what a Crown Corporation is? Allow me to explain below:
Canadian Crown corporations are state-owned enterprises owned by the Sovereign of Canada (i.e. the Crown). They are established by an Act of Parliament or Act of a provincial legislature and report to that body via a minister of the Crown in the relevant cabinet, though they are “shielded from constant government intervention and legislative oversight” and thus “generally enjoy greater freedom from direct political control than government departments.”
They can provide services required by the public that otherwise would not be economically viable as a private enterprise, or don’t fit exactly within the scope of any ministry. They are involved in everything from the distribution, use, and price of certain goods and services to energy development, resource extraction, public transportation, cultural promotion, and property management.
Price, prices, distribution, certain goods, ever wondered why Canada Post and the CBC have no rivals, ever wonder why no competition dare challenge them? consider educating yourself about Crown Corporations and all price-related problems in Canada will become evident. It should be noted and Stephen Poloz even alluded to this a few weeks ago, Employees of Crown Corporations, although they should be, aren’t considered Government workers, they’re categorized as Private Sector employees. Combined Provincial and Federal I’m not entirely sure how large the Crown Corporate workforce is in Canada but it’s huge and it has a huge impact on our cost of living.
In real terms, if Crown Corporations in Canada were to be privatized with no competitive advantages in the Canadian economy, after the initial negative shock to the system, the Canadian cost of living would plummet most likely prices would be minimally cut in half, the problem would be however that a large number of these quasi-government workers would have to work for a lot less money, because in case you’re unaware, their inflated wages afforded to people working for Crown Corporations are not based on any market fundamentals, which is why many of these unionized Crown Corporations are very Liberal with how they pay their employees, let’s be honest, when you’re a crown corporation losing money, you either ask the government for a bailout which the taxpayer pays for, or if you’re Canada Post, you simply raise prices. Who’s going to stop Canada Post from raising prices, they have no competition? As long as the price increase is reasonable in the government’s eyes, the price goes up and up.
When it comes to CMHC, there exists no equivalent, CMHC stopped ensuring financing for condominiums years ago, but do you think that’s stopped people from using CMHC to purchase their first Condo home? Of course not, people also assume that a foreign homebuyer is an individual who lives in a place like China, much of the capital coming into Canada to purchase real estate in many instances are Canadians, using foreign capital. Once you’re about to buy a home, you learn about all the loopholes, you can even use a loan from a loan shark to purchase a mortgage, the loopholes all exist, call a mortgage broker they’ll tell you, this stuff is only a secret if you’ve been absent from the housing boom.
It’s not like people are dumping all their capital into the housing market, the fact is once more people can qualify for a mortgage, you get more buyers, it’s really that simple. That’s the main reason why the real estate lobby is fighting like hell to have the new stress test measures removed, it has nothing to do with First time homebuyers, it’s foreign homebuyers who all of a sudden who have to ship more money into Canada in order to qualify, which also equates to the likelihood of them not being able to flip a property for a profit, because they’ll be fewer people who can qualify to purchase te property at an inflated price. Everybody knows this stuff is going on!
This problem wouldn’t exist in the first place if CMHC didn’t provide the mortgage insurance, Canada’s housing mess, really shouldn’t be compared with any other countries, our housing disaster is far more disastrous in the long-term because we’ve thrown out market fundamentals in some many sections of the economy, that when an actual recession hits us, it will be painful. At least in America, their market will simply crash, ours, on the other hand, it’s going to be more of stagnation period meaning there could be a 10-15 year stretch where real prices don’t go up or go down, you’re just stuck there and that’s the best case scenario if things go as planned.
If what I think happens which is the BoC is forced to raise interest rates, because the U.S market crashes, which I expect it will and every nation runs in to saving the US dollar like they always do, the Loonie will drop like a stone and because we’ve lost our manufacturing base, the prices for imports will skyrocket, which will force the BoC’s hand to raise interest rates, which of course equates to the price of debt in Canada ballooning, once that happens there’s no easy fix and that’s when the size of Government(including Crown Corporations) will have to shrink, people always forget why governments shouldn’t run deficits.
I’ve also predicted that Trump will renegotiate America’s debts, I stand by that, when the economic crisis in America happens, Trump will renegotiate America’s debts with their creditors, people forget that Trump was once in Billion dollar debt and got himself out of it, I predict that’s what will happen when the U.S market crashes in a few years.
There is no Canadian Prime minister hopeful including Maxime Bernier that I see running in the Federal election that will be able to renegotiate Canada’s debts when the economic crash hits Canada. This to me is why this coming election in Canada is vital because at the very least Maxime Bernier will know how to cut costs, it Canada votes for anyone else and the U.S market crash happens, well… That type of financial advice I won’t be giving away for free. Because I’ve written 100’s of articles about this stuff and now, it’s coming the time where I have to look out for myself and my family. As a child I didn’t fully understand the story of Noah and the Ark, now I’m seeing it for myself. The CBC article can be read below:
Buying a home? CMHC could soon kick in 10% of the cost — for a price – CBC
Interesting times ahead