Feds Prop Up Housing Bubble with Jumbo Mortgages w/Guest Ron Butler - The Loonie Hour Episode 154

The federal government shocks the market by pushing CMHC insured mortgages up to $1.5M. The Bank of Canada finally gets inflation back down to 2%. The Federal Reserve surprises markets, cuts rates by 50bps.
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[@Casey-qm1nd]

Ron has been on the show a few times already. Next time can you bring on Mark Mitchell? The guy is a proactive thinker and has great critical thinking skills and insights.

[@donm2067]

Comedic genius as well

[@lucashann9444]

MM all the way for the win

[@bc5810]

Agreed. Mark is incredibly smart and funny.

[@fwra1234]

love the little edited clips he throws into videos too

[@chriss729]

I love Ron.

[@vincentlalande90]

Energy should be in the equation as it will ultimately affect consumer goods.

[@jimmybaggs5342]

If mortgage insurance is “wildly profitable” why do we need taxpayer involvement?

[@ElectronicWasteland-p2x]

It's likely the state of the Chinese economy that caused the aggressive rate cut. China is trending into a worse economic collapse than Japan had in the 1990s.

[@KeithDickerIceCapAssetManageme]

Definitely contributes.

[@michael2275]

Time to leave Canada. Trudeau ruined it.

[@mechtechtools838]

Stop talking and go ahead and leave

[@johnnyboyvan]

Ron is like the best. I love how he tells the actual truth. Elections equal rate cuts ✂️ as usual. 🙄

[@martinz6445]

Ron talking in his own podcast while swearing, it’s the best Canadian housing podcast

[@jonathanfillion7890]

They are not increasing mortgage length to make it more affordable, it's to keep the value high.

[@BellaBella-jw9ef]

And to avoid a crash during their reign.

[@richardrichard9785]

It's a purely political move. It stimulates demand. It hurts affordability.

[@MyYoutube-yb7xc]

It makes it possible for some first-time home buyers to buy a home they like. Why make all policies to favor just the existing homeowners. First-time buyers need something too.

[@richardrichard9785]

@@MyKZbin-yb7xc What it makes more possible than ever is for buyers to sabotage their financial future on a grotesquely inflated asset, undermining any sensible financial planning they attempt to execute. Just because you can buy a home, doesn’t mean you should. The same logic applies to Ferraris, yachts, racehorses, and most timeshares. Lol!

[@MyYoutube-yb7xc]

@richardrichard9785 yet people want to buy those things. The houses are not Ferraris or luxury Yachts. They maybe expensive, but serve a very different purpose.

[@richardrichard9785]

@@MyKZbin-yb7xc You are entitled to your opinion. I have been a financial professional for almost 30 years……and I am entitled to my opinion as well. Interestingly, I have yet to come across any credible economist or financial pro who think this new policy shift is net-positive for anyone outside of the real estate industry.

[@cortez9978]

I have $200K in retirement account, yet can't afford a house in the suburbs here around NY, obviously something needs to break or no house will ever get sold again except mansions to CEOs. I now look to the stock market to boost my reserve, and buy a home afterwards.

[@M.Herlihy]

Unexpectedly for most Realtors, homeowners and home sellers, the debt ceiling crisis may result in upward pressure on interest rates, that’s why I always delegate my excesses with the help of a financial advisor

[@mette-lo]

I couldn't agree more, dabbled in stocks at first 2019, but sold off like every other amateur early 2020 due to the pandemic crash, shortly afterwards, I got fully invested using an advisor this time, my portfolio has maintained balance growth ever since, and as of today, I'm barely 25% short of hitting a 7-figure ballpark goal after subsequent investments.

[@Ballesteros-d]

everyone says the stock market is geared towards long-term investments, yet results like this gets me fascinated... mind sharing info of this professional aiding you please?

[@mette-lo]

Katherine Nance Dietz is the licensed advisor I use. Just google the name. You’d find necessary deets. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.

[@FrankHaubrich-mt6gw]

excellent share, just copied and pasted Katherine Nance Dietz on the internet out of curiosity, spotted her consulting page ranked top and was able to schedule a call session. Ive seen commentaries about advisors but not one looks this phenomenal

[@mr.d4295]

Honestly the best possible thing that could happen would be to completely abolish CMHC and all mortgage insurance companies, and max 25 year amortization.. This new change will only allow people to WAAAAY over leverage.. The solution to lack of sales isn't to let people borrow more money, the solution is to reduce speculation and drastically reduce the price of existing homes. ..

[@Whiskeytango2178]

When I heard this was coming down the pipe I was floored. This is plainly irresponsible. But what else can be expected from this financially illiterate sitting government.

[@MyYoutube-yb7xc]

This is a good step for the FTHB, so they can also buy a house. Period.

[@MathieuTitoLandry]

Love that Ron looks like he is talking to us from the 90s, camera aspect ratio, microphone, clothing, setting...

[@MarijaMidgley]

This current situation in Canada reminds me of the short story The Masque of the Red Death by Edgar Alan Poe. The Masquerade, The feast and excess, the Prince Prospero and his circle of sycophants hiding in the high castle feeling safe and untouchable indifferent and oblivious to the sufferings of citizens outside the walls and yet the gruesome carnage eventually ends it all.

[@MyYoutube-yb7xc]

Exactly, the ones who think that they are the only ones who need favors and the first-time home buyers need no favor. The ones sitting in the castles are the ones who already own homes and are criticizing a move that will get the FTHB on that ladder.

[@ilikeshroomgals]

Good to see Ron on the show. Very inciteful.

[@dutchgirl7603]

Increasing the CMHC limit provides the banks with more liquidity ... think about that for a minute.

[@nicolasbenson009]

I paid up all my mortgages in 2yrs while working with a Financial Adviser. I’m 54 and my husband 57 we are both retired with over $3 million in net worth and no debts. We got to realize that the secret to financial freedom is making better investments.

[@sharonwinson-m8g]

That is so amazing, I’m trying to get onto the investing ladder at 40. I wish at 55 I will be testifying to similar success..

[@tatianastarcic]

It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.

[@Vincent-j8u]

That's quite impressive! Can you share more information about your financial advisor?

[@tatianastarcic]

Well, there are a few out there who know what they are doing. I tried a few in the past years, but I’ve been with Sophia Maurine Lanting for the last five years or so, and her returns have been pretty much amazing.

[@TinaJames222]

Thanks for this. I curiously searched for her full name and her website came first. I looked through her credentials and did my due diligence before contacting her. Once again many thanks

[@andrewmason2722]

Get your lemon loaves ready, boys

[@Rawdiswar]

😂😂😂

[@surjs3599]

Wow a guest that is a truth-sayer. Non political comments

[@GS0021]

Ron the great! You guys are upping the game with your guests! 💪

[@TidyTrailers1]

So I’m pretty sure I understand the increase to from 1 million to 1.5 million is to buy votes in the GTA and for CMHC to insure all the mortgages on new construction loans in the GTA and Vancouver. So assuming a buyer put 300k down on a new construction condo worth 1.5 million 3 years ago, and said condo is now only worth 1.2 million the buyer can now put only 120k down and roll over the other 180k from his deposit to help cover the shortfall between the appraisal and what he agreed to buy it from the developer. Buyer still comes up short but doesn’t need to find another 200k or 300k now might only be short 20-100k. So it’s a government bail out on condo developers and pre sale buyers if I’m understanding it correctly.

[@MyYoutube-yb7xc]

Wow! That is such a rare scenario. First, the builder of condo still wants a 20% down, how do you roll this to cover the shortfall? I don't understand it. Also, it has to be a primary home, as investment properties are not covered by the CMHC insurance. If you already paid 300K to the developer, for a house appraised at 1.2, you are already above 20%, do you still qualify for CMHC? I don't get it.

[@saretsky]

@@TidyTrailers1 yes

[@jasonanderson2882]

Is there a way you can pin the time when the actual content/subject matter starts? :)

[@rdefacendis]

50 basis point is so unprecedented? What about the BOC raising rates 100 basis points early in this cycle.. if you think 50 basis points is "WOW"... then explain to us what EXTREME emergency justified 100 beeps increase? While our inflation was elevated at the time... it wasn't Argentina high... You are overstating the importance of a 50 beeps rise..

[@MyYoutube-yb7xc]

No one is getting 12 times of their income. Did he not say you need 300K plus to get a mortgage worth 1.5 million. Is that 12 times ?

[@saretsky]

@@MyKZbin-yb7xc with co-signers and gift money.

[@BellaBella-jw9ef]

That’s the insanity!! Making them debt slaves. Grooming first time buyers to believe they own their home. Repugnant.

[@MyYoutube-yb7xc]

@BellaBella-jw9ef I don't know that any first-time home buyer is buying a 1.5 million dollar house. This is a setting for the next 20 years. According to Ron, the CMHC premium will be about 80K or 90K if someone does that, and you still need 300K plus annual income. I don't have a lot of sympathies for 300K annual income first-time home buyers if that unicorn exists.

[@saretsky]

@@MyKZbin-yb7xc again. Co-signer and gift money; not income. See earlier comment

[@Lifeisapartydresslikeit]

Stop thinking of one person. Two people making 120 to 150K - two professionals- is possible. Also, I’m sure they won’t buy 1.5M but more likely $1,000,000 to $1,100,000 or just buying for 900K and getting 30 year mortgage- IS VERY Affordable

[@Stormshfter]

At the end of the day, it does not matter what the govt does to make accessing credit easier. Unless they create enough jobs to stop the unemployment from increasing we will continue to fall deeper into recession and real estate will continue on the same path just with more victims. This is really just about holding it together a little longer to get re-elected.

[@notalmostfamous9773]

A couple of us would love for you guys to do a really deep dive into Canada's oil and gas industry as well as an oil and gas geo political outlook.

[@marcoalbanese8221]

My opinion is, this program at the higher amounts for homes over $1 million won’t be used too much because if you can afford that specific product at the higher home prices, you won’t want to add the exorbitant mortgage default insurance to the principal. I predict, for those wealthier families, the Bank of Mom and Dad will become the busiest bank in town. I’ll bet a Twinkie on that. Affordability has nothing to do with this program. Please remember how much of a flop the FTHBI was - no one f’n used it and that program was targeted for those with income levels much less than for those considering $million plus homes. Wishing you all a great weekend!!

[@MyYoutube-yb7xc]

I agree with most of what you say, but this will make it easier for the FTHB to buy a house. The equity share program failed because its limit was too low compared to the home prices.

[@robertpenkulis6364]

You should kick the boomer out of the show. He's breaking the rules all the time! Just getting himself a treat. It all doesn't count. I think he should eat the whole package of Twinkies for all the times when he cheated

[@BellaBella-jw9ef]

🤣🤣Rich is Gen X not a Boomer!

[@saretsky]

@@robertpenkulis6364 I agree !

[@MyYoutube-yb7xc]

Everything, up to now, has been killing the home ownership dream for first-time home buyers, the stress test, the high prices, the mortgage deferment , the extended amortization, etc. Favored existing homeowners. This is one thing that favors the first-time home buyer. With the interest rates dropping fast all over the world, the hope for a large price correction is fading. Let's get the first time buyers some tools to get to where the prices are right now. Also, let's get the builders to start building new homes. Remember, the BOC sets the rates, not liberals. This is all BS that FTHB will be buying a 1.5 million homes, it will have a miniscule impact at that range. People making 300K plus, already own a home. Why can't someone say this simple thing instead of spinning a story.

[@fillmorehillmore8239]

There has been poor guidance on virtually everything finance over the last 4 years. Gov't changing demand through policy within a week, BOC NOT keeping rates lower, ect. There is no way I would invest (in RE) within this YOYO economy.

[@quixomega]

I think it would have helped a lot more if they had limited co-signers to spouses only (married or common-law). The Liberals have done nothing to make this better and constantly make it worse.

[@donm2067]

Good. People won't vote based on hair cuts for a few generations

[@Canadian_Eh_I]

Despicable what this government has done to millenials and zoomers

[@quayzie]

At what point was the Liberal party the party of the worker?

[@headab9027]

never - I don't know how people could call them 'left-wing'

[@hv3115]

​​@@headab9027Exactly. This is such ignorant, unsophisticated political analysis.. but that is to be expected from the right-wing leaning hosts of this show. The Liberal party, like the Democratic party in the US, have always been the party of the elites and managerial class. Like all major political parties that are "allowed" into power by those who actually hold power in the country, they are there to protect elites, corporations and owners of capital. The Liberal party has never, EVER, been the party of the working class. That is why you have the NDP.

[@quantifiablyqorrect2905]

Canada is one black swan or earthquake etc away from going belly up!

[@BellaBella-jw9ef]

From becoming communist

[@yellowstoic7678]

With all these people investing in homes, who are these people going to be working to pay their mortgage if no one is investing in businesses 🧐We need non recourse loans to bring real lending standards back. I think people would be more conservative with who they lend to when there's no one to bail them out 🤗

[@dirtlump]

We are going to have a Debt based Banking/Financial system crisis.... very simply because of a 'gdi' (gross domestic income) deficit as derivable from collapsing Canadian consumer spending reliant gdp..... the current now $3+ Trillion combined Mortgage/Consumer DEBT explosion(still expanding) attempting servicing by a Debt expansion based Consumer spending reliant barely $2 Trillion gdp SAYS SO ! Unless some nimrod has a way to miraculously create 'future' gdp capacity.... current parameters are insolvent under actuarial analysis... Full Stop !

[@Rawdiswar]

Wow Ron looks like he lost some weight.

[@joethompson5557]

Looking up Core inflation on the Trading Economics site shows inflation down at 1.5%. That strips out volatile items like energy and food so I don't see the strong increase in core CPI. What am I missing here? Rich had indicated that taking out energy prices, inflation is ripping higher and it doesn't seem like it based on the numbers I'm seeing.

[@SarahJeffy]

It is difficult to make exact projections for the housing market as it is still unclear how quickly or to what degree the Federal Reserve will reduce inflation and borrowing costs without having a substantial negative impact on demand from consumers for anything from houses to cars.

[@froggyguy961]

Evan Siddall believed in Canadians. 3 to 5 years of income believes in cool technology......Any time now

[@moelo5930]

Home prices to the moon as interest rates fall 🤦‍♂️🤦‍♂️🤦‍♂️

[@MrJaywed]

Run from it, dread it, transitory still arrives

[@ShahramHakimelahi]

If NINJ mortgages fáil there is a Jumbo mortgage to suit your agony 😅

[@MyYoutube-yb7xc]

Can we build more houses by destroying the house prices?

[@coinmaster-988]

when it's not your money, it's easy to say "let the house price drop"

[@roxannebradshaw-zh2gy]

Harris Deborah Martinez Margaret Miller Richard

[@peej91]

Time to go to the states and go to the green backs

[@SarahJeffy]

It is difficult to make exact projections for the housing market as it is still unclear how quickly or to what degree the Federal Reserve will reduce inflation and borrowing costs without having a substantial negative impact on demand from consumers for anything from houses to cars.

[@Lucas-t5w4n]

If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.

[@MusicMenacer]

How is carbon tax carney cashing in on this?

[@bat2275]

real estate never goes down for long ... because government will not allow it

[@wesleylawrence6439]

Hey Boomer , how about letting the average guy in on where the opportunitys are .

[@KeithDickerIceCapAssetManageme]

Hi Wesley. Send me an email and we'll connect you with our Oct 4 webinar.

[@gedigan3346]

So with the M2 money supply/ reverse repo markets in QT. China slowing as the iron ore contracts dropping? Where do they see this move they where taking bout? Canada in free fall with BC mining being throttled politically, forestry is done. If there is not any industry there are not tax revenue, low growth,1-2% GDP. Capital is moving to emerging markets from what i gather? Canada/ the west is almost done with, they seem to find the biggest group that they can trigger with a factor that moves people to an issue. Go woke go broke...seems when everyone is starving that will unit a single deciding factor!

[@7966016]

Instead of a small calapse in the housing markets, governments will cause a massive calapse down the road, caused by a never-ending depleation of disposable capital leading to a long, deep recession!

[@tomaga5856]

1.5m cmhc limit 🧨

[@headab9027]

Ron proved how powerful the development industry is with their lobbying. Government doesn't listen to 'the people' - ordinary folks need to organized.

[@TomEdwardi]

I recently sold some of my long-term position and currently sitting on about 250k, do you think Nvidia is a good buy right now or I have I missed out on a crucial buy period, any good stock recommendation on great performing stocks or Crypto will be appreciated.

[@FederickLeo]

As a beginner investor, it’s essential for you to have a mentor to keep you accountable. Kristine Lynn Weber is my trade analyst, she has guided me to identify key market trends, pinpointed strategic entry points, and provided risk assessments, ensuring my trades decisions align with market dynamics for optimal returns.

[@DerickSams]

I managed to grow a nest egg of around 120k to over a Million. I'm especially grateful to Adviser Kristine Lynn Weber, for her expertise and exposure to different areas of the market.

[@FederickLeo]

My colleagues had a good laugh at me when I told them I started my journey with $50k capital and how I accumulated over 6 figures within a span of 7 months. They never believed me until I pulled out my P&L. I know that learning the ins and outs of the market isn't for everyone, that's why personally, she oversees my investments.

[@DerickSams]

Without a doubt! Kristine Lynn Weber is a trader who goes above and beyond. she has an exceptional skill for analyzing market movements and spotting profitable opportunities. Her strategies are meticulously crafted based on thorough research and years of practical experience.

[@TomEdwardi]

nice! once you hit a big milestone, the next comes easier.. How can i reach her if you don't mind me asking?

[@dchong]

Apogee

[@signalarity7171]

You guys are reading way too much into why fed cut 50. Pure political pressure move

[@Picklemedia]

Amazing how many innocuous comments are being blocked by KZbin

[@ToBTCoT]

I think they need to make bitcoin co-legal tender, allow people to save without any tax implications in a currency/money that will reprice housing. Young people need to be able to earn and save in bitcoin without any tax issues for the long-term so that they can afford a house one day.

[@gregbaxter3249]

So fn simple guys all the new immigrants are sending the majority of their money earned or money given to them by our tax dollars given back home and are not doing any spending in our Canadian economy.

[@jupitereye4322]

How would a significant rate cut help the housing market? Let's say we get those ultra-low mortgage rates of 1.5-2% next year, we still have more people than we used to, we still have salaries that are trailing way behind the rise of the cost of food and energy, and unemployment is lower, savings are depleted for many Canadians... Even if interest rates are as low as they used to be everything else is worse than it was, and back then the affordability was bad. I don't see this getting much better, not until salaries rise a bit, and we can't do much of that because we aren't competitive then.

[@BellaBella-jw9ef]

Who wants to own a property on unceded territory? You don’t really own it even after you pay off your mortgage…

[@Casey-qm1nd]

The US housing market and consumers are much less leveraged than here in Canada. We need to talk about this. So I expect the US housing market to get frothy before the Canadian real estate market shows a sign of life, this is because there is a lot more wiggle room for prices to move up in the US. The US will be a lead indicator. This frothiness will heavily feed into US shelter inflation, then factor in the government debts rolling over to much higher rates, and is the government going to slow down spending? They are going to be stuck in a debt spiral. I expect the divergence between US house prices and Canadian house prices to get smaller in margin. The US cuts are an admission that the fed is not interested in fighting inflation. I think they are trying to protect the strength of the USD by not allowing the economy to go into a recession. So the fed wants inflation to stay in a 2-4% range, but good luck with that. Once the inflation genie is out of the bottle, good luck stuffing him back in. The US can expect much higher taxes going forward. It is relative strength of the US consumers that will keep on crushing Canadians for the foreseeable future. Politicians will continue to say the economy is strong blah blah blah.

[@CalCalCal6996]

Great collab guys, Ron is another one of my faves. Thanks for coming to Ottawa! Hope you do a Loonie Hour live here in the future.

[@light1950]

Ottawa here. When I wanted to buy tickets it was all sold out. Waiting you for the next event!

[@tomaga5856]

I don't know about the most interesting in 15 years but definitely significant

[@Macinro191]

Damn, got excited when i saw Ron's on this week, what a legend!

[@mehrankavoosi1333]

Keith will do whatever it takes to not eating a Twinkie

[@andrewvader9077]

Canada could have a snap election this year!

[@HybridHunterBC]

The feds 50 bip cut isn't complicated, the wanted to cut 25 in July, couldn't because of the election, so they did 50 in sep to retro the 25 the wanted I'm July, story over, it's not a panic cut

[@HybridHunterBC]

It was a political cut

[@marcgatto9675]

Ron's a great guest. Love the wry humour.

[@the_ikiru]

There are more than 500 stocks in the S&P 500.

[@paulnormandy6247]

It was truly a pleasure to get to meet you guys. When you make your way back to Ottawa, I'll be there. Thanks for everything you guys do.

[@saretsky]

@@paulnormandy6247 appreciate the support !

[@fretstain]

someone tell Ron his audio sounds like s***

[@DominelliGuitars]

K.D. : "It is what it is"

[@bcbliss5147]

Ron is fantastic!

[@joethompson5557]

Someone needs to explain how a bet works to the boomer. :)

[@KeithDickerIceCapAssetManageme]

hahaha...

[@Memento-_-Mori-_-982]

When is the live event coming to Montréal?

[@saretsky]

@@Memento-_-Mori-_-982 maybe next year !

[@AquaVivaFit]

Good update on this! Amazing what is happening in Canada

[@donm2067]

You spell frightening strangely

[@dmitriguzhel9515]

A-P-O-G-Y😂

[@kennyblobbin]

Can we just stop changing the rates all the time and just give money to everyone? Savers and debtors alike? We keep favoring the debtors, who are in over their head.

[@danielg1291]

Train has left the station. Run and catch or take the next one.

[@Ygg-d2d]

First

[@KeithDickerIceCapAssetManageme]

FIRST!

[@KevinLin1988]

Boomer sarcasm is going over everyone’s head 41:01

[@KeithDickerIceCapAssetManageme]

It's a grind at times.

[@Picklemedia]

@57:02 Prime Boomer

[@Picklemedia]

@45:15 quite the change of tune @Steve. What happened? What changed? I'm super tempted to do a compilation now...

[@Picklemedia]

@32:27 "bit of a contrarian just like myself" 😂

[@Picklemedia]

@38:48 this is the most truth I have heard supply-side Steve speak since I've subscribed.

[@shelterskelter]

Watching Steve switch his tune on housing lately has been fascinating. His child. That was when I saw the largest change. He saw in his first child someone who could be seriously harmed by this immigration and housing market. And as much as I loathe realtors I cant help but be pleased and much more impressed by him.