Equity Fudging

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"The 20% down payment is all but dead" 
​...reads in part the heading of Hal Bundricks' Nerd Wallet observation via Market Watch. ​In his June 28, 2017 piece he goes on to note that in the U.S. markets:

More than 70% of non-cash, first-time home buyers — and 54% of all buyers — made down payments of less than 20% over at least the past five years, according to the National Association of Realtors.

I have not been able to find comparable data in the Canadian market. If any reader has a link to this metric in the Canadian data, please send it to me and I will publish it.

According to Better Dwelling, February 2017, "1 In 5 Canadian Homeowners Commits Mortgage Fraud, Says Top Broker" and the three most frequent frauds are falsifying owner occupancy, hiring a shady mortgage broker to forge documents, and personal financial engineering (eg: hiding debt).

So 20% of Canadian mortgage applicants are willing to overstate their equity and or cash flow positions on a bet that a market that has been a fabulous thrill since the crash of 2008-09 will continue unimpeded. 

Risk managers and margin clerks are no longer buying the story. When market prices drop, everyone's attention shifts to shrinking equity and rising loan to value levels.

The Toronto Housing market has already telegraphed the end of the 10 year trend of single family detached prices gaining 20% per year. Prices are now down over 17% in the last four months from the March 2017 peak. The 2007-08 correction was only a 13% drop in 13 months (Plunge-O-Meter).

And Vancouver buyers are still in lala land.​

​Hilliard Macbeth digs into the Toronto numbers beginning at 8.05 minutes below:
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