Canada Mortgage and Housing Corp. (CMHC) attempts to blame Doug Ford’s government for a problem it helped create – June 28, 2022
The Canada Mortgage and Housing CROWN Corporation (CMHC) was originally established after World War II, to help returning war veterans find housing, which is something I would even support in 2022, but for the CMHC to be engaging in its modern role is one of the root causes of housing problems in Canada. I DO NOT under any circumstances expect someone returning from war to be able to live a normal life.
If they do, GREAT, I’d consider that a bonus, but realistically, I’m PERSONALLY in agreement that someone defending my country, is entitled to some sort of government welfare, that I’d be open to paying taxes for. But when we start talking about CMHC providing mortgage insurance for any person who can’t afford a mortgage from a bank? NO, I’m against that, I’m 100% against that and I’m definitely against that when the CMHC is a FEDERAL Crown Corporation, who can lobby the government to bail itself out from loss.
No, I’m not exactly a fan or supporter of Doug Ford, truth be told, if a Communist was the Premier of Ontario, I’d still be writing this, with all of the tyranny I’ve even written positive things about Justin Trudeau. But Doug Ford can’t compete with CMHC, the mere fact that the CMHC is subsidizing MORTGAGES, puts Doug Ford at a severe disadvantage.
I know that Doug Ford understands the problem, because he’s been trying to get rid of rental controls, but selling POOR people on abandoning rental controls? Good luck with that! If I were running for Premier I know it would take me years to sell the message of abandoning rent controls, because it would be a PAINFUL transition. You have to remember that even if I were to sell Ontaran on abandoning rent controls, there would be a LAG before investors would even start building rental housing.
Investors might think I’m a one-termer and hold off investing because suppose I am Premier now, but I get my ass kicked by a new popular Far-Left Premier who promises to reactivate rental controls and potentially make it retroactive? I’d actually be making the rental situation in Ontario WORSE! These are the challenges Doug Ford faces and it’s easy for the CMHC to play the role of hero, but they’re one of the root causes of the housing problems in Ontario.
What’s my solution? You have to educate first, this is not a quick fix, Ontarians have to know what’s going on in order to buy into a vision of getting rid of Price controls. But none of this will work if CMHC is operational in the manner it is today. Because, if I’m an investor, do I invest in a condo or rental purposed housing? As an investor, Condos are much better to buy than rental purposed housing, because rental-purpose housing, has to adhere to PROVINCIAL and municipal rental purposed housing LAWS!
Condos do not have to adhere to these laws, in fact, a condo owner can also kick out a tenant anytime they feel like it, under Provincial law. So what this does is it puts the renter on the back burner and allows the persons with the capital to put down a down payment, to become landlords and housing speculators on the cheap, thereby superseding any provincial rent control laws, that would benefit low-income tenants.
Now, would this happen WITHOUT the CMHC? Yes, but not to the degree it’s happening now, what’s happening now is that Condo projects are getting approved everywhere because CMHC has lowered the risk of losses. CMHC is in the MORTGAGE insurance business, and the Canadian taxpayer is on the hook if the housing market crashes. CMHC Mortgage-backed security are backed by the Canadian taxpayer
Mortgage-Backed Securities (“MBS”)
Because they are fully-guaranteed by the Canadian Mortgage and Housing Corporation (CMHC), an agency of the Government of Canada, you know your money is safe.
Mortgage-Backed Securities (“MBS”) | Mortgage-Backed Securities (“MBS”)
Now in the past, Canadians were far more ignorant about the CMHC, but now, more Canadians can better understand the language of what’s going on in the housing market and what’s fueling higher prices. Now, obviously, everyone has their own opinion on the matter, in the article below, the writer RIGHTFULLY explains the difference between the Canadian and the U.S housing market, which is very important to understand. Because if you imagine a DEFLATONARY housing market crash in Canada, you might be wrong about that.
Mortgage-backed securities are the little-noticed cog keeping Canada’s housing market running | Clayton Jarvis financialpost.com December 22, 2021
Many associate MBS with the U.S. housing crash, but Canada’s market is very different
Now, obviously, Clayton Jarvis and John Greenwood are two different people and to be fair these two articles were written during very different times. In recent times, more Canadians are invested in the housing market, whereas in 2012, people were more critical of CMHC because we could all see where this thing was heading.
For banks in need of capital, covered bonds are the holy grail of debt securities. That’s because the underlying mortgages used to collateralize covered bonds are nearly always backstopped by the taxpayer through insurance provided by the Canada Mortgage and Housing Corp.
So when you read this, don’t imagine I’m the only person who comprehends what’s going on, anyone close to the problem knows what’s going on, but then the real question is, so… What can we do about it? My answer for this has been consistent, AUSTERITY MEASURES! Sell CMHC in its current form, I guess hold onto the name, for historical sakes and repurpose the mandate to adhere to the concerns of the provinces.
Yes, ofcourse I know it’s easier said than done, but I answered the question. In my lifetime it’s had for me to imagine Ontarians buying into ending rent controls, but the market solutions to housing shortages already exist and this playing the game is getting tired. In the article below, the CMHC seeks to find a scapegoat.
Now, I’ve read articles from Left Wingers who attack Doug Ford for housing, I comprehend the purposes of those articles and why Left-wingers seeking power would write them, but CMHC should NOT be speaking on this problem, as they’re the root cause of why this problem exists. Rental Purposed housing although risky would still have SOME appeal if Doug Ford didn’t have to compete with the CMHC.
I can’t blame any Ontarian for feeling like they hit the jackpot if CMHC approves them for mortgage insurance? I can’t blame any investor who seeks to avoid the rent-controlled environment in favor of building condos that under the conditions of CMHC are almost guaranteed to sell. In the 1990s prior to the CMHC mandate, it was very risky to build a condo. I actually lived in a rental apartment in the 1990s that originally was supposed to be a condo. But they couldn’t find any BUYER!
That apartment building was crappy then and I’ve seen condos built recently that are CRAPPIER than the building I used to live in, and these condos are being scooped up fast, not by owner-occupiers, but mostly by speculators. CMHC has created a BOTTOM for prices, if prices fall below a certain threshold and people stop paying their mortgages, we already saw via Trudeau’s mortgage payment deferral programs what will happen if the Canadian housing market crashes.
Let’s cut the crap and see what’s going on here. What’s going on in the Ontario housing market is beyond the control of Doug Ford. Sure there are things we can blame Doug Ford for, but housing isn’t one of them!
Interesting times ahead!