[Eclectic21]

... That's one thing I'm raising, is asking you to consider the harm to society. The other thing I'm raising is that we're now in a tightening liquidity environment where interest rates are shooting up. The "punch bowl" is being pulled away, and real estate people aren't used to that. I think it's in their own best interest to deleverage because this is going to become dangerous for them. If interest rates really keep rising, property investors are going to have lots of problems.

As I have said before, shouldn't you want problems to drive prices down?

I've also said before that I suspect that if the amateurs you are concerned about did follow your recommendation and sold, the bigger players with deep pockets will snap up the properties for little change to affordability.


Cheers

 

[james4beach]

I've also said before that I suspect that if the amateurs you are concerned about did follow your recommendation and sold, the bigger players with deep pockets will snap up the properties for little change to affordability.

I don't think that's how a marketplace works. When many buyers are tripping over each other and in a buying frenzy, there's buying pressure to push the prices up.

Without a huge number of enthusiastic buyers, of course there still will be some professional buyers but I don't think prices would increase quite the same way. Certainly not the 25% single year increase in Canadian home prices.

Easy availability of credit, and super low interest rates, creates more buyers. Take away the stimulus (those low rates and easy mortgages) and buyers disappear.

 

[scorpion_ca]

I don't think that's how a marketplace works. When many buyers are tripping over each other and in a buying frenzy, there's buying pressure to push the prices up.

Without a huge number of enthusiastic buyers, of course there still will be some professional buyers but I don't think prices would increase quite the same way. Certainly not the 25% single year increase in Canadian home prices.

Easy availability of credit, and super low interest rates, creates more buyers. Take away the stimulus (those low rates and easy mortgages) and buyers disappear.

Totally agreed with you.

Posthaste: The way the housing market is stalling, the Bank of Canada may have to hit the brakes sooner than expected

For the first time since 2010, five-year fixed mortgage rates are all above 4%

financialpost.com

 

[james4beach]

Totally agreed with you.

Yup, economists and the BoC knows all this too. It's quite well known that low interest rates push up housing prices.

 

[nathan79]

Totally agreed with you.

Posthaste: The way the housing market is stalling, the Bank of Canada may have to hit the brakes sooner than expected

For the first time since 2010, five-year fixed mortgage rates are all above 4%

financialpost.com

The title of that article is ridiculous. Although activity is down it's still technically a seller's market. Price drops are minimal so far. The BoC needs to stay the course and tame inflation regardless of the housing market, at least if they want to restore their credibility.

 

[marina628]

I find this hard to believe. I'd wager most people shop very near their max price - and usually, people buy before they sell, counting on getting a pretty good transaction (i.e. quick sale for the price they want).
It's hard to argue that rising interest rates will not bring down prices. It's a forcing function. Lenders are quite simply approving people for less. If there are 2-3 more 50bp hikes this might have a material impact on the market.

Even though I have high tolerance for Risk I sold my $1,500,000 before buying another new construction for half the price because I did not want to be suck with two homes. Maybe my friend are low risk but most have bought much lower than their max including my niece who bought her first home and had $200,000 down.

 

[off.by.10]

I've also said before that I suspect that if the amateurs you are concerned about did follow your recommendation and sold, the bigger players with deep pockets will snap up the properties for little change to affordability.

Funny you should post that now, I had a flyer in the mail yesterday saying "we're experienced investors looking to buy houses and multiplex in your area". And not some random crap printed on a home printer, it was a very professional job which likely involved a graphic designer and high end printing.

 

[Eclectic21]

I don't think that's how a marketplace works. When many buyers are tripping over each other and in a buying frenzy, there's buying pressure to push the prices up.

Without a huge number of enthusiastic buyers, of course there still will be some professional buyers but I don't think prices would increase quite the same way. Certainly not the 25% single year increase in Canadian home prices ...

It's anecdotal ... but for the six houses that sold last year in my neighbourhood, viewings were about twelve people with two to four offers per house. At least four of the offers were from pros. For one house, it turned out of that one offer was officially a pro and the second who looked like a family was a stand in for the pro that lost out on the big.

... Easy availability of credit, and super low interest rates, creates more buyers. Take away the stimulus (those low rates and easy mortgages) and buyers disappear.

In general ... sure. Whether it's as straight line and as direct an impact as you think is what I doubt.


Cheers

 

[Eclectic21]

Funny you should post that now, I had a flyer in the mail yesterday saying "we're experienced investors looking to buy houses and multiplex in your area". And not some random crap printed on a home printer, it was a very professional job which likely involved a graphic designer and high end printing.

Out of curiosity - this is the first flyer?

For me it's been around six years or more. What's recent is instead of one or two a year, it's more like ten flyers a year.


Cheers

 

[off.by.10]

Out of curiosity - this is the first flyer?

Not the first, but the first that looks so nice. It's usually 2-3 ever year but often little more a black & white printed piece of paper. I think those are the people who rebuild on old, larger lots. This seemed like someone looking for investment properties. I also noticed that a house on my street which recently had a for sale sign now has a for rent sign.

 

[scorpion_ca]

Deleted

 

[FI40]

What do you all think about the likelihood of the government implementing an expanded version of the "shared equity mortgage" if prices do start to decline, and it becomes politically expedient to do so?

I think this is a terrible idea btw, but what do I know. It has the potential to push prices up despite whatever happens to interest rates.

I see government intervention as one of the very few ways prices could avoid declining. Another way would be inflation and rates dropping very soon, which seems unlikely.

 

[nathan79]

What do you all think about the likelihood of the government implementing an expanded version of the "shared equity mortgage" if prices do start to decline, and it becomes politically expedient to do so?

I think this is a terrible idea btw, but what do I know. It has the potential to push prices up despite whatever happens to interest rates.

I see government intervention as one of the very few ways prices could avoid declining. Another way would be inflation and rates dropping very soon, which seems unlikely.

The shared equity mortgages have been a failure by most accounts. I'd be surprised if they doubled down on them. I think we're more likely to see 30-year insured mortgages for first time buyers.

 

[james4beach]

The BoC needs to stay the course and tame inflation regardless of the housing market, at least if they want to restore their credibility.

Unfortunately the Bank of Canada is biased towards supporting home prices.

Several years ago, I met a BoC member at a university talk, and he enthusiastically explained to me how important it is that home prices stay strong. He said several times something along the lines of "the economy will be OK as long as home prices don't fall".

Sadly I think the BoC has some kind of ideological commitment to inflate home prices. It's a rigged market with a heavy player... certainly not capitalism, not a free market.

 

[sinfullivingsolution]

interesting thread, which I do have some experience in the rental industry and opinions.

I believe that having a place to live is not a right. its not my responsibility, the governments or a landlords responsibility to provide affordable housing. it is the individual renters responsibility to obtain housing. the problem is that people want to live in highly populated areas that are extremely desirable by all. here lies the problem.

like any other service or product cost is dictated by supply and demand.

for example living in southern ontario is way more expensive than living in new brunswick for housing. people dont want to move out there, which is their choice. our choices define our lives.

if supply if increased for rentals or home for sale the cost would go down. problem is that laws enacted by government strangle free enterprise. the green belt conservation, ridiculous zoning bylaws, bad tenant, bad landlords, rent control, a dysfunctional landlord tenant board and many other issues.

I dont see people who are real estate investors as unethical. they are providing a service to people at fair market value. if a whack of housing was built for rent and sale this would change the market and more than likely real estate investors would have to revalue their rents or house prices to reflect the decline in demand.

as far as a gic providing a similar return as a rental property. not even close. depending on several factors its not unheard of to easily be getting a return in the teens. asset appreciation, a taxational favorable business and good cash flow make real estate such a hot way of making money. even with headaches(which mostly can be screen out by due diligence and buying in up and coming areas) its a no brainer.

if people want affordable housing they can move somewhere where its affordable. otherwise they need pay market value for living accommodations in a high demand area.

personally, I go were I get the most bang for my buck and where I can find work. Ill be moving to new brunswick in a year and buying property up there. more than likely a fixer upper cottage for under 100k.

 

[nathan79]

Unfortunately the Bank of Canada is biased towards supporting home prices.

Several years ago, I met a BoC member at a university talk, and he enthusiastically explained to me how important it is that home prices stay strong. He said several times something along the lines of "the economy will be OK as long as home prices don't fall".

Sadly I think the BoC has some kind of ideological commitment to inflate home prices. It's a rigged market with a heavy player... certainly not capitalism, not a free market.

Lol... not long after you say that I come across this article...

Interest rate trajectory will depend heavily on housing market, Bank of Canada deputy governor says

Bank officials have said they intend to get the benchmark rate into a ‘neutral’ range of between 2 per cent and 3 per cent relatively quickly

www.theglobeandmail.com

Can we fire these f**king clowns?

 

[james4beach]

Can we fire these f**king clowns?

Amazing article. They don't even hide it. Real estate must be propped up at all costs, they say!

And people wonder why home prices are inflated. It's 30 years of central bank (and other government) stimulus.

 

[Emjay85]

Unfortunately the Bank of Canada is biased towards supporting home prices.

Several years ago, I met a BoC member at a university talk, and he enthusiastically explained to me how important it is that home prices stay strong. He said several times something along the lines of "the economy will be OK as long as home prices don't fall".

Sadly I think the BoC has some kind of ideological commitment to inflate home prices. It's a rigged market with a heavy player... certainly not capitalism, not a free market.

Sounds like you missed a huge buy signal that day! if you can't beat em....

 

[MrBlackhill]

For first time on record, more Ontarians moved to Quebec than the reverse in 2021

For the first time in over 50 years of data, there's more people moving from Ontario to Quebec than the other way around.

The free market will regulate itself. Some people are selling their unaffordable house in Ontario to buy a more affordable house in Quebec.

At some point, when people truly won't be able to buy a house in a specific city, they'll buy elsewhere. Obviously, the whole Canadian population can't live in Toronto just because they want to. No matter what are the interest rates, no matter how high or how low are the prices, everybody can't live in the same city, so prices will necessarily go up as long as demand is greater than supply. And supply isn't unlimited.

People must be forced to buy elsewhere if they can't afford it, that's how new great cities emerge.

 

[scorpion_ca]

Can we fire these f**king clowns?

Yes, vote for Pierre Poilievre even though I voted for Liberals last two times but not anymore.

Trudeau’s Tory Rival Says He’d Fire Bank of Canada Governor

Bloomberg - Are you a robot?