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CMHC is YOU Tax Payer
The Globe and Mail reported August 12, 2013 that "Three-quarters of all Canadian mortgages are insured by the federal government, up from only 30 per cent in 1988." ... "Ottawa guarantees a total of $900-billion worth of mortgage insurance." ... "It has been a no-brainer for the banks." Lenders have used up nearly 80% of this year’s available government guarantee by July 31, 2013.
In the Globe & Mail article, the author Barrie McKenna points out:
No Risk means No Due Diligence eh Canada?
Corporate bond manager Canso Investment Counsel Ltd. of Richmond Hill, Ontario estimates:
"...that the combined impact of successive federal programs may have added as much as 50 per cent to house prices in key markets, such as Toronto. Canso estimates that the “affordable” price of an average two-storey home in upscale North Toronto is $615,000 – well shy of the actual price of $900,000."
Subtract 50% off of average Vancouver SFD house prices from the peak and you get $532,499 which puts it right into the PLUNGE-O-METER target zone. 50% off of Toronto (GTA) peak average SFDs and you get $338,398. 50% off of Calgary peak average SFDs and you get $263,581.
In Canso's June Newsletter is a chart showing the comparison of housing as a percentage of GDP between Canada and the USA. Canada is overdependent on residential investment. So was Spain.
History, Charts & Curated Readings
"Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement; and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it." George Santayana Vol. I, Reason in Common Sense
"History, real solemn history, I cannot be interested in.... I read it a little as a duty; but it tells me nothing that does not either vex or weary me. The quarrels of popes and kings, with wars and pestilences in every page; the men all so good for nothing, and hardly any women at all - it is very tiresome." Jane Austen spoken by Catherine Morland in 'Northanger Abbey'