Actually during next 60 days till this rule comes into effect there might little increase in price of the homes as people rushing out to buy but after that all depends upon the marketing , story spinning by the real estate lobby and s5%$8d buyers

If price of the homes do not come down then next govt will increase minimum down payment

Government is systematically / gradually trying to reduce the price of the homes as there are many disadvantages of high price and NO proportionate increase in salary or income.

1) people contribute less to their RRSP or retirement investments
2) People contribute less to their child's education
3) Govt has to reduce debt hence they will have to increase taxes directly or indirectly and if people are already in debt then it becomes difficult to increase taxes



Mortgage rule changes not drastic, but more severe than industry wanted

http://www.canadianbusiness.com/markets/headline_news/article.jsp?content=b5676494

As we have discussed many time that everything (car, gas, food, flight, restaurant, clothes) is expansive here as compare to USA and higher taxes with lower salaries. We have higher salaries as compare to USA in labour market where illegal Mexican compete there. How can people here afford overprice RE without jumbo debt?

Unfortunately too many people took out 40 yr 35 yr mortgages with no money/5% down, or even used liar lones during the last 5 years. There are another group of people who used their low price home as ATM for buying over price home or luxury toys. Banks are worst lender if they do not have tax payer’s support. It's easy to get 500K loan secured by CMHC than for Honda civic with all good credit and paper work. Home ATM game is over without taxpayer guarantee.

In summary there are too many people who are in negative equity and interest can go only in one direction.

1. There may be some price rise or better sale in next few months as RE industry wants to slaughter last supply of greater fool.
2. There will be huge inventory in coming spring and summer but RE game is over.
3. There will be used luxury car/boat on sale with very attractive price
4. Vacation property or negative investment condo will be out in market with attractive offer
5. Builder will throw lot of packages then lower price with new inventory.
6. There is 70% home ownership in this country so limited eligible buyer pool are expecting more lower price that bring RE price crash.

Quote:

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Originally posted by hopesrforever27

Government is systematically / gradually trying to reduce the price of the homes as there are many disadvantages of high price and NO proportionate increase in salary or income.

1) people contribute less to their RRSP or retirement investments
2) People contribute less to their child's education
3) Govt has to reduce debt hence they will have to increase taxes directly or indirectly and if people are already in debt then it becomes difficult to increase taxes

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Quote:

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Originally posted by rahul_singh23

As we have discussed many time that everything (car, gas, food, flight, restaurant, clothes) is expansive here as compare to USA and higher taxes with lower salaries. We have higher salaries as compare to USA in labour market where illegal Mexican compete there. How can people here afford overprice RE without jumbo debt?

Unfortunately too many people took out 40 yr 35 yr mortgages with no money/5% down, or even used liar lones during the last 5 years. There are another group of people who used their low price home as ATM for buying over price home or luxury toys. Banks are worst lender if they do not have tax payer’s support. It's easy to get 500K loan secured by CMHC than for Honda civic with all good credit and paper work. Home ATM game is over without taxpayer guarantee.

In summary there are too many people who are in negative equity and interest can go only in one direction.

1. There may be some price rise or better sale in next few months as RE industry wants to slaughter last supply of greater fool.
2. There will be huge inventory in coming spring and summer but RE game is over.
3. There will be used luxury car/boat on sale with very attractive price
4. Vacation property or negative investment condo will be out in market with attractive offer
5. Builder will throw lot of packages then lower price with new inventory.
6. There is 70% home ownership in this country so limited eligible buyer pool are expecting more lower price that bring RE price crash.

Quote:

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Originally posted by hopesrforever27

Government is systematically / gradually trying to reduce the price of the homes as there are many disadvantages of high price and NO proportionate increase in salary or income.

1) people contribute less to their RRSP or retirement investments
2) People contribute less to their child's education
3) Govt has to reduce debt hence they will have to increase taxes directly or indirectly and if people are already in debt then it becomes difficult to increase taxes

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infocan

Quote:
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Originally posted by infocan
What you say may be okay for canada. GTA seems different. new immigrants come here. People sell land proterty in india and buy staright away here. property prices in india or other develping nations are so high . That was not the case 10-15 years back.
Also not all new immigrants are just doing labhour jobs. People in fincace and IT sector get straight away 6 digit salary.

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Above argument sounds more like real estate broker argument

Very interesting reading


Reduce CMHC role in mortgage insurance: CD Howe

The federal government should limit taxpayer exposure to potential problems in the housing market by reducing the role of the Canada Mortgage and Housing Corp. in the provision of mortgage insurance, CD Howe Institute said in a report Monday.

http://www.financialpost.com/news/financials/Pull+back+CMHC+role+mortgage+insurance+Howe/4199182/story.html

http://www.nationalpost.com/news/canada/Canada+Trust+raises+mortgage+rates/4237864/story.html

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Housing prices to drop 25%, forecaster predicts

http://www.moneyville.ca/article/933010--housing-prices-to-drop-25-forecaster-predicts?source=patrick.net#ctl00_ctl00_cph_contentBody_cph_leftContentContainer_CB_Share_Template0_rpt_Options_ItemTemplate2_Sw_Options_CaseTemplate30_ctl00_addFav

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How do Higher interest rates, tighter mortgage conditions and RE correction news going to effect Canadian RE?
I think we all remember 2005 USA news- no bubble by US Feb & NAR, little correction, this city is different, people love their home, govt support, long term investment........

Thanks ashedfc. Your blog makes sense and agree with taxes, commodity price and US Fed forced inflation.

DSR in the US peaked around 14% of disposable personal income in 2007 compared to a current 18.6% reading in Canada.

3) Home price to income ratios……bubbly no matter how you slice it.

“BC is headed for a credit crisis. A negative savings rate means more money is going out (of the household account) than is coming in from income.”

http://www.td.com/economics/special/db0211_householddebt.pdf
http://financialinsights.wordpress.com/

Quote:

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Originally posted by ashedfc
Even if home price stays the same, & everything else goes up 25%, it will still be considered as a relative drop of 25%..

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