Property Crash in Canada is worsening
#46
Re: Property Crash in Canada is worsening
Whether or not your forecasts of prices prove to be realistic you are completely missing the point I was making about interest rates. In Canada, the amount you can borrow for a mortgage is a function of both your income and your debt repayment load. At a 6% mortgage rate the family earning $100,000 pa, with $50,000 down payment, can afford a home up to $425,000, at 4.5% (now available from ING) they can pay $500,000, at 2.5% (not unimaginable) the price they can pay increases to $640,000.
One of the downsides of the mortgage system here is that in times of low interest rates home buyers tend/are encouraged to buy too much house for their present and potential earning capacity. Back in the early 1980's, I think it was, interest rates here soared as high as 22% for mortgages. Many whose mortgages matured/came up for renewal during this period experienced mortgage repayments doubling and tripling. Needless to say the sale market was virtually non-existent and many of those renewing lost their homes. I think the lenders and the purchasers are both at fault for being loose lenders and over-buying public.
One of the downsides of the mortgage system here is that in times of low interest rates home buyers tend/are encouraged to buy too much house for their present and potential earning capacity. Back in the early 1980's, I think it was, interest rates here soared as high as 22% for mortgages. Many whose mortgages matured/came up for renewal during this period experienced mortgage repayments doubling and tripling. Needless to say the sale market was virtually non-existent and many of those renewing lost their homes. I think the lenders and the purchasers are both at fault for being loose lenders and over-buying public.
Although I have only followed the Vancouver property market for a few years I know that we could not afford to buy at the peak in 2007 anything like what we could have in 2003 when our intensive pre-move research started. Cheaper repayments because of low interest rates, unless guaranteed for the full term of the loan, would not change my choices. Perhaps I'm just not Canadian enough yet and everybody else who wants or needs to live here will think differently and continue to pay prices that have the potential to ruin them financially.
I have no insight into the minds of the truly wealthy international movers and shakers but I am sure that the top end of the market for desirable property in desirable areas (West Vancouver ocean front) will function quite differently to property in East Vancouver where regular folks such as my colleagues actually live. I do question how many truly wealthy overseas individuals are still waiting to invest in Vancouver though. Is the easy-in investor visa still available for people who can buy a half million dollar property?
#47
Re: Property Crash in Canada is worsening
Well I am not buying or selling so I couldnt give a rats fart about the state of the Vancouver cooling hothouse real estate market
I cannot figure out why so many people want to live so close together.
I cannot figure out why so many people want to live so close together.
#48
BE Forum Addict
Joined: Aug 2007
Posts: 1,782
Re: Property Crash in Canada is worsening
And, of course, it is all academic, generally speaking, even if you are moving country it is a question of sell low, buy low. Now, exchange rates, that is a different issue.
#49
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Joined: Jun 2003
Location: 100 mile house BC (tiz a long way away from devon)
Posts: 888
Re: Property Crash in Canada is worsening
Hi
I must be looking in all the wrong places, because i can't find these cheap houses in Vancouver..
jerry
I must be looking in all the wrong places, because i can't find these cheap houses in Vancouver..
jerry