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Originally posted by ashedfc

Welcome to the change in your opinion "From an evergreen/never ending boom in housing to a Cool down approach"

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No change in my opinion at all - it has been the same all along. I never said anything about an "evergreen/never ending boom", please read my posts again. A gradual cool down to me in the best case scenario is the prices stop rising and then potentially drop a bit (say 5-10%) or plateau.

What you've been talking about is an outright crash like the US. I don't expect that to happen in the GTA. And moves like the one above boost my confidence that the govt. is at least trying to prevent that kind of a scenario.

In my books, if you absolutely need a 35 yr. mortgage to afford a house, you should wait (or downsize on the type of house if possible). Equating the meaning of home ownership to the ability to afford bare minimum monthly payments on a 35-yr mortgage is really bad financial planning (if the interest rates rise a bit, you're screwed). The move is targeted at keeping folks like these out of the market and if that drops the home value a bit - it makes sense to me.

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The fineline dividing between Cool Down & Crash is very vague (& not clearly defined). Spanish housing market started with cool down & now very soon its turned into a epic crash.

I am in favor of a cool down (but since this current housing boom isn't supported by substantial rise in average family income; there's more possibility for cool-down to escalate into something major).

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It all depends on the percentage of people in the market taking out 35 yr. mortgages. Would be good to know stats. on that, that would help gauge how this market is going to be impacted. You'd think Flaherty and gang have done some analysis in this respect prior to making this move, the last thing they want is a crash themselves.

Overall, the market is very hard to predict for anyone. Check out the Moody downgrades yesterday of major banks. I'm sure the doomsday preppers were getting their gas masks out expecting apocalypse, but last I checked, both the DOW and NASDAQ were up.