Canada's Big Six banks are adding billions of dollars to their emergency funds as mortgage renewals approach for more than three quarters of homeowners. Andr...
Anyone who’s on a variable rate mortgage and hasn’t increased their monthly payments significantly is going to be in a lot of trouble when they go to renew.
This might actually lead to housing prices dropping significantly.
This might actually lead to housing prices dropping significantly.
This has been scarcely fulfilled promise so far, looks like this prediction has been a bit overestimated. I would very much welcome it but wouldn’t bet on it.
I mean, they can try, but market forces are outside their control.
I don’t think the US wanted to have their housing market collapse in 2008 (?), but it happened nonetheless.
It would suck, psychologically, to “lose” 30% of my house’s value in a downturn, but it would be better for the economy if that happens. And, really, now that I’m a homeowner, all that really matters is the difference in house values when I go to sell/buy. So a downturn might actually be “good” for me, since the differential between this first and a “better” house would be smaller.
Right now, boomers are selling in hot markets to find lavish retirement, transferring wealth from the younger generation to older on massive volumes.
We are not the US in 2008. At that point, half the market was new buyers that could only afford the ARM rates they were given ( maybe even interest only ). When home values became less than the mortgage, they just walked away. The system often allowed them to walk away without losing other assets.
In Canada, the majority of mortgage holders have mortgages far smaller than their home value. They are not going to causally walk away from these assets. Look what you are saying about lower prices being “good” for you. It does not sound like you are going to panic and sell your home in a down market. Mortgage holders also had to qualify at rates higher than they borrowed. Not as high as they are now but the new rates will not be so wildly beyond their means as happened in the US. Mortgages that are close to home value are likely insured.
Finally, rates are coming down. While higher rates will certainly apply downward pressure, the rate reductions help close the gap and also send a signal that rates will be lower in the near future ( not as low as they were ). We will probably see a lot of variable rates with expectations of sticking it out for a year or two while rates drop. If prices do come down, some people will value hunt, making bets that declining rates will drive prices up again in the future.
Once more, I think some downward pressure is likely. I do not expect anything even close to 2008.
My point was just that the government can’t exert complete control on the market to keep housing values inflated. If it’s a bubble, then eventually prices will revert to their “true” value, regardless of government interference.
I think the generational angle is substantially over stated. Sure on a average the older generation is much more likely to own but there plenty that’s getting hit real hard with the inflation brought on by housing prices.
It’s much more accurate to frame it as the government sacrificing the have nots for the haves. In which case there’s no waiting it out as long as a substantial part of Canadian is convinced high housing prices is a good thing.
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Very well explained.
Anyone who’s on a variable rate mortgage and hasn’t increased their monthly payments significantly is going to be in a lot of trouble when they go to renew.
This might actually lead to housing prices dropping significantly.
This has been scarcely fulfilled promise so far, looks like this prediction has been a bit overestimated. I would very much welcome it but wouldn’t bet on it.
No they’ll stop that at all costs. He has already said we can’t do that.
I mean, they can try, but market forces are outside their control.
I don’t think the US wanted to have their housing market collapse in 2008 (?), but it happened nonetheless.
It would suck, psychologically, to “lose” 30% of my house’s value in a downturn, but it would be better for the economy if that happens. And, really, now that I’m a homeowner, all that really matters is the difference in house values when I go to sell/buy. So a downturn might actually be “good” for me, since the differential between this first and a “better” house would be smaller.
Right now, boomers are selling in hot markets to find lavish retirement, transferring wealth from the younger generation to older on massive volumes.
I won’t mind paying less in property tax and insurance costs.
We are not the US in 2008. At that point, half the market was new buyers that could only afford the ARM rates they were given ( maybe even interest only ). When home values became less than the mortgage, they just walked away. The system often allowed them to walk away without losing other assets.
In Canada, the majority of mortgage holders have mortgages far smaller than their home value. They are not going to causally walk away from these assets. Look what you are saying about lower prices being “good” for you. It does not sound like you are going to panic and sell your home in a down market. Mortgage holders also had to qualify at rates higher than they borrowed. Not as high as they are now but the new rates will not be so wildly beyond their means as happened in the US. Mortgages that are close to home value are likely insured.
Finally, rates are coming down. While higher rates will certainly apply downward pressure, the rate reductions help close the gap and also send a signal that rates will be lower in the near future ( not as low as they were ). We will probably see a lot of variable rates with expectations of sticking it out for a year or two while rates drop. If prices do come down, some people will value hunt, making bets that declining rates will drive prices up again in the future.
Once more, I think some downward pressure is likely. I do not expect anything even close to 2008.
I agree with all of that! Well explained.
My point was just that the government can’t exert complete control on the market to keep housing values inflated. If it’s a bubble, then eventually prices will revert to their “true” value, regardless of government interference.
Politicians will literally bankrupt a generation before
going to therapybuilding affordable housing.I think the generational angle is substantially over stated. Sure on a average the older generation is much more likely to own but there plenty that’s getting hit real hard with the inflation brought on by housing prices.
It’s much more accurate to frame it as the government sacrificing the have nots for the haves. In which case there’s no waiting it out as long as a substantial part of Canadian is convinced high housing prices is a good thing.
Before curbing commercial investment, price speculation, or otherwise interfering with the hen that lays the golden eggs.