5833 replies to this topic

[lanforod]

^ oh, yeah, no, I'm not expecting true efficiency like a small business would likely have.

 

If Trudeau had lived up to his promises to use the deficit for infrastructure spending, we'd be far better off; but infrastructure spending has basically stayed roughly the same year over year; there wasn't a multi-billion dollar infusion. 

They've gotten a bit lucky with the increased revenue this past fiscal year, but all signs are pointing to a significant slowdown which curbs revenue.

[Casual Kev]

Forbes - "Everything You've Been Told About Government Debt Is Wrong"

Https://www.forbes.com/sites/francescoppola/2018/04/17/everything-youve-been-told-about-government-debt-is-wrong/amp/

 

Using cheap debt to make investments is good. But the problem is that government borrowing (or lack thereof) has more to do with politics than making sound financial decisions.Fortunately, us individuals don't have to make borrowing decisions based on which way the wind is blowing. 

 

Of course, we also don't have the spending power of an entire nation so it's not necessarily wise to take on a low interest mortgage if the amount you have to borrow in the first place is very high.

[VIResident]

Stephen Poloz’s 'call to arms' for mortgage market shakeup 

 

https://business.fin...th-fighting-for

[spanky123]

Stephen Poloz’s 'call to arms' for mortgage market shakeup 

 

https://business.fin...th-fighting-for

 

 

I think the reason why 5 year fixed mortgages are popular is because it is a balance between short term fears of rate fluctuations and the flexibility of changing lifestyles and needs. I don't think that the consumer would be any better off with a US style system and we know that the taxpayer definitely is not!

[Mike K.]

Hopping from one band-aid to another.

 

Of course he's not happy. Under his watch the stress test has decimated a significant portion of purchasing power for many would-be buyers, and doing away with that silly program will either place the blame of a failed policy on his government superiors or various government agencies. 

 

The stress test should have absolutely, hands-down been introduced with a push for 7 or 10 year fixed-rate mortgages, where purchasers have a choice of going through the stress test, or accepting/qualifying under a higher rate but one which will be frozen for a decade.

[tjv]

I get why the stress test was introduced, we had run away housing prices with no end in sight.  many people were simply not going to ever get into the market.  Combined with rising interest rates, the stress test did help to cool the market somewhat.  The problem is now people are trying to still get into the market and now they have to deal with higher interest rates and a stress test to boot which is really causing roadblocks to home ownership

 

What would have anyone else proposed to cool the housing market to allow people access to home ownership?

 

I would have loved to lock into a 30 year US mortgage a few years ago when I locked down my mortgage.  Combined that with Trump's tax cuts and the mortgage interest rate tax deduction, the US homeowner is way ahead than a Canadian homeowner

[Mike K.]

The market self adjusts. If you can't sell your home for $750,000, you'll price it for less. We don't need the government coming in and curtailing someone's ability to buy a $750,000 home which they saved up for, qualified for, and can afford to maintain the mortgage on ...until the government introduced a measure which saw that same buyer barely qualify for a $600,000 home.

 

The government meddled in the housing industry and the result was far more damaging than they're letting on, and for no reason other than the Liberals' belief that they would create a powerhouse economy where rates would skyrocket. Instead they tore apart national cohesion, eroded consumer sentiment and rates have stagnated.

[spanky123]

We had nearly a decade of housing price stagnation followed by a couple of years of rapid inflation. In other words, we went through a typical market cycle. All Government tinkering did was make it harder for people to buy houses at a time when the curve has flattening again and prices are becoming more affordable as wages increase while housing isn't.

[tjv]

The market self adjusts. If you can't sell your home for $750,000, you'll price it for less. We don't need the government coming in and curtailing someone's ability to buy a $750,000 home which they saved up for, qualified for, and can afford to maintain the mortgage on ...until the government introduced a measure which saw that same buyer barely qualify for a $600,000 home.

I disagree, during the time the stress test was introduced that 750k listed house would attract 10 bidders and then sell far in excess of the listed amount

 

We should also discuss government keeping interest rates artificially low where buyers were more concentrating on what they could afford by their month mortgage payment than thinking that interest rates could double or triple

 

Ditto for government turning a blind eye to all the illegal basement suites or "mortgage helpers".  People saw it as free money to cut their mortgage payment down and how instead they could get an even bigger house or offer even more money because they had say 800 coming in every month tax free, so instead of paying 2800 per month on their mortgage they only had to pay out 2000

 

We have also seen over the last 10 or so years that Canadian homeowners are using their homes as piggy banks and drawing heavily on the equity.

 

As a guess, we've seen houses that sold for 250k 20 years ago now selling for $1+ million

 

Meanwhile my mortgage business, with rates starting at 20% is skyrocketing.  I get to pick and choose there are so many people begging for money

[Mike K.]

People are still bidding on homes, using mortgage helpers and focusing on interest rates.

The only difference is their dollar goes a lot less further than it did two years ago.

That’s why Poloz is saying what he is. Government intervention turned into hindrance in every way.

[tjv]

People are still bidding on homes, using mortgage helpers and focusing on interest rates.

Yup, and why isn't government cracking down on that too?

[Mike K.]

Why would they?

[tjv]

I thought the point of the stress test was to make homes more affordable and to cool the housing market?  The ones I listed will also do that

[RFS]

I thought the point of the stress test was to make homes more affordable and to cool the housing market? The ones I listed will also do that

No the point of stress test was to avoid a situation where people got in over their heads and mass foreclosures Iike in 2009

[Mike K.]

It has made housing affordability worse by concentrating more buyers in the affordable housing range. Buyers who were able to afford more suddenly had to compete with buyers who couldn’t afford as much, so the latter lost out to the former.

Now the same government wants to give first-time buyers money for a down payment, a move that will further erode the ability of those at the lower end of the market spectrum to afford a home as prices will rise.

[tjv]

No the point of stress test was to avoid a situation where people got in over their heads and mass foreclosures Iike in 2009

Mass foreclosures in 2009 in Canada?  huh, never heard about that

 

It has made housing affordability worse by concentrating more buyers in the affordable housing range. Buyers who were able to afford more suddenly had to compete with buyers who couldn’t afford as much, so the latter lost out to the former.

Now the same government wants to give first-time buyers money for a down payment, a move that will further erode the ability of those at the lower end of the market spectrum to afford a home as prices will rise.

and the same thing could easily happen if they eliminated illegal basement suites/mortgage helpers.  Instead of homeowners coming up with say 1,000 a month towards their mortgage, maybe they can only afford a less expensive house or pay less for the same house as no one could afford it.  Ditto if they cranked interest rates, just watch housing prices fall off a cliff

 

As I understand the first time homebuyer down payment still has to be repaid by the borrower, its not a handout.  Also the max housing price is capped at 500k so unless you are buying a cardboard box, it doesn't apply to Victoria.

 

Meanwhile SFH housing prices in Victoria and Vancouver continue to fall and condo prices are flat

[Mike K.]

Eliminating secondary suites would be like eliminating public transit. Why would any government, local or otherwise, do such a thing?

[tjv]

I thought your whole point from earlier today was more government intervention would mean cheaper prices.

 

It wasn't that long ago you were poor if you had borders in your house.  Heck 100 years ago employees of Ford were fired for having borders in their house

[Mike K.]

No, my point is government intervention almost always has unintended consequences.

[tjv]

ah, now I get it and yes I agree