Quote:
Originally Posted by st7860
You say you don't live in Vancouver and still think about it.
Vancouver is affordable to people of all types. It isn't related to being impossible. The higher the better. And for sure you're entitled thinking everyone should have a discount home
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That's the very definition of risk. We've essentially built up a massive economy on the idea of selling each others' houses. Every dollar that goes into housing is coming out of liquidity. It’s a dollar less for saving, investing, growing, insuring against the unforeseen and the future needs of your family. It's not a balanced economy. Although the problem is magnified in Vancouver, it's across Canada.
Quote:
Originally Posted by Caliplanner1
I think the real issue here (as it affects house prices) is that the wealthy (immigrant) "foreigners" are not relying on the health of the local economy to be able to afford a house but rather are bringing in foreign earned monies......thus, effecting a case of (growing income inequality and) imported inflation!
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The reality is the
foreign monies' argument is nothing but a real estate boogeyman to take the attention away from the real problem, the real problem that no political leader wants to touch. It is us. Putting controls on foreigners won't change prices because LOCALS run real estate. Without the "foreigner" to blame, who is there left?
The government also hasn't done us any favors by letting the banks take on essentially no risk and not punishing them for encouraging massive debt loads. But, like I said,
no self-respecting politician is going to blame the people, not if he wants to stay elected. And as an extension of that politicians will not, in an election year, make any moves that seem to be anti-constituent, like making it harder for banks to give out loans to people who shouldn't qualify. They were doing a few things to try and cool the market, like removing CMHC insurance on properties over $1m, removing 0% down 35 and 40-year mortgages, making re-financing based on the value of the house, not the value of the mortgage, but it had a tame effect.
In the end, the USA is what may cool the Canadian market, and hopefully a lot of wealth won't disappear. The
US FED is on track to raising rates by 0.5% this year alone. We're looking at a gradual increase in rates over the next few years. Canada will follow suit, probably after the election. It always does.
A manulife Bank survey showed that a
33% of mortgage owners would be in financial difficulty if mortgage payments increased 10%. That's about an interest rate hike of ~%1. Another
15% of mortgage owners said they can't handle ANY increase at all.
Eggs, meet Basket. Everybody in.
It likely won't be massive collapse like doom n' gloom analysts predict. It will likely be just a small drop and stagnant prices over the next 5–10 years as smart money exits real estate and boomers start selling their homes to fund their retirement. Of course, stagnant prices mean a yearly drop at the rate of inflation, but people don't think that way about houses. Lots of people will have almost NO savings and have wealth locked up in real estate. Illiquid.
If Canada doesn't follow the US (For the first time), investors sees that as a lack of confidence and the CAD$ drops, and everything gets more expensive and puts a lot more people at risk.
That's my 5¢
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Even if interest rates were dropped many years ago as well, the ongoing increasing demand for cheap home loans (as you are arguing) would eventually result in higher/rising home loan interest rates. Is this happening???
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