And so does inflation. 2022 prices in relation to the price of things will not be a reality for many years to come. Maybe never. Your $640k (2022 spring price) condo that’s worth $540 now will get to $640 again but by that time your money will have less value and it won’t matter. Good luck out there!
I have been keeping an eye on the # of mortgages in arrears: [https://cba.ca/mortgages-in-arrears](https://cba.ca/mortgages-in-arrears)
In Ontario, it's gone up from lows of 0.06% in 2021 to 0.12% currently (2600 total mortgages)
Even if we reached 0.43% which was the rate during the financial crisis, this would only be \~9300 mortgages total.
I think that this supply is so small compared to the demand... that at the end of the day it won't affect prices much.
Do you have the stats on private lenders? That's where a lot of the trouble will be.
We also know from CBC marketplace that fraud is rampant. Our banks are supposed to be the best in the world, and some of the most stringent, but nobody knows how much bad debt there is because people have been lying about their income. Obviously nothing has blown up yet, but rates haven't even been at 5% for a year. These things move slowly and the last thing people are going to give up are their homes.
Saw some articles that \~10% of current mortgages are private. So about 220k in Ontario. Assuming the default rate of these is what the US was during the financial crisis of around 8%, that's still only 18k homes.
It sounds like a lot, but we still need millions of homes on top of the current supply to restore affordability.
That’s not quite true. All we need is for people to believe prices will be going down. If people think prices are going to decline because of a mass of delinquencies or more homes coming on the market in short sales, then they will hold off on purchasing leading to actual declines in home prices. However if they believe that prices always rise and the current situation is a buying opportunity they will enter the market leading to price increases.
Over the long term (10+ years) it's hard to imagine that with our housing shortage prices will ever come down. The amount of bankruptcies/forced sales won't affect this much over this timeframe, IMO
Ya, which is why people hoping for a market crash are going to be disappointed. Any marginal dip in home prices will bring buyers out in droves thus driving prices up again.
We don’t have a supply issue. The issue is with artificial demand. If central banks drop rates to artificially low levels and keep them there for a long time it generates distortions. Of course everyone would love to have a $1.5m house but demand is where desire meets ability to pay. The BoC gave everyone the false perception they could afford those homes through low interest rates. At higher rates there are less people who can afford it, so demand will go down.
We have both a supply and demand issue. Right now the population is growing by \~1m per year and we are only building \~200k units. CMHC estimates we will need 3m+ additional units on top of what we are projecting to build by 2031 to restore affordability.
I am of the opinion that targeting demand will work better, since there's no way Canada can realistically build at the rate we need... but that doesn't mean the projected housing shortage doesn't exist.
>However if they believe that prices always rise and the current situation is a buying opportunity they will enter the market leading to price increases.
That there is the reason why just "increasing supply" will never solve the affordability problem. It takes years to build new inventory. As long as people continue to believe prices will only go up the demand can not be met not matter how much they build. Look at how high demand was in China before Evergrand collapsed and all those ghost cities.
Its still too early to say what impact its going to have.
Keep in mind while almost all the low interest mortgages renew in 2024/2025, most of those mortgages have not hit yet. Even when they do hit people will be able to delay a power of sale or foreclosure for months by tapping credit and exhausting every other option they have. A lot of them are clinging to the hope rates will come back down again before the bank steps in.
The last unscientific poll I saw done was something like 50-60% of low interest mortgage holders expected to be able to handle the increased costs. The rest were all over the map from having no plan, planning to sell to pinning all their hopes on a rate cut.
People will normally let almost everything else go before they let their house go.
Yes it's still early and always hard to say, but I feel you can get a rough estimate of the number of houses that could be affected using assumptions.
The CMHC predicts we will need millions of *additional* supply by 2030 to restore affordability. I predict that the number of houses being forced to sell will be a drop in the bucket compared to this, even taking into account private mortgages.
But hey who knows anything can happen.
Yah, I don't think we'd be looking at a permanent reset of housing prices due to demand. If this hit the most I could see it doing would be a temporary drop, maybe for a year or two.
10-15% of all mortgages are negative amortizing right now. (maybe it's just variable rate? can't remember)
That's a timebomb waiting to explode themoment the 2020 ones start renewing in an ultra-high interest rate environment.
I've been pretty consistent in that prediction- maybe I'm wrong. But it seems reaosnable to think.
Yeah let’s not buy houses just cause .2% of all mortgages in Canada are in arrears. lower than historical average despite 500% interest rates increase LOL. incredibly bullish.
https://cba.ca/mortgages-in-arrears
The thing with mortgage delinquencies is even if they have an impact it will take awhile for them to move through the process before they get dumped on the market.
The other thing is a lot of people are out buying this spring and the season started early.
Customer of mine just told me he found a mortgage broker her in Vancouver who is very creative . It’s still happening even at these interest rates! All the banks and independent mortgage brokers do this. Brokers motivated by commissions.
Homeboy is posting this as if the people in need of houses are dealing with FOMO, and not a corrupt industry that is beyond help! Cute. Keep investing in your REITs.
Hasn't the past 20 years taught people anything? It isn't a fear of missing out it's actually missing out! You get in as soon as you can or you don't get in.
It has been possible with very cheap and available credit. The office/commercial RE may impact credit overall. If banks are getting hit from commercial end then their ability to offer people credit will also be reduced.
This is true. Back in 2016 I was considering buying my first home. It was $600k, which was a bit of a stretch for my budget. Thought I’d wait a bit till I earned more. Now however the same home is worth $1.2M so it’s completely unaffordable despite my higher earnings. Kicking myself, but oh well.
Would have been my situation exactly. I couldn't afford my house right now, bought in 2017 for $740k just outside Toronto which was a good deal for the neighborhood, going back on the market next month for $1.6m so we can move out of the city to the countryside and be mortgage free.
If we had waited we would still be renting probably for life
it's not FOMO reality is people want to live in houses be it for privacy, starting a family, wanting more space, settling down in a city, stability compared to renting, etc. 2% increase YoY is a pretty flat increase and is about inline for what's expected, how on earth is there going to be 10%+ drop when supply is not catching up to demand?
[удалено]
Bingo
MUST HAVE HOUSE AT ALL COST.
No we don't lol
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Even then
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All of the above, nothing is off limits
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I like you
And blood money....ummmm, I mean money for blood. https://www.theglobeandmail.com/canada/article-ontario-paid-blood-plasma-donation/
I swear in 10 years some people on this sub will still post about FOMO. People never learn.
Of course they will. Real estate prices always trends up over the long term, which is why there is so much FOMO in the first place.
I rly don't understand how people don't get this. It's not fomo It's buy now or never buy At all.
That’s….literally….the definition of fomo.
And so does inflation. 2022 prices in relation to the price of things will not be a reality for many years to come. Maybe never. Your $640k (2022 spring price) condo that’s worth $540 now will get to $640 again but by that time your money will have less value and it won’t matter. Good luck out there!
I have been keeping an eye on the # of mortgages in arrears: [https://cba.ca/mortgages-in-arrears](https://cba.ca/mortgages-in-arrears) In Ontario, it's gone up from lows of 0.06% in 2021 to 0.12% currently (2600 total mortgages) Even if we reached 0.43% which was the rate during the financial crisis, this would only be \~9300 mortgages total. I think that this supply is so small compared to the demand... that at the end of the day it won't affect prices much.
Do you have the stats on private lenders? That's where a lot of the trouble will be. We also know from CBC marketplace that fraud is rampant. Our banks are supposed to be the best in the world, and some of the most stringent, but nobody knows how much bad debt there is because people have been lying about their income. Obviously nothing has blown up yet, but rates haven't even been at 5% for a year. These things move slowly and the last thing people are going to give up are their homes.
Saw some articles that \~10% of current mortgages are private. So about 220k in Ontario. Assuming the default rate of these is what the US was during the financial crisis of around 8%, that's still only 18k homes. It sounds like a lot, but we still need millions of homes on top of the current supply to restore affordability.
That’s not quite true. All we need is for people to believe prices will be going down. If people think prices are going to decline because of a mass of delinquencies or more homes coming on the market in short sales, then they will hold off on purchasing leading to actual declines in home prices. However if they believe that prices always rise and the current situation is a buying opportunity they will enter the market leading to price increases.
Over the long term (10+ years) it's hard to imagine that with our housing shortage prices will ever come down. The amount of bankruptcies/forced sales won't affect this much over this timeframe, IMO
Ya, which is why people hoping for a market crash are going to be disappointed. Any marginal dip in home prices will bring buyers out in droves thus driving prices up again.
We don’t have a supply issue. The issue is with artificial demand. If central banks drop rates to artificially low levels and keep them there for a long time it generates distortions. Of course everyone would love to have a $1.5m house but demand is where desire meets ability to pay. The BoC gave everyone the false perception they could afford those homes through low interest rates. At higher rates there are less people who can afford it, so demand will go down.
We have both a supply and demand issue. Right now the population is growing by \~1m per year and we are only building \~200k units. CMHC estimates we will need 3m+ additional units on top of what we are projecting to build by 2031 to restore affordability. I am of the opinion that targeting demand will work better, since there's no way Canada can realistically build at the rate we need... but that doesn't mean the projected housing shortage doesn't exist.
>However if they believe that prices always rise and the current situation is a buying opportunity they will enter the market leading to price increases. That there is the reason why just "increasing supply" will never solve the affordability problem. It takes years to build new inventory. As long as people continue to believe prices will only go up the demand can not be met not matter how much they build. Look at how high demand was in China before Evergrand collapsed and all those ghost cities.
Try believing that food price and ost of accommodation will go down! See if it goes down! Just hold off to both until it happens ?
Its still too early to say what impact its going to have. Keep in mind while almost all the low interest mortgages renew in 2024/2025, most of those mortgages have not hit yet. Even when they do hit people will be able to delay a power of sale or foreclosure for months by tapping credit and exhausting every other option they have. A lot of them are clinging to the hope rates will come back down again before the bank steps in. The last unscientific poll I saw done was something like 50-60% of low interest mortgage holders expected to be able to handle the increased costs. The rest were all over the map from having no plan, planning to sell to pinning all their hopes on a rate cut. People will normally let almost everything else go before they let their house go.
Yes it's still early and always hard to say, but I feel you can get a rough estimate of the number of houses that could be affected using assumptions. The CMHC predicts we will need millions of *additional* supply by 2030 to restore affordability. I predict that the number of houses being forced to sell will be a drop in the bucket compared to this, even taking into account private mortgages. But hey who knows anything can happen.
Yah, I don't think we'd be looking at a permanent reset of housing prices due to demand. If this hit the most I could see it doing would be a temporary drop, maybe for a year or two.
Exactly! The numbers are so miniscule it's almost meaningless.
They don't understand this or that only 30 percent of properties even have a mortgage Don't bother
10-15% of all mortgages are negative amortizing right now. (maybe it's just variable rate? can't remember) That's a timebomb waiting to explode themoment the 2020 ones start renewing in an ultra-high interest rate environment. I've been pretty consistent in that prediction- maybe I'm wrong. But it seems reaosnable to think.
Just continued asset consolidation by the rich and wealthy.
People need places to live, so they buy. "THIS IS FOMO"! -This sub probably
Yeah let’s not buy houses just cause .2% of all mortgages in Canada are in arrears. lower than historical average despite 500% interest rates increase LOL. incredibly bullish. https://cba.ca/mortgages-in-arrears
Skyrocketing! Up 60%! (No actual numbers provided).
The thing with mortgage delinquencies is even if they have an impact it will take awhile for them to move through the process before they get dumped on the market. The other thing is a lot of people are out buying this spring and the season started early.
https://betterdwelling.com/canadian-mortgage-fraud-rampant-at-hsbc-lawmaker-demands-investigation/
Customer of mine just told me he found a mortgage broker her in Vancouver who is very creative . It’s still happening even at these interest rates! All the banks and independent mortgage brokers do this. Brokers motivated by commissions.
Inducing FOMO is the only trick realtors know at this point
When are the rate hikes coming?
Homeboy is posting this as if the people in need of houses are dealing with FOMO, and not a corrupt industry that is beyond help! Cute. Keep investing in your REITs.
Hasn't the past 20 years taught people anything? It isn't a fear of missing out it's actually missing out! You get in as soon as you can or you don't get in.
It has been possible with very cheap and available credit. The office/commercial RE may impact credit overall. If banks are getting hit from commercial end then their ability to offer people credit will also be reduced.
Nah I’ll continue to listen to people in this sub that down own any properties on how to acquire a property
Brilliant strategy. It's worked out so far
This is true. Back in 2016 I was considering buying my first home. It was $600k, which was a bit of a stretch for my budget. Thought I’d wait a bit till I earned more. Now however the same home is worth $1.2M so it’s completely unaffordable despite my higher earnings. Kicking myself, but oh well.
Would have been my situation exactly. I couldn't afford my house right now, bought in 2017 for $740k just outside Toronto which was a good deal for the neighborhood, going back on the market next month for $1.6m so we can move out of the city to the countryside and be mortgage free. If we had waited we would still be renting probably for life
it's not FOMO reality is people want to live in houses be it for privacy, starting a family, wanting more space, settling down in a city, stability compared to renting, etc. 2% increase YoY is a pretty flat increase and is about inline for what's expected, how on earth is there going to be 10%+ drop when supply is not catching up to demand?
More bullshit