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CANADIAN IMPERIAL BANK CM.PR.R S
October 18, 2017 - 2:43pm EST by
mojoris
2017 2018
Price: 90.50 EPS 0 0
Shares Out. (in M): 440 P/E 0 0
Market Cap (in $M): 40,000 P/FCF 0 0
Net Debt (in $M): 0 EBIT 0 0
TEV (in $M): 0 TEV/EBIT 0 0
Borrow Cost: General Collateral

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Description

Canadian Housing Market Correction / Collapse – Alpha Short: “It’s Already Happening…”

A Canadian housing market correction / collapse is imminent and the bail-out of alternative sub-prime mortgage lender Home Capital Group (HCG) is only the first domino to fall…

 

In response to massive mortgage fraud at HCG, regulators are cracking down, enacting stricter mortgage underwriting regulations, strengthening anti-money laundering efforts, and instituting foreign buyer taxes…

…At the same time, mortgage rates are increasing due to monetary policy tightening and a more hawkish stance by the Bank of Canada…

…putting severe pressure on Canadian consumers who are over-levered by almost any measure and cannot afford increasing mortgage payments much less a new house…

The combination of increased government regulation, rising interest rates and over-levered Canadian consumers will result in tightened mortgage availability and originations, decreased housing demand and a severe correction in housing prices. Recent housing data, particularly out of Toronto and Vancouver suggests that “it’s already happening.” In Toronto, home sales volume between June and September is down ~37% compared to the same period last year. Additionally, inventory is ballooning, with active listings up 109% in September. Home appraisals performed only months ago are already stale due to rapidly dropping prices (Toronto home prices declined 35% in August, up low single digits in September), forcing appraisers to have a second look at properties they have already assessed. In Vancouver, purchases by Chinese buyers during the Chinese New Year have cratered, declining ~87%.

We have been monitoring the Canadian housing market bubble the past 18 months and initiated a short position in HCG after the completion of a Dutch tender. HCG announced a Dutch tender in March 2016, allowing senior executives to sell shares at a premium in the midst of a regulatory investigation involving the management cover up of mortgage application fraud. We covered our short position after an ~80% correction in the stock price following a proceeding filed by the Ontario Securities Commission (OSC) against the company for misleading investors as well as an emergency “DIP” financing capital raise.

 

 

On 6/22/17, HCG was effectively bailed out by Warren Buffett, which the market interpreted as a vote of confidence for the Canadian housing market as a whole. The reality is that Warren Buffet structured a deal in which he effectively cannot lose, at the expense of existing HCG shareholders (see appendix B for summary). We were surprised that an isolated forced bailout would create such a tremendous opportunity to increase our alpha short bet while at the same time providing time to re-underwrite.

 

Recommendation: SHORT a basket of Canadian mortgage lenders, mortgage insurers, banks and Canadian housing / economic growth ‘proxies’

TABLE OF CONTENTS

I. Home Capital Group “The first domino to fall”

II. Increased Regulatory Scrutiny – “The long arm of the Law”

III. Rising Interest Rates – “Stupid is as Stupid does”

IV. Mountains of Consumer Debt  – “It’s time to collect”

V. Recent Housing Data – “It’s already happening”

VI. Conclusion – “The Next Big Short”

VII. Illustrative Trade Structure

VIII. Appendices: “The Cutting Room Floor”

Appendix A: Issue Spotting / Risks

Appendix B: Berkshire Hathaway’s investment in Home Capital Group

Appendix C: Rizwan Qureshi

Appendix D: EQB vs. HCG loan growth

Appendix E: Gerald Soloway

Appendix F: Alberta and the oil price crash

Appendix G: Ownership overlap between Canadian Banks

Appendix H: Miscellaneous charts


Home Capital Group “The first domino to fall”

The bail out of alternative sub-prime mortgage lender Home Capital Group (HCG) by Warren Buffet, although attractive for Berkshire Hathaway, (3x overcollateralization, 9% yield and a free call option on the common equity price at a ~50% discount) is a bad deal for HCG shareholders; in response to massive mortgage fraud, regulators are cracking down

Home Capital Group (Ticker HCG) is a Canadian alternative lender offering deposit, mortgage lending and credit card issuing services. Historically, the bull thesis centered around HCG’s market leading position in the Canadian alternative mortgage lending space as well as robust origination volumes. In the summer of 2015 however, the company began to unravel:

HCG has become the poster child for mortgage fraud in Canada, however, an entire ecosystem of alternative lenders and insurers have pursued the same growth at any cost mentality. For example, several brokers fired by HCG for mortgage application fraud, including an individual named Rizwan Qureshi (http://www.bnn.ca/cohodes-vs-home-capital-testing-the-short-seller-s-claims-1.593533), went on to join HCG competitors including Equitable Group (Ticker EQB CN). EQB’s total loans grew ~50% since 4Q’14, when Rizwan Qureshi and perhaps other brokers joined the company, in the midst of HCG’s mortgage fraud investigation.

 

 

 

 

 

 

 

 

 

 

As the dust settles at HCG and within the broader alternative mortgage lending ecosystem, regulators are beginning to crack down.

Increased Regulatory Scrutiny – “The long arm of the Law”

The HCG case study of “growth at all costs” is forcing the regulators hand to fundamentally change how the mortgage lending and broader housing market ecosystem operates by enacting stricter mortgage underwriting regulations, strengthening anti-money laundering efforts, and instituting foreign buyer taxes; at the same time, Chinese capital controls will negatively impact the flow of foreign real estate investment in Canada, a major driver of the housing market boom

Increased government intervention in the housing market by The Office of the Superintendent of Financial Institutions (OSFI), the Ontario Securities Commission (OSC) and various local / provincial government authorities will tighten credit and negatively impact housing demand. In July 2016, the Office of the Superintendent of Financial Institutions (OSFI) communicated its intention to increase supervisory scrutiny on mortgage underwriting practices of federally regulated lenders http://www.osfi-bsif.gc.ca/Eng/fi-if/in-ai/Pages/rfmrm.aspx). Provisions laid out in the July 2016 letter in include:

  • Requiring a qualifying stress test for all uninsured mortgages

  • Requiring that Loan-to-Value (LTV) measurements remain dynamic and adjust for local market conditions

  • Expressly prohibiting co-lending arrangements that are designed, or appear to be designed to circumvent regulatory requirements

OFSI finalized the above provisions on October 17, 2017, and will take effect in January 2018 (http://www.osfi-bsif.gc.ca/Eng/osfi-bsif/med/Pages/B20_dft_nr.aspx). The most impactful change announced by OSFI is the establishment of a new minimum qualifying rate, or “stress test,” for borrowers making a down payment of more than 20% of the home’s value. The stress test requirement is stricter than what was originally proposed and requires buyers with uninsured mortgages to prove that they can afford payments based on the greater of the Bank of Canada’s five-year benchmark rate (currently ~4.9%) or their mortgage rate plus two percentage points.

In addition, OSFI released draft changes to Guideline B-20 which is meant to deter and detect money laundering and terrorist financing activity (http://www.osfi-bsif.gc.ca/Eng/fi-if/rg-ro/gdn-ort/gl-ld/Pages/b20.aspx). It has long been suspected that money laundering has helped to feed demand for housing during the boom (http://globalnews.ca/news/3350193/canada-launder-money-real-estate-report/).

New housing measures were also recently introduced by the OSC. In April 2017, the OSC unveiled its Fair Housing Plan, which introduced a number of demand- and supply-side measures, including:

  • The non-resident speculation tax, a 15 per cent tax on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe area by individuals who are not Canadian citizens or permanent residents or by foreign corporations and taxable trustee.

  • The expansion of rent controls to all rental properties, including those built after 1991

  • Measures designed to increase housing supply, including: freeing surplus provincial land for residential construction, empowering municipalities to introduce a vacant homes property tax, providing a rebate for a portion of the development charges related to the construction of new rental units

Much like the non-resident speculation tax enacted in Ontario, Authorities in British Columbia instituted a similar 15% foreign buyers tax in Vancouver back in July 2016. After the tax was enacted, Chinese real estate inquiries in Vancouver plummeted and this same impact will likely be felt in Toronto.

https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iPB3w7sWqUdw/v1/800x-1.png

 

 

 

 

 

 

 

 

 

 

 

Source: https://www.bloomberg.com/news/articles/2016-12-04/vancouver-housing-tax-pushes-chinese-to-1-million-seattle-homes

Recently, A massive money laundering scheme was uncovered at a Vancouver area casino, popular with Chinese gamblers (https://www.bloomberg.com/news/articles/2017-09-25/big-chinese-cash-bets-put-vancouver-casino-in-laundering-probe) …as if regulators weren’t already on high alert…

 

In addition to the laundry list of domestic regulatory interventions, various capital control measures instituted by the Peoples Bank of China (PBoC) will also impact foreign demand for housing. These capital controls include various anti-money laundering measures and new rules that strictly prohibit export of capital for buying bonds, “insurance-type” products, and real estate (http://www.businessinsider.com/chinese-capital-controls-effect-on-real-estate-2017-3).

Taken together, these regulatory measures both in Canada and China, will have a chilling effect on Canadian housing demand and the availability of credit.

Rising Interest Rates – “Stupid is as Stupid does”

The decision by the Bank of Canada to begin tightening monetary policy in concert with other central banks around the world, is ill-advised considering wage growth is decelerating, inflation is stubbornly low and a material driver of economic growth has been a housing bubble; rising mortgage rates will put tremendous pressure on over-levered Canadian consumers who cannot afford increasing mortgage payments much less a new house

According to Bank of Canada, the economy appears to be humming along.

“Canada’s economy has been robust, fueled by household spending. As a result, a significant amount of economic slack has been absorbed. The very strong growth of the first quarter is expected to moderate over the balance of the year, but remain above potential. Growth is broadening across industries and regions and therefore becoming more sustainable” – Bank of Canada, 7/12/17

Recent trends in average hourly earnings for Canadian consumers as well as inflation seem to paint a different picture however. The annualized 24-month average change in wage growth for Canadian consumers has dropped below 2% and inflation has remained subdued between 1-2%. Considering that the U.S. Federal Reserve is concerned with US wages which have averaged ~2.5% in 2017, and inflation approaching its 2% mandate, monetary tightening by the Bank of Canada is alarming.

 

                 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Source: http://www.zerohedge.com/news/2017-07-12/canada-serious-trouble-again-and-time-its-real

    Source: Bloomberg L.P. Pricing data

Additionally, Canadian economic growth has become increasingly driven by the housing market boom. In a June 2017 financial system review, the Bank of Canada characterized imbalances in the housing market as a key vulnerability, despite its rosy depiction of the overall economy. (http://www.bankofcanada.ca/wp-content/uploads/2017/06/fsr-june2017.pdf). Since the U.S. housing crisis, the Canadian housing market as reached nosebleed highs and residential investment as a share of GDP in Canada is closely tracking levels seen in the U.S. from 1991 to 2006.

 

     

 

 

 

 

 

 

 

 

 

 

 

Source: https://www.bloomberg.com/view/articles/2017-06-21/canada-s-housing-bubble-will-burst?utm_content=view&utm_campaign=socialflow- organic&utm_source=twitter&utm_medium=social&cmpid%3D=socialflow-twitter-view

residential investment

         

 

 

 

 

 

 

 

 

 

 

 

 

Source: http://www.huffingtonpost.ca/2016/10/05/canada-real-estate-dependence_n_12364350.html

Bank of Canada figures show that 14% of all private business loans from chartered banks are now bound for so-called real estate operator industries, (largest share in the history of data back to 1981) and 7% of all Canadian workers are employed in the housing construction industry, almost double the share of housing construction workers in the U.S.

http://wpmedia.business.financialpost.com/2017/05/borrowing.jpg?w=640&quality=60&strip=all&h=339

 

 

 

 

 

 

 

 

 

 

Source: http://business.financialpost.com/news/economy/life-after-oil-makes-real-estate-the-new-crutch-of-canadas-economy-and-its-huge/wcm/928cfb57-0901-43be-87c2-c65f93963c8d

       

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: http://globalnews.ca/news/1762519/4-charts-that-show-canada-is-in-serious-trouble-deutsche-bank/

On July 12, 2017, despite average wage growth below 2%, low inflation and economic growth increasingly driven by a housing market bubble, The Bank of Canada raised its target for the overnight rate to 0.75%, the first hike since 2010 (http://www.bankofcanada.ca/2017/07/fad-press-release-2017-07-12/). In an even more surprising move, The Bank of Canada raised rates again on September 6, 2017, increasing the target for the overnight rate to 1.0% (http://www.bankofcanada.ca/2017/09/fad-press-release-2017-09-06/). The market appears to believe that more tightening is to come as 10 year government bond yields are hitting multi-year highs

 

 

 

 

 

 

 

 

 

Source: Bloomberg L.P. Pricing data

Considering the majority of mortgage debt in Canada are adjustable rate mortgages, an increase in interest rates will immediately impact a large swath of Canadian homeowners. A recent analysis by The Huffington Post found that a return to “normal” mortgage rates would put severe pressure on many Canadian homeowners (http://www.huffingtonpost.ca/2016/08/02/mortgage-rates-canada-debt-crisis_n_11262930.html). Assuming mortgage rate normalization to ~5% would imply the following changes in monthly payments:

  • The average mortgage payment on a house bought at today’s average price ($503,301) would rise by $620 per month, from $2,078 to $2,698.

  • In Toronto, average payments on an average-priced house would rise by $923 per month, from $3,079 to $4,002.

  • In Vancouver, payments would rise by $1,097 per month, from $3,677 to $4,774.

Given that a recent poll found half of Canadians couldn’t even afford $200 more in monthly payments, those projections paint a frightening picture (http://www.huffingtonpost.ca/2016/02/16/poll-finds-half-of-respondents-within-200-a-month-of-being-unable-to-pay-bills_n_9242222.html). Rising mortgage rates will put tremendous pressure on over-levered Canadian consumers who cannot afford increasing mortgage payments much less a new house.

Mountains of Consumer Debt – “It’s time to collect”

A boom in consumer mortgage and home equity debt has been the lifeblood of the Canadian economy; unfortunately, by almost any measure, Canadian consumers have taken on unsustainable amounts of debt and have maxed out all available forms of credit setting up a hard landing for domestic housing demand

In order to understand the magnitude of the consumer debt problem in Canada, look no further than growth in home equity lines of credit (HELOCs). According to OFSI, total outstanding HELOC debt reached ~$280Bn in 2Q17, ~15% higher than levels seen in 2014. HELOCs have become popular among Canadian consumers in recent years as way to access cash by borrowing against housing price gains. A material correction in housing prices would be catastrophic for consumers with $280Bn of HELOC debt.

      

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: OSFI

Mortgage debt and HELOCs have been growing 2x the rate of Canadian consumer disposal income, resulting in a debt to income ratio of 150%, compared to 100% in the U.S. currently. For context, the U.S. debt to income ratio in the lead up to the financial crisis never exceeded 130%.

             

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: http://www.bankofcanada.ca/wp-content/uploads/2017/06/fsr-june2017.pdf

 

      

 

 

 

 

 

 

 

 

 

 

 

Source: http://www.zerohedge.com/news/2017-07-12/canada-serious-trouble-again-and-time-its-real

The Canadian Center for Policy Alternatives sums up the dire state of the Canadian consumer nicely:

“Canada has never experienced private debt this high, nor has it ever led advanced economies in private debt accumulation…this over-leveraging will almost certainly reverberate to economic growth generally. An economy addicted to ever higher levels of debt to achieve only mediocre growth—as Canada’s is today—is in for a rude awakening. There is an upper limit to how much debt the private sector can be burdened with”

Source: https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2017/06/Addicted_to_Debt_2017.pdf

Recent Housing Data – “It’s already happening”

The combination of increased government regulation, rising interest rates and an over-levered consumer will result in tightened mortgage availability and originations, decreased housing demand and a severe correction in housing prices. Recent housing data, particularly out of Toronto and Vancouver suggests that “it’s already happening.”

All the right ingredients appear to be in place for a housing market correction and if recent housing data out of Toronto and Vancouver are of any indication, cracks are already beginning to emerge. In Toronto, home sales volume between June and September is down ~37% compared to the same period last year. Additionally, inventory is ballooning, with active listings up 109% in September. Home appraisals performed only months ago are already stale due to rapidly dropping prices (Toronto home prices declined 35% in August, up low single digits in September), forcing appraisers to have a second look at properties they have already assessed (http://business.financialpost.com/personal-finance/mortgages-real-estate/real-estate-market-uncertainty-is-forcing-appraisers-to-take-a-second-look/wcm/3135bbe8-ffae-4e3a-bb9a-bc4933af0982).

http://www.macleans.ca/wp-content/uploads/2017/07/TREB-indicators-bar-and-line-3.png

              

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: http://www.macleans.ca/economy/realestateeconomy/torontos-deflating-housing-bubble-in-one-chart/  

According to the Canadian Real Estate Association’s (CREA) chief economist, Gregory Klump,

"Changes to Ontario housing policy made in late April have clearly prompted many home buyers in the Greater Golden Horseshoe region (Toronto) to take a step back and assess how the housing market absorbs the changes. The recent increase in interest rates could reinforce a lack of urgency to purchase...”

In Vancouver, home sales declined 12% in June. Also, home purchases by Chinese buyers during the Chinese New Year (the most popular time of year for Chinese home purchases in Canada) have cratered, declining ~87% from last year.

                 

 

 

 

 

 

 

 

 

 

 

 

 Source: https://betterdwelling.com/city/vancouver/chinese-new-year-sales-of-vancouver-real-estate-down-78/

Conclusion – “The Next Big Short”

A Canadian housing market correction is imminent and the bail out of alternative sub-prime mortgage lender Home Capital Group (HCG) is only the first domino to fall. In response to massive mortgage fraud at HCG, regulators are cracking down which will negatively impact the availability of credit. At the same time, The Bank of Canada is tightening monetary policy which will put severe pressure on Canadian homeowners who are over levered by almost any measure and cannot afford increasing mortgage payments much less a new house. The combination of increased government regulation, rising interest rates and an over-levered consumer will result in tightened mortgage availability and originations, decreased housing demand and a severe correction in housing prices. If recent housing data is of any indication, “it’s already happening…”

 

Illustrative Trade Structure

  • Short a basket of alternative mortgage lenders, mortgage insurers, banks and other companies exposed to the Canadian housing market and broader Canadian economic growth

  • Structure trade block based on total gross exposure, average daily trading volume, cost of carry characteristics (dividend yield, borrow cost), market capitalization et. al.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home Capital Group (Ticker: HCG CN): HCG was implicated in mortgage fraud as well as failing to properly disclose the result of an internal investigation within the company’s broker network. We covered our position in April / May after a material correction in the stock price. In response to the events at HCG, Canadian regulators began cracking down enacting stricter mortgage underwriting rules, strengthening anti-money laundering efforts and instituting foreign buyer taxes. On 6/22/17 however, Warren Buffett engineered a backdoor bail-out of the company, structured in such a way that he effectively ‘could not lose.’ This created an attractive entry catalyst as we believe Canadian housing market fundamentals are continuing to deteriorate. Based on the below burn down analysis, a housing market correction of 15-20% effectively wipes out HCG’s remaining equity value.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equitable Group (Ticker: EQB CN): We are also short another alternative mortgage lender, EQB, which actually hired various mortgage broker bad actors from HCG (including Rizwan Qureshi). Similar to HCG, a housing market correction of 15-20% effectively wipes out Company Q’s remaining equity value as well.

 

 

 

 

 

 

 

 

 

 

 

Canadian Imperial Bank of Commerce (Ticker CM US): CIBC has the highest relative exposure to the Canadian housing market amongst the ‘big 6’ Canadian banks. A 15-20% housing market correction would have a material, negative impact on CIBC’s capitalization and implies a 50%+ correction vs current trading.

 

 

 

 

 

 

 

 

 

 

 

Genworth MI Canada (Ticker MIC CN): MIC insures mortgages originated and held by alternative mortgage lenders like HCG and EQB. A 15-20% housing market correction would result in spiking loss ratios, lower premiums growth, pro forma earnings power materially below street estimates and a pro forma share price 50% below the current trading range.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAPREIT (Ticker CAR-U): Against the backdrop of a Canadian housing market and broader economy on the brink of a severe correction, CAPREIT trades at a premium capitalization rate of 4.75% vs 6-6.5% for U.S. apartment REITs. Fundamentals are likely to be challenged going forward and we believe there are various accounting shenanigans, and the business is essentially operated as a capital markets Ponzi- scheme. Current trading implies a ~50%-75% premium to our estimated Net Asset Value.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Enercare Inc (Ticker: ECI CN): ECI rents and sells water heaters, furnaces, air conditioners and other HCAC equipment to Canadian homeowners (~70% of revenue). A 15-20% housing market correction would have a material, negative impact on fundamentals, implying EBITDA 25-30%+ lower than current street estimates and implies a share price 60% lower than current trading.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendices: “The Cutting Room Floor”

Appendix A: Issue Spotting / Risks

  • Additional capital injections into the Alternative mortgage lending ecosystem at “reasonable terms"

  • Roll back of recently enacted regulation by OSFI, OSC and various other local / provincial government authorities

  • Easing of Chinese capital controls

  • Inflection in Canadian consumer wage growth

  • Pivot back to dovish monetary policy by the Bank of Canada

  • Various economic indicator trends (export volumes, infrastructure spend, oil prices et. al.)

Appendix B: Summary of Berkshire Hathaway’s investment in Home Capital Group

On 6/21/17, HCG announced Berkshire Hathaway will be making an aggregate $400M equity investment at a weighted average price of $10.00/share. Equity investment implies 38.4% of shares outstanding once completed and will be made in two tranches. The first tranche will bring Berkshire’s investment to 19.99% and closed June 29. The balance will be subject to a shareholder vote expected to take place in September 2017. The Board has endorsed the transaction.

Berkshire will also be providing its own $2.0B back-stop credit facility to replace HCG’s facility in place. The coupon on the facility is 9.5%, decreasing to 9.0% once the initial equity investment is complete. The facility has a standby fee of 1.75%, decreasing to 1% upon completion of the initial investment.

Break even for Buffet is $5.50 per share including interest vs $15.00 stock price at time of investment. Additionally, $2Bn life line collateralized with over $4Bn worth of mortgages


Appendix C: Rizwan Qureshi

Appendix D: EQB vs. HCG loan growth in midst of fraud investigation and broker terminations at HCG – terminated brokers may have went to work for EQB including Rizwan Quershi

 

 

 

 

 

 

 

 

 

 

 

 


Appendix E: Gerald Soloway

Mr. Gerald M. Soloway, also known as Jerry, is the Founder of Home Capital Group Inc. Mr. Soloway served as the Chief Executive Officer of Home Capital Group Inc. from January 1, 1987 to May 11, 2016 and Home Trust Company from 1986 to May 11, 2016. Mr. Soloway served as the Chief Executive Officer at Hometrust Mortgage Company. Mr. Soloway served as the President of Home Capital Group Inc., until January 2008 and served as President of Home Trust Company since 1986. He served as an Executive Director of Home Capital Group Inc. until May 5, 2017. He serves as a Director of Hometrust Mortgage Company. He served as a Director of Home Trust Company since 1986 until May 15, 2017. He practiced law in Toronto, specializing in real estate, mortgage and commercial law and acting on behalf of major banks and trust companies. He studied LLB at Osgoode Hall in 1961 and was subsequently called to the bar in 1963. He attended school in London, Ontario and earned BA from the University of Western Ontario in 1958, majoring in Economics.

Source: CapitalIQ

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix F: Alberta and the oil price crash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix G: Ownership overlap between Canadian Banks

Source: Bloomberg L.P.


Appendix H: Miscellaneous charts

 

cid:image007.png@01D3468B.5A098C50

                    Source: https://betterdwelling.com/canadian-real-estate-buyers-lose-25-buying-power/

 

                    Source: http://www.huffingtonpost.ca/2016/10/05/canada-real-estate-dependence_n_12364350.html

 

                    Source: http://www.huffingtonpost.ca/2016/10/05/canada-real-estate-dependence_n_12364350.html

             Source: http://www.huffingtonpost.ca/2016/10/05/canada-real-estate-dependence_n_12364350.html

           Source: http://globalnews.ca/news/3370937/canadian-housing-prices-similar-us-national-bank/

          Source: https://www.bloomberg.com/view/articles/2017-06-21/canada-s-housing-bubble-will-burst?utm_content=view&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social&cmpid%3D=socialflow-twitter-view

What you get for $1MM in Toronto…not much

          Source: http://www.blogto.com/city/2017/02/tiny-toronto-home-just-sold-1-million/

 

       Source: http://www.bankofcanada.ca/wp-content/uploads/2017/06/fsr-june2017.pdf

 

Canada Households Debt To Gdp

          Source: https://tradingeconomics.com/

      Source: https://tradingeconomics.com/

         Source: Bank of International Settlements / Canadian Center for Policy Alternative

Screen Shot 2017 03 10 at 12.58.55 PM

       Source: http://www.businessinsider.com/chinese-capital-controls-effect-on-real-estate-2017-3

    Historical Canadian Overnight interest rate:

Source: Bloomberg L.P.

 

        Source: http://www.huffingtonpost.ca/2016/08/02/mortgage-rates-canada-debt-crisis_n_11262930.html

       Source: http://www.huffingtonpost.ca/2016/08/02/mortgage-rates-canada-debt-crisis_n_11262930.html

        Source: http://business.financialpost.com/news/economy/life-after-oil-makes-real-estate-the-new-crutch-of-canadas-economy-and-its-huge/wcm/928cfb57-0901-43be-87c2-c65f93963c8d

     Source: Toronto Real Estate Board

             Source: http://www.trebhome.com/market_news/housing_charts/index.htm

             Source: http://www.trebhome.com/market_news/housing_charts/index.htm

           Source: Canadian Real Estate Association (CREA)

 

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.

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