Metro Vancouver condo prices coming down Realtors Blame Stress Test, Canadian Housing Prices Can’t Stagnate For an Extended Period of time – May 4, 2019,
Well, it’s starting to happen, although I’m not sure it will happen for an extended period of time, the reality is that this silly housing boom, that’s oddly enough put a lot of Home Inspectors out of job is starting to show signs of stagnant growth. The culprit for this stagnant growth according to Realtors is the stress test, Realtor commissions get higher as housing prices go up, so you know that Realtors have no incentive to want to see a deflating housing market. What’s worse is that in a deflating housing market a person’s mortgage might be higher than what they can sell their home for, that more than anything is a depressing thought.
The housing Casino, in Canada, revolves around CMHC insuring mortgages, CMHC is a Crown Corporation, in easy to understand terms more ENTITIES can qualify for a mortgage so more crappy condos that most foreigners and real estate speculators want to purchase are built, often times people think of a foreign buyer as a person who buys directly from Hong Kong, but no, it doesn’t always work like that, a lot of foreign-owned property on paper is owned by the domestic population, sometimes flipped very quickly to an unsuspecting sucker who gets trapped owning a crappy condo, because the realtor or some real estate guru gave the illusion of quickly flipping a property for a tidy profit. This is happening all over Canada, it’s an embarrassment really, and don’t take my word for it contact a realtor, show some interest and willings to put a down payment and watch how they’ll put into your mind the idea of a quick flip.
Now prior to CMHC backing mortgages you’d have to come up with the 20% down yourself, CMHC did a great thing you say? allowing people who’d otherwise not qualify to qualify for a mortgage you argue? Sure that’s one way to look at it, but when a government entity, intervenes in the market, people forget that a whole new ‘creature’ is born.
Instead of looking at the price of the mortgage, people pay more attention to their down payment and their monthly payments, Their cash flow. The problem with only looking at cash flow is market crashes, market corrections, deflation, unexpected costs, unexpected fixtures, unexpected property tax hikes, unexpected carbon taxes, unexpected stuff.
When you’re indebted, unexpected things happen, just like unexpected things happen when you’re not in debt when you’re indebted and the unexpected happens you’re worse off, I mean even if you flip your house for a profit, if it’s your residence you’re still going to have to buy or rent another place to live, sure there are people and entities that are far more sophisticated and will profit in an up or down market, but the average condo owner isn’t so lucky, the average condo owner in a downmarket is really going to feel the realities of deflation.
What is mortgage deflation really? It’s fewer options, fewer lenders, no home equity, fewer financial institutions willing to lend you money. This is hard for people with good credit to understand, yes you may have been paying all your bills on time, but because the value of your mortgage is worth more than the value your home or condo will sell for, financial institutions will want to stay away from you. Anyway, I’m not entirely sure what’s going to happen with Canada’s resilient housing market, but one thing is for sure, prolonged stagnation and deflation is not an option for Canada’s houses market, the market will collapse, I don’t think people understand how much speculators exist in Canada’s condo market.
If you’re wondering why condos are so small and so ugly in most instances, it’s because qualification is easy, or I should say was easy. I want to repeat myself Home Inspectors were and still are disappearing during Canada’s housing boom LOL! Now, ask yourself a question, what type of buyer doesn’t get a home inspection? A stupid buyer, a speculative buyer, a buyer who buys for the long term or a desperate buyer, whose happy they got into the market when they did? If you can’t see the writing on the wall I feel sorry for you!
Metro Vancouver home prices slide again, April sales 43% below 10-year average – GlobalNews
More choice, lower prices: Why now may be a good time to buy real estate in Vancouver – CBC
Interesting times ahead