Sunday, January 20, 2013

Real Estate agents continue to whine about mortgage changes




You get the feeling more and more real estate agents are feeling the heat of withering sales. The whining about the government's changes to the mortgage rules continue unabated.  The latest is from our buddy Owen Bigland.
I was wrong when I said I didn't think the new mortgage changes this past July would have much of an impact on the overall Vancouver market. I should have realized the domino effect it would create. 
When you cut off the 1st time buyer existing home owners who want to move up the property ladder by selling their place and buying a bigger home - they can't do it. 
Here's my rant! I'm all for Canadians reducing some of their debt, I've blogged about it many times but why on earth is our finance minister going after good debt like mortgages before he goes after all the bad debt that's out there like credit cards? 
Does he not realize that for the vast majority of Canadians in their 60's, 70's and 80's their principal residence is the largest and sometimes the only asset they own. Most will tell you that looking back at buying their first home was the best financial decision they ever made.  
It's like a forced savings account. Maybe Ottawa should get their own financial house in order before they start telling Canadians they can't buy that first home. You might also want to look into the credit card industry and some of their practices.
Gee Owen, maybe your right. Ottawa should get their own financial house in order before the continue to subsidize the real estate industry through CMHC insured mortgages and with artificially low interest rates?

If it so happens the mortgage rule changes (which don't even return us to what those very rules were 15 years ago) are driving housing prices down to what the vast majority of Canadians in their 60s,70s and 80s originally paid for their homes, then getting on the property ladder wouldn't be an issue now, would they?

In fact, aren't today's regulations (and interest rates) even more lax than what they were for those Canadians in their 60's, 70's and 80's when they first bought? Perhaps we should return to the  mortgage rules that were in place then in order to bring the market back into balance?

Just a  thought.

==================

Photobucket
Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Please read disclaimer at bottom of blog.

26 comments:

  1. Good debt vs bad debt....any debt is wrong Owen

    ReplyDelete
  2. This comment has been removed by a blog administrator.

    ReplyDelete
  3. This comment has been removed by a blog administrator.

    ReplyDelete
    Replies
    1. Seriously? Advertising about Louisville KY condos on a Vancouver Real Estate bear blog?

      Delete
  4. This comment has been removed by a blog administrator.

    ReplyDelete
    Replies
    1. Figures that with a post about realtors, I get comments advertising real estate.

      Delete
  5. What I find most depressing about the entire real estate debacle is the colossal waste of resources that it represents. From around $100 billion in 2006 to around $1 trillion today (total CMHC, Canada Guaranty and Genworth) in federal government mortgage loan and HELOC guarantees.

    Even a small downturn in RE prices may well represent a claim on the federal government that approaches that of the national debt, around $600 billion. Just think what could have been done with this enormous sum of money - education, environmental research, infrastructure, and health care to name a few. Instead, to paraphrase Adam Smith, we have thrown all these resources at what is nothing more than a consume durable. In this case granite counter tops, stainless kitchens and urban sprawl. Depressing.

    ReplyDelete
  6. I know three "middle class" families that can't afford gas. 2 of them have put their cars away and another said quite frankly that they can't afford gas.

    They all live in million dollar houses. One is even trying to sell their 1.8 million dollar house. No job loss, no divorce, no changes - just too much debt.

    ReplyDelete
  7. Maybe this isn't directly about real estate but we are looking to buy a small travel trailer as when people are in debt toys are usually the first to go. Hence we think we can get a better deal.

    Enter Kijiji a province away. Trailer for $27k only used for 3 weeks last year great deal. In BC here we can buy it new for $22500.

    Fellow replies, "Maybe you want to get that one, it's a better deal." - Sent from my iPhone.

    iPhone will be next thing for sale - just keep our email in case you change your mind.

    ReplyDelete
  8. It's all fun and games until the market starts to drop, like now.

    He must not have much to talk about these days.

    ReplyDelete
  9. Just counted 12 Ads for condos in the Georgia Straight paper. Plus an additional 7 ads related to real estate.

    I wonder what percentage of the Vancouver economy is related to real estate? The ad revenue it generates alone must be huge for papers, billboards etc.

    Construction jobs, real-tors, furniture stores, architects, mortgage brokers, Banks, raw material suppliers. Apparently half of the new jobs that were created before the crash in the states were real estate related. This could get ugly here. Even a slow down could have a ripple effect.

    ReplyDelete
  10. A friend told me that the BC economy's GDP is 30% tied to Real Estate...can anyone confirm?
    If true, then this is going to get ugly!

    ReplyDelete
    Replies
    1. I think the magic number is 33%, Construction (both residential and commercial) + FIRE industries (umbrella for all supporting industries).

      Delete
  11. I'm always amazed that no one is calling these fools out. Any mortgage rule changes that are implemented will not effect anyone who can qualify by their own credit worthiness with a bank. It's only those that require CMHC insurance who are effected, ie the SUBPRIME market. So basically they are trying to tell everyone we new more reckless lending. If they are right and these changes are having a major effect on the market (I happen to think it's more buyer fatigue at this point) then that should be incredibly alarming as to the size of the subprime market in Canada. All told the new changes amount to less than a 1% increase. If 1st time buyers can't qualify then they weren't credit worthy in the first place and I don't want my tax dollars backing their mortgage. Beyond that you're taking about the $1,000,000 cap and that's not a reasonable place to expect first time buyers to be effected. Can't we just admit that prices are too high and buyers have pulled back from the insanity?

    ReplyDelete
  12. All debt is bad debt. Houses always increase in value? Wrong! Not for the next 7 or so years according to some experts. Sounds very desperate! Why else would be make that video?

    ReplyDelete
  13. how about Singapore? thought they were in a bubble 2 years ago, and everyone predicted that it would burst an average home $12 million US dollars is now $18 million US dollars. could happen in Vancouver?

    ReplyDelete
    Replies
    1. It already has happened in Vancouver... that's the point.

      Delete
  14. 150+ views on YouTube. I see that Owin' Bigtime's videos usually receive around 200 views. Is it even worth giving this guy any attention?

    ReplyDelete
  15. AnonymousJanuary 21, 2013 at 9:33 PM - All debt is bad debt....

    I would have to disagree. When Visa is offering 0% for 6 months or .99% and I can go out and re-invest 30k in an ETF or even a high interest savings @ 2% it's free money and the .9% interest I am charged is tax deductible on investments.

    Responsible use of credit. Just saying

    Cheers

    ReplyDelete
    Replies
    1. That is a tiny return, but very easy to do. If you miss the payment date by a millisecond, your gains turn to a massive loss relative to the expected gain.

      Delete
  16. This comment has been removed by a blog administrator.

    ReplyDelete
  17. This comment has been removed by a blog administrator.

    ReplyDelete
  18. This comment has been removed by a blog administrator.

    ReplyDelete
  19. This comment has been removed by a blog administrator.

    ReplyDelete